HIPAA Violation Fines & Penalties With 5 Cases to Learn From [2024 Update]

HIPAA violation fines vary according to the level of culpability, with civil monetary penalties ranging from $100 to $50,000 per violation. Intentional violations can also lead to criminal penalties, resulting in fines and possible imprisonment. 

Remaining HIPAA compliant and avoiding large fines and other harsh penalties is crucial for healthcare providers.

In this article, we’ll cover common HIPAA violation fines, how to avoid them and common cases to learn from.

HIPAA Violation Fines: What Happens If HIPAA is Violated?

When a HIPAA violation occurs, entities may face civil monetary penalties and, in some cases, criminal penalties. Depending on the level of culpability and whether the violation was intentional or not, fines can vary significantly.

In cases of unknowing violations, penalties can range from $100 to $50,000 per violation, with an annual maximum of $25,000 for repeat violations. For violations due to reasonable cause, the penalty range is $1,000 to $50,000 per violation, with an annual maximum of $100,000 for repeat violations.

The fines for HIPAA violations can be adjusted based on inflation, and state attorneys general have the authority to issue fines up to a maximum of $25,000 per violation category per year.

In addition to fines, entities may be required to comply with a corrective action plan. This can involve correcting the violation within a specified time frame, such as 30 days if the violation is attributable to willful neglect.

When determining the consequences of a HIPAA violation, factors such as the nature, consequences, and motive of the violation are taken into account. Additionally, the entity's knowledge about the violation and whether they should have known it was a violation can impact the outcome.

To avoid penalties, it is crucial for covered entities and business associates to adhere to HIPAA regulations and ensure compliance. By staying informed about the rules and requirements of HIPAA, they can minimize the risk of violations and the resulting fines or penalties.

HIPAA Violation Punishment Categories

Civil Monetary Penalties

HIPAA violations can result in financial penalties known as civil monetary penalties (CMP). These penalties are imposed by authorities to ensure compliance with the regulations and to maintain the confidentiality and security of sensitive patient information.

Tier 1: Lack of Knowledge

In this tier, penalties are imposed for violations that the covered entity was unaware of and could not have realistically known was a violation through exercising a reasonable amount of due diligence. The penalties in this category range from $100 to $50,000 per violation, with an annual maximum of $25,000 for repeat violations.

Tier 2: Reasonable Cause and Not Willful Neglect

Violations falling under this tier are those where the covered entity had reasonable cause for the violation but did not act with willful neglect. Penalties for such violations range from $1,000 to $50,000 per violation, with an annual maximum of $100,000 for repeat violations.

Tier 3: Willful Neglect, Corrected Within 30 Days

This tier focuses on violations involving willful neglect but were corrected within 30 days of discovery. In this case, penalties range from $10,000 to $50,000 per violation, with an annual maximum of $250,000 for repeat violations.

Tier 4: Willful Neglect, Not Corrected Within 30 Days

If the violation involves willful neglect and was not corrected within 30 days of discovery, the penalties increase significantly. In this category, penalties range from $50,000 to $1.5 million per violation. The annual maximum for repeat violations in this tier is not specified, but it is essential for covered entities to address violations promptly and take preventive measures to avoid future offenses.

In recent years, the Office for Civil Rights (OCR) has taken action to also enforce the HIPAA Right of Access, with financial penalties ranging from $15,000 to $160,000. These cases typically involve refusals to provide copies of records or excessive delays in providing the required information.

To determine an entity's level of culpability for a violation, the HHS will consider factors such as history of prior compliance, the size of the covered entity, financial condition, and the impact of the violation on patients, among others.

Furthermore, the HHS also has a policy called Notice of Enforcement Discretion, which allows the OCR to exercise its enforcement discretion to reduce penalties in certain cases. This policy is typically applied when the OCR determines that a covered entity or business associate has made a good faith effort to comply with the HIPAA regulations but fails to do so due to circumstances beyond its control.

Criminal Penalties

Criminal penalties can be imposed on entities that violate HIPAA regulations, particularly involving the wrongful disclosure of protected health information (PHI). There are three tiers of criminal penalties based on the severity of the violation.

Tier 1: Wrongful Disclosure of PHI

This tier encompasses HIPAA violations that occur when the individual did not know they were violating the regulations. Penalties in this tier range from $100 to $50,000 per violation, with an annual maximum of $25,000 for repeat violations. Entities falling into this tier are typically afforded a lesser penalty due to their lack of knowledge regarding the violation.

Tier 2: Wrongful Disclosure of PHI Under False Pretenses

The second tier involves the wrongful disclosure of PHI under false pretenses. This occurs when an individual knowingly violates HIPAA regulations. Penalties in this category can range from $1,000 to $50,000 per violation, with an annual maximum of $100,000 for repeat violations. These penalties are steeper than Tier 1 to reflect the intentional nature of the violation.

Tier 3: Wrongful Disclosure of PHI Under False Pretenses with Malicious Intent

Tier 3 criminal penalties are reserved for the most severe HIPAA violations and involve the wrongful disclosure of PHI under false pretenses with malicious intent. This can include the intentional disclosure of PHI for personal gain or with the intent to cause harm. In these cases, penalties can be particularly severe, with fines and potential imprisonment depending on the circumstances.

How are HIPAA Violations Discovered?

HIPAA violations can be discovered in multiple ways, including investigations, complaints, proactive enforcement initiatives by the Office for Civil Rights (OCR), and through regular audits conducted by the Department of Health and Human Services (HHS).

Investigations often arise from the reporting of breaches by Covered Entities and Business Associates, as mandated by the HIPAA Breach Notification Rule. Once a breach is reported, OCR may determine whether further actions, including investigations, are needed.

Complaints from patients and employees alike can also trigger investigations into potential HIPAA violations. When OCR receives a complaint, they conduct a preliminary review and decide if an investigation is warranted. If so, the OCR investigates the complaint and subsequently enforces penalties and corrective actions if any violations are found.

OCR also carries out enforcement initiatives focusing on specific areas of compliance within HIPAA regulations. These initiatives serve to discover violations and ensure organizations are following the rules.

In addition to these methods, HHS conducts regular audits of Covered Entities and Business Associates to check HIPAA compliance. The audit process helps discover violations and identify the necessary corrective actions to improve compliance across the healthcare industry.

Who Issues the Penalties for Non-Compliance of HIPAA?

The penalties for non-compliance with the Health Insurance Portability and Accountability Act (HIPAA) can be issued by several different entities. These entities play a critical role in enforcing the regulations and ensuring that healthcare organizations and professionals adhere to the necessary standards.

The Office for Civil Rights (OCR) is one of the primary entities responsible for enforcing HIPAA compliance. Operating under the Department of Health and Human Services (HHS), the OCR investigates complaints, conducts audits, and imposes civil monetary penalties on covered entities that have failed to comply with HIPAA regulations.

Another relevant entity is the Department of Health and Human Services (HHS) itself. While the OCR handles the majority of enforcement activities, the HHS has the authority to enforce HIPAA regulations in certain situations. Sometimes, the HHS and OCR work together to address violations and issue fines to covered entities that fail to comply with the regulations.

The Department of Justice (DOJ) may also issue penalties for HIPAA violations, particularly for criminal cases. When a healthcare provider or other covered entity knowingly or intentionally violates HIPAA, the DOJ can impose criminal penalties, including fines and imprisonment, depending on the severity of the violation.

The State Attorneys General can also enforce HIPAA compliance and investigate potential violations within their jurisdiction. They have the authority to issue civil monetary penalties and seek injunctive relief in cases where state residents have been negatively impacted by an organization's failure to comply with HIPAA.

5 HIPAA Violation Cases to Learn from

HIPAA Violation Case Example #1 - iHealth Solutions

One notable HIPAA violation case involved iHealth Solutions, a healthcare billing service provider. The company was found to have improperly stored patient health information, which resulted in the exposure of over 19,000 patients' data. The Office for Civil Rights (OCR) investigated the case and imposed a fine of $750,000, emphasizing the importance of proper data storage and protection in compliance with HIPAA regulations.

HIPAA Violation Case Example #2 - Banner Health

Banner Health, a prominent healthcare system, experienced a massive data breach in 2016, impacting 3.7 million individuals' sensitive information. Investigations revealed that both administrative and technical safeguards were inadequate. In response, Banner Health agreed to a corrective action plan, which included a $200,000 fine. The case highlights the necessity for healthcare providers to implement robust HIPAA-compliant security measures, especially regarding data storage and access controls.

HIPAA Violation Case Example #3 - Northcutt Dental

A smaller dental practice, Northcutt Dental, faced a HIPAA violation case in 2018. The violation occurred when the dental practice failed to terminate a former employee's remote access privileges, allowing unauthorized access to patients' protected health information (PHI). The dental practice was fined $25,000, underlining the critical need for maintaining proper access controls and ensuring that staff permissions are updated regularly.

HIPAA Violation Case Example #4 - Oklahoma State University

Oklahoma State University experienced a HIPAA violation when a phishing attack compromised its patient billing system. The breach affected more than 279,000 patients' data, exposing them to potential identity theft or privacy violations. The university was fined $250,000 and required to implement a corrective action plan, demonstrating that even large institutions must prioritize cybersecurity and proper employee training to protect sensitive patient information.

HIPAA Violation Case Example #5 - Memorial Hermann Health System 

The Memorial Hermann Health System in Texas faced a HIPAA violation case when unauthorized staff members accessed a patient's PHI without a valid reason. The health system subsequently disclosed the patient's information to the media, violating the patient's privacy rights under HIPAA. As a result, Memorial Hermann faced a $2.4-million settlement to resolve the issue, emphasizing the importance of protecting patient privacy and maintaining strict controls over PHI access.

These HIPAA violation cases, from large healthcare systems to small dental practices, emphasize the crucial need for proper safeguarding of patient health information. Compliance with HIPAA regulations protects both patients and healthcare providers from potential security breaches and the resulting fines.

How to Avoid HIPAA Violations

Maintaining HIPAA compliance is crucial for healthcare providers, their business associates, and any organizations dealing with protected health information (PHI). Adhering to HIPAA regulations can help avoid costly violation fines and protect patient privacy. Here are some key steps to avoid HIPAA violations:

1. Conduct regular risk assessments: Organizations should perform thorough risk assessments at least once a year to identify vulnerabilities in their systems and processes related to PHI. This process will help in addressing potential risks and implementing robust security measures to safeguard sensitive information.

2. Develop comprehensive policies and procedures: Establishing clear policies and procedures for HIPAA compliance helps ensure all employees understand their responsibilities when handling PHI. This includes creating guidelines for accessing, transmitting, and storing PHI securely.

3. Train employees on HIPAA regulations: Providing regular training sessions for staff members on HIPAA rules and policies can help prevent accidental or intentional violations. Training should cover relevant topics such as patient privacy, PHI security, and breach reporting procedures.

4. Implement strict access controls: Limiting access to PHI is essential in reducing the chances of unauthorized disclosures or snooping. Implementing role-based access controls ensures that only authorized personnel can access sensitive information. Additionally, organizations should revoke access privileges immediately when an employee is no longer associated with them.

5. Ensure business associate agreements are in place: When outsourcing services that involve PHI, it is vitally important to have a signed business associate agreement (BAA) with the vendor. This contract outlines the responsibilities of both parties in maintaining compliance and protecting PHI, reducing the risk of improper information handling by third parties.

6. Establish a strong incident response plan: In case of a security incident or breach, having a well-designed incident response plan will allow organizations to take prompt and effective corrective action. This proactive approach can potentially minimize the damage caused by a breach and demonstrate compliance with regulatory authorities.

By implementing these measures, organizations can increase their chances of maintaining HIPAA compliance and avoid costly fines and penalties associated with violations. Remember, safeguarding patient information is not only a legal requirement but also an essential aspect of maintaining trust within the healthcare industry.

Key Takeaways on HIPAA Violation Consequences

HIPAA violation fines and penalties are imposed to ensure healthcare organizations maintain strict compliance with the Health Insurance Portability and Accountability Act (HIPAA) regulations. There are different levels of penalties based on the severity and knowledge of the violation.

Criminal penalties can also be imposed for intentional violations, which can lead to higher fines and even potential imprisonment for the individuals involved.

FAQs

What is the Maximum Penalty for Violating HIPAA?

The maximum penalty for violating HIPAA depends on the type of violation and the level of culpability involved. Civil penalties can range from $100 to $50,000 per violation, with an annual maximum of $1.5 million for identical violations. Adjustments to the maximum penalty may also be made annually in line with inflation.

What are the Two Types of HIPAA Violation Punishments?

HIPAA violation punishments are divided into two types: civil penalties and criminal penalties. Civil penalties are assessed based on the level of knowledge and intent behind the violation, while criminal penalties are imposed for more serious, intentional violations, and may result in imprisonment in addition to fines.

Why are Penalties for Violating HIPAA So Expensive?

Penalties for violating HIPAA are expensive because they are meant to ensure compliance with the law and protect sensitive patient information. The high cost serves as a strong deterrent for healthcare entities, encouraging them to prioritize patient privacy and safeguard their personal health information.

What Can Happen to a Healthcare Worker or Their Workplace if They Do Not Follow HIPAA Laws?

If a healthcare worker or their workplace does not follow HIPAA laws, they may be subject to various consequences, including fines, corrective actions, and even loss of government funding. In some cases, healthcare workers may face criminal charges for intentional violations, potentially resulting in imprisonment.

What is the Civil Penalty for Unknowingly Violating HIPAA?

The civil penalty for unknowingly violating HIPAA can range from $100 to $50,000 per violation, depending on the level of culpability and the steps taken to correct the violation. The annual maximum for unknowingly violating HIPAA is $25,000 per violation category.

How Much is a HIPAA Violation Lawsuit Worth?

The worth of a HIPAA violation lawsuit may depend on various factors, such as the severity of the violation, the extent of the damages caused, and the financial resources of the healthcare provider. Each case is unique, making it difficult to provide a specific dollar amount for an average HIPAA violation lawsuit.

What Were the Most Common HIPAA Non-Compliance Penalties That Happened?

Common HIPAA non-compliance penalties include fines for lack of safeguards and policies to protect personal health information, inadequate risk analysis and management, improper use or disclosure of protected health information, and failure to provide patients with timely access to their records.

Do the HIPAA Violation Fines Change Every Year?

Yes, HIPAA violation fines can change every year. The maximum penalty amounts may be adjusted annually to account for inflation, ensuring that they remain an effective deterrent for healthcare providers and continue to enforce compliance with HIPAA laws.

Who Gets the Money from HIPAA Violation Fines?

The money from HIPAA violation fines is typically collected by the enforcing agency, such as the U.S. Department of Health and Human Services' Office for Civil Rights or state attorneys general. These funds may be used to support the enforcement of HIPAA laws and, in some cases, may be allocated towards improving patient privacy and data security initiatives.

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