Stolen Laptop Costs Research Institute Millions

The Feinstein Institute for Medical Research (Feinstein) recently agreed to pay, the U.S. Department of Health and Human Services, Office for Civil Rights (OCR), $3.9 million to settle allegations that Feinstein violated the HIPAA Privacy and Security Rules. This settlement confirms the OCR’s position that nonprofit research institutes are held to the same standards as all other HIPAA covered entities.

The OCR began its investigation, after Feinstein filed a breach report revealing that a laptop computer containing electronic protected health information (ePHI) had been stolen from an employee’s car. The laptop contained the ePHI of approximately 13,000 patients and research participants. The laptop was unencrypted.
In addition to the breach, OCR’s investigation determined that Feinstein failed to:

(1) conduct a risk analysis of all of the PHI held at Feinstein, including the PHI on the stolen laptop;

(2) implement policies and procedures for granting access to ePHI to workforce members;

(3) implement physical safeguards for the laptop;

(4) implement policies and procedures managing the movement of hardware that contains ePHI; and

(5) implement encryption technology or to ensure that an alternative measure to encryption was deployed to safeguard the ePHI.

HIPAA does not expressly require encryption of ePHI, however, covered entities and business associates, who do not encrypt ePHI, are required to document why encryption is not reasonable or appropriate. Covered entities and business associates that do not encrypt ePHI are also required implement measures equivalent to encryption to safeguard ePHI.

 
In addition to other violations, the OCR’s investigation revealed that Feinstein failed to document why encrypting the laptop was not reasonable or appropriate. Further, contrary to having measures equivalent to encryption for safeguarding ePHI, the OCR found that Feinstein lacked policies and procedures for the receipt and removal of laptops containing ePHI from its facilities and policies and procedures for authorizing access ePHI.

 
This settlement provides us with three lessons. First, it’s important to realize that research institutes are held to the same standards as other covered entities. To the extent a research institute maintains PHI, it is essential to develop adequate policies and procedures to protect the PHI. Failing to do so, exposes the institute to considerable risk. Second, encrypting ePHI goes a long way towards reducing liability. Had Feinstein’s laptop been encrypted to the NIST standard, Feinstein’s ePHI would have been secured and Feinstein wouldn’t have been required to report a breach. Instead, as is often the case, the OCR’s investigation revealed multiple additional HIPAA violations. By not encrypting ePHI covered entities and business associates risk not only the cost of a breach, but also the potential for added costs following an OCR investigation. Lastly, covered entities and business associates that don’t encrypt their ePHI, are required to document why encryption is not reasonable or appropriate. Failing to do so is a HIPAA violation and subjects covered entities and business associates to liability.

The Myth of a HIPAA Compliant Product

Purchasing a “HIPAA compliant” technology product does not guarantee HIPAA compliance.

There. I said it.

In today’s healthcare marketplace, a vendor’s representation that its product is “100% HIPAA Compliant” is an important assurance for covered entities and business associates. Due to the complex and confusing HIPAA regulations, the idea of “purchasing” compliance can be very attractive.

Unfortunately, you cannot buy HIPAA compliance. To explain, allow me to use the example of encryption technology.

HIPAA Compliant Encryption

Nearly every vendor of an encryption product that targets the healthcare market will claim that the product is HIPAA compliant. This representation is critical because health information that is properly encrypted is exempt from the HIPAA breach notification rules.

But when a vendor states that its encryption product is “HIPAA compliant,” the vendor is merely stating that the product meets the HIPAA encryption guidelines for data at rest (stored data) and data in motion (data that is transmitted over networks).

In reality, the HIPAA Security Rule requires more than merely using technology that meets the encryption guidelines.

The HIPAA Security Rule – What Product is “Reasonable and Appropriate”?

The HIPAA Security Rule standard related to encryption states that covered entities and business associate must: “Implement a mechanism to encrypt and decrypt electronic protected health information.”

Because this standard is “addressable,” an entity must carefully analyze its operations to determine what type of encryption product is reasonable and appropriate for its business.

The analysis must focus on a number of different factors related to the entity, including:

  • The entity’s size, complexity and capabilities;
  • The entity’s technical infrastructure, hardware and software security capabilities;
  • Costs of encryption measures; and
  • Probability and criticality of potential risks to electronic PHI.

For example, if a small entity simply wants to send a limited number secured e-mails containing patient information, a top-of-the-line encryption product for all IT systems may not be necessary. Rather, a basic e-mail encryption product may suffice.

However, if a large health system regularly transmits a large amount of health information over public networks, a basic e-mail encryption product is probably not appropriate.

The vendor of the e-mail product might claim that its product is “HIPAA compliant,” but under the Security Rule, a deluxe encryption solution for the health system’s various IT systems probably makes more sense.

In all cases, it is important for the entity to document why it believes that a selected encryption product is appropriate for its operations.

Conclusion

The takeaway is that HIPAA compliance takes real work. While the idea of buying compliance might be attractive, HIPAA requires covered entities and business associate to look inward and conduct a thorough analysis of their operations.

Do not be misled by thinking that HIPAA compliance can be achieved by entering credit card information and pushing a button.

If you would like more information about HIPAA compliance, please contact Casey Moriarty.