BCBST Pays $1.5 Million to HHS to Settle Potential HIPAA Privacy and Security Violations

On March 13, 2012, Blue Cross Blue Shield of Tennessee (BCBST) agreed to a payment of $1.5 million to the Department of Health and Human Services (HHS) and to a corrective action plan as part of a Resolution Agreement with HHS for potential violation of Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rule violations.  According to a HHS Press Release of the same date, “the enforcement action [by HHS’ Office for Civil Rights (OCR)] is the first resulting from a breach report required by the Health Information Technology for Economic and Clinical Health (HITECH) Act Breach Notification Rule.”

According to the HHS Press Release:

“The investigation followed a notice submitted by BCBST to HHS reporting that 57 unencrypted computer hard drives were stolen from a leased facility in Tennessee.  The drives contained the protected health information (PHI) of over 1 million individuals, including member names, social security numbers, diagnosis codes, dates of birth, and health plan identification numbers.  OCR’s investigation indicated BCBST failed to implement appropriate administrative safeguards to adequately protect information remaining at the leased facility by not performing the required security evaluation in response to operational changes.  In addition, the investigation showed a failure to implement appropriate physical safeguards by not having adequate facility access controls; both of these safeguards are required by the HIPAA Security Rule.

“‘This settlement sends an important message that OCR expects health plans and health care providers to have in place a carefully designed, delivered, and monitored HIPAA compliance program,’ said OCR Director Leon Rodriguez.  ‘The HITECH [Act] Breach Notification Rule is an important enforcement tool and OCR will continue to vigorously protect patients’ right to private and secure health information.'”

In Appendix A (Corrective Action Plan) to the Resolution Agreement, pay particular attention to the provisions of Section VI (Corrective Action Obligations):

A. Policies and Procedures

B. Distribution and Updating of Policies and Procedures

C. Minimum Content of the Policies and Procedures and Reportable Events

D. Training

E. Monitoring

The content of these provisions provides excellent guidance on procedures underpinning compliance efforts and consequences of non-compliance.

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