HIPAA and Football
By Ashley Thomson, Partner at Practus, LLP. A Virtual Law Firm.
On rare occasions a Court can issue an opinion that is so logical and on-point you want to stand up and cheer. Maybe you’re only cheering if you’re a HIPAA-nerd, like me. My name is Ashley and I work with Knicole. I was the assistant GC for Truman Medical Center for 17 years. As AGC at Truman, I was inundated with so many various issues.
Here’s what got me standing up in my home office as if Patrick Mahomes just threw a pass to Tyreek Hill and the KC Chiefs scored the winning touchdown in the Super Bowl—the 5th Circuit Court of Appeals held that a lost or stolen unencrypted device containing protected health information (“PHI”) does not automatically result in a violation of the HIPAA Disclosure Rule or Encryption Rule. If you want to do your own touchdown dance check out Univ. of Texas M.D. Anderson Cancer Ctr. v. United States Dep’t of Health & Human Servs., No. 19-60226, 2021 WL 127819, at *5 (5th Cir. Jan. 14, 2021).
Unless you’ve spent the last 20 years living under a rock, you are generally aware that HIPAA is a law that protects your health information from public disclosure. Most people don’t spell it correctly and even less people know what the acronym means. In 2009, HIPAA was supplemented with the HITECH Act. Together, these laws govern how health care providers handle your medical information and what to do if there is a breach of the information. HIPAA and HITECH’s implementing regulations (the “Regulations”) require all covered entities “implement a mechanism to encrypt” all PHI that is stored electronically. 45 C.F.R. Section 164.312(a)(2)(iv). Second, the Regulations prohibit unpermitted disclosure of PHI. 45 C.F.R. Sec. 164.502(a). These two regulations are referred to as the Encryption Rule and the Disclosure Rule respectively. These requirements are enforced by the Department of Health and Human Services (“HHS”) in conjunction with the Office for Civil Rights (“OCR”).
Whew, that was a quick history lesson. Now, back to the story.
In 2012 and 2013 MD Anderson Cancer Center (“MD Anderson”) had three (3) events happen involving unencrypted devices containing PHI. First, a laptop was stolen. Second, a thumb drive was lost during someone’s commute home. Third, a visiting researcher misplaced a thumb drive. Pursuant to the regulations, MD Anderson reported these events to HHS.
HHS concluded that MD Anderson violated the Regulations and imposed a fine over $4,000,000 (let me spell that out for you. . . FOUR MILLION DOLLARS).
You may be wondering, what in the world did they violate that would result in such an outrageous fine? So did MD Anderson!
MD Anderson threw its proverbial, red challenge flag and pursued its appeal rights and ended up, finally, in Federal Court where they succeeded on establishing that the mere loss of unencrypted PHI does not violate the Disclosure Rule and that the Encryption Rule does not require that a covered entity sit down and force each and every person to encrypt their devices.
Let’s look first at the Disclosure Rule. As a general rule, HIPAA prohibits the disclosure of PHI without permission from the patient. 45 C.F.R. Sec. 164.502(a). HIPAA defines disclosure as “the release, transfer, provision of access to, or divulging in any manner of information outside the entity holding the information.” 45 C.F.R. Sec. 164.103. Prior to reaching the 5th Circuit, MD Anderson had been told the mere fact that the unencrypted laptop and thumb drives were lost or stolen resulted in the conclusion the PHI had been improperly disclosed to someone outside of the covered entity. Thank goodness, the Court stepped in with the reasonable statement that many of us in the health care field have been saying for years. . . just because a device is lost or stolen doesn’t mean the PHI was improperly disclosed. “It defies reason to say an entity affirmatively acts to disclose information when someone steals it.” Univ. of Texas M.D. Anderson Cancer Ctr.,2021 WL 127819, at *5.
HHS claimed that it would be difficult for them to enforce the Disclosure Rule if it had to show that the PHI was disclosed to someone outside of the covered entity. Well, go complain to the referees HHS “that’s precisely the sort of policy argument that HHS could vet in a rulemaking proceeding. It’s not an acceptable basis for urging us to transmogrify the regulation HHS wrote into a broader one.” Id. And with that, the Court unceremoniously stated the obvious and provided some reason in the rather unreasonable world of HIPAA enforcement.
Next up? The Encryption Rule where HHS argued that MD Anderson’s desire to do more to encrypt their devices was an admission of non-compliance with the regulations. Not so fast, said the Court. The rule requires that a covered entity have a mechanism for the encryption PHI not that it implements an iron clad, hacker proof, 100% guaranteed encryption system. MD Anderson had an encryption mechanism which is enough to satisfy the regulation, even if HHS now “wishes it had written a different” regulation. Id.at *4.
I feel like this is the SUPERBOWL of HIPAA decisions. You may not be as excited about this opinion as I was. That’s ok. . . I’m a HIPAA and privacy nerd and I’m ok with that.
Let’s hope I have many touchdowns to stand up and celebrate on Sunday! Go Chiefs!
The legal fine print: As exciting as this opinion is, please remember that devices should be encrypted and PHI should be protected to the maximum extent possible. While this is a great decision, it doesn’t remove the obligation to comply with the Regulations.
 PHI contains 18 different identifiers. 42 C.F.R. § 164.514(a)(2)(i).
 It’s the Health Insurance Portability and Accountability Act of 1996.
 HITECH stands for the Health Information Technology for Economic and Clinical Health Act of 2009.
 Later, we can delve into what qualifies as a covered entity. Let’s just all agree that MD Anderson is a covered entity.
 This is a very simple overstatement, but it works for the purposes of this article.
 Let’s face it, most of these devices are lost or stolen and (1) never found or (2) thrown out as the thieves take what they really wanted . . . cold hard cash or credit cards. An old janky laptop or a random thumb drive is not at the top of the most wanted list for kleptomaniacs.
Posted on February 3, 2021, in Federal Government, Federal Law, Health Care Providers and Services, HIPAA, Knicole Emanuel, Legal Analysis, Legal Remedies for Medicaid Providers, Medicaid, Medicaid Advocate, Medicaid Appeals, Medicaid Attorney, Medicaid Providers, Medicare, Medicare Administrative Contractor, Medicare Attorney, Medicare Audits, Monetary Damages and tagged Ashley Thomson, Breach of HIPAA, Disclosure Rule, HIPAA, HIPAA Penalties, HITECH, Knicole Emanuel, Practus. Bookmark the permalink. 1 Comment.