In the first half of 2022, nearly 20.2 million healthcare records were compromised, according to HIPAA Journal. Can you imagine the impact of that?

Protecting patient information and reducing the chances of data breaches means closely following HIPAA regulations. If these rules are ignored, it’s not just your organization’s reputation at stake. Patient trust can also be damaged, and you might face steep fines that strain your resources.

Curious about what’s commonly overlooked in HIPAA compliance? We will take you through the most frequent violations, the penalties that come with them, and real-life examples showing just how vital it is to keep your organization HIPAA-compliant.

What Exactly is a HIPAA Violation?

The Health Insurance Portability and Accountability Act, known as HIPAA, was created in 1996 to make healthcare administration easier, prevent fraud, and keep patients' medical information private.

To help organizations follow HIPAA’s rules, the U.S. Department of Health and Human Services (HHS) set up clear guidelines. These guidelines are in place to support healthcare providers and related businesses in meeting HIPAA requirements while keeping patient data safe.

What happens if HIPAA rules are violated? Will the consequences depend on the seriousness of the violation or is there a strict penalty for every breach?  

The answer largely depends on the nature and severity of the infraction. In most cases, the Office for Civil Rights (OCR) prefers to handle violations with guidance rather than punishment. They often encourage voluntary compliance or provide technical support to help organizations fix their compliance issues.

But what about more serious cases, especially those that go unresolved? If violations are severe, ongoing, or involve multiple compliance issues, financial penalties may come into play. Here’s a closer look at the four levels of HIPAA penalties:

• Tier 1: What if the organization genuinely didn’t know about the violation? This category applies when an organization was unaware of the issue and could not have reasonably prevented it, assuming they were following HIPAA rules with due diligence.

• Tier 2: Should the organization have known about the issue? This tier is for cases where the organization should have been aware of the problem but could not avoid it, even with reasonable precautions. It’s important to note that this level does not imply any intentional neglect.

• Tier 3: What if the violation resulted from willful neglect? In cases where a breach is due to deliberate disregard for HIPAA rules, Tier 3 applies, though an attempt has been made to correct the issue afterward.

• Tier 4: What about violations where there’s been no attempt to fix the issue? This is the most serious category, reserved for cases of willful neglect where the organization hasn’t taken any corrective action within 30 days.

Each tier represents a different level of accountability, with penalties increasing based on the severity and response to the issue. Which tier do you think is most commonly applied? And more importantly, how can your organization ensure it doesn’t fall into any of these categories?

Fines Imposed on Covered Entities and Business Associates by the HHS Office for Civil Rights

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OCR Fines for HIPAA Violations from 2008 to 2024

Real-World Consequences of HIPAA Violations in 2024

In 2024, the consequences of violating HIPAA are more serious than ever. Healthcare organizations, providers, and their employees must be aware that HIPAA violations not only put patient trust at risk, but also carry severe financial and reputational consequences. But what does this really mean in practice? Let’s explore some real-world examples of HIPAA violations that have happened:

1. Gums Dental Care

In 2024, Gums Dental Care in Silver Spring, MD, was fined $70,000 for failing to provide a patient with timely access to her and her children’s medical records, a violation of HIPAA’s Right of Access. The patient requested her records in April 2019 but only received a confirmation of visits, not the actual records. Despite several follow-up requests, including one in June and another in August, the records were never provided.

The practice claimed it didn’t send the records due to a $25 administration fee and concerns over potential insurance fraud. However, while HIPAA rules allow reasonable fees, they do not justify withholding records. Gums Dental also argued it lacked a secure website for email transmission, but OCR determined that was not a valid excuse, especially since no alternative was offered. The penalty was upheld after a hearing, marking the 50th enforcement action under the HIPAA Right of Access initiative since 2019.

2. Providence Medical Institute

The U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) imposed a $240,000 fine on Providence Medical Institute (PMI) for violations of the HIPAA Security Rule related to a ransomware attack. This marks the fifth penalty in 2024 stemming from ransomware-related non-compliance with HIPAA.

Providence Medical Institute, a California healthcare provider, acquired Center for Orthopaedic Specialists (COS) in 2016 but only fully integrated it in 2019. In February 2018, a ransomware attack encrypted COS's systems after an employee fell victim to a phishing email. Despite restoring files from backups multiple times, the threat actor gained repeated access to the system, leading to the compromise of sensitive data, including Social Security numbers, credit card information, and more, affecting 85,000 individuals.

Post-incident assessments revealed several security failures, including outdated systems and lack of encryption. Additionally, PMI failed to establish a business associate agreement with its IT vendor, CSnC, until June 2018, violating HIPAA’s requirements. OCR's investigation resulted in the $240,000 penalty, emphasizing the importance of strong cybersecurity and HIPAA compliance.

3. Heritage Valley Health System

Heritage Valley Health System reached a settlement in 2024 over alleged HIPAA Security Rule violations, agreeing to pay a $950,000 penalty. This follows a 2017 malware attack involving NotPetya ransomware, which was traced back to a connection with their business associate, Nuance Communications. After the breach was reported in the media, the Office for Civil Rights (OCR) launched an investigation into whether Heritage Valley was complying with HIPAA requirements.

The investigation found several areas of concern, including the failure to conduct a proper risk analysis and develop an emergency plan for systems containing sensitive patient information. The health system was also found lacking in securing access to electronic health data. As part of the settlement, Heritage Valley has agreed to implement a corrective action plan, which includes conducting regular risk assessments, improving their security policies, and training staff on HIPAA compliance. OCR will be overseeing their progress for the next three years.

This case highlights the increasing risk of ransomware attacks in healthcare and the need to follow HIPAA-compliant medical billing services to protect patient privacy.

What Can Organizations Learn from HIPAA Violation Stories?

Organizations can learn valuable lessons from HIPAA violation stories about the steps they need to take to reduce the risk of violations or data breaches. Each story offers insights into how certain mistakes occurred and what could have been done to prevent them. We need to improve our risk assessments and put the right safeguards in place to better protect patient data.

‍Isaac Smith is an accomplished healthcare professional with over 13 years of experience in healthcare administration, medical billing and coding, and compliance. He holds several AAPC specialty certifications and has a bachelor’s degree in Health Administration. He currently works for Medcare MSO in the ICD-10 editorial department.