On January 2, the U.S. Department of Health and Human Services (HHS) announced its first settlement involving a breach of unprotected electronic protected health information (ePHI) affecting fewer than 500 individuals.  The $50,000 settlement resolved potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule.

The settlement stemmed from an HHS Office of Civil Rights (OCR) investigation of a breach on a hospice’s annual breach report.  The hospice reported the breach as a theft of an unencrypted laptop computer containing ePHI.  Under the Health Information Technology for Economic and Clinical Health (HITECH) Breach Notification Rule, the hospice was required to report the breach to the Secretary of HHS as part of its annual report.

While investigating the reported breach, OCR discovered the hospice: (i) had not conducted an accurate and thorough risk analysis to safeguard ePHI as part of the hospice’s security management process and (ii) did not have polices or procedures in place to address mobile device security.  In addition to the $50,000 settlement the resolution requires the hospice to comply with a two year corrective action plan.

As noted by OCR Director Leon Rodriguez, “[t]his action sends a strong message to the health care industry that, regardless of size, covered entities must take action and will be held accountable for safeguarding their patients’ health information.”  Covered entities should take active steps to maintain active and effective HIPAA compliance programs that include thorough risk assessments (including potential vulnerabilities with portable electronic devices), active review and enforcement of privacy and security policies and procedures, and consistent monitoring of compliance.  Covered entities should also consider use of encryption for all devices that are used to store, transmit, or maintain protected health information.

The HHS press release is available here and HHS guidance regarding mobile device privacy and security is available here.