On September 2, 2015, the U. S. Department of Health and Human Services (“HHS”) announced a $750,000 settlement with Cancer Care Group, P.C. (“CCG”), a radiation oncology practice in Indiana, for Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules violations. The alleged violations occurred in 2012, but a subsequent HHS Office for Civil Rights (OCR) investigation led to allegations from OCR that there was a lack of compliance with HIPAA Privacy and Security Rules requirements dating back to 2005.

CCG notified OCR on August 29, 2012 of a data breach of electronic protected health information (ePHI) resulting from the theft of a laptop bag that was left unattended in an employee’s car.  The bag contained a laptop computer and unencrypted backup storage media.  OCR estimated that the stolen data included the names, addresses, dates of birth, Social Security numbers, insurance information, and clinical information of approximately 55,000 current and former patients.

After receiving notification of the breach, OCR conducted an investigation that OCR alleged revealed CCG was in “widespread non-compliance with the HIPAA security rule.”  Specifically, OCR determined that CCG failed to conduct an enterprise-wide risk analysis at any time between April 21, 2005 (the compliance date of the Security Rule) and November 5, 2012, almost 5 months after the data breach.  OCR also determined that CCG also failed to have in place a written policy covering the removal of hardware and electronic media containing ePHI from CCG facilities.  OCR noted that an enterprise-wide risk analysis would have determined that removal of unencrypted media was a high risk to the group’s ePHI security.

In addition to the $750,000 payment, the settlement requires CCG to adopt a robust corrective action plan to correct HIPAA compliance program deficiencies. The entire Resolution Agreement can be viewed here.

This case highlights the need for all covered entities and business associates to conduct regular risk assessments and vulnerability testing.  A proper risk assessment will help organizations to identify vulnerabilities to the ePHI they store. While the Security Rule does not mandate encryption, as it is an addressable implementation specification, this settlement again reinforces OCR’s position that unencrypted computer hard drives, mobile devices, and electronic media will be under intense scrutiny should a breach occur. Thus, in most instances it is advisable for those types of devices to be encrypted.