Uplift Medical, P.C. (Uplift) failed to provide forty-one individuals with timely access to their medical records and failed to cooperate with an HHS investigation of complaints regarding the company's noncompliance with HIPAA. Uplift argued that the medical records were not available because they were being used in a criminal hearing. As a result, HHS proposed a $4,351,600 penalty. Seems reasonable? Uplift did not request a hearing to challenge the penalty which was subsequently imposed by HHS.
Surprisingly, Uplift was no more cooperative in paying the fine than in cooperating with the investigation. As a result, HHS filed a complaint against Uplift and its owners to collect the penalty, alleging that Uplift continued operating after its corporate charter had been forfeited. HHS contended, and the court agreed, that Uplift had become a de facto partnership and its owners were therefore liable for the HIPAA civil money penalties as de facto partners. The court also held that the owners were barred from challenging the penalty for failure to exhaust their administrative remedies, by requesting a hearing and by the doctrine of res judicata.