MD Anderson Fined $4.3 Million For HIPAA Violations

Posted on June 21, 2018 I Written By

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

An administrative law judge has ruled that MD Anderson Cancer Center must pay $4.3 million to the HHS Office of Civil Rights due to multiple HIPAA violations. This is the fourth largest penalty ever awarded to OCR.

OCR kicked off an investigation of MD Anderson in the wake of three separate data breach reports in 2012 and 2013. One of the breaches sprung from the theft of an unencrypted laptop from the home of an MD Anderson employee. The other two involved the loss of unencrypted USB thumb drives which held protected health information on over 33,500 patients.

Maybe — just maybe — MD Anderson could’ve gotten away with this or paid a much smaller fine. But given the circumstances, it was not going to get away that easily.

OCR found that while the organization had written encryption policies going back to 2006, it wasn’t following them that closely. What’s more, MD Anderson’s own risk analyses had found that a lack of device-level encryption could threaten the security of ePHI.

Adding insult to injury, MD Anderson didn’t begin to adopt enterprise-wide security technology until 2011. Also, it didn’t take action to encrypt data on its devices containing ePHI during the period between March 2011 and January 2013.

In defending itself, the organization argued that it was not obligated to encrypt data on its devices. It also claimed that the ePHI which was breached was for research, which meant that it was not subject to HIPAA penalties. In addition, its attorneys argued that the penalties accrued to OCR were unreasonable.

The administrative law judge wasn’t buying it. In fact, the judge took an axe to its arguments, saying that MD Anderson’s “dilatory conduct is shocking given the high risk to its patients resulting from the unauthorized disclosure of ePHI,” noting that its leaders “not only recognized, but [also] restated many times.” That’s strong language, the like of which I’ve never seen in HIPAA cases before.

You won’t be surprised to learn that the administrative law judge agreed to OCR’s sanctions, which included penalties for each day of MD Anderson’s lack of HIPAA compliance and for each record of individuals breached.

All I can say is wow. Could the Cancer Center’s leaders possibly have more chutzpah? It’s bad enough to have patient data breached three times. Defending yourself by essentially saying it was no big deal is even worse. If I were the judge I would’ve thrown the book at them too.