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$2.3 Million 21st Century Oncology HIPAA Settlement Agreed with OCR

A 21st Century Oncology HIPAA settlement has been agreed with the Department of Health and Human Services’ Office for Civil Rights (OCR) to resolve potential HIPAA violations discovered during the investigation of a 2015 breach of 2.2 million patients’ PHI.

The breach in question was discovered by the Federal Bureau of Investigation (FBI) in 2015. The FBI informed 21st Century Oncology on November 13 and December 13, 2015, that an unauthorized individual accessed and stole information from one of its patient databases.

21st Century Oncology conducted an investigation with the assistance of a third-party computer forensics company and discovered the network SQL database was potentially first accessed on October 3, 2015. The database was accessed through Remote Desktop Protocol from an Exchange Server within 21st Century Oncology’s network. The database contained the protected health information of 2,213,597 individuals.

As occurs after all data breaches that impact more than 500 individuals, OCR conducted an investigation into the 21st Century Oncology data breach. That investigation uncovered multiple potential violations of HIPAA Rules.

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OCR determined that 21st Century Oncology failed to conduct a comprehensive, organization-wide risk assessment to determine the potential risks to the confidentiality, integrity, and availability of electronic protected health information, as required by 45 C.F.R. § 164.308(a)(1)(ii)(A).

21st Century Oncology was also determined to have failed to implement sufficient measures to reduce risks to an appropriate and acceptable level to comply with 45 C.F.R. § 164.306(A).

21st Century Oncology also failed to implement procedures to regularly review logs of system activity, including audit logs, access reports, and security incident tracking reports, as required by 45 C.F.R. §164.308(a)(1)(ii)(D).

The breach resulted in the impermissible disclosure of the protected health information of 2,213,597 patients.

Further, protected health information of patients was disclosed to business associates without first entering into a HIPAA-compliant business associate agreement and obtaining satisfactory assurances that HIPAA requirements would be followed.

To resolve those potential HIPAA violations, 21st Century Oncology agreed to pay OCR $2.3 million. In addition to the financial settlement, 21st Century Oncology has agreed to adopt a comprehensive corrective action plan (CAP) to bring its policies and procedures up to the standards demanded by HIPAA.

Under the CAP, 21st Century Oncology must appoint a compliance officer, revise its policies and procedures with respect to system activity reviews, access establishment, modification and termination, conduct an organization-wide risk assessment, develop internal policies and procedures for reporting violations of HIPAA Rules, and train staff on new policies.

21st Century Oncology is also required to engage a qualified, objective, and independent assessor to review compliance with the CAP.  Since 21st Century Oncology had already initiated bankruptcy proceedings at the time of the settlement, the HIPAA fine will be covered  by its insurance policy.

Separate $26 Million Settlement Resolves Meaningful Use, Stark Law, and False Claims Act Violations

In addition to the OCR settlement to resolve potential HIPAA violations, 21st Century Oncology has also agreed to a $26 million settlement with the Department of Justice to resolve allegations that it submitted false or inflated Meaningful Use attestations in order to receive incentive payments. 21st Century Oncology self-reported that employees falsely submitted information relating to the use of EHRs to avoid downward payment adjustments. Fabricated reports were also submitted, and the logos of EHR vendors were superimposed on reports to make them appear genuine.

The settlement also resolves allegations that the False Claims Act was violated by submitting or enabling the submission of claims that involved kickbacks for physician referrals, and also violations of the Stark Law, which covers physician self-referrals.

According to the Department of Justice, “The Stark Law prohibits an entity from submitting claims to Medicare for designated health services performed pursuant to referrals from physicians with whom the entity has a financial relationship unless certain designated exceptions apply.”

“We appreciate that 21st Century Oncology self-reported a major fraud affecting Medicare, and we are also pleased that the company has agreed to accept financial responsibility for past compliance failures,” said Middle District of Florida Acting U.S. Attorney Stephen Muldrow.

In addition to paying the settlement amount, 21st Century Oncology has entered into a 5-year Corporate Integrity Agreement with the HHS’ Office of Inspector General (OIG).

Author: Steve Alder is the editor-in-chief of HIPAA Journal. Steve is responsible for editorial policy regarding the topics covered on HIPAA Journal. He is a specialist on healthcare industry legal and regulatory affairs, and has several years of experience writing about HIPAA and other related legal topics. Steve has developed a deep understanding of regulatory issues surrounding the use of information technology in the healthcare industry and has written hundreds of articles on HIPAA-related topics.