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Medical Informatics Engineering Settles HIPAA Breach Case for $100,000

Medical Informatics Engineering, Inc (MIE) has settled its HIPAA violation case with the HHS’ Office for Civil Rights for $100,000.

MIE, an Indiana-based provider of electronic medical record software and services, experienced a major data breach in 2015 at its NoMoreClipboard subsidiary.

Hackers used a compromised username and password to gain access to a server that contained the protected health information (PHI) of 3.5 million individuals. The hackers had access to the server for 19 days between May 7 and May 26, 2015. 239 of its healthcare clients were impacted by the breach.

OCR was notified about the breach on July 23, 2015 and launched an investigation to determine whether it was the result of non-compliance with HIPAA Rules.

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OCR discovered MIE had failed to conduct an accurate and through risk analysis to identify all potential risks to the confidentiality, integrity, and availability of PHI prior to the breach – A violation of the HIPAA Security Rule 45 C.F.R. § 164.308(a)(l)(ii)(A).

As a result of that failure, there was an impermissible disclosure of 3.5 million individual’s PHI, in violation of 45 C.F.R. § 164.502(a).

MIE chose to settle the case with OCR with no admission of liability. In addition to paying a financial penalty, MIE has agreed to adopt a corrective action plan that requires a comprehensive, organization-wide risk analysis to be conducted and a risk management plan to be developed to address all identified risks and reduce them to a reasonable and acceptable level.

“Entities entrusted with medical records must be on guard against hackers,” said OCR Director Roger Severino. “The failure to identify potential risks and vulnerabilities to ePHI opens the door to breaches and violates HIPAA.”

The settlement releases MIE from further actions by OCR over the above violations of HIPAA Rules, but action is also being taken by 16 state attorneys general over the data breach. The lawsuit was filed in December 2018 and a summary judgement has now been agreed and is awaiting court approval. The lawsuit alleged there was a failure to implement adequate security controls, that known vulnerabilities had not been corrected, encryption had not been used, security awareness training had not been provided to staff, and there were post-breach failures at MIE.

This is OCR’s second financial penalty of 2019. Earlier this month, a $3,000,000 settlement was agreed with Touchstone Medical Imaging to resolve multiple HIPAA violations, several of which were related to the delayed response to a data breach.

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.