OCR Imposes $1 Million HIPAA Penalty on Lifespan for Lack of Encryption and Other HIPAA Failures

The HHS’ Office for Civil Rights has imposed a $1,040,000 HIPAA penalty on Lifespan Health System Affiliated Covered Entity (Lifespan ACE) following the discovery of systemic noncompliance with the HIPAA Rules.

Lifespan is a not-for-profit health system based in Rhode Island that has many healthcare provider affiliates in the state. On April 21, 2017, a breach report was filed with OCR by Lifespan Corporation, the parent company and business associate of Lifespan ACE, about the theft of an unencrypted laptop computer on February 25, 2017.

The laptop had been left in the vehicle of an employee in a public parking lot and was broken into. A laptop was stolen that contained information such as patient names, medical record numbers, medication information, and demographic data of 20,431 patients of its healthcare provider affiliates.

OCR investigated the breach and discovered systemic noncompliance with the HIPAA Rules. Lifespan ACE uses a variety of mobile devices and had conducted a risk analysis to identify potential risks to the confidentiality, integrity, and availability of ePHI. Through the risk analysis, Lifespan ACE determined that the use of encryption on mobile devices such as laptops was reasonable and appropriate given the level of risk but failed to implement encryption. The lack of encryption was a violation of 45 C.F .R. § I 64.312(a)(2)(iv).

OCR also discovered Lifespan ACE had not implemented policies and procedures that required the tracking of portable devices with access to a network containing ePHI, nor was there a comprehensive inventory of those devices, in violation of 45 C.F.R. § 164.310(d)(1).

Lifespan Corporation was a business associate of Lifespan ACE, but both entities had failed to enter into a business associate agreement with each other. Lifespan ACE had also not obtained a signed business associate agreement from its healthcare provider affiliates, in violation of 45 C.F.R. § 164.502(e).

As a result of the compliance failures, Lifespan ACE was responsible for the impermissible disclosure of the ePHI of 20,431 individuals when the laptop was stolen – See 45 C.F.R. § 164.502(a).

Lifespan ACE agreed to settle the case, pay the financial penalty, and adopt a comprehensive corrective action plan (CAP). The CAP requires Lifespan ACE to enter into business associate agreements with its affiliates and parent company, create an inventory of all electronic devices, implement encryption and configure access controls, and review and revise its policies and procedures with respect to device and media controls. Those policies and procedures must be distributed to the workforce and training must be provided on the new policies. Lifespan ACE’s compliance efforts will be scrutinized by OCR for the duration of the two-year CAP.

“Laptops, cellphones, and other mobile devices are stolen every day, that’s the hard reality.  Covered entities can best protect their patients’ data by encrypting mobile devices to thwart identity thieves,” said Roger Severino, OCR Director.

This is the second HIPAA penalty to be announced by OCR in the past week. On July 23, 2020, OCR announced Metropolitan Community Health Services dba Agape Health Services had been fined $25,000 for longstanding, systemic noncompliance with the HIPAA Security Rule.

Author: Steve Alder has many years of experience as a journalist, and comes from a background in market research. He is a specialist on legal and regulatory affairs, and has several years of experience writing about HIPAA. Steve holds a B.Sc. from the University of Liverpool.