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Wakefern Food Corporation Settles HIPAA Breach Case with NJ Attorney General for $235,000

Wakefern Food Corporation has agreed to pay $235,000 in civil financial penalties to resolve allegations of violations of federal and state laws related to a data breach involving the protected health information of 9,700 customers of two ShopRite supermarkets in Millville, New Jersey and Kingston, New York. In addition to the financial penalties, the settlement requires improvements to be made to data security practices.

Wakefern Food Corporation is the parent company of Union Lake Supermarket, LLC, which owns the ShopRite store in Millville and ShopRite Supermarkets, Inc., which owns the ShopRite store in Kingston, NY.

In 2016, Wakefern replaced electronic devices that were used to collect customer signatures and purchase information at the two locations. The old devices were disposed of in regular dumpsters without first destroying the devices or purging/clearing the stored data to ensure sensitive information could not be recovered. The devices contained the protected health information of 9,700 customers of the two stores including names, contact information, zip codes, driver’s license numbers, dates of birth, prescription numbers, prescription types, pickup and delivery dates.

After receiving reports about the improper disposal of ePHI, the New Jersey Division of Consumer Affairs launched an investigation and determined the disposal of the devices was in violation of the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule and there had been multiple violations of the state’s fraud act. Staff at the stores had also not been provided with appropriate training on the handling and disposal of sensitive information.

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“Pharmacies have a legal obligation to protect the privacy and security of the patient information they collect, and to properly dispose of that information when the time comes,” said New Jersey Attorney General Gurbir S. Grewal. “Those who compromise consumers’ private health information face serious consequences.”

Wakefern has agreed to pay $209,856.50 in civil penalties and $25,143.50 for reimbursement of attorneys’ fees and investigative costs and will implement protective measures to ensure future data branches are prevented. Those measures include appointing a chief privacy officer, executing a business associate agreement with ShopRite Supermarkets, Union Lake, and each of the members that operate pharmacies within the supermarkets, and ensuring appropriate measures are implemented to safeguard protected health information. Each of the ShopRite stores that has a pharmacy is required to appoint a HIPAA privacy officer and HIPAA security officer to oversee compliance and online training must be provided for those officers on their privacy and security roles.

“New Jersey consumers have a right to know that when they purchase a prescription medication at the neighborhood supermarket, their most private information will be fully protected under the law and not carelessly left to fall into the wrong hands,” said Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs. “This settlement ensures that ShopRite supermarket pharmacies will be trained and monitored for HIPAA compliance to avoid future conduct that place consumers at risk for privacy invasion and identity theft.”

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.