The United States Court of Appeals for the Fifth Circuit recently vacated a $4.3 million civil monetary penalty imposed by the Department of Health and Human Services’ Office for Civil Rights (“OCR”) in 2017 against the University of Texas M.D. Anderson Cancer Center (“MD Anderson”). The Court held that OCR’s civil monetary penalty for alleged violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy Rule and HIPAA Security Rule was “arbitrary, capricious, and otherwise unlawful.”
The MD Anderson case stemmed from three breaches suffered by MD Anderson in 2012 and 2013 that resulted in the unauthorized disclosure of the protected health information (“PHI”) of approximately 35,000 patients. OCR investigated and imposed the $4.3 million civil monetary penalty, finding that MD Anderson had allegedly, during the calendar years 2011-2013, (1) failed to implement a mechanism to encrypt electronic PHI (“ePHI”) in violation of the HIPAA Security Rule and (2) improperly disclosed PHI in violation of the HIPAA Privacy Rule. MD Anderson appealed the penalty to an administrative law judge (“ALJ”), who upheld the penalty in June 2018.
MD Anderson then appealed the penalty to the United States Court of Appeals for the Fifth Circuit, who undertook a de novo review. The Fifth Circuit vacated the ALJ’s ruling and held that OCR’s actions were “arbitrary, capricious, and otherwise unlawful” for four reasons:
- MD Anderson implemented various mechanisms to encrypt ePHI, including an “IronKey” to encrypt and decrypt mobile devices, a mechanism to encrypt emails and various other mechanisms for file-level encryption, and the plain text of the HIPAA Security Rule “does not require a covered entity to warrant that its mechanism provides bulletproof protection of all systems containing ePHI”;
- The text of the HIPAA Privacy Rule defines a disclosure as “the release, transfer, provision of access to, or divulging in any manner of information outside the entity holding the information,” and MD Anderson did not affirmatively act to disclose PHI and OCR did not prove that someone outside the entity received the information;
- OCR failed to impose penalties against several other covered entities for similar breaches, and OCR “offered no reasoned justification for imposing zero penalty on one covered entity and a multi-million-dollar penalty on another”; and
- The penalty amounts contradicted the HIPAA Enforcement Rule, which limits all penalties within a calendar year for all violations that were attributable to a covered entity’s reasonable cause to $100,000 (a point that OCR conceded, and OCR in fact asked for the penalty to be reduced to $450,000).
The MD Anderson decision may encourage other covered entities or business associates to challenge civil monetary penalties they receive from OCR. As we wrote about in 2019, OCR reduced the maximum annual penalties for most HIPAA violations, though it is unclear whether OCR’s action was a direct response to the MD Anderson case.
Read the court’s holding here.
Search
Recent Posts
Categories
- Behavioral Advertising
- Centre for Information Policy Leadership
- Children’s Privacy
- Cyber Insurance
- Cybersecurity
- Enforcement
- European Union
- Events
- FCRA
- Financial Privacy
- General
- Health Privacy
- Identity Theft
- Information Security
- International
- Marketing
- Multimedia Resources
- Online Privacy
- Security Breach
- U.S. Federal Law
- U.S. State Law
- U.S. State Privacy
- Workplace Privacy
Tags
- Aaron Simpson
- Accountability
- Adequacy
- Advertisement
- Advertising
- American Privacy Rights Act
- Anna Pateraki
- Anonymization
- Anti-terrorism
- APEC
- Apple Inc.
- Argentina
- Arkansas
- Article 29 Working Party
- Artificial Intelligence
- Australia
- Austria
- Automated Decisionmaking
- Baltimore
- Bankruptcy
- Belgium
- Biden Administration
- Big Data
- Binding Corporate Rules
- Biometric Data
- Blockchain
- Bojana Bellamy
- Brazil
- Brexit
- British Columbia
- Brittany Bacon
- Brussels
- Business Associate Agreement
- BYOD
- California
- CAN-SPAM
- Canada
- Cayman Islands
- CCPA
- CCTV
- Chile
- China
- Chinese Taipei
- Christopher Graham
- CIPA
- Class Action
- Clinical Trial
- Cloud
- Cloud Computing
- CNIL
- Colombia
- Colorado
- Commodity Futures Trading Commission
- Compliance
- Computer Fraud and Abuse Act
- Congress
- Connecticut
- Consent
- Consent Order
- Consumer Protection
- Cookies
- COPPA
- Coronavirus/COVID-19
- Council of Europe
- Council of the European Union
- Court of Justice of the European Union
- CPPA
- CPRA
- Credit Monitoring
- Credit Report
- Criminal Law
- Critical Infrastructure
- Croatia
- Cross-Border Data Flow
- Cyber Attack
- Cybersecurity
- Cybersecurity and Infrastructure Security Agency
- Data Brokers
- Data Controller
- Data Localization
- Data Privacy Framework
- Data Processor
- Data Protection Act
- Data Protection Authority
- Data Protection Impact Assessment
- Data Transfer
- David Dumont
- David Vladeck
- Delaware
- Denmark
- Department of Commerce
- Department of Health and Human Services
- Department of Homeland Security
- Department of Justice
- Department of the Treasury
- Disclosure
- District of Columbia
- Do Not Call
- Do Not Track
- Dobbs
- Dodd-Frank Act
- DPIA
- E-Privacy
- E-Privacy Directive
- Ecuador
- Ed Tech
- Edith Ramirez
- Electronic Communications Privacy Act
- Electronic Privacy Information Center
- Elizabeth Denham
- Employee Monitoring
- Encryption
- ENISA
- EU Data Protection Directive
- EU Member States
- European Commission
- European Data Protection Board
- European Data Protection Supervisor
- European Parliament
- Facial Recognition
- Facial Recognition Technology
- FACTA
- Fair Information Practice Principles
- Federal Aviation Administration
- Federal Bureau of Investigation
- Federal Communications Commission
- Federal Data Protection Act
- Federal Trade Commission
- FERC
- FinTech
- Florida
- Food and Drug Administration
- Foreign Intelligence Surveillance Act
- France
- Franchise
- Fred Cate
- Freedom of Information Act
- Freedom of Speech
- Fundamental Rights
- GDPR
- Geofencing
- Geolocation
- Georgia
- Germany
- Global Privacy Assembly
- Global Privacy Enforcement Network
- Gramm Leach Bliley Act
- Hacker
- Hawaii
- Health Data
- Health Information
- HIPAA
- HIPPA
- HITECH Act
- Hong Kong
- House of Representatives
- Hungary
- Illinois
- India
- Indiana
- Indonesia
- Information Commissioners Office
- Information Sharing
- Insurance Provider
- Internal Revenue Service
- International Association of Privacy Professionals
- International Commissioners Office
- Internet
- Internet of Things
- IP Address
- Ireland
- Israel
- Italy
- Jacob Kohnstamm
- Japan
- Jason Beach
- Jay Rockefeller
- Jenna Rode
- Jennifer Stoddart
- Jersey
- Jessica Rich
- John Delionado
- John Edwards
- Kentucky
- Korea
- Latin America
- Laura Leonard
- Law Enforcement
- Lawrence Strickling
- Legislation
- Legislature
- Liability
- Lisa Sotto
- Litigation
- Location-Based Services
- London
- Madrid Resolution
- Maine
- Malaysia
- Markus Heyder
- Maryland
- Massachusetts
- Mexico
- Microsoft
- Minnesota
- Mobile App
- Mobile Device
- Montana
- Morocco
- MySpace
- Natascha Gerlach
- National Institute of Standards and Technology
- National Labor Relations Board
- National Science and Technology Council
- National Security
- National Security Agency
- National Telecommunications and Information Administration
- Nebraska
- NEDPA
- Netherlands
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- New Zealand
- Nigeria
- Ninth Circuit
- North Carolina
- Norway
- Obama Administration
- OECD
- Office for Civil Rights
- Office of Foreign Assets Control
- Ohio
- Online Behavioral Advertising
- Opt-In Consent
- Oregon
- Outsourcing
- Pakistan
- Parental Consent
- Paul Tiao
- Payment Card
- PCI DSS
- Penalty
- Pennsylvania
- Personal Data
- Personal Health Information
- Personal Information
- Personally Identifiable Information
- Peru
- Philippines
- Phyllis Marcus
- Poland
- PRISM
- Privacy By Design
- Privacy Policy
- Privacy Rights
- Privacy Rule
- Privacy Shield
- Protected Health Information
- Ransomware
- Record Retention
- Red Flags Rule
- Rhode Island
- Richard Thomas
- Right to Be Forgotten
- Right to Privacy
- Risk-Based Approach
- Rosemary Jay
- Russia
- Safe Harbor
- Sanctions
- Schrems
- Scott Kimpel
- Securities and Exchange Commission
- Security Rule
- Senate
- Serbia
- Service Provider
- Singapore
- Smart Grid
- Smart Metering
- Social Media
- Social Security Number
- South Africa
- South Carolina
- South Korea
- Spain
- Spyware
- Standard Contractual Clauses
- State Attorneys General
- Steven Haas
- Stick With Security Series
- Stored Communications Act
- Student Data
- Supreme Court
- Surveillance
- Sweden
- Switzerland
- Taiwan
- Targeted Advertising
- Telecommunications
- Telemarketing
- Telephone Consumer Protection Act
- Tennessee
- Terry McAuliffe
- Texas
- Text Message
- Thailand
- Transparency
- Transportation Security Administration
- Trump Administration
- United Arab Emirates
- United Kingdom
- United States
- Unmanned Aircraft Systems
- Uruguay
- Utah
- Vermont
- Video Privacy Protection Act
- Video Surveillance
- Virginia
- Viviane Reding
- Washington
- WeProtect Global Alliance
- Whistleblowing
- Wireless Network
- Wiretap
- ZIP Code