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What Is the Cost of a HIPAA Violation?

a man in a suit sitting at a desk and between the hands says, “HIPAA violation.”

Imagine you’re running a successful online healthcare business, providing telemedicine services to a wide range of patients. Then, one day, you receive a notice from the Department of Health and Human Services Office (HHS) or Office for Civil Rights (OCR) stating that your website has violated HIPAA compliance. Turns out, there was a system glitch that accidentally disclosed your patient’s protected health information (PHI) on your public-facing website.

It’s a clear violation of the HIPAA Privacy Rule, which requires proper safeguards to protect PHI. This incident not only puts your business’s reputation at risk but also exposes it to potential legal penalties. It’s a tough situation to be in, and you’ll need to take immediate action to address it. However, you might not know the true cost of HIPAA violations until you have come out on the other side.

In this blog post, we will talk about what is the cost of a HIPAA violation from a reputation, financial, and legal aspect. Additionally, we will also discuss common mistakes business owners make that lead to violations of HIPAA security, as well as steps you can take to make sure you are HIPAA compliant.

Who Could Potentially Be in Violation of HIPAA Regulations?

Violating HIPAA, which stands for the Health Insurance Portability and Accountability Act, can have serious consequences for you as an entity or business associate. The goal of establishing HIPAA laws in 1996 was to protect patient data, as well as to make sure that privacy and security were considered when discussing patients’ health care and sensitive information.

Covered Entities That Have To Follow HIPAA Policies and Procedures

Several types of businesses, which are referred to as covered entities, could potentially be in breach of HIPAA compliance. These covered entities predominantly include healthcare providers’ websites that deal with patient data, such as online medical databases, electronic medical records systems, and telemedicine platforms.

Here are just a few examples:

  • Non-Profit Health Websites – Non-profit health websites that provide health advice and forums where users share personal health information could unintentionally breach HIPAA if not properly managed.

  • Websites That Sell Medical Equipment – E-commerce websites selling medical equipment directly to patients and requiring personal health information during purchase are also at risk.

  • Health Insurance Company Websites – Additionally, health insurance companies’ websites that handle protected health information fall under this category.

  • Health & Wellness Phone Applications – Health and wellness apps or any digital platform that collects, stores, or transmits PHI must also heed the HIPAA compliance rules.

Business Associates Who Have To Comply With HIPAA

The people who work for a covered entity or business, which are referred to as business associates, can also be liable under HIPAA security measures. This individual has access to PHI and provides services on behalf of a HIPAA-covered entity. For example, a cloud hosting company that stores patient data for a healthcare provider would be considered a business associate.

BAAs Help Keep Everyone HIPAA Compliant

When it comes to HIPAA compliance for business associates, something that helps make sure HIPAA privacy is taken seriously is business associate agreements (BAA.) This written contract between an entity and a business associate lays out the dos and don’ts of handling PHI as per HIPAA standards.

The BAA is there to make sure that business associates fully understand their legal obligations when handling PHI. This contract helps to make sure that everyone understands the policies and procedures when it comes to protecting patient information while providing services on behalf of covered entities. It outlines the specific ways PHI can be used and shared, the steps to keep the info safe, and how to report any data breaches to the covered entity.

The Repercussions of HIPAA Violations

a person typing at a laptop with a red warning sign graphic overlay

Not only can it damage your reputation and credibility, but it can also result in significant financial losses and legal penalties. There are a variety of ways in which a business can be penalized for not complying with HIPAA requirements. Still, the main areas we will cover here are the financial, reputation, and legal costs of doing so.

Financial Costs & Legal Penalties For Not Complying With HIPAA Rules

Violating HIPAA can have devastating financial consequences for a business. The penalties for HIPAA violations are divided into four tiers, each representing a different level of culpability and carrying its own range of fine amounts.

What Tier One HIPAA Violations Cost

This penalty applies when the violation was unintentional and couldn’t have been reasonably avoided. The fine ranges from $100 to $50,000 for each violation, with a maximum penalty of $1.5 million per year for identical violations.

Tier Two Penalties for Violation of HIPAA Rules

Second-tier penalties for noncompliance are where the violation could have been avoided by exercising reasonable diligence, but the entity should have known better. The fine ranges from $1,000 to $50,000 for every security rule violation, with a maximum penalty of $1.5 million each year for identical violations.

Tier Three Penalties for HIPAA Violations

HIPAA violations resulting from “willful neglect” of HIPAA security rules, where there were attempts of corrective action, fall under this penalty. The fine ranges from $10,000 to $50,000 per violation, with a maximum of $1.5 million per year for identical violations.

Tier Four Penalties for Violations of HIPAA Compliance

These HIPAA compliance violations occur due to willful neglect without any attempts to rectify the situation within 30 days of notification. The fine is a minimum of $50,000 per violation, with a maximum of $1.5 million per year for identical violations.

Apart from these fines, businesses may also face other financial repercussions, such as the cost of notifying patients about data breaches, providing credit monitoring services, and HIPAA compliance efforts, such as implementing system changes to ensure compliance in the future.

Criminal Penalties for HIPAA Violations

Not only do they result in civil penalties, but a HIPAA violation can result in criminal penalties when the violation involves knowingly obtaining or disclosing identifiable health information in a prohibited manner. The Department of Justice (DOJ) determines the potential jail term based on the intent and nature of the violation. There are three tiers of criminal sanctions:

  • Tier One – This applies when the person did not know about the violation, resulting in a potential fine and up to one year of imprisonment.

  • Tier Two – This involves cases where the violation occurred under false pretenses, with penalties including a fine and up to five years in jail.

  • Tier Three – This covers situations in which the violation involved willful neglect, intent to sell or use PHI for personal gain, commercial advantage, or malicious harm, carrying a potential fine, and up to 10 years in jail.

Civil Lawsuits for HIPAA Violations

HIPAA does not provide a private right of action. However, if a business violates HIPAA and the violation leads to harm, the affected individuals may file a lawsuit for damages.

While the lawsuit would not be directly due to the HIPAA violation, the data breach could be used as evidence of negligence or to demonstrate a breach of an implied contract to protect the patient’s privacy and confidentiality. The damages from these lawsuits can vary greatly depending on the harm caused by the violation.

a shocked woman wearing glasses at a desk looking at a computer

Reputational Costs When You Violate HIPAA

When healthcare organizations do not comply with HIPAA, the damage to their reputation can be pretty serious and long-lasting. Patients trust their sensitive information to health care providers, so when that trust is broken, it can shake their confidence. Once news of a HIPAA violation gets out, it can result in negative media coverage, making the organization’s reputation take a hit.

It Costs You Your Valued Patient Relationships

When patients find out about HIPAA violations, they might start questioning the organization’s integrity. Additionally, not just existing patients start asking. Even potential ones may be put off from seeking their services. It’s not just the patients either; business partners may also reconsider their association, worried about how it might affect their reputation.

The Cost of a HIPPA Violation Always Outweighs the Cost of a HIPAA COnsultant

Not only do HIPAA violations cost you money and legal problems, but they can cost you time, too. Building trust and credibility is no easy task and can take a lot of time and resources. When asking yourself what is the cost of a HIPAA violation as a business owner, there’s so much more than financial penalties involved.

That’s why healthcare organizations need to not only understand the importance of HIPAA compliance and risk assessment but also make sure to have HIPAA consulting services on compliance in place.

Employing HIPAA Consulting Services & Security Awareness

HIPAA consulting services offer numerous benefits to your business, revolutionizing the way you handle the privacy and security of PHI. Here are just a few of the many benefits of having regular HIPAA compliance consulting:

HIPAA Compliance Services Act As A Guide For Your Business

HIPAA compliance services can help you navigate the complexities of HIPAA rules. They work towards achieving full compliance and minimizing the risk of violations. While they are considered a third party to your organization, HIPAA consultants are there to guide you forward to compliance and prevent HIPAA violations down the road.

HIPAA Consulting Gives Your Business Personalized Help

HIPAA consultants provide tailored advice based and your risk analysis of violating a HIPAA security rule based on your specific business needs. They assist you in implementing compliance efforts that ensure the safety and protection of patient data.

HIPAA Consultants Are Risk Management For Your Business

Many business owners view HIPAA compliance consulting as a form of risk analysis and management. It not only protects your business from legal ramifications but also builds trust with clients and associates.

A HIPAA Consultant Can Save You Money & Time

When you hire a HIPAA consultant, you save your business valuable time and resources. Instead of deciphering HIPAA’s requirements alone, you can rely on the expertise of your HIPAA consulting services to help you through it. You can then focus your resources on other critical areas of your business and boost productivity.

Get Reliable HIPAA Consulting at Absolute Computer Systems

Now that you know what is the cost of a HIPAA violation and why you can’t be without a HIPAA consultant, it’s time to protect your business! You simply cannot afford to be without one to provide the protections you need for your patients, employees, and business.

When it comes to making sure your business is doing everything possible for HIPAA compliance in Lake County, IL, Racine County, or Kenosha County, WI, call on Absolute Computer Systems. With our fast, responsive times, proactive approach, and trustworthy reputation, you can count on us to help you comply with HIPAA. Contact us to book a consultation today!