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Compliance Services

What are the Consequences of a HIPAA Violation?

July 18, 2023

7 minutes

doctor looking at camera with mask on and goggles

The consequences of a HIPAA violation that goes against regulations can be extremely harmful to businesses, especially for repeat offenders or those found being negligent to the established regulations.

As an example of a HIPAA violation and what can happen when health organizations do not protect their patients’ protected health information (PHI), take the Hawaiian Eye Center, which had to notify their patients of a data breach that involved their names, Social Security numbers, patient records, and other information.  

If you’d first like to review whether your organization is compliant, download and review our Checklist: What are the HIPAA Safeguards for Compliance?. 

 In another HIPAA violation example, a dental practice reached a settlement with the Office for Civil Rights and paid $23,000 in fines as well after revealing a patient’s protected information on a social media platform. They were also asked to develop a corrective action plan. HIPAA violation consequences often go beyond that, since in these cases, customer trust is also lost which can hurt business reputation and result in future losses. 

Read on to learn more about what qualifies as a HIPAA violation, the consequences for HIPAA violations of different categories, and what businesses can do to avoid these violations in the first place.

More Examples of a HIPAA Violation  

  • HIPAA is full of strict rules and regulations regarding the protection and use of individual healthcare information. The rules apply to covered entities such as doctors, nurses, healthcare providers, and insurance companies that handle this type of data.  

  • HIPAA violations are organized into two main categories: intentional and accidental. In simpler terms, did the organization know that a patient’s PHI (protected health information) had been exposed? HIPAA violation consequences can differ based on whether the violation was intentional or not.

  • Both types of violation will result in fines, but intentional misuse of individually identifiable health information is a serious offense that is investigated by the Department of Justice (DOJ) and can result in both fines and jail time.  

  • An accidental violation can occur due to a lack of data encryption or cybersecurity standards, resulting in a data breach and loss of patient health data. Cyberattacks resulting in lost or stolen data can come from multiple attack vectors from full-blown cyberattacks to simpler phishing tactics. They can also be caused by employee error, such as lost credentials or the misplacement of files. 

  • Intentional violations can be performed by anyone but typically involve stolen data that is intended to be sold by the covered entity or maliciously used for personal or commercial gain. An example would be stealing patient data to sell to a rival company or use as extortion.  

In either case of a HIPAA violation, there will be consequences:

HIPAA Violation Consequences  

75% of healthcare services reported having a cybersecurity infrastructure that is not prepared to deal with cyber threats. They believe that patients’ privacy and data could be at risk. Large institutions like hospitals and educational systems that have access to sensitive information but are notorious for weak cybersecurity protocols make the perfect prey for cyber criminals. 

Because protected health information is so important, HIPAA violations are met with serious consequences, especially if covered entities are found to be willfully negligent of the rules and regulations.  

Therefore, it is crucial for covered entities to develop a thorough cybersecurity program to protect their patients’ data. However, they also must continue to serve their clients uninterrupted.   

HIPAA Violation Consequences Continued: Fines and Tiers  

HIPAA violations are categorized into four distinct tiers that identify the severity of the violation and measure the negligence performed by the covered entity (any organization that must follow HIPAA regulations) when handling protected information and data.  

The graphic below explains the HIPAA violation tiers and their respective fines: 

HIPAA Violation Tiers and Fines | How much are HIPAA violation fines? | DOT Security

These HIPAA violation fines are dictated by the HITECH Act a health act created to improve overall health, service, and patient engagement in the US. These fines are adjusted annually to account for inflation.  

These are the current HIPAA fines with adjustments: 

HIPAA Fines Adjusted for Inflation (2022) | HIPAA fine tiers | DOT Security

While each tier has a designated fine minimum and maximum, the actual fine is determined after an investigation by the Department of Health and Human Services’ (HHR) Office for Civil Rights (OCR). This authority takes violation history and severity into account.  

What are the HIPAA Violation Tiers?

The four tiers of HIPAA Violations and their corresponding consequences are as follows: 

Tier 1 Violation: This is a violation that the covered entity was unaware of and could not have realistically avoided, even if a higher amount of care had been given to following the HIPAA regulations. A tier one violation results in a minimum fine of $100 per violation up to $50,000.  

Tier 2 Violation: This occurs when a HIPAA-covered entity should have been aware of a violation but could not have avoided it. This is the last tier before the OCR labels the violation “willful neglect.” For tier two violations, the minimum fine is $1,000 per violation up to $50,000.  

Tier 3 Violation: A tier 3 violation is the first violation that is a result of what the OCR deems “willful neglect” of HIPAA regulations. In a tier three case, the covered entity has at least made an attempt to correct the problem. For tier three violations, the minimum fine is $10,000 per offense with a maximum of $50,000.  

Tier 4 Violation: This is the highest tier of HIPAA violation and is defined as a violation due to willful neglect where there is no attempt at correction. There is a minimum fine of $50,000 per violation and no set maximum.  

Criminal Violations of HIPAA  

If a HIPAA violation is deemed criminal—for example, if HIPAA-protected information is stolen, or if a covered entity knowingly obtains or discloses PHI—the DOJ will investigate. Offenders can face large fines and additional jail time depending on the severity of the offense.  

Offenses committed under false pretenses can face fines up to $100,000 and 5 years in prison.  

Offenses committed with the intent to sell, transfer, or use healthcare information for commercial or personal gain, or malicious harm can bring fines of $250,000 and up to 10 years in prison.  

Wrapping up on the Consequences of a HIPAA Violation

Maintaining HIPAA compliance and meeting all regulations is critical for covered entities in the healthcare industry. This is not only because the consequences of a violation are fines and potential jail time, but also a serious data breach can result in lost business, erosion of trust from patients, and irreparable harm to your organization’s reputation.  

To learn more about HIPAA and what it takes to ensure your healthcare organization is compliant, download and review DOT Security’s helpful Checklist: What are the HIPAA Safeguards for Compliance?.