Your E and O Won’t Cover HIPAA HITECH Fines

Resources to help you – HITECH Survival Center

I had a long conversation yesterday with a friend on the P&C side of the business and she has been researching whether a broker’s E&O policy could cover fines and penalties under HIPAA HITECH.

From all her research with E&O carriers there is no coverage. Since an E&O insurer cannot gauge the risk nor police the degree to which a broker is compliant with the privacy and security rules they will not insure it.

So put another way your firm is naked from a risk management perspective in terms of its insurance cover.

HIPAA HITECH is not some toothless DOL or ERISA law nor the HIPAA of 2003. WHY?

  • HHS is going to use fines to  fund enforcement,
  • The state Attorneys General keep a portion of any fines they levy
  • There is a “tip line” setup and any whistleblower get to keep a portion of any fines they help create

What is your risk? Lets start with the reputational risk alone

  • A new “Tattle” rule requires BA’s to report their CE’s (clients and carriers) breaches
  • Local media notification is mandatory if a breach involves 500 or more lives
  • allow the state Attorneys General to take legal action on privacy/security violations. CT took the first action against Health Net last week.
  • Establish new criminal and civil penalties for noncompliance that apply to BA’s as well

Violation

Penalty/Violation Maximum per Year
Tier A – Did not Know 100 25,000
Tier B – Reasonable cause, not willful neglect $1,000 100,000
Tier C – “Willful Neglect”, corrected $10,000 $250,000
Tier D – “Willful Neglect”, uncorrected $50,000 $1,500,000

So your organization’s only defense against HIPAA HITECH penalties and reputational risk is to get compliant, stay compliant and be sure to encrypt your email when transmitting PHI.

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One Comment on “Your E and O Won’t Cover HIPAA HITECH Fines”


  1. […] Industry Radar Insights Knowledge is Power. More Knowledge is the Ultimate Power. « Your E and O Won’t Cover HIPAA HITECH Fines […]


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