Last week, the Connecticut Attorney General became the first state attorney general to enter into a settlement agreement for HIPAA violations, as a result of the new authority granted to attorneys general under the Health Information Technology for Economic and Clinical Health Act (HITECH Act).

This settlement resulted from the first ever attorney general action under the HITECH Act, as a result of the loss by Health Net, a health insurer, of a computer disk drive that contained unencrypted protected health information such as claims forms, health plan appeals information, and other sensitive data relating to approximately 1.5 million health plan participants (approximately one-third of whom resided in Connecticut). The Connecticut AG focused upon the several month delay by Health Net in reporting the loss to law enforcement officials. 

As part of the settlement, Health Net has agreed to pay $250,000 to the state, offer two years of credit monitoring for affected participants, obtain $1 million of identity theft insurance, and reimburse affected individuals for security freezes. An additional contingent payment of $500,000 will need to be paid, under specified circumstances, in the event that the lost information is actually accessed and misused. Further, Health Net has agreed to a corrective action plan that includes various privacy and security measures to heighten protections for health information as well as other sensitive data, regular monitoring, and reporting to the attorney general’s office. Many of the steps that Health Net agreed to undertake relate to the handling of portable media and the encryption of sensitive data, such as encryption of hard drives, including those on desktop computers, as well as to the improvement of security training and awareness for personnel. 

While many commentators have understandably focused on the security breach notification provisions of the HITECH Act, the provision of the Act that authorizes state attorneys general to bring civil actions for violations of HIPAA also warrants attention. The inclusion of this provision adds an additional avenue for enforcement of privacy and security violations by HIPAA-covered entities, although the Connecticut action is the only action that has been brought to date since HITECH Act was enacted in February 2009.