On June 26, 2012, the U.S. Department of Health and Human Services (HHS) entered into a settlement with the Alaska Department of Health and Social Services (DHSS) for $1.7 million as well as a corrective action plan (CAP) for alleged security violations of the Health Insurance Portability and Accountability Act (HIPAA). This represents the first HHS action against a state agency.


Pursuant to reporting requirements under the Health Information Technology for Economic and Clinical Health (HITECH) Act, DHSS reported that a portable electronic storage device, specifically a USB drive, containing electronic protected health information was stolen from an employee’s vehicle. This report prompted an investigation by the HHS Office for Civil Rights (OCR), the agency responsible for HIPAA enforcement. As a result of the investigation, OCR determined that DHSS did not meet certain basic requirements under the HIPAA Security Rule. Specifically, OCR determined DHSS failed to:

  • Complete a risk analysis;
  • Implement specific risk management measures;
  • Complete security training for workforce members;
  • Implement device and media controls; and
  • Address device and media encryption

In order to correct the alleged deficiencies, DHSS entered into a three (3) year CAP that obligates DHSS to:

  • Develop, maintain and revise written policies and procedures to comply with HIPAA;
  • Distribute policies and procedures to workforce members;
  • Train workforce members on the policies and procedures;
  • Regularly conduct risk analyses and develop risk management procedures to address this risk;
  • Designate an independent monitor for the duration of the CAP; and
  • Submit annual reports to HHS.

This enforcement action highlights the growing exposure for covered entities under HIPAA.