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May 2017

No Business Associate Agreement Leads to a $31,000 Penalty

Jim Hoover

Suite 3400 • 420 North 20th Street • Birmingham, Alabama 35203


On, April 20, 2017, the Center for Children’s Digestive Health (CCDH) paid the U.S. Department of Health and Human Services (HHS) $31,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule and agreed to implement a corrective action plan. CCDH is a small, for-profit health care provider with a pediatric subspecialty practice that operates its practice in seven clinic locations in Illinois. 


In August 2015, the HHS Office for Civil Rights (OCR) initiated a compliance review of the Center for Children’s Digestive Health (CCDH) following an initiation of an investigation of a business associate, FileFax, Inc., which stored records containing protected health information (PHI) for CCDH. While CCDH began disclosing PHI to Filefax in 2003, neither party could produce a signed Business Associate Agreement (BAA) prior to Oct. 12, 2015. Additionally, neither party could produce a signed BAA prior to Oct. 2015.


The OCR has penalized more and more cases with covered entities and business associates for not having a business associate agreement.  It is important for you to remember that if your law firm represents a healthcare client and has access to patient health information as a result of that representation your firm is likely a business associate of the healthcare client.  As a result, the law firm and healthcare client must enter into a HIPAA compliant business associate agreement.  Otherwise, both the healthcare client and the law firm are subject to penalties. 





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