How to avoid liability after a data breach

Data breaches in the healthcare industry are a threat to patients and their protected health information (PHI). With stolen PHI, cybercriminals can cause much harm to patients as well as to healthcare organizations. Beyond these direct consequences, healthcare organizations might even be responsible for additional liabilities.

Generally, a healthcare organization will have to answer to the U.S. Health and Human Resources’ (HHS’) Office for Civil Rights (OCR) as well as to patients themselves. Therefore, the best method available to avoid liability after a data breach is by demonstrating HIPAA compliance. Healthcare organizations and their business associates are subject to the HIPAA Act’s rules and must be HIPAA compliant to prevent data breaches.

Learn more: HIPAA compliant email: the definitive guide

HIPAA and data breaches

The Health Insurance Portability and Accountability Act (HIPAA) sets out the rules and regulations surrounding access to and disclosure of PHI. The HIPAA Privacy Rule establishes the national standards to protect individuals' PHI, while the Security Rule creates a framework for the defense of electronic PHI (ePHI). Both rules set the limits and conditions of PHI exposure, particularly without patient authorization.

HIPAA's regulations protect PHI from unnecessary exposure by increasing patient power and insisting on the use of strong physical, administrative, and technical safeguards. To enhance data confidentiality and mitigate the impact of breaches, healthcare organizations must prioritize HIPAA compliance by using strong security measures, including data encryption, employee training, and secure PHI disposal practices.

Furthermore, the HIPAA Act includes information about what to do after a data breach. Healthcare organizations must inform the impacted individuals and OCR under the Breach Notification Rule when a breach involves unprotected PHI. This notification process encourages accountability and transparency and guarantees that patients know of potential violations. The healthcare industry has faced the highest number of breaches compared to other industries.

Healthcare data breaches

HIPAA compliance promotes strong security, especially as data breaches in the healthcare industry have continued to increase. According to reports, the total number of individuals affected by healthcare data breaches from 2005 to 2019 was 249.09 million. Of these, 157.40 million individuals were impacted in the last five years alone. New data also shows that healthcare data breaches exposed 170 million records in 2024.

Common examples of breaches that result in exposed PHI include unauthorized employee access, lost or stolen devices, hacking incidents, and phishing/ransomware attacks. The two most widespread types of healthcare breaches are hacking/IT incidents and unauthorized internal disclosures.

Hacking attacks aim at gaining unauthorized access to confidential healthcare data. They can include malware, ransomware, phishing, and exploitation of unpatched systems. They have been the leading cause of healthcare data breaches, accounting for the most exposed records. Unauthorized internal disclosures occur when employees inappropriately access or disclose PHI, resulting from privilege abuse, unauthenticated access or disclosure, improper disposal, or unintentional sharing with unauthorized parties. Other types of breaches include:

• Theft or loss of devices
• Improper disposal of data
• Accidental disclosure

No matter the type of breach, a data breach can have far-reaching consequences and serious accountabilities and responsibilities.

Liabilities to healthcare organizations after a data breach

A HIPAA violation occurs when a healthcare organization does not maintain appropriate safeguards. Whether deliberate or accidental, HIPAA violations can result in costly liabilities for healthcare providers and their business associates. Fees issued by OCR for HIPAA violations can be severe, ranging from fines of $127 to $63,973 per violation, with an annual maximum of $1.9 million for repeated violations.

Certain breaches might entail significant financial and criminal consequences. In cases of willful neglect or criminal intent, penalties can be even more severe, including fines of up to $500,000 and/or imprisonment for up to 10 years. Moreover, patients can also take direct legal action against healthcare organizations, either individually or through a class-action lawsuit. While it is not possible for a patient to directly sue for a HIPAA violation, they can file under state laws.

Beyond the direct financial costs of a data breach, healthcare organizations face a variety of other liabilities, from service disruptions to lost revenue, increased insurance premiums, and the daunting task of rebuilding patient trust and organizational reputation. In fact, disrupted operations, postponed surgeries, and closed emergency departments have direct impacts on patient care and patient outcomes.

Discover more: HITECH Act Enforcement Interim Final Rule

Avoid liabilities with HIPAA compliance

Maintaining HIPAA compliance is a legal obligation and a step toward keeping patients safe. Avoiding data breach liabilities is possible with HIPAA compliance because of HIPAA’s insistence on strict control of patients’ PHI. A strong cybersecurity strategy helps healthcare organizations meet regulatory requirements and avoid legal consequences and significant fines.

Maintaining HIPAA compliance is an ongoing process that requires vigilance, and by taking a proactive approach to cybersecurity, healthcare organizations can mitigate the risk of cyberattacks and protect sensitive patient data. Cybersecurity shields PHI from breaches and unauthorized access, which is central to maintaining patient privacy and confidentiality. Even if a breach occurs, strong cybersecurity protocols can detect an intrusion quickly, minimize the damage, and expedite recovery.

Need to know: Why HIPAA compliance pays off

What do health organizations need to do to have strong cybersecurity?

HIPAA compliance involves continuously updating security measures to protect sensitive health information. One of the first steps toward HIPAA compliance is conducting a risk assessment. This assessment helps identify vulnerabilities and develop strategies to address them. Other steps include:

1. Establishing up-to-date policies and procedures
2. Implementing a program to identify cyber vulnerabilities
3. Using continuous employee awareness training
4. Ensuring proper technological safeguards
5. Utilizing strong access controls
6. Keeping communication channels secure
7. Choosing business associates that are HIPAA compliant themselves
8. Creating data backup and disaster recovery plans in case of an incident
9. Regularly auditing and monitoring systems
10. Having an incident response plan ready in case it is needed

HIPAA compliance regulations aim to protect patient and employee health information. Adhering to HIPAA standards helps providers protect patient privacy, leading to strengthened relationships and better patient outcomes.

In the news: 2025 so far

The first half of 2025 has seen many data breaches that involve healthcare organizations and their business associates. More than 29 million individuals were impacted by healthcare data breaches reported to OCR. Recent attacks have stemmed from various sources, including phishing, ransomware, misconfigured analytics tools, and vendor system issues.

So far, nine of the 10 largest breaches have been the result of hacking or IT-related incidents. Four of these involved providers, while six involved business associates. Organizations involved in the breaches generally expressed regret and stated their commitment to improving cybersecurity.

Many of these covered entities initiated investigations, notified law enforcement, and offered free identity monitoring to impacted individuals. What happens next after a breach tends to depend on the organization, the breach itself, and any decision made by OCR about liability.

FAQs

What is HIPAA, and how does it relate to cybersecurity?

The HIPAA Act is a U.S. law designed to protect sensitive patient health information from being disclosed without the patient's consent or knowledge. HIPAA's Security Rule requires healthcare organizations to implement administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability of ePHI.

Who does HIPAA apply to?

HIPAA applies to covered entities, which include healthcare providers, health plans, and healthcare clearinghouses. It also applies to business associates of these covered entities. These are entities that perform certain functions or activities on behalf of the covered entity.

How can you identify a data breach?

Identifying a HIPAA breach involves recognizing any unauthorized acquisition, access, use, or disclosure of PHI that compromises its security or privacy. Monitoring access logs, conducting regular security assessments, and promptly investigating any suspicious incidents are central steps in identifying potential breaches. Early detection enables prompt action to mitigate harm and fulfill reporting requirements under HIPAA regulations.

How can healthcare organizations prevent data breaches?

Healthcare organizations can reduce the risk of data breaches by implementing strong cybersecurity measures, conducting regular security training for employees, and using encryption to protect sensitive data.

What tools can I use to ensure HIPAA compliance?

There are various tools available to assist with HIPAA compliance, including HIPAA compliance software, secure email solutions, encryption technologies, and training programs. Choose tools that align with your organization's specific needs and requirements.

What should a healthcare organization do immediately after discovering a data breach?

Upon discovering a data breach, a healthcare organization should contain the breach, assess the scope of the impact, notify affected individuals and relevant authorities, and begin an investigation to understand how the breach occurred and how to prevent future incidents.