data security representation Photo: Shutterstock

In late May, 16 state attorney general offices announced the settlement of the “first-ever” multistate Health Insurance Portability and Accountability Act (HIPAA)-related data breach lawsuit.

With no federal data privacy law in sight, HIPAA lawyers say the suit will likely become the norm as more state attorneys general litigate on behalf of their citizens' HIPAA rights.

The settlement comes after a December filing by Arizona, Arkansas, Connecticut, Florida, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Nebraska, North Carolina, Tennessee, West Virginia and Wisconsin against health care IT provider Medical Informatics Engineering Inc. in U.S. District Court for the Northern District of Indiana.

The 16 AG offices alleged MIE's web-based health record program WebChart didn't safeguard data properly or disclose the 2015 breach of 3.9 million individuals' electronic protected health information in accordance to HIPAA and the states' data breach notification requirements and related laws. 

MIE didn't claim an admission of liability or wrongdoing, but the health care vendor did agree to pay $900,000 to the 16 state attorneys general offices and to comply with various injunctive provisions. The provisions ranged from requiring the defendant comply with all administrative and technical safeguards and implement specifications mandated by HIPAA to having MIE document staff undergo training regarding information privacy and security policies. 

Lawyers contacted by Legaltech News said that while the terms of the settlement weren't eye-catching, the composition of the suit and its success could a model to follow in future litigation.

To be sure, data breach HIPAA suits from multiple AGs were encouraged by the 2009 enactment of the Health Information Technology for Economic and Clinical Health (HITECH) Act, said Fox Rothschild partner Elizabeth Litten.

The HITECH Act grants state attorneys general the ability to bring civil actions on behalf of state residents for violations of the HIPAA Privacy and Security Rules, enjoin further violations of it and obtain damages. The U.S. Department of Health & Human Services Office for Civil Rights also developed HIPAA enforcement training to assist state attorneys general with their new authority and encourages collaboration among state attorneys general, according to HHS.

While the Medical Informatics Engineering case is the first of its kind, it does provide some insight into how HIPAA data privacy enforcement will materialize in the future, Litten said. 

“It's a good roadmap to see how enforcement actions will look like with these state attorneys general and the OCR,” she noted.

What's more, if more states are successful in multistate HIPAA-related data suits, it could be encouragement for companies to lobby strongly for a national data privacy law to settle the confusion borne from multiple statewide data regulations.

“It does underscore the push for having a nationwide privacy law,” said Nelson Mullins Riley & Scarborough partner Roy Wyman. “I think you are seeing more larger companies promoting that with a hope that it will create one enforcement mechanism and limit—in a sense—the liability, because they will be looking at federal enforcement and not the patchwork of different states and potentially 51 different plaintiffs for every breach.”