The Impact of HIPAA Violations on Healthcare Providers
Healthcare Assessments | HIPAA
Published: Feb 18, 2025
Being HIPAA-compliant means that a healthcare provider has adequate measures in place to protect patient data. In recent years, there has been an alarming growth in the number of data breaches targeting the healthcare industry, and more breaches have meant more (and more serious) consequences for the affected provider.
The significance of HIPAA to the healthcare industry cannot be understated—medical records and the related protected health information (PHI) are some of the most sensitive information in the digital space, which is why HIPAA was introduced to protect it. It’s also why violations of HIPAA stringent regulations can be devastating, especially for smaller practices.
As experienced HIPAA assessors that have discovered different kinds of gaps at different kinds of organizations over many years, we know that achieving and maintaining HIPAA compliance is difficult. But to fully illustrate what’s at stake if you don’t, we’re going to detail the varied consequences that can be laid down by governing bodies should you be found in violation.
How HIPAA Violations Can Impact Healthcare Providers
Though not the only ones who can levy penalties—as you’ll soon understand—the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) is primarily responsible for investigating possible HIPAA violations.
Should your organization be found to have committed such, the different types of blowbacks as decided by the OCR may include:
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Consequence |
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Financial Penalties |
The most common consequence of breaking HIPAA regulations, you may receive a fine of several thousand dollars per HIPAA violation—neglect, even if unintentional, can still cost hundreds of thousands of dollars’ worth of fines, and intentional violations can cost you millions of dollars. These financial penalties vary depending on your level of negligence, with fines ranging from $100 to $50,000 per violation and a maximum fine of $1.5 million per violation category, though these numbers will be multiplied by the number of years you allowed the violation to persist. |
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Corrective Action Plans (CAPs) |
The Office for Civil Rights (OCR) may also impose a HIPAA corrective action plan to remedy the underlying HIPAA privacy and security compliance issues that led to the HIPAA violation in the first place. An aggressive enforcement action, a CAP may span a year or several years, and during this time, you will be required to regularly report to the OCR and undergo regular HIPAA audits. |
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Government Audits |
The OCR investigates patient complaints and reviews HIPAA compliance through its auditing procedures (not to be confused with a CAP, which merely includes audits as part of other corrective actions). For your organization, an OCR audit can be costly in terms of the resources it requires, including staff time and the expenses necessary to provide documentation. |
You can read more about recent OCR enforcement actions in our article on the Office’s recent reports to Congress in 2023.
But as we said, the OCR aren’t the only ones with the power to punish an organization in violation of HIPAA. While the Office would certainly address issues discovered, you may also face further detrimental impact in the following additional ways:
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Consequence |
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Attorneys General Penalties |
The Health Information Technology for Economic and Clinical Health (HITECH) Act allows state attorneys generals to issue financial penalties to healthcare organizations for HIPAA violations in their states. Most recently in 2023, the AGs of California, New York, Ohio, and Pennsylvania levied financial penalties for HIPAA violations, the least of which was for $200k. |
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Class-Action and Civil Lawsuits |
Victims of data breaches may pursue class-action lawsuits against a healthcare provider on the grounds of negligence, just as individual victims may also pursue monetary compensation through civil lawsuits—how well you fare in court against is largely determined by your stance toward compliance. The legal system treats proactive compliance more favorably than reactive compliance, with willful-neglect cases incurring greater financial penalties and possibly even jail time for compliance officers and others within an organization. |
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Criminal Charges |
The most sobering reality of any HIPAA violation, whether willful or otherwise, is that if damage is severe enough, people can face criminal charges, along with time in jail. Criminal charges for violating HIPAA privacy law are broken into three tiers. Each tier is based on the intentions of the person that illegally accessed or exposed PHI.
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For more information on the different tiers of civil and criminal consequences for HIPAA violations, check out our article that provides context for the violations in each tier, as well as examples and related penalties.
To reduce the risk of these HIPAA violations and fines, healthcare organizations should conduct HIPAA assessments following the OCR’s audit protocol. That audit protocol is extensive, as well as time and labor intensive, which has led some compliance teams to bring in third-party auditors instead, as there are some big benefits to be gained from going this route.
Reducing the Impacts of HIPAA Violations
Of course, the greatest benefit of being HIPAA-compliant and validated in that is the fact that your organization won’t get subjected to punitive action and the aforementioned consequences if and when a breach does occur—any combination of the above would be devastating for a practice.
But now that you understand what’s at stake, you’ll want to know what you can do to avoid having to recover from such negative impacts, and we can help with that as well—check out our articles that can help you understand what to look out for and how to better maintain compliance:
About Michael Seegel
Michael Seegel is a Senior Manager with Schellman. Prior to joining Schellman in August 2018, Michael worked as an IT Audit Manager, specializing in managing SOC 1 & 2 Type II engagements. Michael also has prior experience performing HITRUST assessments, ISO 27002 audits, IT SOX compliance, and ERP implementations. As a manager at Schellman, Michael primarily focuses on performing HITRUST assessments for organizations in or doing business with healthcare organizations. Michael currently holds the CPA, CISSP, CISA, and CCSFP certifications.