Can a Business Associate be Liable for a HIPAA Breach When Its Client Isn’t a Covered Entity?

Yesterday morning, some of were following up on a ProPublica report  about a New Jersey clinic who, when suing patients for overdue accounts, included their diagnostic codes in materials sent to their collection agency. Those records – containing the patients’ names, diagnostic codes, and treatment codes – became part of public court records.

There were some interesting questions raised by the case. The Short Hills Associates in Clinical Psychology provides its patients with its notice of privacy practices, but when an aggrieved patient filed a complaint with HHS over the disclosure of his diagnostic code, OCR closed the case without action because the clinic – using paper records for transactions – was not a HIPAA-covered entity.

But what about the collection agency? If the clinic was not a HIPAA-covered entity, was the collection then not a Business Associate under HIPAA? At first blush, it might seem unreasonable to think that they could still be a business associate and subject to HIPAA’s restrictions on only disclosing what is necessary to obtain payment.

But Texas attorney Jeff Drummond raised some very interesting points in our discussion, including one that if the collection agency was a BA for any other entity, then they might be covered by HIPAA to protect all clients’ patient records.

Jeff has blogged about the issues raised by this case on HIPAA Blog. It’s a post – and interpretation of HIPAA – that I found surprising, to say the least. I would love to see a panel discuss this issue at a conference. In the meantime, I may shoot a link to it over to HHS to ask for their reaction.

In the meantime, go read Jeff’s post.

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