OSF Healthcare System and its Affiliated Covered Entities (OSF Healthcare) have agreed to pay a penalty of $552,250 to resolve alleged violations of the HIPAA Privacy, Security, and Breach Notification Rules.

OSF Healthcare is a Peoria, Illinois-based integrated health system that serves patients at 174 locations in Illinois and Michigan, including 16 hospitals. On April 23, 2021, OSF Healthcare discovered that ransomware had been used to encrypt files on its network. The threat group deployed a variant of Nephilim ransomware to encrypt files and demanded payment to prevent a data leak and to obtain the keys to unlock the encrypted files.

The forensic investigation determined on August 24, 2021, that the protected health information (PHI) of 53,907 patients was exfiltrated from its network, including names, driver’s license numbers, diagnosis and treatment information, prescription information, medical record numbers, provider names, dates of services, financial account information, and health insurance information. OCR was notified about the attack on October 1, 2021, and individual notification letters started to be sent on the same date.

As with all breaches of the PHI of 500 or more individuals, OCR initiated an investigation to assess compliance with the HIPAA Rules. OCR determined that OSF Healthcare had not conducted a comprehensive and accurate risk analysis to identify risks and vulnerabilities to the confidentiality, integrity, and availability of patients’ PHI, as required by 45C.F.R. § 164.308(a)(l)(ii)(A), and that there had been an impermissible disclosure of the PHI of 53,907 patients, in violation of 45 C.F.R. § 164.502(a).

OCR also determined that OSF Healthcare failed to issue timely notifications to the individuals affected by the data breach and did not provide a timely notification to the Secretary of the HHS, in violation of 45 C.F.R. § 164.404(b) and § 164.408(b). OCR determined that the alleged HIPAA violations were severe enough to warrant a financial penalty, and after advising OSF Healthcare System of the findings of the investigation and the intention to impose a financial penalty, a settlement was agreed to resolve the alleged violations informally.

Under the terms of the settlement, in addition to the $552,250 financial penalty, OSF Healthcare agreed to implement a corrective action plan and will be monitored for compliance with the plan for a period of two years. The corrective action plan includes the requirement to conduct an accurate and thorough risk analysis, and develop and implement a risk management plan to address and mitigate security risks and vulnerabilities identified in its risk analysis.

“An accurate and thorough HIPAA risk analysis is not only required by law, but it is also necessary to protect health information and prevent or mitigate ransomware attacks,” said OCR Director Paula M. Stannard. “If a HIPAA-regulated entity doesn’t know what threats and vulnerabilities exist to its electronic protected health information, they will often learn the hard way when their systems are hacked.”

OCR has resolved eight HIPAA investigations with settlements so far this year, collecting $2,280,250 in penalties. The OSF Healthcare settlement is the largest penalty of the year to date. All eight investigations identified risk analysis failures, and this is the second case involving a penalty to resolve breach notification failures.

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