What Happens When an Employee Violates HIPAA? Penalties, Reporting, Remediation Checklist

Civil Penalties and Penalty Tiers

HIPAA is enforced by the Office for Civil Rights (OCR). Civil penalties are typically assessed against covered entities and business associates, not individual employees, but your actions can trigger investigations, fines, and mandated Corrective Action Plans that affect your organization.

OCR uses tiered penalties that scale with culpability and remediation. The tiers progress from no knowledge, to reasonable cause, to willful neglect corrected, to willful neglect not corrected. Penalties apply per violation and can stack, with annual caps adjusted periodically for inflation.

In deciding the amount, OCR weighs factors such as the nature and extent of the violation, the volume and sensitivity of Protected Health Information (PHI) involved, the number of individuals affected, the duration, actual or potential harm, prior compliance history, and how quickly you corrected the issue.

• Tier 1: No knowledge and reasonable diligence would not have revealed the violation.
• Tier 2: Reasonable cause (neither willful neglect nor purely accidental).
• Tier 3: Willful neglect that is corrected within the required timeframe.
• Tier 4: Willful neglect that is not corrected—highest fines and oversight.

Civil resolutions often include a multi-year monitoring period and detailed reporting to OCR. Expect requirements to upgrade safeguards, retrain staff, and strengthen governance.

Criminal Penalties and Imprisonment

Employees can face criminal liability when they knowingly obtain or disclose PHI in violation of HIPAA. Penalties escalate with intent: basic offenses can bring fines and up to one year in prison; doing so under false pretenses can bring up to five years; offenses for personal gain, commercial advantage, or malicious harm can carry up to ten years.

Criminal cases are prosecuted by the Department of Justice and may include restitution and forfeiture. Charges often involve selling PHI, identity theft, or deliberate snooping on records without a job-related need. Your employer’s internal sanctions do not bar criminal enforcement.

Reporting Obligations for Breaches

The Breach Notification Rule requires covered entities to notify affected individuals without unreasonable delay and no later than 60 calendar days after discovery. Business associates must notify their covered entity so that notifications can be made on time.

A breach is presumed when PHI is acquired, accessed, used, or disclosed in a manner not permitted by HIPAA unless a documented risk assessment shows a low probability of compromise. Assess four factors: the type of PHI, the unauthorized person, whether PHI was actually viewed or acquired, and mitigation success.

• Individuals: Notify by first-class mail or agreed electronic means, describing what happened, the types of PHI, steps individuals should take, actions taken to mitigate harm, and contact information.
• HHS OCR: For breaches affecting 500+ individuals, notify within 60 days of discovery. For fewer than 500, log the breach and submit to OCR within 60 days after the end of the calendar year.
• Media: If 500+ residents of a state or jurisdiction are affected, provide a media notice.

If PHI was properly encrypted or the data was de-identified, notification may not be required. Your Compliance Officer coordinates these determinations, timelines, and submissions.

Remediation and Corrective Action Plans

Effective remediation reduces harm, demonstrates good faith, and can lower penalties. It should start the day you discover the incident and continue through sustained improvement and documentation.

Remediation checklist

• Contain and control: Stop further use or disclosure, disable accounts, recover or remote-wipe lost devices, and secure systems.
• Preserve evidence: Save logs, messages, screenshots, and system images; record the discovery date and timeline.
• Risk assessment: Evaluate PHI types, volume, unauthorized recipients, viewing likelihood, and mitigation steps.
• Notifications: Coordinate individual, OCR, and media notices under the Breach Notification Rule; track deadlines and content.
• Safeguards: Patch vulnerabilities; strengthen access controls, encryption, and auditing; revise policies and procedures.
• Training: Deliver targeted re-training to the involved workforce and refresher training to similarly situated teams.
• Sanctions: Apply consistent, documented workforce sanctions as required by HIPAA.
• Monitoring: Increase auditing, set corrective metrics, and schedule follow-up reviews to verify effectiveness.
• CAP readiness: Prepare to implement an OCR-mandated Corrective Action Plan if required, with milestones and regular reporting.

Employee Sanctions and Disciplinary Measures

HIPAA requires covered entities and business associates to have a workforce sanction policy. Discipline should be consistent, proportionate, and documented, reflecting the tiered penalties concept and the distinction between errors and willful neglect.

• Examples: coaching and re-training, written warnings, final warnings, suspension, role changes or access restrictions, and termination for serious or repeated violations.
• Aggravating factors: willful neglect, large volumes of PHI, sensitive data types, harm to individuals, concealment, and repeat offenses.
• Mitigating factors: prompt self-reporting, cooperation, quick remediation, limited scope, and a clean history.

Licensure boards, professional credentials, and contractual obligations may impose additional consequences. Maintain confidentiality in HR processes and apply sanctions uniformly.

Reporting Violations by Employees

Report suspected violations immediately—fast reporting limits harm and may reduce organizational exposure. Follow your organization’s procedure and use the designated hotline or incident system.

• Alert your supervisor and the Privacy or Compliance Officer right away; provide facts, dates, systems, and people involved.
• Stop unsafe activity if you can do so safely; secure devices and do not delete potential evidence.
• Do not investigate beyond policy or share details outside the need-to-know group; maintain confidentiality.
• Complete required incident forms and cooperate with interviews, forensic reviews, and remediation steps.
• Escalate concerns if you face retaliation or inaction; HIPAA and organizational policies prohibit retaliation for good-faith reporting.

Examples of Common HIPAA Breaches

• Misdirected emails or faxes caused by auto-complete or wrong numbers.
• Lost or stolen unencrypted laptops, smartphones, or USB drives containing PHI.
• Snooping in records of acquaintances, coworkers, or public figures without a job-related need.
• Posting PHI or identifiable images on social media or using personal messaging apps for patient communication.
• Discussing patient details in public areas like elevators, cafeterias, or rideshares.
• Improper disposal of paper records or devices, or placing PHI in regular trash.
• Sharing passwords, weak authentication, or leaving screens unlocked in clinical areas.
• Uploading PHI to personal cloud storage or emailing PHI to personal accounts.
• Ransomware or malware incidents due to unpatched systems or phishing.
• Using vendors without a Business Associate Agreement or allowing vendors to use PHI beyond permitted purposes.

Conclusion

When an employee violates HIPAA, your organization faces tiered civil penalties and oversight, and you may face discipline or, in intentional cases, criminal charges. Fast reporting, thorough remediation, and strong Corrective Action Plans protect patients, reduce risk, and restore compliance.

FAQs

What are the consequences of a HIPAA violation by an employee?

You may receive coaching, written warnings, access restrictions, suspension, or termination, depending on intent, scope, and harm. Intentional misuse of PHI can trigger criminal prosecution. Your organization can face civil fines, mandatory Corrective Action Plans, and multi-year monitoring.

How are civil and criminal penalties for HIPAA violations determined?

Civil penalties follow tiered penalties tied to culpability and remediation, with amounts set per violation and capped annually. OCR considers factors like PHI sensitivity, number of people affected, harm, and history. Criminal penalties depend on intent—from basic knowing violations to offenses for personal gain—with prison exposure increasing at each level.

What steps must employees take when reporting a HIPAA violation?

Report immediately to your supervisor and Compliance Officer, use the incident hotline or portal, preserve evidence, avoid discussing the matter outside authorized channels, and cooperate with the investigation. If you experience retaliation or inaction, escalate through designated channels consistent with policy.

What remediation measures are required after a HIPAA breach?

Contain the incident, document discovery, complete a four-factor risk assessment, and issue notices required by the Breach Notification Rule. Strengthen safeguards, retrain staff, apply appropriate sanctions, and monitor effectiveness. Be prepared to execute a formal Corrective Action Plan with clear milestones and reporting.