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A Better Partnership

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Mar 2005
01
March 01, 2005

HIPAA Team

As we work toward compliance with the HIPAA security rules, here's a sobering reminder of the increasing risk we face relating to the protection of sensitive information.

This morning, I came across an unpublished Michigan Court of Appeals decision that held a union liable under a theory of negligence for failing to protect the social security numbers of its members. The union permitted one of its employees to take information about union members home, where the employee's daughter apparently misappropriated the members' information to commit identity fraud. The court found that the union was a fiduciary for its members, that it had a duty to protect their sensitive information, and that there was a real and foreseeable risk that the information could be misappropriated for identity fraud.

This decision is limited to the facts of the case. Moreover, it is an unpublished opinion, and therefore does not establish any binding precedent. Nevertheless, employers with health plans may be in a similar situation as the union to its members--particularly if you have a self-administered health plan. A court could easily conclude that you also have a fiduciary duty to protect the information, and would likely look to the HIPAA regulations as the standard of care for such information.

The case can be found at the following link: http://www.michbar.org/opinions/appeals/2005/021505/26184.pdf

If you have any questions about this case or the status of your HIPAA security compliance efforts, please contact Norbert Kugele at 616.752.2186.

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