Companies in the health care industry face many unique challenges when undergoing a bankruptcy, including challenges arising due to the federal and state law framework governing the use and disclosure of medical information. In February 2018, the U.S. Department of Health and Human Services announced that it had reached a settlement with the receiver appointed to liquidate the assets of Filefax Inc., a medical record storage and transportation company, resolving claims against Filefax for potential violations of the Health Insurance Portability and Accountability Act, or HIPAA. The HHS investigation, which commenced in 2015, indicated that Filefax impermissibly disclosed the protected health information, or PHI, of 2,150 individuals by leaving the PHI in an unlocked truck in the Filefax parking lot, or by granting permission to an unauthorized person to remove the PHI from Filefax and leaving the PHI outside the Filefax facility for collection in an unsecured manner. During the investigation, Filefax stopped operating and was involuntarily dissolved. As part of the settlement, the receiver agreed to pay $100,000 out of the receivership estate and to properly store and dispose of the remaining medical records in compliance with HIPAA.
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First appeared in Law360 on May 15, 2018. (Subscription required)