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Get customers' OK before auctioning off PHI, HHS lawyers tell MedLab

Posted on December 20, 2013 by Dissent

Anthony Brino writes:

The Health Insurance Portability and Accountability Act could end up halting parts of a laboratory company’s bankruptcy auction, if a federal judge in Delaware agrees with the Department of Health and Human Services.

Lawyers for HHS filed a protective objection in Delaware bankruptcy court December 18, arguing that Laboratory Partners, Inc. [aka MedLab] needs to get permission from former customers before selling their protected health information as part of an auction of its long-term care business unit.

“HIPAA regulations provide that covered entities who seek to sell their customers’ protected health information can only do so with their customers’ authorization,” federal lawyers wrote, asking the judge to deny the sale motion until the company proves it has former beneficiaries’ approval.

I was a bit surprised to see this, as I thought pharmacies and others could sell/include PHI as part of their assets. But Brino helpfully cites the government’s lawyers:

If the buyer of the long-term care division is a HIPAA covered entity, the sale of the PHI in the assets would “not necessarily require the authorization of the beneficiaries as it would be considered a disclosure for the purposes of healthcare operations,” as federal lawyers told Laboratory Partners’ legal team.

“However,” the federal lawyers wrote, Laboratory Partners “has been unable to assure the United States that the purchaser will be a ‘Covered Entity.’”

Read more on Government Health IT.

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