Stealing private health information is not just about identity theft

“The case involved the theft and transfer of medicare patient information from the Cleveland Clinic in Weston, Florida. Defendant Ferrer Jr. purchased the patient information from co-defendant Isis Machado, a former Cleveland Clinic employee, who pled guilty on January 12, 2007 and testified against Ferrer at trial. The theft resulted in the submission of more than $7 million in fraudulent medicare claims, with approximately $2.5 million paid to providers and suppliers. According to the Justice Department, this is the first Health Insurance Portability and Accountability Act (“HIPAA”) violation case that has gone to trial in the United States.”

Read the whole Justice Department report here.

This theft of data led to fraudulent Medicare costs – paid for by our tax dollars. There is no reason to believe that private health plans are immune to similar thieves who want to cash in on fraudulent insurance claims, thereby driving up the cost of your insurance and mine. How much of this happens? The scary but true answer is: many have estimates, but no one really knows.

Patients, their family members, doctors, insurance companies and even lowly benefit managers have expressed frustration at the privacy rules arising from HIPAA. It’s true, these rules sometimes seem calculated to stop all the wheels of commerce at one swell foop. However it's important to understand more of the total story.

This case reveals a bit more of the total story - what the government is trying to prevent. Note that this is the first HIPAA violation that has gone to trial. If this is the kind of culprit that the feds are going after using HIPAA, I say more power to them.