A covered entity that exchanges protected health information (PHI) to or through a HIO or otherwise participates in electronic health information exchange is responsible for its own non-compliance with the Privacy Rule, and for violations by its workforce. A covered entity is not directly liable for a violation of the Privacy Rule by a HIO acting as its business associate, if an appropriate business associate agreement is in place. Nor can a HIO as a business associate be held liable for civil money penalties arising from violations of the Privacy Rule. Rather, where a business associate agreement exists between a covered entity and a HIO for the electronic exchange of PHI, the HIO will be contractually obligated to adequately safeguard the PHI and to report noncompliance with the agreement terms to the covered entity, and the covered entity will be held accountable for taking appropriate action to cure known noncompliance by the business associate, and if unable to do so, to terminate the business associate relationship. See 45 C.F.R. §§ 164.502(e), 164.504(e). Furthermore, a covered entity is not liable for a disclosure that is based on the non-compliance of another entity within the health information exchange, as long as the covered entity has complied with the Privacy Rule.
