What if Healthcare Startups Don't take HIPAA Compliance Seriously?

May 8, 2023

Health Insurance Portability and Accountability Act (HIPAA) is all about protecting patient data from being violated. It is a government act created in 1996 to protect the patient's privacy. And since then, it has been followed by the major healthcare industry to keep every patient's data safe.

But what happens if healthcare startups don't take HIPAA compliance seriously? What are the consequences that you might have to face?

If you are a healthcare startup or developing the next big health tech device, software, or mobile app, today we're going to share everything you need to know about HIPAA compliance before entering the healthcare world. Let's get to it.

Various Penalties Your Company Face for Violating HIPAA Compliance 

Below are the various types of HIPAA violations that the Department of Healthcare and Human Rights office has outlined. If you choose a reliable company that develops the best healthcare web solutions which are HIPAA compliant, you can prevent the thorns of HIPAA violations in your daily course.

  1. Civil Penalties

Civil penalties are for those who have violated HIPAA compliance but not with malicious intent. For example, someone might have genuinely forgotten to put the file away or need to be more aware of their wrongdoing. Such people are charged with civil penalties. 

Civil penalties have been divided into four categories per the violation's severity. Let's look at each one of them in detail below outlined by the Department of Health Care & Human Rights.

First Tier - Lack of Knowledge

The first tier is for individuals unaware of the HIPAA violation rules or accidentally violating HIPAA compliance. 

  • Minimum Penalty (per violation) - $127
  • Maximum Penalty (per violation) - $63,973
  • Annual Penalty - $30,487

Second Tier - Not Willfully Neglected and Minor Cause of the Violation

The second tier deals with the individual who is aware of the breach but could not have prevented the violation even with reasonable care. 

  • Minimum Penalty (per violation) - $1,280
  • Maximum Penalty - (per violation) - $63,973
  • Annual Penalty - $121,946

Third Tier - Willfully Overlooked, But Fixed Within 30 Days

The third tier of violation is for those individuals who have breached the violation but have taken the necessary measure within 30 days to prevent it. 

  • Minimum Penalty (per violation) - $12,794
  • Maximum Penalty (per violation) - $63,973
  • Annual Penalty - $304,865

Fourth Tier - Willfully Overlooked, But Not Fixed Within 30 Days

This is the last tier for individuals who have willfully violated the HIPAA compliance rule and have yet to take any measures to correct it promptly. 

  • Minimum Penalty (Per Violation) - $60,973
  • Maximum Penalty ( Per Violation) - $1,919,173
  • Annual Penalty - $1,919,173

So, these are the penalties that you can face while violating compliance. The largest fine ever changed in HIPAA compliance is $5.5 million after Advocate Health System suffered three data breaches that included the privacy of 5 million patients.

Note: OCR can impose HIPAA penalties for non-compliance even if there was no electronically Protected Healthcare Information (ePHI) breach. People who fall into the category of non-compliance are those who fail to get BAA - Business Associate Agreement from the third-party provider, fail to teach personnel about security procedures, and are liable to fines.

  1. Criminal Penalties

Criminal penalties are harsher than the civil Penalty, and they can even be sent to prison for not being compliant with HIPAA rules. The charge's criminal penalties are as follows:

  • Fine of Up to $50,000 or imprisonment for those covered entities who knowingly obtain and disclose the patient’s health information with the third party. 
  • You can have to pay a fine of $100,000 or jail of 5 years for those covered entities who commit HIPPA violation crimes under pretense. 
  • Those who violated the rule for their gain can have to pay a fine of up to $250, 000 or 10 years in prison. 

How Can You Avoid Paying the Above Penalties?

Above are the consequences of HIPAA compliance violation, but how do you know your company is HIPAA compliant, and how can you avoid paying the penalties?

First of all, HIPAA is not something that applies to all situations. Just because you are a startup developing a healthcare app doesn't mean you need to be HIPAA compliant. 

For example, you wouldn't need to be HIPAA compliant in an app like Runkeeper and Fitbit, where you input data to monitor your health and fitness goals. However, if your app records, stores, collects and shares PHI, then HIPAA rules apply to you. 

Just like that, you need to follow various sets of rules to ensure that your startup is HIPAA compliant; otherwise, you will have to pay-literally. Or even have life-long imprisonment. 

 So, how do you make sure your startup is HIPAA compliant? 

One of the best ways to make sure your startup is HIPPA compliant is to hire the best healthcare app development company. Why?

Nowadays, virtually all people and patients use mobile phones. Thus, they like access to healthcare information, guidance, and services while on the go. Healthcare software development may assist you with managing patients and employees, delivering medications, and other difficulties.

Healthcare app development company allows major healthcare startups to meet diverse market needs. It also maintains, supports and increases existing applications with a big customer base.

Excellent Webworld has a broad spectrum of healthcare app development that complies with FDA, HIPAA, EPCS, and HL7 laws, which will increase the dependability of your app. Our healthcare software developers value customers' privacy and data security. Therefore, mHealth apps will include a GDPR-compliant data-strategy to provide a top-notch user experience. 

Moreover, the team of skilled designers offers you the logical UI/UX and branding solution for your project as they understand the importance of outstanding design in mobile healthcare solutions.


In conclusion, HIPAA compliance violation is a severe offense, and if done knowingly or unknowingly, you will be charged with a penalty or matter that can also stretch to imprisonment. So, if you are a healthcare startup, medical business owner, or just a small healthcare staff, ensure you take all the knowledge before entering the healthcare profession. There are many people who can mislead you.

By referring to the above information, you can prevent harsh consequences and create awareness about HIPAA compliance violations.

Emiy Watson

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