Rite Aid Corporation and its 40 affiliated entities have agreed to pay $1 million to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today.

In a coordinated action, Rite Aid also signed a consent order with the Federal Trade Commission (FTC) to settle potential violations of the FTC Act. Rite Aid, one of the nation’s largest drug store chains, has also agreed to take corrective action to improve policies and procedures to safeguard the privacy of its customers when disposing of identifying information on pill bottle labels and other health information. The settlements apply to all of Rite Aid’s nearly 4,800 retail pharmacies and follow an extensive joint investigation by the HHS Office for Civil Rights (OCR) and the FTC.

OCR, which enforces the HIPAA Privacy and Security Rules, opened its investigation of Rite Aid after television media videotaped incidents in which pharmacies were shown to have disposed of prescriptions and labeled pill bottles containing individuals’ identifiable information in industrial trash containers that were accessible to the public. These incidents were reported as occurring in a variety of cities across the United States. Rite Aid pharmacy stores in several of the cities were highlighted in media reports. Disposing of individuals’ health information in an industrial trash container accessible to unauthorized persons is not compliant with several requirements of the HIPAA Privacy Rule and exposes the individuals’ information to the risk of identity theft and other crimes. This is the second joint investigation and settlement conducted by OCR and FTC.

OCR and FTC settled a similar case involving another national drug store chain in February 2009. The HIPAA Privacy Rule requires health plans, health care clearinghouses and most health care providers (covered entities), including most pharmacies, to safeguard the privacy of patient information, including such information during its disposal. Among other issues, the reviews by OCR and the FTC indicated that:

• Rite Aid failed to implement adequate policies and procedures to appropriately safeguard patient information during the disposal process
• Rite Aid failed to adequately train employees on how to dispose of such information properly
• Rite Aid did not maintain a sanctions policy for members of its workforce who failed to properly dispose of patient information

Under the HHS resolution agreement, Rite Aid agreed to pay a $1 million resolution amount to HHS and must implement a strong corrective action program that includes:

• Revising and distributing its policies and procedures regarding disposal of protected health information and sanctioning workers who do not follow them
• Training workforce members on these new requirements
• Conducting internal monitoring
• Engaging a qualified, independent third-party assessor to conduct compliance reviews and render reports to HHS

Rite Aid has also agreed to external independent assessments of its pharmacy stores’ compliance with the FTC consent order. The HHS corrective action plan will be in place for three years; the FTC order will be in place for 20 years.