What Legal Risks Should Practices Watch Out for With Patient Data?

Patient data is incredibly powerful, there’s no arguing there. In fact, each and every patient encounter adds to a growing stack of valuable data: diagnostic details, prescriptions, lab results, billing codes, and care plans. But while the clinical and operational value is undeniable, there’s also no denying the fact that patient data comes with serious legal risks.

This is especially true today, when cyber threats are escalating and regulations around how that data is stored, accessed, and shared, are getting more complex by the year. Understanding where the current legal threats are coming from and how to harden your processes against them, should therefore be one of your practice’s priorities.

The Legal Minefield of Patient Data Isn’t Getting Smaller

Whether you’re a solo practitioner or part of a big health system, one thing is true: you’re operating under a thicket of data laws. HIPAA is the obvious one, but it’s not the only threat vector. The FTC, state attorneys general, and even the Department of Justice are increasingly involved in cases related to data privacy violations, especially when third-party vendors or mobile health apps are involved.

In 2024, there was a major cyberattack that paralyzed Change Healthcare (a division of UnitedHealth Group), exposing vast amounts of patient data and grinding revenue cycle operations to a halt across hundreds of organizations. This wasn’t just a technical mess, it actually triggered multiple class-action lawsuits, state-level investigations, and a new wave of scrutiny from HHS.

Sometime later, another breach involving Ascension Health left clinicians locked out of medical records and patients wondering if their data had hit the dark web. What’s important to understand is that these aren’t edge cases. This is happening on the regular now.

And the thing is, even if you weren’t hacked directly, using a compromised third-party vendor can still land you in legal hot water. The Office for Civil Rights (OCR) has made it clear: if you trust a vendor with protected health information (PHI), you’re on the hook if that vendor messes up.

What the Law Actually Cares About (That You Might Not Be Tracking)

It’s tempting to think HIPAA only applies when something goes wrong. But enforcement actions today are targeting proactive lapses like bad encryption, outdated policies, and weak access controls. Some examples of legal pitfalls you should have on your radar:

• Improper Disposal of data or hardware with PHI
• Lack of Risk Assessments, which are still one of the top failure points OCR flags
• Failure to Sign or Maintain BAAs (Business Associate Agreements)
• Sharing Data With Marketing Partners without proper consent (see the GoodRx and BetterHelp cases for why this matters, both were fined millions by the FTC)

You also have to navigate emerging state-level data privacy laws. California’s CCPA and CPRA now apply to healthcare providers that aren’t covered under HIPAA in some cases, like behavioral health apps or wellness platforms.

The Cybercrime Surge Is Affecting Everybody

Here’s the number that should make you pause: over 11 million people had their health data compromised in 2023 alone, according to HHS. That’s nearly one in four Americans.

Ransomware groups are getting smarter. They’re using AI to craft personalized phishing campaigns, and they’re also going after smaller practices now, ones that don’t have dedicated IT teams or mature cybersecurity budgets.

If your staff isn’t trained to recognize a suspicious login attempt or if your systems still rely on outdated VPNs with no MFA (multi-factor authentication), you’re already behind. A single mistake could turn into mandatory breach notifications, lawsuits, and seven-figure fines. Not to mention reputational damage.

How to Stay Legally Compliant

You don’t need to become paranoid but you do need to treat this like any other clinical risk: manageable if taken seriously. A few high-impact places to focus:

• Run a Security Risk Analysis at Least Annually. OCR wants to see documentation. Not just that you meant to check your security, but that you did it, acted on it, and updated your plan accordingly.
• Limit Access and Log Everything. Staff should only access the minimum PHI they need to do their jobs. And logs should show who accessed what, when, and from where.
• Use a Management System Built for Compliance. Tools like DrChrono’s practice management system come with built-in HIPAA compliance, access controls, audit logs, and secure patient communication features. That’s the kind of infrastructure that proves due diligence when regulators come knocking.
• Encrypt, Backup, Repeat. To protect yourself, encrypt data in transit and at rest. Regularly back up systems and test your restoration plan. Backups don’t help if they’re outdated or corrupted.
• Train Like It’s a Clinical Protocol. Staff should know how to spot phishing, what to do if they click something suspicious, and how to report security incidents. Make it routine, not optional.

What Practices Are Often Missing

The most common mistake is treating compliance as a checkbox. OCR investigations often reveal that practices had policies on paper but never implemented them in reality. Regulators don’t care about what’s written in your binder, but what’s happening in your day-to-day workflows.

So, you want to take a hard look at how your data is actually handled. Don’t let your systems lag while the threats accelerate. Lock things down, document your processes, and treat data security like a core part of patient care.