Elgon, Inc. Resolution Agreement and Corrective Action Plan

Resolution Agreement

I. Recitals

  1. Parties.  The Parties to this Resolution Agreement (“Agreement”) are:

a. The United States Department of Health and Human Services, Office for Civil Rights (“HHS”), which enforces the Federal standards that govern the privacy of individually identifiable health information (45 C.F.R. Part 160 and Subparts A and E of Part 164, the “Privacy Rule”), the Federal standards that govern the security of electronic individually identifiable health information (45 C.F.R. Part 160 and Subparts A and C of Part 164, the “Security Rule”), and the Federal standards for notification in the case of breach of unsecured protected health information (45 C.F.R. Part 160 and Subparts A and D of 45 C.F.R. Part 164, the “Breach Notification Rule”). HHS has the authority to conduct compliance reviews and investigations of complaints alleging violations of the Privacy, Security, and Breach Notification Rules (the “HIPAA Rules”) by covered entities and business associates, and covered entities and business associates must cooperate with HHS compliance reviews and investigations.  See 45 C.F.R. §§ 160.306(c), 160.308, and 160.310(b).

b. Elgon, Inc. (“Elgon”) meets the definition of “business associate” under 45 C.F.R. § 160.103 because it provides Electronic Medical Record (EMR) and billing support services to several covered entities, and therefore is required to comply with the HIPAA Rules.

c. HHS and Elgon shall together be referred to herein as the “Parties.”

  1. Factual Background and Covered Conduct
    On March 25, 2023, an unknown actor gained access to a server on Elgon’s information system through open ports on Elgon’s firewall. Elgon did not detect the intrusion until March 31, 2023, when a ransom note was found. The breach affected the protected health information (PHI) of individuals treated by Elgon’s covered entity client, Century Homecare.  It was ultimately determined that the PHI of 31,248 individuals was affected, including demographic information (name, social security number, address, driver’s license, and date of birth) and clinical information (medication, diagnosis, and condition).

    HHS’ investigation indicated that the following conduct occurred (“Covered Conduct”):

a. Elgon has failed to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information that it holds. See 45 C.F.R. § 163.308(a)(1)(ii)(A).

  1. No Admission.  This Agreement is not an admission of liability by Elgon.
  2. No Concession.  This Agreement is not a concession by HHS that Elgon is not in violation of the HIPAA Rules and not liable for civil money penalties.
  3. Intention of Parties to Effect Resolution.  This Agreement is intended to resolve HHS Transaction Number 01-23-531885 and any violations of the HIPAA Rules related to the Covered Conduct specified in paragraph I.2 of this Agreement.  In consideration of the Parties’ interest in avoiding the uncertainty, burden, and expense of formal proceedings, the Parties agree to resolve this matter according to the Terms and Conditions below.

II. Terms and Conditions

  1. Payment.  HHS has agreed to accept, andElgon has agreed to pay HHS, the amount of $80,000.00 (“Resolution Amount”).  Elgon agrees to pay the Resolution Amount in one lump sum on the Effective Date of this Agreement as defined in paragraph II.14 to written instructions to be provided by HHS.
  2. Corrective Action Plan.  Elgon has entered into and agrees to comply with the Corrective Action Plan (“CAP”), attached as Appendix A, which is incorporated into this Agreement by reference.  If Elgon breaches the CAP, and fails to cure the breach as set forth in the CAP, then Elgon will be in breach of this Agreement and HHS will not be subject to the Release set forth in paragraph II.8 of this Agreement.
  3. Release by HHS.  In consideration of and conditioned upon Elgon’s performance of its obligations under this Agreement, HHS releases Elgon from any actions it may have against Elgon under the HIPAA Rules arising out of or related to the Covered Conduct identified in paragraph I.2 of this Agreement.  HHS does not release Elgon from, nor waive any rights, obligations, or causes of action other than those arising out of or related to the Covered Conduct and referred to in this paragraph.  This release does not extend to actions that may be brought under section 1177 of the Social Security Act, 42 U.S.C. § 1320d-6.
  4. Agreement by Released Parties.  Elgon shall not contest the validity of its obligation to pay, nor the amount of, the Resolution Amount or any other obligations agreed to under this Agreement. Elgon waives all procedural rights granted under section 1128A of the Social Security Act (42 U.S.C. § 1320a-7a) and 45 C.F.R. Part 160 Subpart E, and HHS claims collection regulations at 45 C.F.R. Part 30, including, but not limited to, notice, hearing, and appeal with respect to the Resolution Amount.
  5. Binding on Successors.  This Agreement is binding on Elgon and its successors, heirs, transferees, and assigns.
  6. Costs.  Each Party to this Agreement shall bear its own legal and other costs incurred in connection with this matter, including the preparation and performance of this Agreement.
  7. No Additional Releases.  This Agreement is intended to be for the benefit of the Parties only and by this instrument the Parties do not release any claims against or by any other person or entity.
  8. Effect of Agreement.  This Agreement constitutes the complete agreement between the Parties.  All material representations, understandings, and promises of the Parties are contained in this Agreement.  Any modifications to this Agreement shall be set forth in writing and signed by all Parties. 
  9. Execution of Agreement and Effective Date.  The Agreement shall become effective (i.e., final and binding) upon the date of signing of this Agreement and the CAP by the last signatory (Effective Date).
  10. Tolling of Statute of Limitations. Pursuant to 42 U.S.C. § 1320a-7a(c)(1), a civil money penalty (“CMP”) must be imposed within six years from the date of the occurrence of the violation.  To ensure that this six-year period does not expire during the term of this Agreement, DMS agrees that the time between the Effective Date of this Agreement and the date the Agreement may be terminated by reason of Elgon’s breach, plus one-year thereafter, will not be included in calculating the six (6) year statute of limitations applicable to the violations which are the subject of this Agreement.  Elgon waives and will not plead any statute of limitations, laches, or similar defenses to any administrative action relating to the Covered Conduct identified in paragraph I.2 that is filed by HHS within the time period set forth above, except to the extent that such defenses would have been available had an administrative action been filed on the Effective Date of this Agreement.
  11. Disclosure.  HHS places no restriction on the publication of the Agreement.
  12. Execution in Counterparts.  This Agreement may be executed in counterparts, each of which constitutes an original, and all of which shall constitute one and the same agreement. 
  13. Authorizations.  The individual(s) signing this Agreement on behalf of Elgon represents and warrants that they are authorized to execute this Agreement and bind Elgon, as set forth in paragraph I.1.b.  The individual(s) signing this Agreement on behalf of HHS represent and warrant that they are signing this Agreement in their official capacities and that they are authorized to execute this Agreement.

 

For Elgon, Inc.

/s/
Kim Bellil 
Chief Operating Officer
Elgon, Inc.     

Dated: 11/12/2024

For U.S. Department of Health and Human Services

/s/
Susan M. Pezzullo Rhodes
Regional Manager, New England Region 
Office for Civil Rights      

Dated: 11/12/2024                          
 

Appendix A

Corrective Action Plan

Between the

U.S. Department of Health and Human Services

and

Elgon, Inc.

I.   Preamble

Elgon, Inc. (“Elgon”) hereby enters into this Corrective Action Plan (“CAP”) with the United States Department of Health and Human Services, Office for Civil Rights (“HHS”).  Contemporaneously with this CAP, Elgon is entering into the Agreement with HHS, and this CAP is incorporated by reference into the Agreement as Appendix A.  Elgon enters into this CAP as part of consideration for the release set forth in paragraph II.8 of the Agreement.  Capitalized terms without definition in this CAP shall have the same meaning assigned to them under the Agreement.

II.   Contact Persons and Submissions

  1. Contact Persons 
    The contact person for Elgon regarding the implementation of this CAP and for receipt and submission of notifications and reports (“Elgon Contact”) is:

    NAME: Kim Bellil
    ADDRESS: 405 Grove St., Suite 204, Worcester, MA 01605
    EMAIL: kim@elgonsystems.com
    TELEPHONE: 774-505-2476

    HHS has identified the following individual as its authorized representative and contact person with whom Elgon is to report information regarding the implementation of this CAP:

    Ms. Susan M. Pezzullo Rhodes, Regional Manager
    Office for Civil Rights, New England Region 
    Department of Health and Human Services
    JFK Federal Building, Room 1875 
    Boston, MA 02203 
    Susan.Rhodes@hhs.gov  
    Telephone: 617-565-1347
    Facsimile:  617-565-3809

    Elgon and HHS agree to promptly notify each other of any changes in the contact person or the other information provided above.
  2. Proof of Submissions.  Unless otherwise specified, all notifications and reports required by this CAP may be made by any means, including certified mail, overnight mail, electronic mail, or hand delivery, provided that there is proof that such notification was received. For purposes of this requirement, internal facsimile confirmation sheets do not constitute proof of receipt.

III.   Effective Date and Term of CAP

The Effective Date for this CAP shall be calculated in accordance with paragraph II.14 of the Agreement (“Effective Date”). The period for compliance (“Compliance Term”) with the obligations assumed by Elgon under this CAP shall begin on the Effective Date of this CAP and end three (3) years from the Effective Date, unless HHS has notified Elgon under section VIII hereof of its determination that Elgon breached this CAP.  In the event of such a notification by HHS under section VIII hereof, the Compliance Term shall not end until HHS notifies Elgon that it has determined that the breach has been cured.  After the Compliance Term ends, Elgon shall still be obligated to: (a) submit the final Annual Report as required by section VI; and (b) comply with the document retention requirement in section VII. Nothing in this CAP is intended to eliminate or modify Elgon’s obligation to comply with the document retention requirements in 45 C.F.R. §§ 164.316(b) and 164.530(j).

IV.   Time

In computing any period of time prescribed or allowed by this CAP, all days referred to shall be calendar days. The day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal holiday, in which event the period runs until the end of the next day which is not one of the aforementioned days.

V.   Corrective Action Obligations

       Elgon agrees to the following:

  1. Security Management Process
    1. Elgon shall conduct a comprehensive and thorough analysis of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information (“ePHI”) held by Elgon (“Risk Analysis”). This Risk Analysis shall evaluate the risks to the ePHI on all of Elgon’s electronic equipment, data systems, and applications controlled, administered or owned by Elgon or any Elgon entity, that create, store, transmit, or receive ePHI. Prior to conducting the Risk Analysis, Elgon shall develop a complete inventory of all of its facilities, electronic equipment, data systems, and applications that create, store, transmit, or receive ePHI that will then be incorporated into its Risk Analysis. Elgon may submit a Risk Analysis currently underway for consideration by HHS for compliance with this provision.  Elgon shall provide documentation supporting a review of current security measures and level of risk to its ePHI associated with the following: network segmentation; network infrastructure; vulnerability scanning; logging and alerts; and patch management. 
    2. Elgon shall provide the Risk Analysis, consistent with section V.A.1, to HHS within one hundred eighty (180) days of the Effective Date for HHS’ review. Within sixty (60) days of its receipt of Elgon’s Risk Analysis, HHS will inform Elgon whether HHS approves or disapproves of the Risk Analysis. If HHS disapproves of the Risk Analysis, HHS shall provide Elgon with technical assistance, as necessary, regarding the basis for disapproval so that Elgon may prepare a revised Risk Analysis. Elgon shall have sixty (60) days in which to revise its Risk Analysis accordingly, and then submit the revised Risk Analysis to HHS for review and approval. This submission and review process shall continue until HHS approves the Risk Analysis. 
    3. Elgon shall develop an enterprise-wide Risk Management Plan to address and mitigate any security risks and vulnerabilities found in the Risk Analysis described above. The Risk Management Plan shall include a process and timeline for Elgon’s implementation, evaluation, and revision of its risk remediation activities.  
    4. Within ninety (90) days of HHS’ final approval of the Risk Analysis described in section V.A above, Elgon shall submit Elgon’s Risk Management Plan to HHS for HHS' review. Within sixty (60) days of its receipt of Elgon’s Risk Management Plan, HHS will inform Elgon whether HHS approves or disapproves of the Risk Management Plan. If HHS disapproves of the Risk Management Plan, HHS shall provide Elgon with technical assistance, as necessary, so that Elgon may prepare a revised Risk Management Plan. Upon receiving a letter of disapproval of the Risk Management Plan from HHS and a description of any required changes to the Risk Management Plan, Elgon shall have sixty (60) days in which to revise its Risk Management Plan accordingly, and submit the revised Risk Management Plan to HHS for review and approval. This submission and review process shall continue until HHS approves the Risk Management Plan. Within thirty (30) days of HHS’ approval of the Risk Management Plan, Elgon shall begin implementation of the Risk Management Plan and distribute the plan to workforce members involved with implementation of the plan.
  2. Policies and Procedures
    1. Elgon shall review and revise, as necessary, its written policies and procedures to comply with the Federal standards that govern the privacy of individually identifiable health information and/or the security standards for the protection of electronic protected health information (45 C.F.R. Parts 160 and 164, Subparts A, C, and E, the Privacy and Security Rules) and the Federal standards for notification in the case of breach of unsecured protected health information (45 C.F.R. Part 160 Subparts A and D of 45 C.F.R. Part 164, the “Breach Notification Rule”).  Elgon’s policies and procedures shall include, but not be limited to, the Minimum Content set forth in section V.D.
    2. Elgon shall provide the policies and procedures identified in section V.B.1 above to HHS for review and approval within sixty (60) days of HHS’ approval of its Risk Management Plan, as required by section V.A.3.  Upon receiving any recommended changes to such policies and procedures from HHS, Elgon shall have thirty (30) days to revise such policies and procedures accordingly and provide the revised policies and procedures to HHS for review and approval.  This process shall continue until HHS approves such policies and procedures. 
    3. Elgon shall adopt (in accordance with its applicable administrative procedures) the policies and procedures approved by HHS pursuant to section V.B.2 within thirty (30) days of receipt of HHS’ approval.
  3. Distribution of Policies and Procedures
    1. Elgon shall distribute the policies and procedures identified in section V.B. to all members of the Elgon’s workforce who use or disclose ePHI within thirty (30) days of HHS approval of such policies and procedures, and thereafter to new members of the workforce who will use or disclose ePHI within thirty (30) days of their becoming a member of the workforce.
  4. Minimum Content of the Policies and Procedures 

    The policies and procedures shall include, but not be limited to:
    1. Measures that address the following Security Rule provisions:

a. Security Management Process – 45 C.F.R. § 164.308(a)(1)(i) & (ii); and

b. Security Awareness and Training – 45 C.F.R. § 164.308(5).

  1. Training
    1. Elgon shall provide HHS with its HIPAA training materials for all members of the workforce that have access to PHI within thirty (30) days of the adoption of those policies and procedures described section V.B.3.
    2. Upon receiving notice from HHS specifying any required changes, Elgon shall make the required changes and provide revised training materials to HHS within thirty (30) days.
    3. Within sixty (60) days after receiving HHS’ final approval and at least every 12 months thereafter, Elgon shall provide training for each workforce member who has access to PHI.  Elgon shall also provide such training to each new member of the workforce who has access to PHI within thirty (30) days of their beginning of service.
    4. Each Elgon workforce member who is required to attend training shall certify, in electronic or written form, that he or she has received the training.  The training certification shall specify the date training was received.  All course materials shall be retained in compliance with section VII.
    5. Elgon shall review the training at least annually, and, where appropriate, update the training to reflect changes in Federal law or HHS guidance, any issues discovered during audits or reviews, and any other relevant developments.

VII.   Reportable Events

  1. Reportable Events.  After the implementation of the policies and procedures in accordance with paragraph V.B.1, Elgon shall, during the remainder of the Compliance Term, upon receiving information that a workforce member may have failed to comply with such policies and procedures, promptly investigate the matter.  If Elgon, after review and investigation, determines that a member of its workforce has failed to comply with such policies and procedures, Elgon shall report such event(s) to HHS as provided in section VI.B.4. Such violations shall be known as “Reportable Events.” The report to HHS shall include the following:
    1. A complete description of the event, including the relevant facts, the persons involved, and the provision(s) of the policies and procedures implicated; and
    2. A description of the actions taken and any further steps Elgon plans to take to address the matter to mitigate any harm, and to prevent it from recurring, including application of appropriate sanctions against workforce members who failed to comply with the policies and procedures.

VI.   Implementation Report and Annual Reports

  1. Implementation Report
    1. Within one hundred twenty (120) calendar days of receipt of HHS’ approval of the policies and procedures required by section V.C.1, Elgon shall submit     a written report to HHS summarizing the status of its implementation of the requirements of this CAP.  This report, known as the “Implementation Report,” shall include:

a. An attestation signed by an owner or officer of Elgon attesting that the policies and procedures approved by HHS as outlined in section V.C are being implemented;

b. An attestation signed by an owner or officer of Elgon attesting that all members of the workforce have completed the initial training required by section V.E;

c. An attestation signed by an owner or officer of Elgon stating that he or she has reviewed the Implementation Report, has made a reasonable inquiry regarding its content and believes that, upon such inquiry, the information is accurate and truthful.

  1. Annual Reports.  The one (1) year period after the Effective Date and each subsequent one (1) year period during the course of the Compliance Term shall be known as a “Reporting Period.”  Within sixty (60) days after the close of each corresponding Reporting Period, Elgon shall submit a report or reports to HHS regarding Elgon’s compliance with this CAP for each corresponding Reporting Period (“Annual Report”).  The Annual Report shall include:
    1. A copy of the schedule, topic outline, and training materials for the training programs provided during the Reporting Period that is the subject of the Annual Report;
    2. An attestation signed by an officer or director of Elgon attesting that Elgon obtain and maintain written or electronic training certifications from all persons who are required to attend training under this CAP;
    3. An attestation signed by an officer or director of Elgon attesting that any revision(s) to the policies and procedures required by section V were finalized and adopted within thirty (30) days of HHS’ approval of the revision(s), which shall include a statement affirming that Elgon distributed the revised policies and procedures to all appropriate members of Elgon’s workforce within sixty (60) days of HHS’ approval of the revision(s); and
    4. A description of Reportable Events, if any, as required by section VII, or an attestation signed by an officer or director of Elgon stating that no Reportable Events occurred during the Compliance Term.

VIII.   Document Retention

Elgon shall maintain for inspection and copying, and shall provide to HHS, upon request, all documents and records relating to compliance with this CAP for six (6) years from the Effective Date.  

IX.   Breach Provisions

Elgon is expected to fully and timely comply with all provisions contained in this CAP.

  1. Timely Written Requests for Extensions.  Elgon may, in advance of any due date set forth in this CAP, submit a timely written request for an extension of time to perform any act required by this CAP.  A “timely written request” is defined as a request in writing received by HHS at least five (5) days prior to the date such an act is required or due to be performed. This requirement may be waived by HHS only.
  2. Notice of Breach of this CAP and Intent to Impose CMP.  The Parties agree that a breach of this CAP by Elgon constitutes a breach of the Agreement.  Upon a determination by HHS that Elgon has breached this CAP, HHS may notify Elgon Contact of: (1) Elgon’s breach; and (2) HHS’ intent to impose a CMP pursuant to 45 C.F.R. Part 160, for the Covered Conduct set forth in paragraph I.2 of the Agreement and any other conduct that constitutes a violation of the HIPAA Privacy, Security, or Breach Notification Rules (“Notice of Breach and Intent to Impose CMP”).
  3. Elgon’s Response.  If Elgon is named in a Notice of Breach and Intent to Impose CMP, Elgon shall have thirty (30) days from the date of receipt of the Notice of Breach and Intent to Impose CMP to demonstrate to HHS’ satisfaction that:
    1. Elgon is in compliance with the obligations of the CAP that HHS cited as the basis for the breach;
    2. The alleged breach has been cured; or
    3. The alleged breach cannot be cured within the thirty (30) day period, but that Elgon: (a) has begun to take action to cure the breach; (b) is pursuing such action with due diligence; and (c) has provided to HHS a reasonable timetable for curing the breach.
  4. Imposition of CMP.  If at the conclusion of the thirty (30) day period, Elgon fails to meet the requirements of section IX.C. of this CAP to HHS’ satisfaction, HHS may proceed with the imposition of a CMP against Elgon pursuant to the rights and obligations set forth in 45 C.F.R. Part 160 for any violations of the HIPAA Rules applicable to the Covered Conduct set forth in paragraph I.2 of the Agreement and for any other act or failure to act that constitutes a violation of the HIPAA Rules.  HHS shall notify Elgon Contact in writing of its determination to proceed with the imposition of a CMP pursuant to 45 C.F.R. §§ 160.312(a)(3)(i) and (ii).

For Elgon, Inc. (Elgon)

/s/
Kim Bellil 
Chief Operating Officer
Elgon, Inc.

Dated: 11/12/2024

For U.S. Department of Health and Human Services

/s/
Susan M. Pezzullo Rhodes
Regional Manager, New England Region
Office for Civil Rights

Dated: 11/12/2024

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