This month’s compliance landscape features enhanced federal cybersecurity guidance, notable False Claims Act enforcement actions, and significant financial risks associated with data breaches. These updates reinforce the need for proactive compliance programs that are adaptable, thoroughly documented, and ready for scrutiny from federal agencies, state authorities, or private litigants. Below, we summarize key developments and provide insights to help you navigate your compliance responsibilities in 2026.
Federal Update
OCR Highlights System Hardening to Protect ePHI
Agency: U.S. Department of Health and Human Services, Office for Civil Rights (OCR)
In its latest cybersecurity newsletter, OCR underscored the need for HIPAA-covered entities and business associates to adopt system hardening practices that reduce vulnerabilities in environments hosting electronic protected health information (ePHI) System hardening—such as regular patching, removal of unused services, secure configuration, and endpoint protection—is a foundational security step OCR says is integral to safeguarding patient data against threats like ransomware and exploitation of known vulnerabilities.
Why this matters:
- Increased cyber threats are specifically targeting healthcare systems, highlighting the need for robust security measures.
- HIPAA’s Security Rule mandates reasonable safeguards to protect electronic protected health information (ePHI).
- The Office for Civil Rights (OCR) emphasizes system hardening and provides actionable practices for organizations to incorporate into their operational risk and security strategies.
Key takeaways:
- Update patch management processes and track remediation timelines.
- Harden servers, endpoints, and network devices to industry baselines.
- Incorporate these practices into ongoing risk assessments and documentation.
False Claims Act Complaint Filed Against Priority Hospital Group
Agency: U.S. Department of Justice (DOJ)
Filed: January 21, 2026
The DOJ filed a False Claims Act complaint against Priority Hospital Group LLC and related facilities, alleging that extended care services were billed as medically unnecessary to inflate Medicare payments, and that physician referrals were improperly incentivized. The action highlights DOJ’s sustained focus on billing integrity and anti-kickback enforcement in post-acute and long-term care settings.
What This Means for Healthcare Providers:
False Claims Act enforcement remains a key compliance priority. Overbilling—whether due to medical necessity issues, coding errors, or improper referral arrangements—can expose organizations and leaders to civil liability, treble damages, and significant penalties.
Actionable reminders:
- Validate clinical documentation and medical necessity with clinical leaders.
- Assess referral practices for compliance with the Anti-Kickback and Stark Laws.
- Strengthen internal audit processes and corrective action.
PharMerica Breach Settlement Projected to Exceed $5M
Settlement: Approx. $5.275M (Class Action Resolution)
PharMerica Corporation reported a significant ransomware incident that exposed protected and personally identifiable information for millions of individuals. A proposed settlement of more than $5 million will fund claims by affected individuals, legal fees, and improved security measures to mitigate future breaches. The case underscores that breach consequences extend well beyond regulatory fines to substantial civil liability and reputational risk.
Why this matters:
Even when breaches are not directly enforced by OCR, related litigation—primarily class actions—can create material financial and operational impacts. Compliance and security programs must address breach prevention, preparedness, and response as core risk areas.
Compliance considerations:
- Conduct tabletop exercises to validate incident response plans.
- Maintain an up-to-date inventory of systems and data flows.
- Monitor evolving breach litigation trends and best practices.
State Enforcement
OrthopedicsNY Fined for Data Security Failures
Jurisdiction: New York
Settlement: $500,000 Penalty
OrthopedicsNY LLP agreed to pay a $500,000 penalty following a ransomware attack that compromised personal and protected health information of hundreds of thousands of patients and staff. As part of the resolution, the practice must implement enhanced security safeguards, including multi-factor authentication, encryption, network monitoring, and risk assessments.
Compliance Insights:
State enforcement actions continue to mirror federal expectations for robust security. Penalty regimes like New York’s highlight the importance of reasonable, documented safeguards tailored to an organization’s risk profile.
Key takeaways:
- Align security safeguards with recognized frameworks (e.g., NIST).
- Document risk assessment findings and remediation plans.
- Ensure continuous monitoring and audit readiness.
Conclusion: Strengthening Compliance in 2026
January’s developments underscore several compliance imperatives for healthcare organizations: cybersecurity practices must translate from policy to operational implementation; billing integrity and documentation must withstand increased scrutiny; and breach preparedness remains a foundational risk mitigation strategy.
Verisys is committed to helping compliance professionals make informed decisions with real-time healthcare provider data solutions, risk insights, and tools that support documentation, data verification, and monitoring across provider networks—strengthening your readiness in an evolving regulatory landscape.
References:
https://www.hipaajournal.com/ocr-harden-system-security/
https://thehipaaetool.com/pharmerica-breach-to-cost-more-than-5-million/
https://www.hipaajournal.com/orthopedicny-settlement-ny-ag/
