AOL Chief Executive Tim Armstrong announced plans to restructure its 401(k) program. Why you ask? Well in a conference call with employees, Mr. Armstrong explained to his employees:
“Two things that happened in 2012,” he said, according to a transcript provided by an AOL employee to Capital Magazine and reported by Joe Pompeo. “We had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general. And those are the things that add up into our benefits cost. So when we had the final decision about what benefits to cut because of the increased healthcare costs, we made the decision, and I made the decision, to basically change the 401(k) plan.”
The question is, “Is this a HIPAA violation?” Potentially, yes. Though the employees weren’t named, this is Protected Health Information, and it wouldn’t take much for a fellow employee to determine who the employees are. If the employees that were mentioned in this call were to file a complaint against AOL, the company could be in some serious hot water (fines) with Health and Human Services (HHS).
David Smith, Total HIPAA Compliance’s resident HIPAA expert had this to say, “This irresponsible action by the CEO of a major company represents exactly why Privacy is a growing concern among our citizens. I just hope that someone in HR at AOL learned a lesson about what to say and not say around corporate leaders, and AOL’s communications consultant has very good E&O insurance.”
Update: AOL has reversed the 401(k) cuts after the backlash from employees. Armstrong has also apologized for mentioning specific healthcare examples when trying to explain their shift in the decision-making process.
Update 2: Over the weekend one of the mother’s of the distressed babies stepped forward to explain the ordeal her family had to suffer through. Luckily, her child is thriving!
“In other words, we experienced exactly the kind of unforeseeable, unpreventable medical crisis that any health plan is supposed to cover. Isn’t that the whole point of health insurance?” said Deanna Fei, mother of the child. She went on to say, “Our daughter has already overcome more setbacks than most of us have endured in the span of our lives. Having her very existence used as a scapegoat for cutting corporate benefits was one indignity too many.”
The moral of the story – HIPAA is in place to protect employees’ privacy. Learn the law and think before you speak.
