Final answer:
In the presented scenario, the HHS has found a healthcare organization guilty of fraud and non-compliance, which corresponds with 'Willful neglect'. 'Willful neglect' refers to a blatant disregard for complying with health information privacy and security laws. The correct option is C.
Step-by-step explanation:
The scenario described involves the U.S. Department of Health and Human Services (HHS) identifying a healthcare organization guilty of fraud and noting non-compliance by the organization. Given this situation, the term that applies would be Willful neglect.
This term refers to a categorical disregard for the necessity to comply with the law, in this case, health information privacy and security laws. It is the opposite of exercising due diligence or making efforts to comply. Neither the safe harbor provision, which shields entities under certain conditions, nor the Stark Law exception, which pertains to physician referrals, applies here.
Breach notification would pertain to informing individuals about unauthorized use of their health information, which goes beyond simple non-compliance or fraud.