You clearly have no idea how such systems work. My guess is that the IRS served their warrant and then demanded read only ODBC/API access to the companies systems. The company's DBAs likely balked at the idea... I know I would... and said "listen, if you have that sort of access, you could violate Hipaa if you submit the wrong query. We're very stringent on what we allow to be run against our tables" But the IRS being the IRS said "Fuck you, we're the IRS" and went right ahead. Once you have a legit login and password the data is no longer encrypted for you.
Knowing the ramifications of what the IRS were doing, the company likely logged their queries. The IRS's DBAs likely were worried the company in question could potentially get a court injunction to stop their access so their first query was likely "Select * from customers;" and dumped the entire table to a local table. Then company in question likely saw this, freaked out, but realized any lawsuit they filed would likely be quashed by "We have an ongoing investigation" yada yada... so they kept quiet about it until the original case was over.
I'm just guessing but I've been in similar situations and the governments admins are pricks and usually don't have a clue what they are doing. Violating hipaa is VERY easy to do if you don't know what you're doing. So much so that many people don't even want to work in departments that have access to such information. Make a typo in your query and you're getting walked out the door.