ADA petitions FTC for Red Flags exemption

Jan 28, 2010

The ADA and three other groups have petitioned the Federal Trade Commission (FTC) to exclude health professionals from the Red Flags anti-identity theft rules.

In a joint press release issued January 27 by the ADA, the American Medical Association (AMA), the American Osteopathic Association (AOA), and the American Veterinary Medical Association (AVMA), the ADA called the FTC's interpretation of the regulation "an unjustified, unfunded mandate on health professionals for detecting and responding to identity theft."

In their formal petition, the organizations cited a ruling by the U.S. District Court for the District of Columbia, in a case brought by the American Bar Association, that lawyers should be excluded from the requirements imposed by the Red Flags Rule.

The FTC's interpretation of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) oversteps its authority, according to the health groups. In response to these concerns, the FTC postponed the rule's effective date to June 1, but it has never changed the position that the rule will apply to health professionals.

"Congress did not intend the original Red Flags legislation to apply to small businesses, but rather it was intended to encourage large businesses like banks, credit firms, and national retailers to implement best practices to protect customers from identity theft," said ADA President Ronald Tankersley, D.D.S.

In its ruling against the FTC, the court said that the application of this rule to attorneys "is both plainly erroneous and inconsistent with the purpose underlying enactment of the FACT Act." The court also stated that the FTC "not only seeks to extend its regulatory power beyond that authorized by Congress," but also "arbitrarily selects monthly invoice billing as the activity it seeks to regulate."

"The court ruling sends a clear signal that the FTC needs to re-evaluate the broad application of the Red Flags Rule," said AMA President J. James Rohack, M.D. "Our four organizations firmly believe that applying the rule to health professionals, but not to lawyers, would be unfair."

"Postponement of the rule's effective date is inadequate," added AOA President Larry Wickless, D.O. "Our four organizations need a commitment from the FTC that it will not apply the Red Flags rules to health professionals if it is not applied to lawyers."