Health Professionals Petition the FTC for Relief from Red Flags Rule

On January 27, 2010, leaders of the American Dental Association (ADA), American Medical Association (AMA), American Osteopathic Association (AOA), and the American Veterinary Medical Association (AVMA) sent a letter to the Federal Trade Commission (FTC) Chairman Jon Leibovitz requesting that health professionals be excluded from the “Red Flags” Rule, a new regulation intended to combat identity theft.

The letter was prompted by a recent decision from the U.S. District Court for the District of Columbia involving a suit was brought by the American Bar Association (ABA) against the FTC. The court ruled that lawyers should be excluded from the requirements of the Red Flags Rule. The court stated that the application of the Red Flags Rule to attorneys “is both erroneous and inconsistent with the purpose underlying enactment of the [Fair and Accurate Credit Transactions Act of 2003 (FACT Act)].”

Similarly, the leaders of these health professional organizations called upon the FTC to exclude health professionals from the Red Flags Rule. The joint letter to the Chairman requests that the FTC take two actions: (1) announce that the Rule will not be applied against licensed healthcare professionals (LHCPs) until at least ninety days after final resolution of the ABA litigation; and (2) confirm that if the final resolution of the ABA litigation is that the Rule will not be applied to attorneys, the Rule will also not be applied to LHCPs.

The letter argues that the application of the Rule to healthcare professionals exceeds the scope of the FTC’s authority under the FACT Act, would increase health care costs, and imposes burdens on healthcare professionals without benefit to the public.

For more information on compliance with the Red Flags Rule, visit our website or contact one of our attorneys at 248-544-0888.