Docs to FTC: Change Red Flags Rule

The American Medical Association, American Dental Association and American Veterinary Medical Association have jointly written to Federal Trade Commission members asking that health professionals be excluded from the Red Flags rule.

The rule requires many businesses, including health care organizations, to take specific steps to minimize identity theft. These steps include identifying suspicious activity involving Social Security numbers, credit reports and other identifying information. This would involve new policies and procedures, and likely implementation of new data security and regulatory compliance software products.

The FTC has delayed enforcement of the Red Flags rule four times as various professions protest their inclusion. The compliance date now is June 1, 2010.

The three medical associations as individual groups have previously pushed for the exemption, saying Congress did not intend to include health professionals. The joint letter follows a recent court ruling that attorneys should be exempted from the rule. In the letter, the associations contend that considerations that led to a federal court decision that exempts attorneys also apply to health professionals. What follows is full text of the letter to FTC commissioners, dated Jan. 29:

"We are writing to you and to each member of the Federal Trade Commission in our capacities as President or Chief Executive Officer of the American Dental Association, the American Medical Association, the American Osteopathic Association, and the American Veterinary Medical Association. Together, our four organizations represent hundreds of thousands of licensed health care professionals (LHCPs) who would be subject to the Commission's Red Flags Rule (the Rule), 16 C.F.R., sec. 681, if the Rule is extended to LHCPs who accept payment after their services have been rendered. We are writing to request that the Commission make clear that, in light of the decision in American Bar Association v. FTC (D.D.C. No. 09-1636 (RBW)) (the ABA litigation), the Rule will not be applied to such professionals.

"Specifically, we request that the Commission take two actions:

1. Announce that the Rule will not be applied against LHCPs until at least ninety days after final resolution of the ABA litigation; and

2. Commit that, if the final resolution of the ABA litigation is that the Rule will not be applied to attorneys, the Commission will not apply the Rule to LHCPs either.

"In this letter, we will briefly set forth the basis for this request.

"Our associations have previously expressed the view individually that application of the Rule to health care professionals would exceed the scope of the Commission's authority under the enabling statute -- the Fair and Accurate Credit Transactions Act of 2003 (the FACT Act). In our previous communications, we have also explained why such application would increase the costs of health care and would impose burdens on our members - with little, if any, benefit to the public. Nevertheless, although it has postponed the effective date, the Commission has never disavowed the position that the Rule will be applied to LHCPs. healthdatamanagement