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.
"We now submit that application of the Rule to LHCPs has, at the very least, been called into serious question by the decision in the ABA litigation. As you know, the federal district Court for the District of Columbia on November 30, 2009, in that case enjoined application of the Rule to attorneys. In a thorough and thoughtful opinion, the court held that application of the Rule to attorneys 'is both plainly erroneous and inconsistent with the purpose underlying enactment of the FACT Act' (Opinion, at 40). It stated that in applying the Rule to attorneys, the Commission 'not only seeks to extends its regulatory power beyond that authorized by Congress, but it also untimely and arbitrarily selects monthly invoice billing as the activity it seeks to regulate.' Id.
"We have carefully reviewed the decision in the ABA litigation. While acknowledging that there may be minor differences between lawyers and LHCPs for purposes of the applicability of the Rule, we believe that the dispositive considerations underlying that decision apply equally to LHCPs. Apart from technical legal analysis, moreover, we see no basis for concluding that Congress intended to have the Rule apply to LHCPs but not to lawyers. Indeed, implementation of the Rule with respect to LHCPs but not to lawyers would be manifestly unfair and anomalous. For these reasons, we are asking the Commission to take the steps described above.
"In making this request, we recognize that the Commission has delayed enforcement of the Rule. However, as long as it appears that the Rule will be applied to LHCPs once it becomes effective, our members still have to incur the costs of preparing to comply. Further, our associations are called upon to answer questions about the Rule. Thus, a mere postponement of the effective date through a date certain is inadequate. Rather, what is called for is a commitment not to apply the Rule to LHCPs if it is not applied to lawyers.
"We hope that you and the other Commissioners will agree to this request. If you or any Commissioners would like to discuss this issue, however, we would be pleased to meet with you and/or your colleagues. Any Commissioner who might be interested in arranging a meeting regarding application of the Rule to our members should contact Jack Bierig at 312-853-7614 (firstname.lastname@example.org). For now, we thank you and the other Commissioners for your consideration of this request."
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