The Federal Trade Commission on May 28 announced it would delay enforcement of the Red Flags Rule from June 1 to Dec. 31, 2010.

The commission cited congressional consideration of legislation that would affect the scope of entities covered by the rule to require businesses to take specific steps to minimize identity theft. For instance, S. 3416, introduced on May 25 in the Senate, would exempt health care practices with 20 or fewer employees, as well as accounting and legal practices of similar size.

Covered health care professionals under the bill include physicians, dentists, podiatrists, chiropractors, physical therapists, occupational therapists, marriage or family therapists, optometrists, speech therapists, language therapists, hearing therapists and veterinarians.

The commission in its announcement urged Congress to quickly act "to pass legislation that will resolve any questions as to which entities are covered by the rule and obviate the need for further enforcement delays. If Congress passes legislation limiting the scope of the Red Flags Rule with an effective date earlier than December 31, 2010, the Commission will begin enforcement as of that effective date."

The American Medical Association, which on May 21 filed a lawsuit to prevent the FTC from applying the rule to physicians, applauded the delay. "We call on the FTC to exempt physicians from the rule completely."

The extension is a promising sign that the AMA lawsuit caught the attention of the FTC, the association says. "Last November, a federal court blocked the rule from being applied to attorneys after the FTC was found to be extending its regulatory power beyond that authorized by Congress. We hope this latest extension will be long enough for the FTC to take a good, hard look at the rule and finally exclude physicians from this unjustified and burdensome regulation of medicine."


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