Physician groups have gotten an agreement from the Federal Trade Commission to delay enforcement of the Red Flags Rule until a federal appeals court rules on a lawsuit the American Bar Association filed against the FTC.

That means physician compliance to the rule could be delayed beyond Dec. 31, 2010, after which the FTC currently expects to start enforcement.

A federal district court last year, in a lawsuit the ABA filed against the FTC, ruled to exempt attorneys from the Red Flags Rule, which requires businesses to take specific steps to minimize identity theft. The American Medical Association, American Osteopathic Association and Medical Society for the District of Columbia filed suit against the FTC on May 21.

Under intense pressure from numerous businesses and members of Congress, the FTC on May 28 delayed enforcement of the rule from June 1 to Dec. 31, the latest of several such delays. The commission cited in its decision congressional consideration of legislation that would affect the scope of entities covered by the rule.

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.

Now, the FDA has signed a "joint stipulation" with the physician organizations under which the lawsuit will be on hold until the date on which the federal appeals court issues its ruling in the ABA lawsuit. This date shall be the "Re-opening Date," according to the stipulation. The FTC, however, further commits to delay enforcement of the rule to physicians for another 90 days after the Re-opening Date.

The FTC's answer to the physicians' lawsuit, currently due by July 20, will be deferred until 60 days after the Re-opening Date. Nothing in the stipulation will impair parties' rights or obligations with respect to any enacted legislation, including the reinstatement of Red Flags enforcement against physicians.

For a copy of the Joint Stipulation by the FTC and physician organizations, send e-mail to joseph.goedert@sourcemedia.com.

 

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