May 28, 2010

On Friday the U.S. Federal Trade Commission (FTC) again delayed enforcement of its Red Flags Rule at the request of several members of Congress. This gives the American Medical Association (AMA) more time to seek a permanent exemption for physicians.

The announcement comes after the AMA and two other medical organizations filed a federal lawsuit against the FTC on May 21 asking that the FTC be prevented from extending the rule to physicians. The rule requires certain businesses to implement procedures for preventing and detecting identity theft.

Then on Tues. May 25 Senators John Thune (R-S.D.) and Mark Begich (D-Alaska) introduced Senate Bill 3416 calling for exemption from the Red Flags Rule for some small businesses like doctors and dentists offices. Thune’s office reported that last year a similar bill, HR 3763, passed the House of Representatives with a unanimous vote, 400-0.

“Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule – and to fix this problem quickly,” said FTC Chairman Jon Leibowitz in a press release. “We appreciate the efforts of Congressmen Barney Frank and John Adler for getting a clarifying measure passed in the House, and hope action in the Senate will be swift. As an agency we’re charged with enforcing the law, and endless extensions delay enforcement,” he said.

Congress directed the FTC and other agencies to create regulations requiring creditors and financial institutions to implement procedures for preventing and detecting identity theft. The FTC maintains that because physicians accept delayed payment through insurance reimbursement and payment plans, they are considered creditors. The rule became effective Jan. 1, 2008 and full compliance was originally scheduled for Nov. 1, 2008 but enforcement has been delayed several times.

“For two years the AMA has made the case to the FTC that physicians are not creditors like banks and lenders, and the misguided Red Flags Rule should not apply to them,” wrote Cecil B. Wilson, M.D., AMA President-elect, in a press release.