Congress Delays Red Flags Rule

A lawsuit filed in federal court May 21 seeking to prevent the Federal Trade Commission (FTC) from extending identity theft regulations to physicians may be the reason behind why the Red Flags Rule didn’t go into effect June 1. The American Medical Association (AMA), American Osteopathic Association (AOA), and the Medical Society of the District of Columbia (MSDC) filed the suit on the grounds that the FTC exceeded its authority under the Fair and Accurate Credit Transaction Act of 2003.

The Red Flags Rule would require many businesses and organizations to implement a written Identity Theft Prevention Program designed to detect the warning signs—or “red flags”—of identity theft in their day-to-day operations. The AMA, AOA, and MSDC contend that this rule’s application to physicians is “arbitrary, capricious and contrary to the law,” according to the complaint.

“This unjustified federal regulation of medicine treats physician practices like banks, credit card companies and mortgage lenders,” said AMA President-elect Cecil B. Wilson, M.D. “The extensive bureaucratic burden of complying with the red flags rule outweighs any benefit to the public.”

According to Part B News, Congress requested the delay because it is still working on legislation that would limit the scope of the Red Flags Rule. On Oct. 20, 2009, the House of Representatives unanimously passed HR 3763, a bill that would automatically exempt some businesses from the Red Flags Rule and allow others to request an exemption.

According to an AMA press release, the AMA and AOA have been deliberating with the FTC for the past two years regarding the “unintended consequences” of the Red Flags Rule. On Jan. 27, the AMA and AOA joined other groups to petition the FTC to exclude physicians from the rule. The FTC responded March 25 saying it could not accommodate the request.

While litigation and legislation seeking to free physicians from the enforcement of the Red Flags Rule proceeds, physicians can turn to AMA and FTC online resources to help them comply with the rule in the event it goes into effect Dec. 31.

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