March 01, 2010

​news update

 Red Flags Rule does not apply to lawyers; how about veterinarians?

posted February 18, 2010



A court recently ruled that a federal regulation requiring companies to develop identity-theft prevention programs does not apply to attorneys.

Therefore, the regulation should not apply to health care professionals.

That's according to a letter from the AVMA, American Medical Association, American Dental Association, and American Osteopathic Association to the chairman of the Federal Trade Commission.

The FTC issued the Red Flags Rule to implement provisions of the Fair and Accurate Credit Transactions Act of 2003 that require financial institutions and creditors to develop programs to prevent identity theft. According to an FTC press release from April 30, 2009, creditors "include professionals, such as lawyers or health care providers, who bill their clients after services are rendered."

On Aug. 27, the American Bar Association filed suit against the FTC, arguing that the agency exceeded its statutory authority in applying the Red Flags Rule to attorneys. On Oct. 29, the U.S. District Court for the District of Columbia granted a summary judgment in favor of the ABA.

On Dec. 1, Judge Reggie B. Walton issued his full opinion. He wrote, in part: "The selection of 'financial institution' along with 'creditor' as the targets of the legislation implies that the FACT Act was created to apply to entities involved in banking, lending, or financial related business."

The AVMA, AMA, ADA, and AOA reviewed the court's decision. On Jan. 27, they sent their letter requesting that the FTC not apply the Red Flags Rule to health care professionals if the rule does not apply to lawyers.