Health Law

FTC Agrees to Postpone Application of Red Flag Rules to Physicians Pending Outcome of Litigation

By William Maruca

More breathing room for physicians under the Red Flag rule: Following the blanket compliance extension through December 31, 2010, the FTC has announced that it had reached a joint legal stipulation with the AMA, the American Osteopathic Association and the Medical Society of DC stating that it would not pursue enforcement of the rule against physicians pending the results of an appeal of a decision striking down the application of the rule to law firms. 

In an article posted by Modern Healthcare (registration required), it was reported that on June 25, the FTC agreed to a stipulation with the three medical societies who brought suit to block the agency from applying the rule to medical practices. The American Bar Association's motion for summary judgment for declaratory and injunctive relief from the Rule's application to lawyers was granted. The FTC has appealed this decision, and has agreed to postpone enforcing the rule against physicians until the appeal is decided. If Congress does not act to modify the rule before January 1, 2011, this stipulation will continue to exempt physicians from compliance until the conclusion of the appeal process. 

In a June 14 speech before the AMA's House of Delegates (entitled A Doctor and a Lawyer Walk into a Bar: Moving Beyond Stereotypes), FTC chairman Jon Liebowitz defended his agency's reputation and emphasized the pro-physician efforts it has undertaken: 

Fastidious bureaucrats aren't pushing Congress to work quickly to fix the Red Flags Rule that has unintentionally swept up countless small businesses – including every doctor, dentist, lawyer, gardener, plumber, and housekeeper who bill customers on a monthly basis – the FTC is.  

Let me assure you, we feel your pain on red flags, and we want to fix it. We agree with you that the red flags rule reaches too far. We have delayed enforcement of the rule to give Congress an opportunity to legislate a solution. As to doctors, I am pleased to announce that the FTC, as part of a stipulation with the AMA, will not enforce the rule against any AMA or state medical society members until the court of appeals resolves the issue. And we call on Congress to do that sooner rather than later; the financial reform legislation moving right now is a perfect opportunity. 

The stipulation text has not been released, so it is not clear whether this enforcement moratorium applies to all physicians or only those who belong to the societies who brought the suit.

Full post as published by HIPAA Health Law & Technology on June 28, 2010 (boomark / email).