AMA ends red flags lawsuit against FTC

NEWS IN BRIEF — Posted March 14, 2011

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The Litigation Center of the American Medical Association and the State Medical Societies has ended its lawsuit against the Federal Trade Commission over the agency's so-called red flags rule, citing a new federal statute and a favorable ruling in a related case.

The red flags rule was the result of the FTC's interpretation of the Fair and Accurate Transactions Act of 2003, which was created to tighten security of financial data held by banks and credit card companies. Physicians initially were considered creditors under the rule, meaning that they would be required to implement identity theft prevention and detection programs in their practices. The AMA and other physician organizations argued that the regulation would become a bureaucratic burden for health professionals who already are subject to regulations ensuring the safeguarding of patient information. In May 2010, the Litigation Center sued the FTC.

On Dec. 18, 2010, President Obama signed legislation into law that excluded physicians from being considered creditors under the rule. A federal appeals court on March 4 dismissed a similar lawsuit against the FTC lodged by attorneys who had been subject to the red flags rule, stating that the new statute rendered the original FTC interpretation of the 2003 legislation moot.

Saying the court's decision reinforces the intent of the new law to exclude physicians, the Litigation Center on March 7 announced it was formally dropping its suit.

Note: This item originally appeared at

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