Physician societies file lawsuit on FTC's Red Flags Rule

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The American Medical Association (AMA), American Osteopathic Association (AOA) and the Medical Society of the District of Columbia (MSDC) have filed a suit in federal court seeking to prevent the Federal Trade Commission (FTC) from extending identity theft regulations to physicians.

The complaint, prepared by the Litigation Center of the AMA and State Medical Societies, targets the contentious “red flags rule,” which requires creditors to implement safeguards against identity theft. The medical societies charge that the FTC’s rule exceeds the powers delegated to it by Congress and that its application to physicians is “arbitrary, capricious and contrary to the law.”

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

“The final red flags rule provided no indication from the FTC that physicians fell within the definition of creditor,” said AOA President Larry A. Wickless, DO. “The FTC’s decision to apply the rule to physicians is both misguided and inconsistent with its regulatory power.”

According to the societies, the suit follows two years of communications to the FTC from the AMA and AOA 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 red flags rule. The FTC responded on March 25 saying it could not accommodate the request.

The AMA, AOA and MSDC said they “strongly disagree” with the FTC’s view that any physician who does not require payment at the time of providing medical services to patients is required to comply with the red flags rule beginning on June 1.