A federal court has ruled that the “red flags” rule should not apply to attorneys. The reasoning behind the decision justifies exempting healthcare facilities from the rule, a number of healthcare organizations recently told the Federal Trade Commission.
The rule would force businesses that classify themselves as “creditors” to implement identity theft protection measures. It could affect nursing homes since they routinely provide services for which they are reimbursed at a later date, technically classifying them as “creditors.” Heads of four medical organizations—the American Medical Association, the American Dental Association, the American Osteopathic Association, and the American Veterinary Medical Association—recently sent a letter to the FTC arguing that healthcare should be exempt from the rule.
A Nov. 30 decision by the U.S. District Court for the District of Columbia holds that application of the rule to attorneys is “erroneous” and “inconsistent” with the law that created the “red flags” rule. The case was brought by the American Bar Association.