In our Fall 2010 issue, we
reported that the FTC had granted
a temporary reprieve to physicians
for enforcement of its “red flags”
rules — rules requiring creditors to
implement programs to prevent
identity theft — after the medical
professionals sued the FTC seeking
to have a court declare unlawful
and set aside the rules. That case
was held in abeyance pending
the outcome of the American Bar
Association’s lawsuit on the same
rule. Congressional action has
since mooted these lawsuits in a
manner favorable to the groups
challenging the rules.

On December 18, 2010, the
President signed into law the Red
Flag Program Clarification Act of
2010, which clarified the definition
of “creditor” and made it clear that
allowing deferred payments alone
would not trigger the identity theft
protection requirements of the
rule and that the FTC’s rule “is no
longer viable.” On March 4, 2011,
the U.S. Court of Appeals for the
District of Columbia Circuit, in the
American Bar Association’s case,
declared that this legislation moots
the case and, as such, it must be
dismissed.

The American Medical
Association welcomed the Court
decision as should many associations
whose professional members
may benefit from this ruling.