Association seeks indefinite delay on FTC Red Flags Rule
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Posted Dec. 9, 2008 |
By Arlene Furlong Washington—The ADA is urging the FTC to indefinitely postpone the effective date of the Red Flags Rule for dentists while reconsidering its applicability to them overall.
The Rule requires financial institutions and creditors to develop a written plan to prevent and detect identity theft. The Federal Trade Commission staff has deemed dentists and physicians as creditors that are subject to the rule when they don't receive payment in full from their patients at the time of treatment.
In a Nov. 24 letter, the ADA requests a meeting with the FTC to discuss reasons the Association believes the rule should not be applied to dentists. The reasons, background and analysis supporting the ADA position are discussed at length in the letter, which is posted in its entirety at ADA News Today on ADA.org.
"Nowhere in the Red Flags Rule are dentists or physicians mentioned or included within the term creditors," the ADA letter also states. "Nor are dentists or physicians typically considered creditors within the customary meaning of the term."
Many in the health care sector were taken by surprise to learn from FTC-issued guidance that the rules, mandated by a 2003 fair-credit law and issued in November 2007, were intended to go beyond financial institutions to include health care providers.
As a result, the FTC delayed the original enforcement date of the rule for six months—until May 21, 2009—saying in its announcement: "Some industries and entities within the FTC's jurisdiction were uncertain about their coverage under the rule." The FTC's announcement of the enforcement delay came after more than two dozen national and specialty medical associations challenged what physicians considered the agency's overly broad interpretation of the statute. The groups asked the FTC to clarify its position and delay enforcement of the rules until it does.
"We believe that characterizing dentists as creditors under the Red Flags Rules is contrary to the legislation on which the rule is based," said Tamra Kempf, ADA chief legal counsel. "The rule should not have been extended to dentists without giving affected parties notice and an opportunity to comment. In addition, applying the rule to dentists and physicians is against sound public policy and will inject substantial compliance costs into the health care system without a substantial reason for doing so."
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