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U.S. House passes ADA-backed Red Flags exemption legislation

Washington—The U.S. House of Representatives Oct. 20 approved by a 400-0 vote legislation to exempt most dental offices from the Federal Trade Commission's Red Flags Rule. Thirty-two House members were recorded as not voting.

"This is great news for most dental practices in this country and demonstrates the effectiveness of our grassroots advocacy initiatives," said ADA President Ron Tankersley.

"Obviously, applying the Red Flags Rule to the typical dental practice overreached the original intent of the legislation and would result in unnecessary bureaucratic burdens and expense," Dr. Tankersley said. "I am pleased that the House of Representatives overwhelmingly understood the wisdom of the exemption."

The Association is seeking similar Senate legislation to assure final congressional passage and enactment of a law providing an exclusion from Red Flags identity theft guidelines for certain businesses including "a health care practice with 20 or fewer employees," which means most private practice dental offices.

The ADA pushed for a legislative exemption and gained support from key lawmakers during the Association's springtime Washington Leadership Conference. As passed by the House, the measure would amend the Fair Credit Reporting Act under which the FTC and other federal agencies issued identity theft prevention regulations.

"It is obvious that physicians and dentists are not creditors, and they should not be forced to spend hundreds of dollars to comply with this needless regulation," said dentist/Rep. Mike Simpson (R-Idaho), one of the key sponsors of the bill. "They don't require full payment at the time of service because they first bill the insurance company, then they bill the patient the remainder of the bill. This system should not be treated the same as a loan with a financial institution," said Congressman Simpson.

Rep. John Adler (D-N.J.), the bill's chief sponsor, said the FTC "went too far. During these tough economic times, the federal government should not be placing burdensome regulations on small businesses."

"By passing this fix today, Congress can provide the FTC a clear definition of how Congress intended the policy to be enacted and protect small businesses and their customers from unnecessary government intervention," said Rep. Christopher Lee (R-N.Y.),  a cosponsor.

"In my opinion, the manner in which this legislation was crafted, with input from both sides of the aisle, with the FTC and with the various sectors that would be adversely affected if we had not acted, is the model for how this House can work to actually solve the problems facing our country," said Rep. Paul Broun (R-Ga.), a physician who cosponsored the measure. 

The FTC says health care practices may be "creditors" as defined by the 2003 law to include "any entity that extends or renews credit—or arranges for others to do so—and includes all entities that regularly permit deferred payments for goods or services," and thus subject to the Red Flags Rules. The Association has challenged FTC's interpretation of the Fair Credit law while seeking legislative remedy.

The FTC has thrice deferred enforcement of the regulation with respect to health care practices.