'Red Flags Rule' Applicability to Physicians Challenged

AAFP Joins Motion Filed by Council of Medical Specialty Societies

August 26, 2010 03:25 pm Sheri Porter

The Council of Medical Specialty Societies, or CMSS, recently filed a motion to intervene on behalf of all physicians in an existing case filed by the AMA, the American Osteopathic Association and the Medical Society of the District of Columbia. The case involves the applicability to physicians of an antifraud identity theft federal regulation known as the "Red Flags Rule."

The rule, which was originally drafted in 2008 in connection with the implementation of the Fair and Accurate Credit Transactions Act of 2003, requires financial institutions and creditors -- including physician practices -- to address the risk of identity theft by implementing identity theft prevention programs.

The AAFP is one of 26 medical organizations seeking to be specifically added as plaintiffs pursuant to the CMSS motion to intervene in the existing case, which seeks to prevent the Federal Trade Commission, the government agency charged with upholding the rule, from applying it to physicians.

According to an Aug. 17 notice posted on the CMSS website(www.cmss.org), the Red Flags Rule "imposes significant burdens on physicians, particularly solo practitioners and those practicing in small groups."

Norman Kahn, M.D., EVP and CEO of CMSS, said in the press release that his organization took the lead on this issue "to protect all physician members of the CMSS societies from the unintended consequences of the Red Flags Rule."

"Adhering to the policies of the Red Flags Rule would substantially drain the financial resources of physicians, particularly those whose support systems are limited," said Kahn.

The Academy's General Counsel Tom Robinett, J.D., said in an interview that the AAFP would like to see a ruling on CMSS' motion to intervene and the AMA lawsuit by the end of the year.

"A positive ruling on the case would provide a definitive decision that will apply to all physicians and will exclude physicians from the application of the Red Flags Rule and the hassles that go along with being a creditor," said Robinett.

"This rule shouldn't apply to physicians who take a credit card or bill a patient for services and thus extend credit to that patient," said Robinett. The Red Flags Rule was an outgrowth of identity theft problems associated with financial institutions and credit card companies and was never intended to include America's physicians, he added.

The U.S. District Court for the District of Columbia recently ruled in favor of an American Bar Association request to exempt lawyers from the Red Flags Rule.


please wait Processing