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Courts lend more support for releasing you from Red Flags Rule
e-Reports, March 21, 2011
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A federal appeals court issued a decision March 4 that further validates the AMA’s long-standing argument to the Federal Trade Commission (FTC) that physicians who bill after rendering services are not subject to the Red Flags Rule as creditors.

The present regulations of the FTC are invalid in light of the Red Flag Program Clarification Act of 2010, according to the U.S. Court of Appeals for the District of Columbia Circuit. The act was passed by Congress last December to shed much needed light on who is considered a creditor under the Red Flags Rule.

The recent judgment was issued in a lawsuit by the American Bar Association challenging application of the Red Flags Rule to attorneys. The AMA had filed a similar lawsuit on behalf of physicians. The court’s ruling makes clear that the rule does not apply unless there is an explicit advancement of funds.

The AMA was engaged in a lawsuit to challenge the FTC’s efforts to extend the Red Flags Rule to all physicians. The lawsuit filed by the AMA Litigation Center (of which the ISMA is a member), state medical societies, the American Osteopathic Association and the Medical Society of the District of Columbia, in addition to 26 national medical specialty societies, will now formally end.

Leonard Nelson of the AMA Litigation Center advised the ISMA that no regulations from the FTC currently exist, but the agency will likely issue new ones for physicians now that the old ones were invalidated by December’s legislation.

“The AMA will remain vigilant that the FTC respects the meaning and intent of the Clarification Act,” said AMA President Cecil B. Wilson, M.D.

To read the decision document see here.

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