Red Flag Appeals Court Ruling Victory for Physicians, AMA Says

John Commins, for HealthLeaders Media , March 7, 2011

The intention of the requirement is to prevent potential cases of identity theft. If a patient says he or she is someone else, the wrong person or entity would be billed for that individual's care.  But doctors complained that requiring such proof of identity is time-consuming, awkward, and may delay care if the patient didn't bring proper documents. 

On Friday, the three-judge appeals panel wrote that "the Clarification Act makes it plain that the granting of a right to 'purchase property or services and defer payment therefore' is no longer enough to make a person or firm subject to the FTC's red flags rule -- there must now be an explicit advancement of funds. In other words, the FTC's assertion that the term 'creditor,' as used in the red flags rule and the FACT Act, includes 'all entities that regularly permit deferred payments for goods or services,' including professionals 'such as lawyers or health care providers, who bill their clients after services are rendered,'…is no longer viable."

The appeals court ruling may be viewed here. The Red Flag Program Clarification Act of 2010 may be viewed here.


John Commins is a senior editor with HealthLeaders Media.

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