Helping physicians to protect patients and their practices.

Like some other professional associations, the American Medical Association (AMA) is challenging the Federal Trade Commission's interpretation, of the Red Flags Rules as the regulation applies to some professional practitioners. Despite its challenge, the AMA has prepared guidance to help its members comply with the rules. CPA firms with physician practice clients may have an opportunity to assist them in their compliance efforts.

As readers know, the Federal Trade Commission (FTC) delayed the compliance deadline of the Red Flags Rules until June 1, 2010. The Red Flags Rules comprise an antifraud regulation that requires certain entities to develop and implement written prevention and detection programs to protect consumers from identity theft. The regulation requires creditors and financial institutions with covered accounts to implement programs to identify, detect and respond to the warning signs, or "red flags," that could indicate identity theft.

The FTC has interpreted the rules to include law, accounting and physician practices among the creditors who bill clients for services after they have been provided.

The American Bar Association successfully challenged the FTC's designation of lawyers as creditors in federal court. Also, in a letter to the FTC, AICPA CEO Barry Melancon pointed out that CPAs are personally acquainted with their clients and adhere to strict privacy requirements related to identifying...