FTC "Red Flag" Identity Theft Regulations

VHCA (6/27/2008)

Both federal and state governments have made cracking down on identity theft a top priority.  A new division of the Federal Trade Commission has been created for just that purpose.  New legislation and regulations have been adopted to deter, detect, and mitigate identity theft.  One such reform is the new so-called Red Flag Regulations which become effective November 1, 2008. 

AHCA sought an opinion from its General Counsel, Reed Smith LLP, regarding whether the regulations are applicable to nursing facilities and assisted living facilities.   Reed Smith has provided an analysis of the regulations, as well as an accompanying form.  As usual, we are not and cannot provide legal advice per se.  But AHCA has asked Reed Smith to determine, in its opinion, the extent of the applicability of the regulation.

The Red Flag Regulations have two parts.  One part applies to anyone who uses “consumer reports,” defined to include credit checks and criminal histories.  Reed Smith is of the opinion that this part clearly applies to nursing homes and assisted living facilities (“ALFs”).  The second part pertains to the detection of unauthorized account use by “creditor or financial institutions.” It is less clear as to whether those rules apply to nursing homes and ALFs. 

AHCA has asked Reed Smith LLP to obtain guidance from the regulators to determine whether this second part of the Red Flag Regulations applies to nursing facilities and assisted living facilities.   If, in the opinion of Reed Smith, the Red Flag Regulations do apply to some AHCA members, Reed Smith will work with AHCA to develop and circulate best practices for compliance. When we receive further information, we will update you.

To ensure that you comply with the aspects of the Red Flag Identity Theft regulations that apply, read the Reed Smith memo and the form.