On January 21, 2017 LabMD v. FTC, a case where we here at Cause of Action Institute weighed in with a friend of the Court brief on behalf of affected medical professionals [see brief here], was argued.  You should listen to it here.

CoA Institute also represented LabMD in the FTC proceedings and in collateral federal court actions seeking to halt the FTC’s administrative prosecution in the U.S. District Court for the Northern District of Georgia and in the U.S. Court of Appeals for the Eleventh Circuit. The arguments made here, and seemingly grasped by the 11th Circuit at oral argument, have been made by CoA Institute for quite some time.  This case was heard before three experienced jurists Gerald B. Tjoflat, Charles R. Wilson and Senior U.S District Court Judge Eduardo C. Robreno. (Interestingly, Judge Robreno is within the Third Circuit but sat on the 11th here).

Suffice to say it was not a good day for the ham-handed actions of the FTC in this case. The Court focused on the fact there appeared to be no harm to anyone from the action sued upon.  “A tree fell and nobody heard it, that’s the case we have here,” said Judge Tjoflat (if my memory for voices is accurate).  A nice summary of some of the more pungent comments from the bench were listened to, are found in Westlaw, and transcribed here:

“Counsel, let me put it this way. What the aroma that comes out of this case is that Tiversa was shaking down private industry with the help of the FTC, with the threat of going to the FTC. If you don’t cooperate, we will go to the FTC. It may well be how they got some of their clients…

“That’s an aroma, with falsifications to the commission. The administrative law judge just shredded Tiversa’s presentation, just totally annihilated it.”

In this case, the FTC with no consumer complaints, and no evidence of injury, and with no prior standards issued by the FTC for data security, put a company many physicians relied upon completely out of business. This is so even though the medical privacy act embodied by HIPAA was not violated.

The FTC relied on false information from Tiversa. “Oh, Come on!” said Judge Tjoflat responding to the assertion the FTC did not rely on that information to prosecute the matter.   Their own ALJ heard the facts (presented by CoAI) and destroyed the case and the Commission just overruled it; an appeal to Power and not Reason.  Judge Wilson specifically asked how LabMD would know it’s procedures would violate any standard.

The 11th Circuit already stayed the FTC Order with an Order of its own that bodes ill for Government.  Now we have this oral argument where the FTC was completely friendless.

Douglas Meal of Ropes & Gray, who argued the matter for LabMD, deserves kudos for a job well done. as does the rest of the Ropes & Gray team.  I will also note that Patrick Massari and Michael Pepson did a splendid job on the amicus brief which argument was also mentioned by the Court.

John J. Vecchione is President and CEO of Cause of Action Institute.