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06/3/2014

National Law Journal: FTC Data Security Trial on Hold Pending Investigation

Read the full story: National Law Journal

The FTC’s smoking gun: a file with information about 9,300 consumers, including names, birth dates, social security numbers and medical tests results for conditions such as cancer. According to the FTC complaint, a LabMD employee installed a peer-to-peer file sharing application on her work computer and inadvertently shared the file.

 

The file was found by Tiversa—but LabMD lawyers say just how that happened is unclear. Tiversa “has patented technology which allows it to search peer-to-peer networks in an unprecedented breadth and volume,” William Sherman II, a partner at Dinsmore & Shohl retained by non-profit watchdog Cause of Action to represent LabMD, said during opening statements on May 20.

 

Sherman said LabMD employees couldn’t find the file on the peer-to-peer network even when searching using its precise name. “The evidence will show that the only entity able to find this file has patented technology,” Sherman said.

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06/3/2014

Atlanta Business Chronicle: Congressional probe delaying LabMD’s lawsuit

Read the full story: Atlanta Business Chronicle

A lawsuit filed by an Atlanta-based medical testing lab against the Federal Trade Commission has been put on hold following word that a congressional committee is investigating a company involved in the case.

 

Michael Daugherty, LabMD’s CEO, welcomed news that Congress is looking into the FTC’s involvement with Tiversa.

 

“The benefit of the doubt the federal government enjoys needs to be scrutinized when to comes to the behavior of the FTC,” Daugherty said Tuesday during a conference call with reporters.

 

Reed Rubenstein, senior vice president of litigation for Cause of Action, the government accountability group representing LabMD, said the court case has been postponed until June 12.

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05/30/2014

FTC Proceedings Against LabMD Stalled by Congressional Investigation

FOR IMMEDIATE RELEASE            CONTACT: Adam Temple, (843) 722-9670

May 30, 2014                                                              temple@jdafrontline.com

FTC Proceedings Against LabMD Stalled by Congressional Investigation

Tiversa Employee Indicated he Would Take the 5th, House Oversight Committee Investigates Tiversa Dealings with FTC

Congress launched an investigation into Tiversa and their dealings with federal agencies including the FTC which threw a wrench into the FTC’s administrative proceedings against LabMD today.

“An investigation by the House Oversight committee will hopefully bring the accountability and transparency that we have yet to see from the FTC. We will now wait to see what Congress is able to uncover,” said Reed Rubinstein, of Cause of Action.

The investigation was brought to light in FTC proceedings today, which prompted former Tiversa employee and potential trial witness Rick Wallace to indicate his intention to take the 5th, through his attorney.

Tiversa CEO Robert Boback’s attorney asked for more time before his client would testify.

Judge Chappell granted a recess until June 12.

 

The unofficial transcript from today’s proceedings:

Disclaimer: This is a draft and subject to change and revision by the court – it is not the final transcript.

FTC v. LabMD May 30, 2014 Unofficial Trial Transcript by CauseOfAction

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05/27/2014

Atlanta Journal Constitution: Medical lab battles feds over privacy

Read the full story: Atlanta Journal Constitution

Daugherty said he has spent more than a half-million dollars on the case so far. He’s had help from Cause of Action, a nonprofit group that said it got involved to help a small business with limited resources fight back against unfair regulation.

 

“I don’t think Congress intended for the FTC to regulate HIPAA,” said Daniel Epstein, the group’s executive director. “If it wanted to, they could authorize a law to do so.”

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05/15/2014

LabMD Files Appeal, Takes Fight Against FTC Back to 11th Circuit

LabMD Files Appeal, Takes Fight Against FTC Back to 11th Circuit

Judge tells FTC investigation is “a sad comment on your agency” but lacks jurisdiction to stop it

 Washington, D.C. (May 15, 2014) – Today, Cause of Action (CoA) is filing an emergency appeal on behalf of LabMD, following a federal judge’s ruling that he lacked jurisdiction even while telling the Federal Trade Commission (FTC) “the public is served by guiding people beforehand rather than beating them up after.”

On May 7, 2014, in open court, U.S. District Court Judge William S. Duffey, Jr., criticized the FTC for its practice of monitoring blogs containing critical speech, for “parachuting in” to the highly regulated health care field, and for its failure to “tell…[health care companies] what the FTC rules are because they have never told anybody.” He told the FTC that its investigation of LabMD was “a sad comment on your agency …” and that the FTC’s assault against LabMD harmed the “consuming public” by taking LabMD “out of the market” thereby reducing the number of companies providing cancer detection services.  Judge Duffey advised the FTC that it had an obligation to give companies “guidance” as to what it does or does not expect with respect to data security because “the public is served by guiding people beforehand rather than beating them up after …”

However, on May 13, 2014, Judge Duffey ruled he lacked jurisdiction to stop the FTC’s attack against LabMD.

Today, Cause of Action (CoA) is filing an emergency appeal on behalf of LabMD in the 11th Circuit seeking to stop the FTC’s assault.

Daniel Epstein, CoA’s Executive Director said:

“No federal agency should be able to act without authority to damage business and exert power it has never been granted, which is why LabMD must appeal the Federal District Court’s decision. Judge Duffey described the FTC’s aggressive actions against LabMD as ‘a sad comment’ on the agency, and accountability for its over-the-line attempts to insert the agency into the healthcare field must be stopped.

“When a district judge recognizes the egregious and shameful behavior of an agency but rules that he is unable to take action to stop it, the Federal Courts of Appeals are well positioned to ensure that runaway power is not tolerated in our federal system.”

 ###

 

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05/15/2014

The FTC goes to federal court, and the Judge was not impressed

In a hearing before U.S. District Court Judge William Duffey in the North District of Georgia, the government made some ridiculous arguments and was criticized by a federal judge for shutting down a small business without providing any guidance. Here are some of the highlights from the hearing:

The government claims it monitored a private citizen’s website to ensure he was still able to express his free speech rights

A Department of Justice attorney claimed that Federal Trade Commission employees regularly visited LabMD CEO Michael Daugherty’s personal website to “monitor whether or not he’s still continuing to express his speech.” Judge Duffey responded:

Court on FTC Monitoring part 1

The transcript continues:

Court on FTC Monitoring part 1 interesting and troublign turn

Judge Duffey criticizes the FTC’s actions in reducing the amount of competition in medical detection business by driving LabMD out of the market.

FTC has taken LabMD out of the market

 

Should a federal agency be able to go after people for not complying with guidance they haven’t given?

 

FTC should have given guidance

 

What about the government claiming to use documents as evidence against LabMD when it doesn’t know where the documents came from?

holy cow

 

 

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05/15/2014

Washington Free Beacon: Nonprofit Challenges Government Definition of a Media Outlet

Read the full story: Washington Free Beacon

Cause of Action also points out that the U.S. District Court for Washington, D.C., recognized a similar watchdog group as a member of the media in a 2003 decision.

“The FTC’s repeated denial of our status as a news media organization threatens all new media and nonprofit news organizations that seek fee waivers for FOIA requests,” Cause of Action president Dan Epstein said in a statement. “Simply because the FTC feared that unfavorable information would be made public, we were unfairly denied access. If every agency behaves like the FTC, it will be devastating to those who fight for government accountability and transparency. The FTC’s job is not to play news editor and decide what is or isn’t news.”

This is the first time a federal appeals court has considered the issue. Because Cause of Action’s appeal will set precedent, the amicus brief argues the case “has implications beyond the outcome for the parties directly involved, and could make it difficult for the news media to fully report on the workings of government for the benefit of the public.”

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