Yesterday, the FTC appealed the decision by its Chief Administrative Law Judge to dismiss the agency’s case against LabMD.
The ALJ ruled “historically, liability for unfair conduct has been imposed only upon proof of actual consumer harm” and that the “record in this case contains no evidence that any consumer…has suffered any harm as a result of Respondent’s alleged failure to employ ‘reasonable’ data security for its computer networks.” Yet the agency continues on, notwithstanding the fact that it has destroyed LabMD, an innovative and effective cancer detection laboratory, apparently only to punish the company’s CEO, Michael Daugherty, for speaking out, and to intimidate anyone else who might dare stand up against the agency.
Every unbiased decision-maker who has reviewed this case, including the FTC’s own Chief Administrative Law Judge, the U.S. House of Representatives Oversight & Government Reform Committee, and a U.S. District Court Judge, has found FTC’s claims against LabMD to be baseless, and its conduct inexplicable and an “embarrassment” to the government.
Complaint counsel’s appeal of the ALJ’s decision will not be to an independent court, but to the Commission – the very body that decided to sue LabMD in the first place. It is worth noting that one Commissioner has “voluntarily” recused herself because she prejudged the outcome of the case, and the facts suggest other Commissioners also may have conflicts of interest that prevent a fair and level hearing of the matter. This is not a fair fight.
As former FTC Commissioner Joshua Wright said earlier this year, “in 100 percent of cases where the administrative law judge ruled in favor of the FTC staff, the Commission affirmed liability; and in 100 percent of the cases in which the administrative law judge ruled found no liability, the Commission reversed. This is a strong sign of an unhealthy and biased institutional process…Even bank robbery prosecutions have less predictable outcomes than administrative adjudication at the FTC.”
Nevertheless, Cause of Action looks forward to contesting the FTC’s appeal.
Ultimately, there will be no vindication for FTC, no matter what the Commission might do, because the agency cannot run and hide from the facts of this case. Thanks to the ALJ, the truth is out. The FTC’s reputation has been severely stained by its cronyism with Tiversa, its abusive overreaching and out-of-control power grab, and its inexplicable decision to waste millions of taxpayer dollars to crush a good and innovative business providing critical, even life-saving, services to doctors and patients. Based on the facts, Congress and the American people have ample reason to doubt the FTC’s judgment, competence and technical expertise to regulate data security, and there is nothing the Commission can do to make those facts disappear.
