LabMD is challenging an FTC ruling that it was in violation of Section 5 of the Federal Trade Commission Act.
LabMD is challenging an FTC ruling that it was in violation of Section 5 of the Federal Trade Commission Act.

Six amicus briefs filed by business, tech and medical interests in a federal court Tuesday and on Dec. 28 support LabMD's argument that the Federal Trade Commission (FTC) operated outside its authority when it found the now defunct cancer testing firm to in violation of Section 5 of the FTC Act following what the commission has characterized as a data breach.

"I am heartened that leaders from business, healthcare and technology are so supportive of LabMD,” company founder, President and CEO Michael J. Daugherty said in comments to SC Media. “They understand how this case will impact their own compliance efforts.”

He added that since “the FTC has tried everything to vilify LabMD, having our own physician clients eager to sign on and file their own brief was the cherry on top." In addition to a group of doctors, cybersecurity pro Gary Miliefsky, TechFreedom, the International Center for Law and Economics, the National Federation of Independent Business Small Business Legal Center, and the National Technology Security Coalition filed in favor of the company's efforts to challenge the FTC.

LabMD launched its appeal in December in the Eleventh Circuit court after the same court granted a temporary stay of the FTC's order against the company. The case against LabMD has stretched from 2013 when the commission pursued enforcement action against the facility for leaving information on patients vulnerable to exposure through a file-sharing program. It has taken a number of twists and turns, some of them ugly and even sparked a congressional committee probe.

FTC Chief Administrative Law Judge Michael Chappell, dismissed the case on November 16, 2015, ruling that the FTC “failed to carry its burden of proving its theory that Respondent's alleged failure to employ reasonable data security constitutes an unfair trade practice because Complaint Counsel has failed to prove the first prong of the three-part test – that this alleged unreasonable conduct caused or is likely to cause substantial injury to consumers.”

But the commission challenged Chappell's ruling and found LabMD to be in violation of Section 5 because it did not reasonably secure the data in its custody. The Eleventh Circuit gave the Atlanta-based company an opening for appeal in the fall with the temporary stay and the company filed the appeal in late December.

Arguing that medical data is governed and protected by HIPAA and noting the potential conflicts between that law and Section 5, a group of doctors in one brief said they and others “have a strong interest in ensuring that the FTC cannot abuse its “unfairness” authority to regulate the practice of medicine by imposing new, confusing, and burdensome patient-information data-security obligations inconsistent with federal healthcare law.”