The saga between the FTC and LabMD will not be resolved anytime soon. The case has been at a standstill since last May, and late last week, the administrative law judge postponed the proceeding until May 5th.
The case stems from an alleged data breach of LabMD’s patient information in 2010. The FTC investigated the incident and filed an administrative complaint against LabMD alleging that its security practices violated Section 5 of the FTC Act. LabMD has consistently maintained that the FTC has overextended its authority under Section 5. LabMD was forced to unwind its business as a result of the investigation.
Fireworks have exploded in the case as LabMD alleges that Tiversa, the company that provided the information to the FTC on the alleged data breach, basically took the data from LabMD’s server, while Tiversa has responded that the data was found outside LabMD’s server. LabMD has a previous employee lined up to testify after the witness was granted immunity from the Department of Justice.
The case will be exciting to follow on multiple levels–the challenge to FTC’s regulatory authority, the testimony about how the data was obtained and given to the FTC, and how the investigation destroyed a company who fought back. We will be on the edge of our seats and will keep you updated as the proceeding gets underway in May.