We continue to watch with great interest the battle between LabMD and the Federal Trade Commission (FTC) over the FTC’s enforcement action against LabMD for a security breach that allegedly occurred in 2010. Only LabMD and Wyndham Worldwide have challenged the FTC’s enforcement authority over security breaches and health information under Section 5 of the FTC Act to date.
According to LabMD, it was forced to wind down its business operations due to the enforcement action filed by the FTC against it in 2013. The CEO, Michael Daugherty’s account of the enforcement action is detailed in the book “The Devil Inside the Beltway.”
After the FTC filed its Complaint against LabMD alleging lax security measures, LabMD fought back alleging that the FTC exceeded it enforcement authority in filing the complaint. When LabMD was unsuccessful before the administrative law judge, it filed suit against the FTC in Federal Court. The lower Court found that it did not have jurisdiction as there was no final action in the administrative hearing. In January, the Eleventh Circuit upheld the lower Court’s decision.
LabMD argued in its request for an en banc rehearing that the Eleventh Circuit should allow the rehearing as the case presents important around the ability of courts to review agency overreach in expanding enforcement powers.
We will continue to watch this case closely and provide updates on developments as they occur.