law

06 May Analyst Backs LabMD In FTC Row, Alleges Fraud At Tiversa

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Originally posted on Law 360

By Jimmy Hoover

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Law360, Washington (May 05, 2015, 9:16 PM ET) — LabMD Inc. on Tuesday scored a major hit in its data security fight with the Federal Trade Commission after a former analyst at the cybersecurity firm Tiversa Inc. testified that his company lied to the agency about the extent of LabMD’s data leaks after the medical testing firm turned down its services.

Richard E. Wallace said in a hearing that during his time as one of the company’s chief forensic analysts from 2007 to 2014, he helped Tiversa and CEO Robert J. Boback spin lies to the FTC about the “proliferation” of LabMD-held insurance records among identity thieves — which LabMD claims is the sole basis for the agency’s 2013 administrative complaint against it for alleged data protection failures.

Wallace said that, rather than a proliferation, he merely downloaded a file off of LabMD’s own server and manufactured those claims per Boback’s orders, who he said wanted to steer LabMD into using Tiversa’s monitoring and remedial services.

According to Wallace, Boback became infuriated that LabMD’s president and CEO, Michael J. Daugherty, rejected their services.

“[Boback] basically said F-him, make sure he’s at the top of the list,” Wallace said at the hearing, describing the Tiversa CEO’s reaction to LabMD’s refusal of services.

Atlanta-based LabMD conducts laboratory tests on samples that physicians obtain from patients and also performs medical testing for consumers around the country.

Tuesday’s proceedings before Administrative Law Judge D. Michael Chappell had stalled for several months after Wallace revealed that Tiversa had emerged as the subject of an investigation from the House Committee on Oversight and Government Reform and that he was pursuing immunity for his testimony in the FTC proceedings — immunity he finally received.

Wallace said that he left the company in February 2014 after Boback had pressured him to lie under oath in a planned deposition from LabMD’s attorneys about the extent of LabMD’s data leaks.

According to LabMD’s attorney Reed Rubinstein of Dinsmore & Shohl LLP, the testimony marked a “remarkable day” in the case and vindicated the company’s assertion that “the FTC action was based on manufactured evidence.” At the close of the hearing Tuesday, Rubenstein announced that LabMD will seek a criminal investigation against the Tiversa.

“Obviously the FTC never checked what came in from Tiversa,” Rubinstein said in an interview with Law360.

Under direct examination from William A. Sherman II of Dinsmore & Shohl, Wallace outlined a pattern of fraud and deception at his former company and said it was “common practice” at Tiversa to deceive companies into believing identity thieves had stolen their files off of peer-to-peer networks in an effort to charge for remedial services.

Wallace said Tiversa carried out the scheme by inserting the IP addresses of known identity thieves into a “data store” and making it appear to the companies that the identity thieves had pilfered their files, despite the fact that they had already been shut down by law enforcement. Because their computers were down, Wallace said, “there was no way to contradict what Tiversa was saying.”

During a re-direct examination Tuesday from his own attorney, Mary Beth Buchanan of Bryan Cave LLP, Wallace also recounted an episode in which Boback allegedly forced him to conjure up a report claiming that trade secrets related to the avionics found in the cockpit of Marine One, the helicopter for presidential transport, had been stolen by Iranian nationals — a fake story later plastered in headlines across major news outlets including, CBS News, NBC News and Fox News.

“It was very big press for Tiversa. And believe it or not, it was not easy to find an active Iranian IP address that law enforcement couldn’t get a hold of,” Wallace said.

The FTC declined an opportunity to depose as well as cross-examine Wallace on Tuesday, though FTC attorney Laura Riposo VanDruff indicated that she may file a motion to introduce a rebuttal witness within the next week.

Counsel for Tiversa and Boback could not be immediately reached Tuesday for comment.

LabMD is represented by William A. Sherman II, Reed Rubinstein and Sunni Harris of Dinsmore & Shohl LLP and Hallee Morgan, Kent Huntington, Daniel Epstein, Patrick Massari and Prashant K. Khetan of Cause of Action.

The FTC is represented by Alain Sheer, Laura Riposo VanDruff, Megan Cox, Ryan Mehm, John Krebs and Jarad Brown.

The case is In the Matter of LabMD Inc., docket number 9357, before the Federal Trade Commission Office of the Administrative Law Judges.

–Editing by Emily Kokoll.

To download your own copy of this article, click here

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19 Mar LabMD, FTC Data Security Fight Delayed Again

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Screen shot 2014-08-22 at 5.55.03 AMLaw360, New York (March 16, 2015, 8:34 PM ET) —

 

 

An administrative law judge has postponed until May 5 the resumption of proceedings in the Federal Trade Commission‘s closely watched data security fight with LabMD Inc., marking the latest delay in a case that has been on hold for almost a year.

In an order dated Thursday, Chief Administrative Law Judge D. Michael Chappell revealed that the evidentiary hearing in the case, which was scheduled to resume on March 19, would instead be rescheduled to May 5.

The order offered no reason for the extension, saying only that the decision was “based upon good cause” and had been made following a conference call with the parties during which there had been no objections. The case has been on hold since May 30, when witness Rick Wallace revealed a congressional investigation into a key player in the FTC’s case.

“The judge told us the hearing was postponed, so we’ll show up on May 5 and we’ll see what Mr. Wallace has to say then,” Reed Rubinstein, a Dinsmore & Shohl LLP partner and the senior vice president of litigation at Cause of Action, which is representing LabMD in the administrative proceeding, told Law360 on Monday.

A spokeswoman for the FTC said that the commission did not have a comment on the extension.

Thursday’s order marks the latest twist in the long-running and hotly contested battle between the regulator and medical testing laboratory.

After a lengthy probe into the laboratory’s data security practices, and shortly after the company’s CEO released an online trailer to his book highlighting corruption at the FTC, the regulator in August 2013 filed an administrative complaint alleging that LabMD violated Section 5 of the FTC Act by failing to safeguard medical and financial information on nearly 10,000 customers.

LabMD shot back that the unfairness prong of Section 5 didn’t give the FTC authority to regulate how a business protects consumer information. And even if it did, LabMD argued, the Health Insurance Portability and Accountability Act would trump it because the information at stake is sensitive medical information.

After the FTC commissioners affirmed the agency’s authority to bring the suit in a January 2014 ruling rejecting the laboratory’s bid to dismiss the action, the focus of the case shifted to whether the data security standards that LabMD had in place to protect consumers’ sensitive medical and personal information could be considered reasonable.

However, shortly after the trial to resolve these issues began, Judge Chappell brought the proceedings to a halt, due to testimony by Wallace that the House Intelligence Committee on Oversight and Government Reform was conducting an investigation into data security firm Tiversa Inc., which had provided the FTC with a the file containing sensitive information that had purportedly been found outside the medical testing laboratory’s internal network.

The FTC’s data security suit rests in large part on Tiversa’s claims that its routine scanning activities found that the LabMD patient file had leaked outside the company, an assertion that Wallace — a former Tiversa employee — is expected to refute by testifying that the file had only been found on the LabMD server.

But while the House Oversight Committee concluded its probe by releasing a Dec. 1 report that Tiversa failed to provide complete information about work it performed, the committee did not address the question of whether Wallace could be granted immunity for his testimony in the administrative proceedings, which Judge Chappell had elected to keep on hold until the immunity issue had been resolved.

The quandary was finally put to rest in January, when after receiving permission from theU.S. Department of Justice, Judge Chappell granted LabMD’s request to give immunity to Wallace, and ordered him to testify at the resumption of the evidentiary hearing, which the judge scheduled for March 3.

As the proceedings were about to get underway, Judge Chappell issued an order granting Wallace’s request to adjourn the trial and his appearance for deposition until March 19, a plan that remained in place until the judge issued his latest extension order Thursday.

LabMD is represented by William A. Sherman II, Reed Rubinstein and Sunni Harris of Dinsmore & Shohl LLP and Hallee Morgan, Kent Huntington, Daniel Epstein, Patrick Massari and Prashant K. Khetan of Cause of Action.

The FTC is represented by Alain Sheer, Laura Riposo VanDruff, Megan Cox, Ryan Mehm, John Krebs and Jarad Brown.

The case is In the Matter of LabMD Inc., docket number 9357, before the Federal Trade Commission Office of the Administrative Law Judges.

–Editing by John Quinn.

 

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02 Mar FTC To Face Grilling By 3rd Circ. Over Data Security Powers

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Shared directly from Law360 Screen shot 2014-08-22 at 5.55.03 AM

 

Law360, New York (February 27, 2015, 8:55 PM ET) — The scope of the Federal Trade Commission‘s authority will take center stage at the Third Circuit on Tuesday, with questions posed by the appellate panel in advance of the arguments indicating that the regulator faces an uphill battle to fend off Wyndham Worldwide Corp.’s claims that the agency doesn’t have the power to regulate companies’ cybersecurity practices.

The highly anticipated oral argument session, which is slated to kick off on Tuesday morning before a three-judge panel in Philadelphia, will mark the latest step in the appellate court’s interlocutory review of an order issued by U.S. District Judge Esther Salas in April that rejected Wyndham’s contention that the commission does not have the authority under the unfairness prong of Section 5 of the FTC Act to police allegedly lax corporate data security practices.

“This is going to be one of the most important decisions that is going to come down over data security, because it’s really going to determine the jurisdiction of the FTC, which has planted itself as the principal regulator in this area,” said Fox Rothschild LLP privacy and data security practice leader Scott Vernick.

With the potentially game-changing arguments looming, the Third Circuit panel offered some insight into its thinking by taking the unusual step of sending the parties a letter on Feb. 20 that expanded on the pair of questions that Judge Salas had asked the appellate court to consider.

In her June order sending the dispute to the Third Circuit, Judge Salas certified the questions of whether the commission can bring an unfairness claim involving data security under Section 5 and, if so, whether the FTC must formally promulgate regulations before bringing its unfairness claim.

But in its recent letter, the appellate panel asked counsel to be prepared to discuss a slightly different pair of questions during oral arguments, beginning with whether the FTC has declared through the procedures provided in the FTC Act that unreasonable cybersecurity practices are “unfair.”

The panel continued by saying, “Assuming that it has not, is the FTC asking the federal courts to determine that unreasonable cybersecurity practices are ‘unfair’ in the first instance, and if so, can the courts do so in this case” brought under the regulator’s authority to enjoin an entity that the commission believes is violating the FTC Act.

“These questions imply that the Third Circuit is still grappling with the question of what authority the FTC has to enforce the prohibition against unfair practices under the FTC Act in the context of cybersecurity,” said Shook Hardy & Bacon LLP data security and data privacy practice co-chair Al Saikali. “The FTC will want to demonstrate that its treatment of Wyndham is consistent with how it has applied the unfair practice prong of the act in the past. If the FTC can’t make the required showing, it will face an uphill battle trying to establish why it now wants to do so for the first time, and it means that the court may need to apply a tougher standard.”

The possibility that the Third Circuit may push back hard on the commission’s long-running assertion that it has broad authority to regulate practices that it deems to be “unfair” is surprising, giving the reception the contention received at the district court level.

In her opinion, Judge Salas strongly endorsed the regulator’s position, saying that an “untenable consequence” of the hotel chain’s argument that the FTC must provide fair notice of what constitutes “unreasonable” data security standards would be that the commission would have to cease bringing all unfairness actions without first proscribing particularized prohibitions, a result that she characterized as in “direct contradiction with the flexibility necessarily inherent” in Section 5.

“Most people have assumed that the FTC would win this case, but this latest inquiry raises some additional doubt about the approach the FTC has been taking in its enforcement activities,” said Wiley Rein LLP privacy practice chair Kirk Nahra.

With its questions, the Third Circuit appears to be pushing for information on the general use of the unfairness doctrine by the commission, and asking whether the FTC is even using that approach in its actions, or if it is asking the court to create something entirely separate, according to Nahra.

“It raises some questions about whether the FTC has been clear in what it is doing, and whether the FTC’s actions can be traced to a specific statutory requirement,” he said. “In my mind, it is raising some new doubts about whether the FTC will win this case.”

By signaling that it is most interested in the hotel chain’s central argument that the unfairness prong does not provide the commission with broad authority to set data security standards, rather than its narrower contention that the FTC has failed to plead facts sufficient to demonstrate a substantial injury to consumers, the appellate panel has given a significant boost to the widespread belief that its ultimate decision will have a seismic impact on the future of data security regulation, according to attorneys.

“If [the Third Circuit] addresses the broader issue of the FTC’s authority, it would mark the first time that a federal appellate court has determined whether the FTC has the authority to bring Section 5 actions based on allegedly inadequate data security practices,” said Kurt Wimmer, chairman of Covington & Burling LLP’s privacy and data security practice. “Although the Third is just one circuit, this would be a highly influential decision — particularly in light of the lack of judicial precedent for the FTC’s privacy and security jurisdiction.”

The second question posed by the appellate panel also raises the less high-profile but equally important question of what role the courts have in regulating data security, especially given the absence of formal guidance from the FTC on the issue, attorneys noted.

“I’m not sure that the court is in any better position than the FTC to make that determination [of what constitutes reasonable data security],” Vernick said. “If you say that the court can, then it’s going to come down to a battle of experts, because the plaintiff is going to put up an expert that says the company did not adhere to the standard of care, and the defendant’s expert will say that the company did.”

However, having the FTC set out proscriptive data security standards in advance of launching enforcement actions, as Wyndham argues it should, may not be the best way to approach the issue either, according to attorneys.

“While it’s technically true that there is a lack of regulation and we don’t know what the standards are, that argument might be overblown,” Vernick said. “A lack of regulation may ultimately be helpful because you don’t risk setting a one-size-fits-all standard for data security that doesn’t fit anybody.”

Wyndham is represented by Eugene F. Assaf, Christopher Landau, Susan M. Davies and K. Winn Allen of Kirkland & Ellis LLP, Douglas H. Meal and David T. Cohen of Ropes & Gray LLP, and Jennifer A. Hradil and Justin T. Quinn of Gibbons PC.

The FTC is represented by its attorneys Joel R. Marcus-Kurn, David C. Shonka Sr. and David L. Sieradzki.

The case is FTC v. Wyndham Worldwide Corp. et al., case number 14-3514, in the U.S. Court of Appeals for the Third Circuit.

–Editing by Katherine Rautenberg and Kat Laskowski.

 

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14 Feb Red Auerbach lights his cigar as Congress nails strange bedfellows Tiversa and the FTC

Red Auerbach LightsJust in from Law360…

House Panel Says Tiversa Held Out On FTC In LabMD Fight

 By Emily Field

Law360, New York (February 13, 2015, 9:27 PM ET) — Tiversa Inc.’s credibility as a witness in the Federal Trade Commission’s data breach row with LabMD Inc. was called into question in an investigation by a congressional committee, which said in a report made public Friday that the data security company failed to provide complete information about work it performed.

The House Committee on Oversight & Government Reform said in its Dec. 1 report that, to all appearances, Tiversa kept back information contradicting what it told the FTC about the source and dissemination of a LabMD file. The FTC in August 2013 claimed LabMD failed to protect patient data, largely based on a file handed over by Tiversa, which the company claimed was outside LabMD’s internal network.

Tiversa’s failure to produce the requested documents “calls into question Tiversa’s credibility as a source of information for the FTC,” according to the committee, and the FTC “should no longer consider Tiversa to be a cooperating witness.”

The FTC in August 2013 alleged LabMD failed to protect patient data, largely based on a file handed over by Tiversa.

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Strange Bedfellows. FTC & Tiversa

 

In a separate suit filed last month, LabMD is accusing Tiversa of creating a breach itself and then trying to sell its services to LabMD to repair it, with Tiversa allegedly turning the medical testing laboratory in to the FTC when it refused.

In responding to the FTC’s September 2013 subpoena, the report says, Tiversa kept back information that contradicted testimony CEO Robert Boback gave to the FTC about the LabMD file.

Despite “nearly identical” requests from the FTC and the committee, Tiversa gave the committee documents it didn’t show the FTC, according to the report.

According to an internal Tiversa forensic report, it downloaded the LabMD file from a source in Atlanta by August 2008, the committee said.

“This contradicts Boback’s testimony that Tiversa first downloaded the LabMD file from an IP address in San Diego, California,” the committee said. “If Tiversa had in fact downloaded the LabMD file from a San Diego IP address in February 2008, then that fact should be included in this 2008 report. It is not.”

The committee said, given how Tiversa names files, it’s unlikely that the LabMD file analyzed in the company’s internal records is different from the file at issue in the FTC proceedings.

“If, however, the earlier reports do refer to a different file, then Tiversa neglected to inform the FTC of a second, similarly sized leak of LabMD files,” the report said.

Tiversa created the only forensic report substantiating its claims to the FTC in June 2014, after the committee began its investigation, which “raises serious questions,” according to the report.

Tiversa also didn’t give the committee emails between Boback and Richard Wallace — a former Tiversa employee who was granted immunity for his testimony in the FTC’s trial against LabMD — that were submitted in the FTC proceeding, the committee said.

“Tiversa did not produce these documents to the committee even though they are clearly responsive to the committee’s subpoena,” the committee said. “Their inclusion in the FTC proceeding strongly suggests that Tiversa also never produced these documents to the FTC.”

The committee’s probe into the relationship between Tiversa and federal agencies came to light after Wallace told the FTC’s administrative law court of the investigation and said he wouldn’t testify without immunity, spurring an administrative law judge to stay the case in May.

After receiving permission from the U.S. attorney to grant Wallace immunity for his testimony, the administrative law judge rebooted the case by ordering the evidentiary hearing to resume on March 3.

Representatives for LabMD and Tiversa didn’t immediately respond to requests for comment Friday.

The cases are In the Matter of LabMD Inc., docket number 9357, before the Federal Trade Commission Office of the Administrative Law Judges, and LabMD Inc. v. Tiversa Holding Corp. et al., case number 2:15-cv-00092, in the U.S. District Court for the Western District of Pennsylvania.

–Additional reporting by Michael Lipkin. Editing by Jeremy Barker.

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photo credit: http://blogs.worldbank.org/publicsphere/files/publicsphere/file000704919536.jpg

24 Jan LabMD sues Tiversa for Racketeering, Conversion, Fraud … And more.

photo credit: http://blogs.worldbank.org/publicsphere/files/publicsphere/file000704919536.jpg

After years of throwing everything they’ve got in the path of justice, including taking LabMD’s medical data, trying to prevent the publication of Michael J. Daugherty’s book, The Devil Inside the Beltway, and attempting to manipulate a former Tiversa employee (who has recently received immunity from the Justice Department in what the Administrative Law Judge called Tiversa’s “improper attempt to place evidence on the public record, unilaterally, with the transparent purpose of impugning the credibility of anticipated testimony and/or influencing the immunity process”), recent events and admissions, detailed in the Complaint, have provided key evidence of Defendants’ illicit actions.

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read the lawsuit here….

 

LabMD vs Tiversa Holding Corp, Robert J. Boback, M. Eric Johnson

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22 Aug The Eleventh Circuit is holding oral arguments

 

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The Eleventh Circuit has announced that they are going to hold oral arguments in LabMD’s case even though the appellate court had refused. See below for Law 360’s reporting of this development. To view the original article, click HERE.

The Eleventh Circuit said Wednesday that it has decided to hold oral arguments on LabMD Inc.’s latest bid to halt the Federal Trade Commission from policing corporate data-security standards, a dispute which the appellate court has already once refused to entertain.

In a brief docket entry, the appellate court announced that it “has determined that oral arguments will be necessary in this case,” which LabMD mounted in May after a Georgia district court ruled that it lacked jurisdiction to consider whether the FTC had overstepped its statutory authority by bringing a closely-watched administrative proceeding accusing the laboratory of failing to implement reasonable data security standards to protect private health information.

The Eleventh Circuit in May declined to hear the appeal on an expedited briefing schedule or grant a stay of the administrative proceeding pending its review of the lower court’s ruling, but both the laboratory and the FTC have since filed their briefs in the case, leading the appellate court to issue its oral argument determination Wednesday.

“The court’s decision to grant oral argument indicates that this case presents important issues about the FTC’s abuse of authority, and we are optimistic that LabMD will prevail once all arguments are made,” Cause of Action Executive Director Dan Epstein said in a statement Wednesday.

The court has yet to set a date for oral arguments, and a representative for the FTC could not be immediately reached for comment Wednesday.

The often contentious dispute between the regulator and medical testing laboratory began in August 2013, when the FTC filed an administrative complaint alleging that LabMD failed to safeguard medical and financial information on nearly 1 million customers and allowed data to leak on to the peer-to-peer file-sharing network LimeWire and into the hands of identity thieves.

Instead of settling the claims, LabMD became only the second company, after hotel chain Wyndham Worldwide Corp., to push back at the commission’s authority to regulate the security of consumer information as an “unfair” practice under Section 5.

Besides responding to the administrative complaint, the company also asked the District of Columbia and the Eleventh Circuit in separate filings to halt the commission from proceeding with its action.

In February, the Eleventh Circuit ruled that it could not review the Section 5 challenge because the statute “only gives courts of appeal authority to review an order of the commission to cease and desist from using any method of competition or act or practice, [and] there is no such order here.”

The determination led LabMD to abandon the complaint it already had brought in the District of Columbia for an injunction halting the administrative case and file a new complaint in Georgia.

In May, the Georgia federal court threw out the suit, ruling that district courts are in no position to interfere with ongoing administrative enforcement actions.

After the Eleventh Circuit refused to disrupt the proceeding in May, the FTC responded to the laboratory’s appeal by urging the appellate court to uphold the lower court’s holding that it is premature for the court to become involved in the administrative proceeding.

If the outcome of the proceeding ends up being unfavorable to LabMD, it can bring its challenge at that point, the FTC asserted in its brief.

But LabMD countered in an Aug. 11 reply brief that the court should be able to review an executive branch agency’s action under the Administrative Procedure Act before the administrative case concludes, and that its First Amendment retaliation claim can proceed because constitutional claims arising in an administrative case need not wait until the agency takes a final action.

The disputed trial before the administrative law judge that LabMD is seeking to halt began in May, although the proceedings were quickly put on hold and have yet to resume following the discovery that a Republican-led House committee is investigating data security firm Tiversa Inc., which is a key player in the FTC’s case.

LabMD is represented by Cause of Action, which has retained Ronald L. Raider, Burleigh L. Singleton and William D. Meyer of Kilpatrick Townsend & Stockton LLP, and Reed D. Rubinstein of Dinsmore & Shohl LLP.

The FTC is represented by its own Perham Gorji, and by Mark B. Stern, Lauren Fascett, Adrienne E. Fowler and Abby Christine Wright of the U.S. Department of Justice.

The case is LabMD Inc. v. Federal Trade Commission, case number 14-12144, in the U.S. Court of Appeals for the Eleventh Circuit.

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23 Jul Breaking News!

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Hearing Tomorrow to Examine the Federal Trade Commission’s Data Security Enforcement Authority

 

WASHINGTON – Tomorrow, House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) will convene a hearing titled, “The Federal Trade Commission and Its Section 5 Authority: Prosecutor, Judge, and Jury.”  The hearing will examine the FTC’s enforcement practices with respect to data security, as well as the basis of recent FTC actions related to data security practices.

In addition, the hearing will examine the sources of the FTC’s information for several recent data breach investigations, which have been the subject of an ongoing Committee investigation. Witnesses include organizations that the FTC has contacted or investigated after they refused to purchase “cyber-intelligence” services from Tiversa, Inc.

 

Hearing Details:

“The Federal Trade Commission and Its Section 5 Authority: Prosecutor, Judge, and Jury”

Full Committee Chairman Darrell Issa (R-Calif.)

9:30 a.m. in Rayburn 2154. The hearing will be streamed live at oversight.house.gov.

 

Witnesses:

 

Mr. Michael Daugherty

Chief Executive Officer

LabMD, Inc.

 

Mr. David Roesler

Executive Director

Open Door Clinic of Greater Elgin

 

Mr. Gerard Stegmaier

Partner

Goodwin Procter

 

Mr. Woodrow Hartzog

Associate Professor
Samford University

Contact:  Becca Watkins, 202.225.0037

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09 Jun THE FTC TAKES OFF THE GLOVES

Photo credit: Medieval Warfare Armour & Shields

Folks, the Federal Trade Commission has only just begun to take off their gloves in their 21st Century updating of medieval torture. While their old machines are in the museums, their new tactics have gone high tech and LabMD is tightly strapped to their slab.

All professional tyrants and bullies have plenty of tricks up their sleeves. This nest is no exception. For starters, the FTC seduced Congress into allowing the FTC to make their own rules and have their own Administrative Court . This is very handy when the judge makes an adverse decision, as the commissioners sit above him and can flip his decision like a Sunday morning omelette. Yes, we spend months and millions in an Administrative Court and if the FTC jailers don’t like the ruling they can just overturn it. Prosecutors in the real world would kill for this type of power, and with that in their back pocket, off the FTC goes choosing from their smorgasbord of tricks and tactics, due process and fair notice be damned. Here is a sampler:

Trick One:  Use the court (inside the FTC building called the Administrative Court) to drain the victim dry by making him spend millions defending himself. Always good to starve the victim to get a nice loose skin. The courts have ruled repeatedly that they won’t interfere until this bloodletting is completed. Once this is over, off you go to Federal court to pay the game again.

Trick Two:  Allow the media to assume, using the very well worn FTC habit of lying through omission, that the judge decides on motions to dismiss.  This is a lie. The FTC decides what the judge sees. The FTC likes to keep a bag over the judge’s head because cowards don’t deign to play fair.

Trick Three:  Break every rule in the book if you have to, as the FTC banks on your very short attention span. For example, in our trial the FTC has rested their case. Does that stop them from trying to enter additional evidence as their case implodes? Why don’t be silly! Rules don’t apply to the Gods. They are just laying bread crumbs on the trail to flipping Judge Omelette.

Trick Four: Scare every future organization into early submission by making the execution of LabMD particularly dirty and gruesome. Show no shame. Sink as low as possible. Destroy a cancer detection center. Kill jobs. Trample into healthcare like a bull in a china shop. Lie, cheat, and be so outrageous that the mention of your name makes every CEO run for cover. After all, this is America. The FTC knows all too well the odds of their being held accountable are laughably low.

While this is just a sampler from the FTC’s menu, let me assure you that they aren’t done with me. Hell hath no fury like cowards caught in the act.

Is Congress beginning to wonder what the hell is going on over at the FTC?   Congress rarely acts, the media doesn’t report and the American people don’t pay attention. The FTC banks on it. But so far we have pleading of the 5th and more fun to come. The FTC’s utter lack of integrity will be put on display for all the world to see. Maybe this time things will be different.

I understand you may find my acid words over the top and dramatic. To this I implore,  “Watch and remember.” As I mentioned to an FTC lawyer just this past weekend: Shameless.

 

Photo credit: Medieval Warfare Armour & Shields

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