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

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.

Michael Daugherty

Michael Daugherty is President & CEO of LabMD, an Atlanta-based clinical and anatomic medical laboratory with a national client base. Mike founded LabMD in 1996 after 14 years in surgical device sales with U.S. Surgical Corp. and Mentor Corporation. Outside of LabMD, enjoys playing tennis, travel, and flying his Cirrus SR22 Turbo single engine aircraft.