LabMD Seeks Stay From FTC Order Finding It Liable for Unfair Data Security Practices
LabMD asked FTC commissioners for a stay of the agency's July 28 final order -- which reversed an administrative law judge ruling and found the cancer testing lab liable for unfair data security practices (see 1607290023 and 1608120002) -- pending…
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a court review. LabMD, which filed the stay application Tuesday, said it's warranted because it satisfies four factors. The case "involves several novel bases for decision, all of which invite alternative conclusions" demonstrated by the different conclusions reached by the FTC and ALJ Michael Chappell (see 1511160069), LabMD said. The company said it's likely to succeed on the merits because the FTC order violates due process and isn't supported by evidence. The firm said the order requires it to hire third-party contractors to perform research and other time-consuming tasks involving "substantial compliance costs," which the company has no way to pay. "That is irreparable harm," the company's filing said. The FTC declined comment Wednesday. LabMD CEO Michael Daugherty emailed that the case will have a "greater impact" on other companies than on his own, which "has already been destroyed." He said "when law firms start reporting the power the FTC has to turn hearsay into truth they'll finally start defending their clients instead of kowtowing to government corruption. This stay request is just a necessary steppingstone out of a biased system that is severely broken. If the FTC decision stands you'll be guilty for being hackable even if never hacked. You're only defense will be a kiss for luck and a roll of the dice." LabMD, which the commission said failed to take proper and reasonable security measures on its computer networks and exposed personal data of about 10,000 patients, has 60 days after the order to appeal to a U.S. Court of Appeals.