The FTC Versus LabMD Data Security Fighting Match May Hit the Tube


Reality TV, docudrama or one man’s Sisyphean task? The list of Washington, D.C.-based political dramas—The West Wing, House of Cards, Veep and Scandal may soon have another entry.

The upcoming show, The Devil Inside the Beltway, will be based on a book by the same title, written by Michael J. Daugherty, the CEO of Atlanta-based medical testing company LabMD Inc. According to the book cover, it explores “the devastating real-life consequences of out-of-control cyber surveillance tactics used by U.S. government bureaucrats together with private enterprise and academia.”

In 2013, the Federal Trade Commission initiated an enforcement action against LabMD for allegedly storing its patient data on a peer-to-peer file-sharing network. Although Federal Trade Commission (FTC) Chief Administrative Law Judge D. Michael Chappell ruled in November 2015 that the FTC failed to show that LabMD’s security practices caused or were likely to cause substantial injury to consumers, the commission July 29 reversed Chappell’s ruling. The FTC held that the disclosure of sensitive personal health information was itself sufficient to establish consumer harm.

Unbowed in its long-standing fight with the FTC, LabMD appealed the case to the U.S. Court of Appeals for the Eleventh Circuit. LabMD is now backed by the significant data breach defense team at Ropes & Gray LLP, which has previously defended companies that faced high-profile data breaches, including Target Corp., Sony Corp. and Wyndham Worldwide Corp.

Daugherty recently told Bloomberg BNA that the TV show is now in development. The FTC didn’t respond to Bloomberg BNA’s request for comments.

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