Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.
A new policy out of the Justice Department prevents department litigators from relying on guidance documents to establish legal violations in civil enforcement actions.
The policy announced Jan. 25 means guidance documents can no longer be used as a basis for bringing civil enforcement actions, and it could lessen the risk companies will face catastrophic punitive damages, particularly in False Claims Act cases.
The new policy follows on the heels of a November 2017 memo issued by Attorney General Jeff Sessions, which prohibited agency guidance documents from being converted into binding rules. “In the past, the Department of Justice and other agencies had blurred the distinction between regulations and guidance documents,” the DOJ said in a Jan. 25 statement announcing the policy.
“Although guidance documents can be helpful in educating the public about already existing law, they do not have the binding force or effect of law and should not be used as a substitute for rulemaking,” Associate Attorney General Rachel Brand said in the statement.
“Consistent with our duty to uphold the rule of law with fair notice and due process, this policy helps restore the appropriate role of guidance documents and avoids rulemaking by enforcement,” she said.
The new guidance will particularly affect False Claims Act cases, several health-care fraud attorneys told Bloomberg Law.
“This new policy from the Associate’s Office is a very significant development for life sciences and health-care enforcement cases,” Laurence Freedman of Mintz Levin told Bloomberg Law Jan. 26. “It is a terrific step to ensure fair notice and due process in False Claims Act and other cases, and to make it crystal clear that subregulatory guidance does not create enforceable rights and obligations.”
“In life sciences and health care, there has been an explosion of subregulatory guidance, and many have noted that this has become regulation through enforcement,” Freedman said. “The policy draws a sensible line—subregulatory guidance can be used to establish knowledge of regulatory requirements, but not to create new obligations,” he said.
Freedman’s health-care and life sciences litigation practice focuses on defending clients against allegations and investigations of fraud and abuse involving governmental programs.
“This new policy has the potential to be very significant with respect to DOJ’s enforcement of False Claims Act cases, most of which are initiated by individual whistleblowers,” Laura F. Laemmle-Weidenfeld of Jones Day in Washington told Bloomberg Law Jan. 26.
“The DOJ is the only federal agency with authority to prosecute FCA cases, although it is expected to consult with its client agencies such as FDA and HHS-OIG in the process of bringing such cases,” according to Laemmle-Weidenfeld, who is a Bloomberg Law advisory board member and specializes in defending clients in health-care fraud enforcement actions.
“The guidance has a significant impact on civil enforcement by DOJ and is aimed squarely at punitive False Claims Act enforcement that may not be supported by clear regulations or statutes,” Katie McDermott of Morgan, Lewis & Bockius LLP in Washington told Bloomberg Law Jan. 26. She is also a Bloomberg Law advisory board member and specializes in defending clients in health-care fraud enforcement actions.
The new policy could decrease the chances that the government will use guidance-type documents such as fraud alerts and advisory opinions to bootstrap civil claims against companies, Kevin G. McAnaney of the Law Offices of Kevin G. McAnaney in New York said. It’s also likely to be useful against relators’ counsel who routinely try to use guidance as proof of kickback violations, he told Bloomberg Law Jan. 26.
The DOJ routinely uses Office of Inspector General special fraud alerts, bulletins, and advisory opinions in support of anti-kickback and False Claims Act cases, according to McAnaney, who specializes in health-care fraud issues.
“The government loves to make the argument that the fraud alerts, advisory opinions, etc. ‘put industry on notice’ and then tries to bootstrap that into ‘knowing’ false claims,” he said.
“There is a need for this guidance in FCA cases, which are evolving too often into regulatory or contract violation cases cobbled together sometimes by no more than draft agency guidance or inconsistent guidance that purports to be lawmaking,” McDermott said.
“The guidance suggests there should no reliance on guidance documents in conference room arguments by DOJ to suggest highly punitive liability,” she said.
“There is a great deal of unaccountability and arbitrariness when enforcement rests on guidance documents which can be in draft form or even inconsistent,” McDermott told Bloomberg Law. “It is often difficult to get enforcers or policy makers to care about these issues so this guidance is a good start to reframing where enforcement should begin, which is assessing a violation of law, not policy,” she said.
To contact the reporter on this story: Dana A. Elfin in Washington at email@example.com
To contact the editor responsible for this story: Brian Broderick at firstname.lastname@example.org
The policy is at http://src.bna.com/vY4.
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)