https://www.nytimes.com/2018/02/10/us/politics/legal-violations-federal-rules.html
The Justice Department has issued a sweeping new policy against the use of guidance documents:
Under the revised policy, Ms. Brand said, the Justice Department will not “use its enforcement authority to effectively convert agency guidance documents into binding rules.” Moreover, she said, Justice Department lawyers, who represent federal agencies in court, “may not use noncompliance with guidance documents as a basis for proving violations of applicable law.”
In a footnote, the Trump administration makes clear that the new policy has broad ramifications: It applies to any civil lawsuits filed on behalf of the federal government to “impose penalties for violations of federal health, safety, civil rights or environmental laws.”
Administration Imposes Sweeping Limits on Federal Actions Against Companies
By ROBERT PEARFEB. 10, 2018
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The new policy, issued by Rachel L. Brand, the No. 3 official at the Justice Department, is significant because federal agencies have issued guidance documents on a range of laws covering issues like health care and labor. CreditAaron P. Bernstein/Reuters
WASHINGTON — The Trump administration has adopted new limits on the use of “guidance documents” that federal agencies have issued on almost every conceivable subject, an action that could have sweeping implications for the government’s ability to sue companies accused of violations.
Guidance documents offer the government’s interpretation of laws, and often when individuals or companies face accusations of legal violations, what they have really violated are the guidance documents. Defense lawyers say the change in policy gives them a powerful tool to fend off allegations of wrongdoing against their clients.
It also advances a goal declared by President Trump in his first days in office: to reduce the burden and cost of federal rules and requirements. But consumer advocates say the move will crimp enforcement of crucial protections.
The new policy, issued by the No. 3 official at the Justice Department, Rachel L. Brand, is significant because federal agencies have issued hundreds of guidance documents on a wide range of laws covering issues like health care, the environment, civil rights and labor.
Under the revised policy, Ms. Brand said, the Justice Department will not “use its enforcement authority to effectively convert agency guidance documents into binding rules.” Moreover, she said, Justice Department lawyers, who represent federal agencies in court, “may not use noncompliance with guidance documents as a basis for proving violations of applicable law.”
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In a footnote, the Trump administration makes clear that the new policy has broad ramifications: It applies to any civil lawsuits filed on behalf of the federal government to “impose penalties for violations of federal health, safety, civil rights or environmental laws.”
It also applies to cases in which the government asserts that health care providers or federal contractors defrauded the government by filing false or inflated claims.
Lawyers and lobbyists have been rushing to tell clients about the policy, which was issued on Jan. 25. Morgan Lewis, a global law firm, said in a bulletin for clients that it “provides needed relief” for regulated industries, “giving them greater opportunity to push back against enforcement theories” that rely on official guidance documents.
Benjamin C. Mizer, a former Justice Department official who now works at the law firm Jones Day, said the new policy “may significantly affect cases involving the health care and life sciences industries” because the Food and Drug Administration and the Centers for Medicare and Medicaid Services have relied heavily on guidance documents.
The government imposes countless requirements through guidance documents like Medicare billing manuals, special fraud alerts and “coverage determinations” saying whether Medicare will pay for an item or service.
To carry out the Affordable Care Act, federal agencies issued answers to hundreds of “frequently asked questions” telling health insurance companies and employers how to comply.
To combat fraud and abuse, the inspector general at the Department of Health and Human Services has issued guidance documents for hospitals, nursing homes, drug companies and suppliers of medical equipment.
Whistleblowers and government lawyers have often used such guidance documents to show that health care providers committed violations of the False Claims Act to defraud Medicare or Medicaid. They often argue that doctors and hospitals billed the government for services that were not medically necessary or not properly documented.
In view of the new policy, said Lindsey E. Gabrielsen, a lawyer in the Boston office of the law firm Foley & Lardner, the government “will face serious hurdles” in enforcement actions based on violations of health care guidance documents.
Environmental and civil rights lawyers are reaching similar conclusions.
Sidley Austin, a large corporate law firm, recently advised clients that the new Justice Department policy “has major implications” for federal efforts to enforce the Clean Air Act and the Clean Water Act. The Justice Department, Sidley said, “relies heavily on Environmental Protection Agency guidance documents to establish violations of law.”
On civil rights, Barry L. Goldstein, a lawyer in Oakland, Calif., who handles such cases, called the policy shift “extraordinary” and said it was “stepping away from guidelines that have been essential for effective enforcement of civil rights laws for 40 years.”
“The government has successfully used the guidelines to establish violations of fair employment law before the Supreme Court and other courts,” Mr. Goldstein added.
The new policy also has implications for companies that do business with the government.
“Civil prosecutors have one less tool in their enforcement toolbox,” said Emily S. Theriault, a Washington lawyer who represents military contractors. “The Brand memo puts government contractors in a better position when negotiating and defending False Claims Act cases where they are accused of violating a government policy as part of a so-called conspiracy to defraud the U.S. government.”
Ms. Brand, the associate attorney general, worked at the Justice Department under President George W. Bush and later, as a senior member of the litigation team at the U.S. Chamber of Commerce, challenged a handful of federal regulations. When the Senate considered her nomination last year, Senator Patrick J. Leahy, Democrat of Vermont, said she had long championed “the rolling back of vital environmental, consumer and labor regulations.”
But she and her supporters said she was simply representing the views of her client, the Chamber of Commerce. On Friday, the Justice Department announced that she was leaving her post and returning to the private sector. She is taking the top legal position at Walmart.
Lawrence Z. Lorber, a labor law specialist who represents employers, said the Labor Department often used guidance documents in enforcing wage and hour laws and laws banning job discrimination by federal contractors.
Under one such directive, the Labor Department periodically audits the pay practices of federal contractors. If it finds discrimination on the basis of sex or race, it can require employers to provide millions of dollars in back pay to the victims. A separate directive describes how the government will identify victims and calculate back pay.
The Chamber of Commerce, which has complained for years about “overzealous enforcement” of the False Claims Act, welcomed the new policy. The Justice Department “deserves a ton of credit,” said Harold H. Kim, the executive vice president of the chamber’s Institute for Legal Reform.