On Monday (January 28, 2019), immediately after the federal government shutdown ended, Deputy Associate Attorney General Stephen Cox delivered a keynote address at a False Claims Act conference in New York in which he highlighted and explained some recent U.S. Department of Justice (DOJ) policy changes “concerning the issue of rulemaking by guidance.”  

Cox’s speech offers some context for DOJ’s recent policy shifts in this area.  In addition, the speech provides some further elaboration concerning the circumstances in which DOJ litigators may rely upon so-called subregulatory agency guidance documents in litigation.[1] 

The recent DOJ policy changes are described in detail in my blog post of January 14, 2019 (“Reconsidering the Legal Status of Agency Guidance”).  In brief, DOJ made two additions late last year to the Justice Manual (formerly known as the U.S. Attorneys’ Manual).  The revisions incorporate the substance of two recent DOJ directives that limited DOJ lawyers’ leeway to use agency guidance documents to seek to regulate private parties (or other persons and entities outside the Executive Branch[2]) beyond the specific mandates of duly promulgated federal statutes and regulations.  The first of the two directives is the Sessions Memo, signed by then-Attorney General Jeff Sessions in November 2017.  The second directive is the Brand Memo, signed by then-Associate Attorney General Rachel Brand in January 2018. 

In brief:

1.     Cox emphasized that in issuing the Sessions and Brand Memos, DOJ had intended to be “informative to other agencies,” “as an example for other agencies to follow.”  Some agencies have already “followed the Department’s lead”; and “[w]e hope other agencies follow suit.  These policies keep government restrained and promote the rule of law, fair notice, and due process.”

2.     Cox noted that, as the revised Manual indicates, the principles of the Brand Memo apply “not only in False Claims Act and civil enforcement cases, but also in criminal actions now.”

3.     Cox highlighted some significant limits on the permissible uses of agency guidance documents that are described in the revised Manual. 

For instance, the Manual provides that “[s]ome guidance documents may be relevant to professional standards that are incorporated into statutes,” such as the requirement that procedures billed to Medicare and Medicaid be medically “reasonable and necessary.” Cox emphasized that any such guidance document merely “discuss[es] an agency’s non-binding views,” and that although agency guidance “can have probative weight” (i.e., “may have some probative value”), it is “not necessarily more probative than guidance from the industry.”  In other words, agency guidance should be treated “just like other statements of medical standards—such as professional standards from the medical industry or expert testimony.” 

More generally, Cox emphasized that the Manual’s examples of permissible uses of agency guidance are each limited by – and “need to line up with” – “the general principle that we’re not going to use ‘violations’ of nonbinding guidance documents to establish a violation of law.  Guidance is not law.  It’s not binding.  And it shouldn’t be given the force or effect of law.”  Indeed, agency guidance cannot even serve as “a thumb on the scale” in determining what “a statute or regulation means.”

This means, for example, that the Manual goes only so far when it provides that agency guidance can be used “to show the defendant’s awareness of an agency’s interpretation of a particular requirement or the agency’s views on the materiality of that requirement.”  As Cox pointed out, “[t]his is not to say that the guidance will carry the day—just because a company knows an agency’s nonbinding interpretation of the law does not mean it’s correct or that the company’s interpretation is unreasonable.”  As Cox had said in a previous speech in 2018:  “Sometimes a statute or regulation can be reasonably interpreted in different ways, and if an agency wants to make its own interpretation binding on the public, it should do so through the requisite rulemaking process.”

[1] Cox’s speech deals with a number of other topics of considerable interest to False Claims Act practitioners in particular, which are not discussed here.

[2] Such persons and entities may include state, local, and tribal government officials and agencies.