Three Important DOJ Memos: The Sessions Memo, Brand Memo, and Garland Memo

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In Allina v. Azar the Supreme Court determined that agency guidance that does not undergo the formal rulemaking process cannot be binding on private entities. This was a landmark decision and halted the use of the use of such documents in healthcare fraud and false claims act cases. Three memos from the DOJ resulted from that case: the Sessions Memo, the Brand Memo, and the Garland Memo. Each had a different take on the impact of that case. Each is vitally important to your practice, how you bill, and how you determine liability for potential healthcare fraud and false claims actions. 

The Sessions Memo 

Guidelines without a formal rulemaking process or act of legislation are de facto regulations and agency guidance documents, non-binding on parties. On November 16, 2017, former United States Attorney General Jeff Sessions authored a memorandum entitled Prohibition on Improper Guidance Documents (“Sessions Memo”). It reminded components of the Department of Justice that guidance documents had not gone through the rule-making process and could not be issued or used to bind private parties. The actual language states, “Effective immediately, Department components may not issue guidance documents that purport to create rights or obligations binding on persons or entities outside the Executive Branch (including state, local, and tribal governments).”

The Sessions Memo was intended to prevent DOJ components from evading required rulemaking processes by using guidance memos to create de facto regulations. Therefore, while guidelines may exist from entities, such as CMS, they are not statutes having gone through a legislative or formal rulemaking process, and if they are going to be used by prosecutors, they should be used as nothing more than to say the individual(s) had knowledge of the guidelines and violated them but did not violate the law. Only those documents that have gone through the legislative and rulemaking processes that have been implemented via statutory and regulatory guidance should be relied on. Those documents that have not gone through the above formal process should not be used to create or establish obligations or rights with respect to regulated private parties. The actual language states, “[e]ffective immediately, Department components may not issue guidance documents that purport to create rights or obligations binding on persons or entities outside the Executive Branch (including state, local, and tribal governments).”

The Brand Memo 

As a follow-up to the Sessions Memo, Associate Attorney General, Rachel Brand, issued her own memorandum (“Brand Memo”) directed at the use of guidance documents in False Claims Act and other affirmative civil enforcement cases, however, the principles should also be applicable to criminal enforcement actions. The Brand Memo made it clear that the principles set out in the Sessions Memo should also be followed by DOJ prosecutors when determining whether guidance documents issued by other federal agencies should be considered “binding” when the requirements set out in the guidance documents are not supported by existing statutes and/or regulations. The Brand Memo states: “The Department should not treat a party’s noncompliance with an agency guidance document as presumptively or conclusively establishing that the party violated the applicable statute or regulation. That a party fails to comply with agency guidance expanding upon statutory or regulatory requirements does not mean that the party violated those underlying legal requirements; agency guidance documents cannot create any additional legal obligations.”

Then, in 2018, the Justice Department updated the United States Attorney Manual, renaming it the Justice Manual, and along with the above referenced memos, it addressed De-facto Regulations and Agency Guidance Documents. Justice Manual section 1-19.000 addresses the limitations on issuance of guidance documents while section 1-20.000 focuses on the USE of guidance documents issued by other federal agencies in litigation. It provides, “Criminal and civil enforcement actions brought by the Department must be based on violations of applicable legal requirements, not mere noncompliance with guidance documents issued by federal agencies, because guidance documents cannot by themselves create binding requirements that do not already exist by statute or regulation.”

Justice Manual § 1-20.201 instructs that if an agency guidance document describes a statutory or regulatory provision, federal prosecutors are permitted to use and rely on such agency guidance documents to argue that a party’s awareness of the guidance document shows that the party had the requisite notice or knowledge of the law. Section 1-20.202 further provides that an agency guidance document can be used as probative evidence that “a party has satisfied, or failed to satisfy, professional or industry standards or practices relating to applicable statutory or regulatory requirements,” and that this rationale applies “broadly in the healthcare arena” expressly citing guidance documents issued by the Centers for Medicare and Medicaid Services (“CMS”) such as the agency’s Medicare Benefit Policy Manual and Local Coverage Determinations (“LCDs”) as relevant evidence that procedures may (or may not) be medically reasonable and necessary.

The Garland Memo

Shortly after taking office, Merrick Garland elected to strip the prior protections Sessions and Brand offered to potential false claims and healthcare fraud defendants. While still bound by the Supreme Court decision in Allina v. Azar, he wanted to erase the prior administrations efforts to ensure enforcement actions were based on actual promulgated guidance. On July 1, 2021 he issued the Garland Memo which respects the Azar decision but claims that DOJ prosecutors can use unpromulgated guidance documents as evidence of scienter or to convince a judge and jury that the provider knew the rules and intended to break them. 

The impact of the Garland Memo is that DOJ prosecutors will continue to apply guidance documents that were authored by agencies but did not go through the formal rulemaking procedure as evidence in enforcement actions. Just as before, non-compliance with an LCD, NCD, or the Medicare Claims Processing Manual may be the basis of federal prosecution.

Azar v. Allina: The Truth About Medicare Coverage Determinations, LCD’s and NCD’s
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Three Important DOJ Memos: The Sessions Memo, Brand Memo, and Garland Memo

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

In Allina v. Azar the Supreme Court determined that agency guidance that does not undergo the formal rulemaking process cannot be binding on private entities. This was a landmark decision and halted the use of the use of such documents in healthcare fraud and false claims act cases. Three memos from the DOJ resulted from that case: the Sessions Memo, the Brand Memo, and the Garland Memo. Each had a different take on the impact of that case. Each is vitally important to your practice, how you bill, and how you determine liability for potential healthcare fraud and false claims actions. 

The Sessions Memo 

Guidelines without a formal rulemaking process or act of legislation are de facto regulations and agency guidance documents, non-binding on parties. On November 16, 2017, former United States Attorney General Jeff Sessions authored a memorandum entitled Prohibition on Improper Guidance Documents (“Sessions Memo”). It reminded components of the Department of Justice that guidance documents had not gone through the rule-making process and could not be issued or used to bind private parties. The actual language states, “Effective immediately, Department components may not issue guidance documents that purport to create rights or obligations binding on persons or entities outside the Executive Branch (including state, local, and tribal governments).”

The Sessions Memo was intended to prevent DOJ components from evading required rulemaking processes by using guidance memos to create de facto regulations. Therefore, while guidelines may exist from entities, such as CMS, they are not statutes having gone through a legislative or formal rulemaking process, and if they are going to be used by prosecutors, they should be used as nothing more than to say the individual(s) had knowledge of the guidelines and violated them but did not violate the law. Only those documents that have gone through the legislative and rulemaking processes that have been implemented via statutory and regulatory guidance should be relied on. Those documents that have not gone through the above formal process should not be used to create or establish obligations or rights with respect to regulated private parties. The actual language states, “[e]ffective immediately, Department components may not issue guidance documents that purport to create rights or obligations binding on persons or entities outside the Executive Branch (including state, local, and tribal governments).”

The Brand Memo 

As a follow-up to the Sessions Memo, Associate Attorney General, Rachel Brand, issued her own memorandum (“Brand Memo”) directed at the use of guidance documents in False Claims Act and other affirmative civil enforcement cases, however, the principles should also be applicable to criminal enforcement actions. The Brand Memo made it clear that the principles set out in the Sessions Memo should also be followed by DOJ prosecutors when determining whether guidance documents issued by other federal agencies should be considered “binding” when the requirements set out in the guidance documents are not supported by existing statutes and/or regulations. The Brand Memo states: “The Department should not treat a party’s noncompliance with an agency guidance document as presumptively or conclusively establishing that the party violated the applicable statute or regulation. That a party fails to comply with agency guidance expanding upon statutory or regulatory requirements does not mean that the party violated those underlying legal requirements; agency guidance documents cannot create any additional legal obligations.”

Then, in 2018, the Justice Department updated the United States Attorney Manual, renaming it the Justice Manual, and along with the above referenced memos, it addressed De-facto Regulations and Agency Guidance Documents. Justice Manual section 1-19.000 addresses the limitations on issuance of guidance documents while section 1-20.000 focuses on the USE of guidance documents issued by other federal agencies in litigation. It provides, “Criminal and civil enforcement actions brought by the Department must be based on violations of applicable legal requirements, not mere noncompliance with guidance documents issued by federal agencies, because guidance documents cannot by themselves create binding requirements that do not already exist by statute or regulation.”

Justice Manual § 1-20.201 instructs that if an agency guidance document describes a statutory or regulatory provision, federal prosecutors are permitted to use and rely on such agency guidance documents to argue that a party’s awareness of the guidance document shows that the party had the requisite notice or knowledge of the law. Section 1-20.202 further provides that an agency guidance document can be used as probative evidence that “a party has satisfied, or failed to satisfy, professional or industry standards or practices relating to applicable statutory or regulatory requirements,” and that this rationale applies “broadly in the healthcare arena” expressly citing guidance documents issued by the Centers for Medicare and Medicaid Services (“CMS”) such as the agency’s Medicare Benefit Policy Manual and Local Coverage Determinations (“LCDs”) as relevant evidence that procedures may (or may not) be medically reasonable and necessary.

The Garland Memo

Shortly after taking office, Merrick Garland elected to strip the prior protections Sessions and Brand offered to potential false claims and healthcare fraud defendants. While still bound by the Supreme Court decision in Allina v. Azar, he wanted to erase the prior administrations efforts to ensure enforcement actions were based on actual promulgated guidance. On July 1, 2021 he issued the Garland Memo which respects the Azar decision but claims that DOJ prosecutors can use unpromulgated guidance documents as evidence of scienter or to convince a judge and jury that the provider knew the rules and intended to break them. 

The impact of the Garland Memo is that DOJ prosecutors will continue to apply guidance documents that were authored by agencies but did not go through the formal rulemaking procedure as evidence in enforcement actions. Just as before, non-compliance with an LCD, NCD, or the Medicare Claims Processing Manual may be the basis of federal prosecution.

Azar v. Allina: The Truth About Medicare Coverage Determinations, LCD’s and NCD’s
Read more
CMS Seven Core Compliance Program Requirements + CCG Services
Read More
Previous
Next

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