A recent action by the Department of Justice ("DOJ") rescinds two prior policies (commonly referred to as the Brand Memo and the Sessions Memo) that had established limits on the federal government's use of agency guidance documents in civil enforcement actions against private businesses and individuals.
The new DOJ policy, set out in the Garland Memo, addresses "agency guidance documents," defined as any "statement of general applicability issued by an agency to inform the public of its policies or legal interpretations," which often take the form of "interpretive memoranda and manuals, policy statements, opinion letters of general applicability, and other similar materials." Guidance materials are sub-regulatory statements; they "do not include legislative rules; adjudicatory or administrative actions; rulings; legal advice or trainings directed at other federal agencies; internal policies and guidelines; or litigation filings." The Brand and Sessions Memos had mandated that DOJ attorneys would not rely solely upon such guidance documents to form the basis of affirmative civil enforcement actions. These restrictions stemmed from concerns about backdoor regulation without a public rulemaking process, and the unfairness of contending, for instance in a False Claims Act ("FCA") action, that a defendant has "knowingly" violated the law when the supposed "law" having been violated is a mere piece of sub-regulatory guidance, such as a provider manual.
The new Garland Memo claims these prior limits were "overly restrictive," and "generated collateral disputes and otherwise hampered [DOJ] attorneys when litigating cases where there is relevant agency guidance." Although conceding that "guidance documents do not bind the public," do not "have the force and effect of law," and "an agency guidance document by itself never forms the basis of an enforcement action," the Garland Memo nonetheless authorizes DOJ to make increased use of guidance in court. Now, in particular, "[t]o the extent guidance documents are relevant to claims or defenses in litigation, [DOJ] attorneys are free to cite or rely on such documents as appropriate" in FCA matters or those involving the vast array of other laws DOJ enforces.
The full practical effect of the new policy remains to be seen. In the years since the issuance of the prior memos, defendants in FCA investigations often have pushed to avoid reliance upon such sub-regulatory guidance, yet the government has sought to use it to show that a defendant knew it was violating a particular statute. Certain courts have held that the government cannot establish this element of an FCA claim by using sub-regulatory guidance.
Going forward, health care providers, life science companies, government contractors, and others facing government enforcement or litigation can expect DOJ to make increasing use of guidance, and defendants should be prepared to explain why such guidance does not establish legally binding standards.