On January 3 and January 6, respectively, the Department of Health and Human Services Office of Inspector General (OIG) issued a final rule amending the regulations that govern the agency’s advisory opinion process and a companion Enforcement Policy Statement Regarding OIG’s Assessment of Advisory Opinion Requests (Policy Statement). The final rule marks the first time OIG has amended the regulations since 2008 and may come as a surprise to the industry, as the agency neither signaled its intention to amend the regulations nor engaged in notice and comment rulemaking given that the rule is procedural.
Citing stakeholder frustration and greater transparency, OIG is amending the regulations to remove the provision that requires OIG to reject advisory opinion requests when “the same or substantially the same course of action is under investigation or has been the subject of a proceeding involving HHS or another governmental agency.” This provision was a frequently cited basis for rejection, and its application resulted in requestors receiving rejection letters from OIG without any substantive legal analysis or transparency as to the underlying investigation or proceeding that served as the basis for rejection, often frustrating requestors.
As a result of this amendment, OIG is no longer required—or permitted—to reject requests for advisory opinions under this provision. Instead, unless a requestor withdraws its request or another basis for rejection exists, OIG must now issue an opinion with substantive legal analysis notwithstanding the existence of an active investigation or proceeding.
OIG issued the Policy Statement to clarify that this procedural change gives OIG more flexibility to issue advisory opinions for requests that previously would have been rejected and stressed that the agency “will continue to carefully consider the facts and circumstances of each advisory opinion request.” However, OIG went on to note that the existence of an active government investigation “could, in many circumstances, indicate that the conduct in question is suspect” under the Anti-Kickback Statute and that “the same or similar conduct by other parties could indicate a suspect arrangement.” OIG noted that such facts “would typically weigh against the issuance of a favorable advisory opinion.”
The industry is likely to welcome this change, as it will allow requestors the opportunity to engage with OIG even when the government is investigating similar conduct. The change may also provide requestors under investigation with a strategic advantage. Investigations often take many years, and while the advisory opinion process may be slow and cumbersome, the regulations governing the advisory opinion process require OIG to issue advisory opinions within 60 days after accepting the request, subject to triggering events that toll this time period. An entity that knows or has reason to believe it is under investigation could now submit an advisory opinion request to OIG about the arrangement that is the subject of the investigation and, if the entity receives an unfavorable opinion, challenge that opinion in court by, for example, seeking a declaratory judgment that the conduct described in the unfavorable opinion does not violate the Anti-Kickback Statute. Such a strategy could provide targets of government investigations with an opportunity to challenge the government’s theory of liability in court before the government even files a complaint.
Finally, the timing of the amended regulations also is noteworthy, as OIG promulgated the amendments before the January 31 close of the comment period to its recent Request for Information (RFI), in which OIG specifically sought comments relating to the advisory opinion process. Stakeholders who have concerns or comments about the advisory opinion process should consider commenting before the deadline.
