Those investigating healthcare entities instructed to stick to statutes and regulations

The U.S. Department of Justice (DOJ) has issued another memo likely to help healthcare providers avoid potentially unfair government investigations. 

The Jan. 25 memo from Associate Attorney General Rachel Brand to the heads of all civil litigation components and U.S. Attorney’s offices instructs the government lawyers to refrain from using government “guidance documents” when bringing a case. (When this happens, it is often referred to as “affirmative civil enforcement,” or ACE)

The most common form of affirmative civil enforcement in the healthcare industry are False Claims Act cases, but any civil investigation by the government would also qualify. The memo reads that the government should base its cases on statutes and regulations, not less formal agency guidance. 

In the context of healthcare, the Medicare Manuals and bulletins issued by Medicare Administrative Contractors (MACs) are all considered guidance. As such, this memo means that when a U.S. Attorney’s office brings a case, it should not base its case on anything in the Manuals or MAC guidance; it must premise the claim on the appropriate federal statutes and regulations.    

The memo also says that the government may use the guidance for “proper purposes,” like explaining a legal mandate, and it may also use the fact that someone read the Manuals to show that the person had an intent to violate the law. But the text of a Manual should not be the basis of a government lawsuit.

While this is likely good news for those handling False Claims Act cases, it is important to note that the memo does not render the Manuals irrelevant. Because the memo is only direct to people within the Department of Justice (DOJ), the memo is unlikely to have impact on Medicare overpayment cases until the overpayment case reaches District Court, the level above the Medicare Appeals Council (which is the level above the Administrative Law Judges, or ALJs.) In short, MACs may still try to point to language in the Medicare Manuals to try to recover a Medicare overpayment. Healthcare professionals still can and should argue that the Manuals are not binding. 

The memo also applies in civil cases, and at least some government lawyers have suggested that they will not apply the same thinking in criminal cases. That position is a bit surprising because one could argue that the new DOJ memo should not be news; government agencies are only supposed to use guidance to explain regulation, not to create new rules. Under longstanding law, policies that don’t go through proper notice and comment are not supposed to be binding. However, courts have often given agencies considerable leeway in interpreting regulations. This has resulted in government Manuals getting deference from the courts in some cases. There is a real possibility that the memo will begin to reverse that trend. 

This memo comes shortly after Michael Granston, Director of the Civil Fraud Division at the DOJ, issued a memo instructing U.S. Attorneys to consider dismissing meritless False Claims Act cases. Taken together, the memos may suggest that healthcare professionals will be a bit less likely to face a lengthy court battle over issues that aren’t explicitly covered by a federal law or regulation.

Program Note:

Listen to David Glaser report on this story this coming Monday on Monitor Mondays.

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