Kusserow on Compliance: DOJ ‘Brand’ memorandum

One of the topics discussed at the recent HCCA Compliance Institute related to current DOJ positions regarding compliance guidance. Many questions have been raised since Atty. Gen. Sessions issued a memorandum at the end of last year that intended to implement the new administration’s goal of reducing overregulation. The AG stated, in the past, the DOJ had published guidance documents binding parties outside of the rulemaking process. Additionally, the AG stated that the DOJ was no longer engaged in this practice. Going forward, the DOJ is not to issue guidance documents that purport to create a right or obligation binding a person or entity outside the executive branch of the federal government. As such, guidance documents provided by the DOJ setting up voluntary standards need to clearly state that compliance with such standards would be voluntary—that failure to comply would not, in itself, result in enforcement action.

Earlier this year, Associate AG Rachel Brand issued a memo on behalf of the DOJ prohibiting certain DOJ uses of federal agency guidance documents in affirmative civil enforcement (ACE) cases (the “Brand Memo”). ACE cases include lawsuits brought by the DOJ on behalf of the United States to recover money lost to fraud or other misconduct, or to impose penalties for violations of Federal health, safety, civil rights or environmental laws, for example, False Claims Act (FCA) enforcement by the DOJ.  The Brand Memo stated that the DOJ is now prohibited from using its enforcement authority to effectively convert agency guidance documents into binding rules; and DOJ litigators may not use noncompliance with agency guidance documents as a basis for proving violations of applicable law in these cases. It also prohibits the DOJ from “using its guidance documents to coerce regulated parties into taking any action or refraining from taking any action beyond what is required by the terms of the applicable statute or lawful regulation.” The primary focus of the memorandum was on government contractor cases.

The long and short of this memorandum is that the DOJ can continue to use agency guidance documents  for “proper purposes,” but 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.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.