Department of Justice may once again use internal agency guidance to enforce the rule of law

In January 2018, then-Associate Attorney General Rachel Brand issued a memo, known as the Brand Memo, in which she instructed the Department of Justice that it was prohibited from using agency “guidance” documents to prosecute (or even threaten to prosecute) defendants for civil violations, including under the False Claims Act.

The Brand memo came on the heels of a similar memo issued by Attorney General Jeff Sessions. In November 2017, he essentially stated that the DOJ could not create and enforce its own binding policies through guidance documents.

However, the Brand Memo took this one step further, applying it to all agency documents. Take a closer look with the False Claims Act attorneys from Bracker & Marcus LLC.

The Brand Memo

The Brand Memo said that the Department of Justice “may not use its enforcement authority to effectively convert agency guidance documents into binding rules.”

In other words, “binding requirements” for parties dealing with the government could only come from statutes and regulations. Unless the DOJ could point to a specific statute or regulation being violated, it was not supposed to prosecute potential violations, even if they were plainly in violation of notices or other public documents issued by the affected agency.

A deadly arrow had been removed from the DOJ’s quiver.

Almost certainly a complete coincidence, Ms. Brand resigned one month later to take a job as head of global corporate governance at Walmart, a company that was at the time embroiled in federal False Claims Act litigation surrounding allegations that it had filled prescriptions for high doses of opiates, among other pending FCA litigation.

How the Brand Memo Affected Agency Policy

This memo resulted in much upheaval, as prosecuting attorneys routinely rely on agency policies to build their cases against violators.

For example, the Medicare Claims Processing Manual is one of a handful of voluminous documents that attempts to set forth Centers for Medicare & Medicaid Services (CMS) policies for Medicare services and billing.

The Brand Memo called the proper use of this document into question, suggesting that CMS could not simply announce its own policies and procedures. Rather, it would have to go through a long and complicated rule-making process—which included a prolonged notice-and-comment rulemaking process—for every new rule that CMS wanted to implement.

Or, Congress could pass statutes to address the specific issues that concerned CMS.

In other words, the DOJ could no longer actively enforce the instruction manual that every provider in America relied upon for decades when billing Medicare (or other similar agency manuals). It could use these documents to evince scienter (i.e., knowledge that they were breaking the rules), but what good was that if the rules were not binding?

A very rough analogy: imagine that Congress passed a law that said each public school had to serve breakfast to all students, made funds available to each school to pay for the food and service workers, and charged the Department of Education with enforcement.

Then, the Department of Education sent out regulations defining what “breakfast” means, stating that cereal did not count as breakfast, breakfast must be a “hot meal” and contain at least 800 calories. If School A is reimbursed for providing “breakfast” that turns out to be a bowl of cereal and milk, under the Brand Memo, the school could argue that they just had to provide “breakfast” and the rules issued by the Department of Education had no force of law.

The Brand Memo didn’t change the law or give defendants a total free pass, however. The school was still getting paid for providing a breakfast that did not meet the DoE’s definition of a “breakfast.”

The Brand Memo’s Impact on Relators

The bottom line is that even when the violations were fairly clear, the government’s hands were tied by the Brand Memo, which later became official Department of Justice policy in the Justice Manual, § 1-20.000. And so it was up to private relator’s counsel—who are not bound by the Brand Memo—to prosecute these violations under the qui tam provisions of the False Claims Act.

The government was not even permitted to threaten bad actors who were clearly violating agency policies unless those policies were “binding” with the force of the law behind them. Many a letter was written by corporate counsel in the wake of the Brand Memo stating, in layman’s terms, “Na na na na boo boo, you can’t catch me.”

Attorney General Rescinds Memos, Restores Some Power to Policy

On July 1, 2021, Attorney General Merrick Garland signed his own memo that rescinded the earlier memos by Jeff Sessions and Rachel Brand in an attempt to restore some sanity to this process. It still, logically, notes that guidance documents are just that—guidance. Something purporting to be guidance cannot also be a binding rule.

However, guidance can certainly educate the public on the agency’s understanding and interpretation of existing rules.

For example, under federal statute and regulations, Medicare will only reimburse providers for a service that is medically reasonable and necessary. You should not be able to inject a patient with applesauce and get paid for it. You should not be able to perform a knee replacement on someone with a tiny bit of arthritis and get paid for it.

Other questions about what is and is not covered can be more gray and nuanced. It is guidance documents that set the basic ground rules for understanding and applying a much broader regulation such as this one.

Competent Counsel Still Invaluable

With the new memo issued by Attorney General Garland, the Department of Justice is now again free to enforce the law and the rules the agencies themselves put into place.

However, this development doesn’t negate the need for experienced counsel. When reporting fraud or defending oneself from whistleblower retaliation, Bracker & Marcus is still prepared to represent relators nationwide.