New Limitations on Guidance Documents Expected to Have Heavy Effect on Industry

The Trump Administration recently adopted new limits on the use of “guidance documents” issued by federal agencies. Various industries use the applicable guidance documents to better understand the government’s interpretation of laws, and as such, this may have a sweeping effect on industry compliance measures.

The revised policy piggybacks off of a previous memo issued by Attorney General Jeff Sessions that prohibited the Agency from issuing guidance documents that effectively bind the public without undergoing the notice-and-comment rulemaking process. This means that the DOJ was unable to issue guidance documents that effectively created rights or obligations that were binding on those outside of the Executive Branch, or to create binding standards by which the DOJ determines compliance with already existing statutory or regulatory requirements.

Under the revised policy, issued by Rachel L. Brand at the Department of Justice (DOJ), the Agency will not “use its enforcement authority to effectively convert agency guidance documents into binding rules.” Guidance documents are not permitted to “create binding requirements that do not already exist by statute or regulation.” Additionally, DOJ lawyers representing the government in court “may not use noncompliance with guidance documents as a basis for proving violations of applicable law,” a common tactic previously used.

The guidance documents may be used for “proper purposes” in cases, such as by using them to explain or paraphrase legal mandates from existing statutes or regulations, or to use evidence that a party read such a guidance document to help prove that the party had requisite knowledge of the mandate.

Brand goes on to note that the DOJ “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.” Just because a party does not comply with the agency guidance that expands upon a statutory or regulatory requirement does not mean that the party violated those underlying legal requirements – agency guidance documents are not permitted to create any additional legal obligations.

This policy applies to future actions brought by the DOJ and – wherever practicable – to any matters pending as of January 25, 2018.

As such, defense attorneys seem to be pleased with this change, saying that it gives them a tool to help fend off wrongdoing allegations against their clients.

Benjamin C. Mizer, a former DOJ official, said that the new policy “may significant affect cases involving the health care and life science industries” because the Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS) heavily rely on guidance documents in court proceedings and other allegations of wrongdoing.

Lindsey E. Gabrielson, a lawyer in the Boston office of Foley & Lardner, stated that the government will now “face serious hurdles” in enforcement actions based on violations of health care guidance documents. Barry L. Goldstein, a lawyer based in Oakland, California, referred to the shift as “extraordinary.”