A 2017 executive order may have an impact on healthcare-related False Claims Act cases.
One month into his administration, President Trump signed an executive order “to lower regulatory burdens on the American people.” The order required each federal agency to designate a Regulatory Reform Officer and establish a Regulatory Reform Task Force to review existing rules and eliminate those considered to be outdated, unnecessary, too costly, or otherwise inappropriate.
To further the president’s directive, this past November, Attorney General Jeff Sessions issued a memorandum to Department of Justice (DOJ) components prohibiting improper use of “guidance documents.” He stated that agencies may use such memoranda and other documents to help explain legal requirements, but that “guidance may not be used as a substitute for rulemaking and may not be used to impose new requirements on entities outside the executive branch.”
The DOJ “has in the past published guidance documents … that effectively bind private parties without undergoing the rulemaking process,” the attorney general wrote, but as of now “the department will no longer engage in this practice.”
Following the announcement of this new guidance policy, DOJ released a list of 25 documents that the attorney general had deemed “unnecessary, inconsistent with existing law, or otherwise improper. The list includes six old documents relating to the Bureau of Alcohol, Tobacco, and Firearms; 10 documents addressing the Americans with Disability Act; three concerning immigration policies; and six other documents on miscellaneous subjects.
In a similar vein, Secretary of Education Betsy DeVos rescinded 72 of her department’s policy documents that were deemed unnecessary or outdated. These included an Obama Administration guidance document concerning transgender student use of restrooms and many others relating to students with disabilities.
Effect on Healthcare
None of the rescinded DOJ or Department of Education (DOE) documents related directly to healthcare issues, but a Jan. 25 memorandum from Associate Attorney General Rachel Brand to United States attorneys and DOJ litigators makes clear that guidance documents are not to be used by the government in civil enforcement actions. As an example, the memorandum states that the policy “applies when the department is enforcing the False Claims Act, alleging that a party knowingly submitted a false claim for payment certifying compliance with material statutory or regulatory requirements.”
Guidance documents have often been cited in healthcare-related False Claims Act cases to help prove or disprove a party’s case. Thus, even though the DOJ policy does not apply directly to the Department of Health and Human Services (HHS) or the Centers for Medicare and Medicaid Services (CMS), government litigators would be guided by it in determining the relevance of HHS or CMS guidance. This has caused concern among some commentators.
Typical of these reactions is a published comment from Benjamin C. Mizer, a former Justice Department official who now works at the Jones Day law firm, that the policy “may significantly affect cases involving the health care and life sciences industries.” Other published comments include that the government is stepping away from 40 years of experience, that it will face serious hurdles in its enforcement efforts as a result, and that the consequences could be “sweeping.”
On the other hand, attorneys for hospitals and physicians may find that the DOJ policy will aid them in defending their clients, and organizations that are the frequent target of government litigation also may welcome the new policy. For example, Harold Kim of the U.S. Chamber of Commerce said the DOJ “deserves a ton of credit” for their efforts to rein in “overzealous enforcement.”
HHS and CMS Regulatory Reforms
HHS and CMS did not reply to this writer’s inquiries about their reactions to the DOJ policy. A search of the CMS website for “guidance documents” resulted in hundreds of hits including a page titled “ Executive Order Guidance.” That page was last updated in October 2016, before President Trump took office.
Clearly, the hundreds of thousands of pages in Medicare and Medicaid regulations and manuals contain many bits of guidance that could stand to be rescinded or revised. Add to this the innumerable regulations of the Food and Drug Administration, Public Health Service, Centers for Disease Control and Prevention, and the many other agencies and offices of HHS, and one can sense the magnitude of the regulatory reform challenge.
In October 2017, Deputy HHS Secretary Eric Hargan addressed the U.S. Chamber of Commerce on the subject, saying that regulatory reform is a concept that warms his heart and that “HHS has developed a robust strategy” for dealing with it. That strategy includes CMS’s Patients Over Paperwork (PoP) initiative.
CMS Administrator Seema Verma has called the PoP initiative a “collaborative process that evaluates and streamlines regulations with a goal to reduce unnecessary burden, increase efficiencies, and improve the beneficiary experience.” Speaking at the Learning and Action Network last fall she pointed out that CMS publishes nearly 11,000 pages of regulations every year and estimated that an average size hospital dedicates 59 FTEs to regulatory compliance, many of whom are doctors and nurses. “That’s a lot of provider time, money, and resources,” she said.
Given the magnitude of the challenge, it is not surprising that various stakeholders and legal experts note that little progress toward regulatory reform has been made despite the initial enthusiasm. Some minor changes have been made in CMS quality programs, the Merit-based Incentive Payment System for physicians, Medicare Administrative Contractors’ documentation requirements, and other areas, but there has been no overt rescission of guidance documents, as there was at the DOJ and DOE. The most visible result has been the publication of monthly newsletters that describe the efforts being made and how to register to receive updates.
One source stated, “When the president took office, there was a lot of noise about regulatory reform, but since then a lot of nothing, at least as far as healthcare is concerned.”
What to Watch For
Because healthcare is perhaps the most heavily regulated sector of the U.S. economy, CMS’s reform efforts hold the potential to lessen the regulatory burden on all Americans. The agency is committed to putting patients first, increasing the number of satisfied customers (e.g., clinicians, institutional providers, and health plans), decreasing the costs of compliance, and increasing the proportion of tasks that can be accomplished “in a completely digital way.”
It is a huge task, and it remains to be seen how well it can be achieved. Healthcare leaders can stay ahead of changes by subscribing to publications like the PoP Initiative newsletters and follow developments on the various CMS websites listed in the resources section below.
Executive Order 13777 of Feb. 24, 2017, “ Enforcing the Regulatory Reform Agenda”
Associate Attorney General Brand’s memorandum, Jan. 25, 2018
U.S. Chamber, “ A Smarter and More Rational Approach to Enforcement”