Senate’s Investigation into Agency Guidance Overlooks a Larger Problem

As Sarah Benator wrote about in the May 19 blog post titled, Will Senate Committee’s Investigation of Agencies’ Use of “Guidance” Benefit Health Care Providers?, the Chairman of the U.S. Senate Committee on Health, Education, Labor, and Pensions recently started an investigation into whether agency “guidance” is being used as a means to impose obligations on the public while circumventing the formal rule making process.

A formal investigation into this issue is a welcome development for the health care industry; however, it is unlikely to address a related, and perhaps more questionable, form of underground rulemaking: enforcement agencies imposing unpublished, unpublicized interpretations of statutes, regulations – and even guidance documents – on industries. We have seen this on several occasions in the Department of Justice’s (DOJ) enforcement of the fraud and abuse laws, particularly the Stark Law. These interpretations of the law are particularly concerning when DOJ’s position appears to change over time and/or differ from the position of the regulatory agency charged with interpreting the regulations at issue. In any event, there is no notice and comment rulemaking; nor is there any independent/judicial review of whether the interpretation is reasonable.

In some instances, DOJ’s position is revealed only when a health care provider is sitting across the negotiation table after a qui tam action has been filed. Because these cases often settle and never get before a court, the only persons who learn about DOJ’s interpretations are the defendants – not the broader public. Even when a case is settled, there is no specific description of how the DOJ intended to apply the law to the facts in the case. With so few cases going to trial, case law precedent is rare. Other health care providers are kept in the dark as to how DOJ will enforce the law.

Anyone operating in a highly regulated industry, like health care, should welcome the currently proposed investigation into how agency guidance is being enforced as regulation. Let’s hope that the investigation will go even further to address these related issues as well.