As we previously reported here, on January 25 Associate Attorney General Rachel Brand issued a memo (the “Brand Memo”) reiterating DOJ’s new position that its litigators cannot use noncompliance with agency guidance documents as evidence of a legal or regulatory violation.
In a recent speech at the Federal Bar Association Qui Tam Conference, Deputy Assistant Attorney General Stephen Cox expanded upon the Brand Memo’s principles. In that speech, Cox linked the Brand Memo to the Administration’s broader efforts to achieve regulatory reform and explained its extension from the “Sessions Memo” prohibitions on DOJ issuing guidance documents that impose supposed legal requirements absent notice-and-comment rulemaking. Cox confirmed that while the Brand Memo “makes clear that [DOJ] won’t be using noncompliance with a guidance document to prove a violation of the applicable statute or regulation,” he went on to explain the circumstances under which “a guidance document can be used properly without undermining the policy.” For example, according to Cox, DOJ can use a defendant’s knowledge of an agency guidance document that “simply paraphrases and explains, in layman’s terms, the requirements to comply with [a] regulation,” compliance with which is material to the government’s payment decision and false certification of compliance with that regulation as evidence that the defendant acted with the intent required to violate the False Claims Act. By contrast, however, Cox assured that DOJ would not use noncompliance with “additional requirements or prohibitions” set forth in agency guidance that “go beyond what the regulation actually says” as evidence of a violation of the regulation itself. Exploring a hypothetical that falls perhaps in the “gray” between those extremes, Cox explained that simply because an agency issues guidance purporting to clarify an “ambiguity in the law,” DOJ will not necessarily conclude that a defendant who received that guidance acted with the intent necessary to violate the False Claims Act. Rather, that conclusion will be based, according to Cox, on an evaluation of the facts and circumstances regarding the reasonableness of a defendant’s interpretation of an ambiguous regulation.
Cox then turned to addressing the January memo from Mike Granston (the “Granston Memo”) (previously reported here), which sets forth DOJ’s approach to dismissal of non-intervened qui tam suits. Cox noted that DOJ intervenes in only about 1 of 5 qui tam cases filed, and cited the time and resource drain associated with the non-intervened suits, the possibility that those suits would produce “bad law,” and the “interest of justice” in not forcing defendants to defend meritless cases as among the important reasons for DOJ to seek to dismiss appropriate cases.
A copy of Cox’s speech can be found here.