Sean Weiss: Because we’re talking about the impact of the executive orders and the might of the pen, and it seems that Attorney General Garland produced a memorandum on the Justice Department communications with the White House, and this was released on Wednesday, July 1, 2021, and what it basically says is: “The success of the Department of Justice depends on the trust of the American people. … That trust must be earned every day and we can do so only through our adherence and the long-standing departmental norms of independence from inappropriate influences, the principled exercise of discretion, and the treatment of like cases alike.” So I don’t mean to smirk or chuckle through some of that, but I’m going to stop because I really want your position and I want folks to hear your analysis on this.
Ron Chapman II: Let’s lay the groundwork here, please, so that everybody can understand how important this is to their daily operations. And I’ll go back through it just like I did with executive power. So, agencies like CMS and departments have the ability to create rules that bind private organizations, public organizations, and specifically, in the healthcare context, we have rules that are promulgated, meaning they go through their formal rulemaking process. And that’s the way that an agency can address a matter of importance, using its specified knowledge that it has as an agency. And this makes sense; we can’t have Congress getting together every time a Medicare rule needs to be changed. Nothing would ever get done in our society, and we wouldn’t be able to have an effective system of laws.
So we’ve created administrative regulations, and we’ve delegated creating those regulations to the agencies. And the agencies just have one responsibility to go through, and that is, they have to publish the regulation, they have to allow a notice and comment rule period, and people’s voices can be heard and entities’ voices can be heard about those regulations, in order to make sure that they are sort of forged in at least some fire of due process. And this is really a due process proceeding.
Well, that’s great, but there’s also this other thing that has happened. Agencies have decided to write unofficial guidance documents; the Medicare claims processing manual is probably the one that impacts most of the people that are listening to us today. They write informal guidance documents, and then what they do is they tie them to administrative regulations. Everybody who bills Medicare signs an 855, or some form of it, and agrees to abide by Medicare’s rules and regulations. Medicare’s rules and regulations include, according to agency precedent, the Medicare claims processing manual. So essentially, the Medicare claims processing manual has become a regulation in and of itself, because it’s been tied to a regulation. Now, what we’ve done when we do that is, we require everybody who operates in the health care system to abide by a book that was drafted by people and didn’t go through a formal due process rulemaking proceeding.
There’s a case, Azar v. Allina, and in that case, the Supreme Court very clearly said that these manuals, these books, these papers published by CMS, these things that you and I — compliance professionals — pour over to see how the agency is interpreting its regulations, they can’t be used to bind a private entity. So, no more can a federal prosecutor go into court and say, you violated Section IB 1.1(C), paren 4, of the Medicare claims processing manual, and therefore you owe us $20 billion. And you think I’m joking right now, [but] that’s how it actually how it happens.
So the Supreme Court very clearly said that — and that’s why I like the composition of the court these days, because they’re capable of making the hard decisions — they say, “Listen, an author of a manual that was published by the government does not have any more rulemaking authority than you or I.” So that case comes out, and in order to make sure that federal prosecutors are adhering to that case, Azar v. Allina, [Attorney General] Jeff Sessions and [Associate Attorney General Rachel] Brand … knowing that Azar v. Allina was about to be precedent, they wrote memos. And those memos say — consistent with what President Trump tried to do in cutting bureaucratic red tape — they say that federal prosecutors can’t use documents that didn’t go through the formal rulemaking process in order to bind parties. So in False Claims Act litigation, in healthcare fraud litigation, and even in some of CMS’s own internal administrative proceedings related to exclusion or monetary penalties, you can’t use these unpromulgated documents.
Well, fast-forward to Merrick Garland being the attorney general of the United States and President Biden being the president, we see in August — I think August 21, I think it was originally maybe published August 1 — a memo that comes out that is very, very unclear. Let’s just start there. The memo recognizes Allina, it recognizes the Brand memo, and it recognizes the now long-held precedent that unpromulgated guidance documents do not have the force and effective law. It recognizes that. But it also encourages prosecutors to use those documents to show scienter — meaning knowledge of regulations to show intent that you broke the regulation — to also inform judges as to an agency’s position on how those regulations must be interpreted. I think [Justice Antonin] Scalia once wrote a long time ago [in Auer v. Robbins] that an agency does not have the ability to interpret its own regulations in that context, through unpromulgated documents. But I think Merrick Garland appears to be taking a run at that with his new memo.