New DOJ Policy Prohibits False Claims Act Cases for Violating Agency Guidance Documents
A recently announced Justice Department policy limits the circumstances under which companies can be held liable for violating agency guidance documents. Issued Jan. 25, the policy memo prohibits DOJ lawyers from enforcing agency guidance documents as if they were binding in “affirmative civil enforcement cases,” including False Claims Act lawsuits. The new policy extends across government a policy adopted in November that prohibited DOJ from issuing binding guidance on its own behalf or enforcing its own guidance as binding.
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Effective immediately, for any future affirmative civil enforcement cases and pending cases “wherever practicable,” DOJ lawyers “may not use its enforcement authority to effectively convert agency guidance documents into binding rules,” and “may not use noncompliance with guidance documents as a basis for proving violations of applicable law,” the memo said.
DOJ may continue to use guidance documents “for proper purposes,” like as evidence that a party read a guidance document that paraphrases existing laws or regulations and had knowledge that its acts violated those laws or regulations. But DOJ “should not treat a party’s noncompliance with an agency guidance document” as proof that the party “violated the applicable statute or regulation,” because “agency guidance documents cannot create any additional legal obligations,” the memo said.
The new policy may have a “huge” impact on companies regulated by the Food and Drug Administration, a frequent issuer of guidance documents, said Hyman Phelps lawyers Anne Walsh and Rachael Hunt in a post on FDA Law Blog. “DOJ can no longer base False Claims Act cases on allegations that a company engaged in off-label promotion because it did not meet the requirements set forth in FDA’s Good Reprint Practice Guidance or the draft guidance governing Responses to Unsolicited Requests for Information. It cannot support a theory that products are unapproved because they do not have the documentation recommended in FDA’s guidance on Deciding When to Submit a New 510(k) for a Change to an Existing Device or establishing Preamendment Status,” they said.
The guidance document does not stop FDA from taking administrative action on its own behalf for violations of its guidance documents, the blog post said. “ Perhaps that will change soon. Nevertheless, the impact of the DOJ policy necessarily will extend to FDA enforcement decisions given DOJ involvement in any [affirmative civil enforcement] cases brought to enforce FDA laws,” the lawyers said.