Physicians Lawyers

DOJ Limits Use of Agency Guidance in Civil Enforcement

Key Takeaway: Recent federal developments may provide health care providers with additional flexibility in meeting certain regulatory requirements. Most notably, the U.S. Department of Justice (DOJ) has limited how its attorneys may rely on agency guidance in civil enforcement actions, while the Bipartisan Budget Act of 2018 codifies flexibility for several technical Stark Law requirements.

Health care providers have long faced compliance risk where federal agencies issued guidance documents that were later used in enforcement matters as evidence of legal obligations. That approach is changing. In November 2017, U.S. Attorney General Jeff Sessions issued a memorandum stating that DOJ guidance documents may not create binding rights or obligations for parties outside the Executive Branch.

In January, Associate Attorney General Rachel Brand reinforced that position in what is now commonly referred to as the “Brand Memo.” The memo directs DOJ litigators not to use agency guidance documents to create “de facto regulations” and not to prove a violation of law based solely on a party’s failure to comply with guidance.

Why this matters: The change may reduce enforcement risk tied to informal agency interpretations that have not gone through formal rulemaking. DOJ attorneys may still rely on statutes, regulations, and other binding legal authorities, but agency guidance alone should no longer serve as the basis for proving noncompliance.

Stark Law Changes Provide Technical Compliance Flexibility

The Bipartisan Budget Act of 2018 also provides relief for certain technical requirements under the Stark Law. The changes largely codify prior Centers for Medicare & Medicaid Services (CMS) guidance and regulations addressing written agreements, signatures, and holdover arrangements.

The Stark Law generally requires certain physician compensation arrangements to satisfy an applicable exception, many of which include strict writing and signature requirements. Historically, otherwise compliant arrangements could create risk if documentation was incomplete, unsigned, or not contained in a single agreement.

Under the Budget Act, the writing requirement may be satisfied through a “collection of documents,” including contemporaneous records showing the parties’ course of conduct. The Act also allows required signatures to be obtained within 90 days after the arrangement should have been signed, provided the arrangement otherwise satisfies the applicable Stark Law exception.

The Budget Act further allows certain expired office space leases, equipment leases, and personal services arrangements to remain protected during a holdover period, so long as the arrangement continues on the same terms and conditions.

Practical impact: These revisions may help providers avoid disproportionate consequences for technical documentation defects, particularly where the underlying arrangement otherwise complies with Stark Law requirements. Providers should not treat the changes as eliminating documentation obligations, but they may offer useful flexibility when reviewing existing physician arrangements.

Recommended Next Steps for Providers

• Review current physician compensation arrangements, leases, and personal services agreements for documentation gaps.
• Confirm that any reliance on agency guidance is distinguished from binding statutory or regulatory requirements.
• Update compliance policies and training materials to reflect the DOJ’s revised approach to guidance documents.
• Consider whether any unsigned or expired arrangements may be addressed under the new Stark Law flexibility.

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John Fisher is a seasoned health care lawyer with more than 30 years of experience advising physicians and health care providers. His practice spans a wide range of issues, including physician investments in ambulatory surgery centers, concierge and cash-based medical practices, and health care fraud prevention. John is dedicated to helping his clients navigate complex legal challenges while protecting their interests and ensuring compliance in a rapidly evolving industry.

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