A basic due-process principle for which Washington Legal Foundation has fought for over 40 years is fair notice of one’s responsibilities under the law. Americans can run afoul of hundreds of thousands of laws and regulations, as well as guidance and other informal documents. Government can enforce many laws and regulations through both civil and criminal proceeding. Business entities, just like individuals, deserve fair notice of what is against “the law.” That’s why we’ve worked to popularize the concept of business civil liberties.
One source of rules mentioned above—informal guidance—can easily escape the notice of individuals and businesses. Guidance in the form of letters, internet postings, agency amicus briefs, and advisory opinions need not adhere to the federal Administrative Procedure Act and similar laws at the state level. Regulators can adopt informal guidance without offering public notice or soliciting and reviewing public comment.
Over the past three years, the U.S. Department of Justice has instituted policies that recognize the fair-notice problem posed by enforcing informal guidance. Several senior-level memos directed prosecutors to refrain from civil and criminal enforcement of guidance documents. In 2018, the policies underlying those memos became a formal part of the “Justice Manual” the DOJ’s guide to prosecutors.
As former U.S. Attorney for Utah, Brett Tolman, notes in a Bloomberg Law United States Law Week piece, those important reforms came too late to help those convicted of failing to follow informal regulatory guidance. He spotlights the case of Todd Farha, former CEO of WellCare. Mr. Farha was charged and convicted of defrauding Florida’s Medicaid program because his company’s conduct didn’t conform to informal “guidance” found in the state Medicaid agency’s letters and calculation templates. WLF has examined numerous troublesome aspects of Mr. Farha’s prosecution, including courts’ improper deference to agency determinations (here) and courts’ refusal to hold prosecutors’ to a higher standard of criminal intent (here and here).
Another federal agency, the Office of Information and Regulatory Affairs, a part of the Office of Management and Budget, has recently released a set of “best practices” that federal agencies should embrace when enforcing the law. Mr. Tolman briefly discusses the memo in his Bloomberg piece. Another former U.S. Attorney (for Nevada), Gregory Brower, and fellow Brownstein Hyatt Farber Schreck shareholder Carrie Johnson, describe the memo and what impact it could have in an October 16 WLF Legal Opinion Letter.
After briefly reviewing the memo’s ten pronouncements, Brower and Johnson note:
While these best practices may seem obvious, anyone who has ever represented a client in the context of a federal enforcement action will welcome the Administration’s acknowledgment that basic concepts of fundamental fairness and due process can too often get lost in the zealousness with which many agencies pursue enforcement actions. However, it is not yet clear whether the various agencies will formally adopt these best practices. Some will receive the Memo as mere recommendations that are largely being followed already and that lack the force of law. The more interesting question is whether and how targets of DOJ criminal investigations leverage the Memo.
Whatever the ultimate impact of the Memo on actual government investigations going forward, it is refreshing to see the executive branch at least acknowledge that basic principles of fairness and due process should apply to the enforcement of federal laws and regulations.