On January 12, 2021, the Department of Health and Human Services (HHS) issued sweeping new directives regarding the procedures the Department will follow when relying on guidance documents, initiating enforcement actions, making jurisdictional determinations, and allowing prior notice and opportunity to be heard on agency determinations. These directives apply to civil and administrative enforcement proceedings and adjudications and take effect immediately.
First, HHS directed that the Department may not use guidance documents to impose binding requirements or prohibitions on persons outside of the executive branch except as authorized by law or expressly incorporated into a contract. That is, noncompliance with a standard or practice found only in a guidance document will not constitute a violation of the applicable statute or regulation. Further, the Department may refer to a guidance document in a civil enforcement action only if it has notified the public of the guidance in advance.
Second, HHS directed that the Department will only apply standards and practices, including in initiating a civil enforcement action or making an agency decision, that have been publicly stated in a way that would not cause unfair surprise. Of note, HHS defined “unfair surprise” to include when the Department initiates litigation following a lengthy period of conspicuous inaction.
Third, HHS directed that it would only rely on bases of jurisdiction, assertions of new ability to regulate, and new bases of liability if these were previously published in the Federal Register or HHS’s guidance repository. Further, the Department directed that it would not rely on these bases retroactively to conduct occurring before publications.
Fourth, HHS implemented new procedures on prior notice and opportunity to be heard regarding adverse agency determinations. Specifically, before any component of the Department takes any civil enforcement action with respect to a particular entity that has legal consequence for that entity, including by issuing to such a person a notice of noncompliance or other similar notice that has immediate regulatory consequence or the immediate effect of subjecting the person to potential liability, the Department shall afford that person an opportunity to be heard, either orally or in writing, as deemed appropriate at the Department’s election.
These actions address mounting due process concerns regarding agency actions and, assuming they are maintained under the incoming administration, are likely to have wide-ranging effects. These directives do not apply to criminal investigations or prosecutions, or to warning letters, inspectional observations, or other communications intended to provide notice to a party and elicit voluntary compliance.
For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new proposed regulations. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.