Informal Rule Making
Notice and comment rule making is very time consuming and expensive. It is not unusual for years to elapse between the initial proposed rule and the final rule. Agencies are empowered to issue guidelines and other documents to help regulated entities. These do not have the same legal force as formal rules, but they can be done quickly and cheaply. The Equal Employment Opportunity Commission and the DOJ have issued several documents clarifying the Americans with Disabilities Act. HCFA and its OIG have issued documents such as the Compliance Plan for Hospitals that provide guidance on how the agency views the law and what an entity will need to do to show compliance with the law.
Some agencies will give advice on specific problems posed by a regulated entity. The Internal Revenue Service (IRS) has the most extensive program through its letter rulings. These are rulings that are binding for the specific persons and transactions addressed in the ruling, but are not legally binding precedents for other transactions. For example, a not-for-profit hospital wants to partner with a physician group and start an ambulatory surgical center. The hospital is concerned that this might jeopardize its not-for-profit status. It can request a letter ruling from the IRS based on a detailed description of the transaction. The IRS will advise it on the potential tax issues and how the IRS will view them.
Given the complex regulations in medical care, and the Draconian consequences of noncompliance, this process is very important for medical care practitioners. In addition to the IRS, the DOJ will give advisory opinions on potential antitrust problems, and the HCFA OIG now provides advisory opinions on potential fraud and abuse issues and other HCFA regulatory matters. These are not binding in the way that IRS letter rulings are, but they are very strong evidence of the views of the agency. It would be surprising if the agency were to take enforcement action against an entity that had a clean bill of health in an advisory ruling.
The most important consideration in requesting agency advice is the timing: you should do it before you enter into the transaction. The agencies make it clear that this is not a mechanism for immunizing past violations. They are free to investigate any existing transaction they learn about through the request for an advisory ruling. Since the request for advice does show good faith in trying to determine how to comply with the law, it is probably better to request an opinion on a questionable practice than to continue it and hope it is not discovered. These opinions should never be requested without the assistance of counsel who can ensure that the issues are properly framed so the agency will address all of them. If an issue is not directly addressed by the advisory opinion, the requester cannot rely on the opinion in planning the transaction.