America’s Overcriminalization Problem

Originally posted to Bloomberg Law Insight by Brett Tolman | October 19, 2020

We have too many laws that can land someone in jail. Estimates put the number north of 300,000 federal statutes and regulations that can be criminally enforced, and the consequences of America’s addiction to criminalizing nearly everything are sobering—1 in every 4 Americans has a criminal record.

We incarcerate more than 19% of the world’s prisoners but make up only 4% of the world’s population. And despite what “real crime” TV would have you believe, less than 2% of federal criminal defendants receive a trial in which the government’s case is put to the test; the vast majority of persons feel compelled to bargain away their constitutional rights in order to receive leniency because our criminal system is so unbalanced.

It may come as a surprise to some, but the Trump administration has been consistently taking steps to address these concerns. Unlike the president’s signing of the FIRST STEP Act, other measures seem to have been overlooked. Regulatory law isn’t everyone’s cup of tea, but the administration’s work to increase fairness in regulatory enforcement is worthy of more attention.

Agency ‘Guidance Documents’ Are Not Law

A federal prosecution needs to be based upon a law passed by Congress. But hundreds of thousands of regulatory laws adopted by agencies further expand the conduct that can be prosecuted. Those regulations are required to be adopted in a manner consistent with Constitutional due process principles reflected in the Administrative Procedure Act.

However, regulators started taking shortcuts and creating “guidance documents” that don’t satisfy APA requirements, and then relying on these “guidance documents” to bind Americans to standards that were never lawfully adopted. This practice is particularly unfair in a criminal case given the potential consequences to the accused.

Thankfully, the Department of Justice has amended its Justice Manual, a document that provides guidance to prosecutors, to clarify that agency guidance documents are not a substitute for law and that “mere noncompliance” with one cannot be the basis of criminal enforcement.

Several executive orders have expanded this rule to all federal agencies. As a former U.S. Attorney, I think it makes perfect sense for the DOJ to instruct its lawyers not to seek jail sentences for those who have merely failed to comply with a non-binding document, but sadly that has not always been true.

To understand the type of case that federal prosecutors can no longer bring, consider Todd Farha, a former health-care executive convicted of “defrauding” the Medicaid program. Farha was charged with criminal offenses based on the way his company, WellCare, filed expense forms to Medicaid that reflected its interpretation of the law.

The government had a different interpretation. The prosecution relied on informal agency guidance documents to convict Farha, even though the guidance was not binding and had never been the subject of public notice and comment. Unfortunately, a court rejected Farha’s appeal, stating that the company’s obligations were governed not only by the law but also by the informal guidance.

This had very real consequences—in a case that involved no harm to any patients and no “bogus” Medicaid claims, Farha was incarcerated for three years because his company failed to comply with a document that prosecutors can no longer rely upon. And he isn’t the only one.

‘Best Practices’ for Enforcement Fairness

I am glad to see that under current DOJ policy, the type of reasoning applied in the Farha case would no longer be acceptable. I am also encouraged to see that the administration has instituted other procedural protections, as set forth recently by Paul Ray, head of the Office of Management and Budget’s Office of Information and Regulatory Affairs in a memorandum directing agencies to review their practices in light of “principles of fairness.”

Included among the “best practices”:

  • Enforcement actions should be prompt and fair;
  • Targets of investigations should be informed when an investigation is closed;
  • There shouldn’t be multiple enforcement actions based on a single set of facts;
  • Performance metrics of government lawyers should incentivize fairness;
  • Favorable evidence should be provided to the accused;
  • Penalties should be proportionate; and
  • Enforcement should be free of coercion and unfair surprise.

In response to this directive, the Department of the Interior announced that all future referrals to the DOJ for prosecution will state whether the accused knew their conduct was prohibited and have made it clear that their agency will focus its “scarce enforcement resources on those who do not merely stumble into a violation, but choose to break the law.”

This list of procedural fairness measures might seem mundane to a law student—surely these are just restatements of what is already required when the government prosecutes a person. But those who practice criminal law realize how far from these ideals many cases have strayed.

We should all be heartened to see the executive branch taking these steps. There is a dire need to see these safeguards in all criminal cases. I hope that any future administration takes heed of these fundamental principles as it goes about the business of prosecuting its own people.

Brett Tolman is a former U.S. Attorney for the District of Utah and current founder and attorney at the Tolman Group, a firm focused on public policy and government reform.