Blue Cross and Blue Shield of North Carolina v. United States
131 Fed. Cl. 457
Fed. Cl.2017Background
- Blue Cross sued the United States in the Court of Federal Claims seeking full Risk Corridors Program payments under the ACA for 2014 (and declaratory relief for 2015/2016), alleging statutory, contract (express and implied-in-fact), breach of implied covenant, and takings claims.
- Section 1342 of the ACA and 45 C.F.R. § 153.510 authorize a three‑year (2014–2016) Risk Corridors Program, using a formula to determine payments to or charges from issuers; neither the statute nor the regulation sets a definite annual deadline for HHS to make full payments.
- HHS adopted a budget‑neutral policy and, after collections for 2014 fell far short of calculated payments ($362M collected v. $2.87B owed), announced pro‑rata payments (12.6% for 2014) and a policy to apply future years’ collections to make up prior shortfalls.
- Congress restricted use of certain CMS funds for making Risk Corridors payments in the 2015 and 2016 appropriations acts, complicating funding; HHS nonetheless recorded unpaid amounts as obligations and stated it would explore other funding subject to appropriations.
- Procedurally, the government moved to dismiss for lack of jurisdiction and failure to state a claim. The court held jurisdiction existed for statutory, contract, and takings claims but dismissed all substantive counts under RCFC 12(b)(6) (and dismissed the requested declaratory relief) because Blue Cross failed to plead plausible claims that payments were presently due.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Section 1342/45 C.F.R. §153.510 are money‑mandating and give rise to presently‑due payment rights | Section1342/§153.510 use mandatory language ("shall/will pay") creating a right to full, timely annual payments (2014 due by Dec.2015) | Even if money‑mandating, the statute/regulation do not set an annual deadline; HHS reasonably may pro‑rate and make up shortfalls over the three‑year program | Court: Statute/regulation are money‑mandating (jurisdiction) but do not impose an annual deadline; payments for 2014 are not "presently due" so statutory claim fails on Rule12(b)(6) |
| Ripeness of claims seeking 2014 payments | Blue Cross: 2014 calculations are complete, partial payments made; withholding review causes immediate hardship (~$130M owed) | Gov: Claims unripe because HHS has not completed multi‑year reconciliation and final program calculations | Court: Claims for 2014 are fit and impose hardship → ripe; but substantive relief denied because payments not presently due |
| Existence of express or implied‑in‑fact contract obligating full annual payments | QHP Agreement and agency statements incorporate statute/regulations and HHS communications manifest intent to contractually bind government to timely full payments | Statute/regulations lack contract language; general presumption that statutes do not create contractual rights; post‑enactment agency conduct cannot create implied federal contractual obligation to pay annually | Court: No plausible express or implied‑in‑fact contract alleging an obligation to pay full annual amounts by end of 2015; Count II and implied contract claims dismissed |
| Takings claim for deprivation of property interest in full annual payments | Blue Cross: contractual/regulatory/statutory right to full annual payments is property subject to Fifth Amendment | Gov: No cognizable vested property interest because no contractual/statutory right to presently due full payments | Court: No cognizable property interest in full, annual payments; takings claim dismissed |
Key Cases Cited
- United States v. King, 395 U.S. 1 (1969) (limits on Claims Court jurisdiction for non‑presently due equitable relief)
- United States v. Testan, 424 U.S. 392 (1976) (Tucker Act confers jurisdiction but does not create substantive money‑mandating rights)
- United States v. White Mountain Apache Tribe, 537 U.S. 465 (2003) (defining money‑mandating statutory sources)
- Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) (agency deference when statute ambiguous)
- Todd v. United States, 386 F.3d 1091 (Fed. Cir. 2004) (Tucker Act jurisdiction requires ‘‘actual, presently due’’ monetary damages for certain contract claims)
- Fisher v. United States, 402 F.3d 1167 (Fed. Cir. 2005) (statutes/regulations must be money‑mandating to support Tucker Act jurisdiction)