Moda Health Plan, Inc. v. United States
130 Fed. Cl. 436
| Fed. Cl. | 2017Background
- The ACA’s §1342 created a three‑year (2014–2016) risk‑corridors program to compensate insurers offering Qualified Health Plans (QHPs) on ACA Exchanges for unusually high losses; the statute states the Secretary "shall pay" specified amounts to losing plans.
- HHS/CMS promulgated implementing regulations and rules, set annual data/deadlines, and in early guidance both acknowledged an obligation to make payments and later expressed an intent to administer the program in a budget‑neutral way across the three years.
- Moda sold QHPs for 2014–2015, suffered substantial losses, and submitted risk‑corridors claims; HHS paid Moda only 12.6% of its 2014 claim and made no 2015 payments, ultimately prorating payments because "payments in" from profitable plans were far less than "payments out."
- Congress, via FY2015 and FY2016 appropriations riders, prohibited use of the CMS Program Management account for §1342 payments (but did not bar all federal funds); GAO had earlier said 2014 CMS funds and ‘‘payments in’’ were available to fund payments.
- Moda sued in the Court of Federal Claims seeking full statutory payments (and alternatively breach of an implied‑in‑fact contract); the government moved to dismiss (jurisdiction and ripeness) and on the merits argued the program was or became budget‑neutral and thus limited payments.
- The court held it had jurisdiction, found Moda’s claims ripe (annual payments required), and granted Moda partial summary judgment on liability — ruling §1342 required full annual payments and that appropriations riders did not repeal or amend that obligation; alternatively, an implied‑in‑fact contract existed and was breached.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject‑matter jurisdiction / "presently due" money | Moda: §1342 and regs are money‑mandating ("shall pay") so Tucker Act jurisdiction exists | Gov: Payments not "presently due" because full payment may not be required until 2017 | Court: Jurisdiction exists; "presently due" argument is really ripeness and fails because statute/regulation are money‑mandating |
| Ripeness / payment schedule | Moda: §1342, structure, Medicare Part D analogy, and agency practice require annual payments (2014 & 2015 due) | Gov: HHS had discretion; three‑year framework means payments not due until program end | Court: Annual payments are required; claims for 2014–2015 are ripe |
| Merits — whether §1342 is budget‑neutral (quantum of payment) | Moda: Statutory text ("shall pay" amounts) compels full annual payments; appropriations riders did not repeal or amend that obligation | Gov: Congress intended (or effectively made via appropriations riders) the program budget‑neutral, limiting payments to "payments in" from profitable plans | Court: §1342 unambiguously required full payments; appropriations riders merely limited a specific account and did not repeal/amend the substantive obligation; Judgment Fund/normal judgment process can satisfy liability |
| Alternative contract claim | Moda: §1342/regulatory scheme constituted an offer creating unilateral implied‑in‑fact contracts when insurers sold QHPs; Moda performed and the Secretary had authority | Gov: No contractual obligation; Anti‑Deficiency/appropriations limits bar contracting | Court: In the alternative, an implied‑in‑fact contract existed and was breached; Secretary had authority and Anti‑Deficiency Act did not preclude the contractual obligation |
Key Cases Cited
- United States v. Dickerson, 310 U.S. 554 (1940) (appropriations language can suspend statutory obligations where Congress’ intent is clear)
- United States v. Will, 449 U.S. 200 (1980) (repeated appropriations language can effectuate repeal/postponement of pay increases)
- New York Airways v. C.A.B., 369 F.2d 743 (D.C. Cir. 1966) (appropriations restrictions do not necessarily extinguish a substantive statutory obligation)
- Radium Mines, Inc. v. United States, 153 F. Supp. 403 (Ct. Cl. 1957) (agency program offering fixed payments in return for voluntary private performance can create contractual obligations)
- Bath Iron Works Corp. v. United States, 20 F.3d 1567 (Fed. Cir. 1994) (Judgment Fund provides post‑judgment funding even where agency lacks appropriations)
- Nat’l R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451 (1985) (statutes are not presumed to create private contractual rights absent clear congressional intent)
- United States v. Testan, 424 U.S. 392 (1976) (Tucker Act requires a separate money‑mandating source to waive sovereign immunity)