Moda Health Plan, Inc. v. United States
892 F.3d 1311
| Fed. Cir. | 2018Background
- The ACA established a three‑year (2014–2016) "risk corridors" program (42 U.S.C. § 18062) requiring HHS to pay insurers a formulaic share of excess losses (“payments out”) and to collect a share of excess gains (“payments in”).
- HHS promulgated implementing regulations and advised insurers the program was not required to be budget‑neutral and that it would "remit payments as required under section 1342."
- After a CMS "transitional policy" altered enrollment composition and increased insurers' losses, HHS adjusted some calculation parameters and indicated risk corridors would be implemented with budget‑neutral adjustments in mind.
- GAO identified two potential funding sources for payments out: (1) payments in and (2) CMS Program Management appropriations. Congress then enacted appropriations riders (FY2015–FY2017) forbidding use of certain CMS funds for risk corridors payments.
- CMS collected far less in payments in than payments out (over $12 billion shortfall across 2014–2016) and issued prorated disbursements; Moda sued in the Court of Federal Claims seeking the unpaid balance.
- The Court of Federal Claims entered judgment for Moda on both statutory and implied‑contract grounds; the Federal Circuit reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1342 created a money‑mandating obligation to pay full formulaic payments out regardless of payments in | Moda: §1342's mandatory language ("shall pay") imposes an unconditional statutory obligation to pay full amounts calculated by the statute | Gov: §1342 was intended/operated as budget‑neutral; absent appropriations authority payments cannot exceed amounts collected | Court: §1342 initially created an obligation to pay full amounts, but appropriations riders manifested Congress's intent to suspend that obligation for the fiscal years at issue; statutory claim fails |
| Whether appropriations riders repealed or suspended the §1342 obligation | Moda: Riders merely limited a funding source; they did not repeal statutory rights or preclude judicial enforcement; reliance and past performance preclude retroactive withholding | Gov: Riders plainly prevented use of CMS Program Management funds and thus capped disbursements to payments in for those years | Court: Appropriations riders, in context and with legislative history, clearly manifested Congress's intent to cap payments out at amounts of payments in for the relevant fiscal years (suspension), so no further statutory liability for those years |
| Whether HHS/agency words and conduct created an implied‑in‑fact contract to pay full amounts | Moda: Statute, regulations, pre‑implementation statements (and HHS conduct) induced insurers to participate without higher premiums — constituting an implied contract | Gov: Legislation/regulation presumptively do not create contractual obligations; no clear government intent to contract | Court: Presumption against statutory/regulatory contracting controls; the record lacks a clear manifestation of intent to form a contract—no implied‑contract claim |
| Whether insurers may enforce unpaid obligations via Tucker Act/Judgment Fund | Moda: Tucker Act gives Court of Federal Claims jurisdiction; Judgment Fund available after judgment | Gov: Appropriations restrictions limit available funds now; claim on merits blocked by riders | Court: Jurisdiction exists, but merits fail because appropriations riders suspended substantive payment obligation; remedy question (post‑judgment funding) not reached here |
Key Cases Cited
- United States v. Langston, 118 U.S. 389 (statute fixing pay cannot be abrogated by later insufficient appropriations absent clear repeal)
- United States v. Mitchell, 109 U.S. 146 (Congress may effect a change by appropriation language when intent to modify is clear)
- United States v. Vulte, 233 U.S. 509 (appropriations riders can temporarily suspend statutory benefits for covered years)
- United States v. Dickerson, 310 U.S. 554 (appropriations language and legislative history can show Congress intended suspension of a statutory benefit)
- United States v. Will, 449 U.S. 200 (repeated appropriations riders can rescind or postpone previously authorized statutory pay increases)
- Salazar v. Ramah Navajo Chapter, 567 U.S. 182 (Anti‑Deficiency Act and appropriations constraints do not extinguish government obligations created by statute)