Moda Health Plan, Inc. v. United States
908 F.3d 738
Fed. Cir.2018Background
- The ACA (§1342 / 42 U.S.C. §18062) created a risk-corridors program (2014–2016) that required HHS to collect "payments in" from profitable qualified health plans (QHPs) and make formula-driven "payments out" to plans with losses.
- The statutory text repeatedly uses "shall" to prescribe HHS's duties to make payments under the formula.
- Insurers (e.g., Moda) relied on that statutory promise, entered the ACA exchanges, and subsequently claimed large unpaid "payments out." Moda obtained judgment in the Court of Federal Claims for unpaid amounts.
- After the ACA, Congress enacted appropriations riders (FY2015, FY2016, FY2017) stating specified funds "may not be used for payments under §1342(b)(1)," effectively restricting particular funding sources for risk-corridor payments.
- A panel of the Federal Circuit concluded the appropriations riders implicitly repealed or suspended the Government’s obligation to make payments; petitions for rehearing en banc were denied. Judge Newman dissented from the denial, arguing the riders did not effectuate an implied repeal and that the Government remained legally obliged to pay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1342 created a nondiscretionary obligation to make risk-corridor "payments out" | §1342's repeated use of "shall" imposes a mandatory duty on HHS to make payments under the statutory formula | (Gov't did not dispute the plain-text obligation but argued subsequent appropriations measures limited payment) | Panel agreed §1342 imposed an obligation, but dispute centers on subsequent appropriations' effect; en banc rehearing denied. |
| Whether appropriations riders for FY2015–FY2017 impliedly repealed or suspended the §1342 payment obligation | Riders merely limited particular funding sources and did not repeal the statutory obligation; appropriations cannot be read to repeal by implication absent clear intent | Riders reflect congressional intent to prevent use of specified accounts and to make the program budget-neutral, thus preventing or capping §1342 payments | Panel majority held riders effectively prevented full payments (implying repeal/suspension); en banc rehearing denied over Newman dissent. |
| Proper interpretive rule for resolving conflict between substantive statute and later appropriations language | Repeals by implication are disfavored, and appropriations measures are especially unsuitable to effect implied repeal; courts should give effect to both statutes where possible | Argues intent can be inferred from appropriations context and legislative history to avoid conflict | Dissent applies Supreme Court canon disfavouring implied repeals for appropriations and argues riders do not clearly express repeal; majority reached opposite conclusion; en banc rehearing denied. |
| National and remedial consequences of denying payments (reliance / public‑private trust) | Nonpayment undermines government credibility, harms insurers and markets, and warrants careful (en banc) review; victims entitled to payment enforcement | Government relied on appropriations limitations and fiscal constraints; funding restrictions preclude further payments from prohibited accounts | Denial of rehearing leaves panel outcome intact; dissent emphasizes broader policy/reliance harms and urges en banc review. |
Key Cases Cited
- Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947) (government should deal fairly with private parties; equitable expectations in public‑private arrangements)
- Tenn. Valley Auth. v. Hill, 437 U.S. 153 (1978) (doctrine disfavoring repeal by implication applies with especial force to appropriations measures)
- BedRoc Ltd. v. United States, 541 U.S. 176 (2004) (statutory interpretation begins with text)
- Sandifer v. U.S. Steel Corp., 571 U.S. 220 (2014) (ordinary meaning of statutory words guides interpretation)
- Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998) (mandatory "shall" normally creates an obligation not subject to judicial discretion)
- United States v. Will, 449 U.S. 200 (1980) (repeals by implication are generally disfavored, especially in appropriations)
- Salazar v. Ramah Navajo Chapter, 567 U.S. 182 (2012) (government's failure to pay undermines contracting and may require honoring statutory commitments)
- Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803) (judicial duty to say what the law is)
- United States v. Mitchell, 109 U.S. 146 (1883) (analysis of congressional intent governs repeal questions)
- United States v. Langston, 118 U.S. 389 (1886) (statutes imposing obligations are not abrogated by later appropriations lacking clear repealing language)