United States Court of Appeals
`for the Federal Circuit
`______________________
`
`MODA HEALTH PLAN, INC.,
`Plaintiff-Appellee
`
`v.
`
`UNITED STATES,
`Defendant-Appellant
`______________________
`
`2017-1994
`______________________
`
`Appeal from the United States Court of Federal
`Claims in No. 1:16-cv-00649-TCW, Judge Thomas C.
`Wheeler.
`
`______________________
`
`Decided: June 14, 2018
`______________________
`
`STEVEN ROSENBAUM, Covington & Burling LLP,
`
`Washington, DC, argued for plaintiff-appellee. Also
`represented by SHRUTI CHAGANTI BARKER, CAROLINE
`BROWN, PHILIP PEISCH.
`
`ALISA BETH KLEIN, Appellate Staff, Civil Division,
`
`United States Department of Justice, Washington, DC,
`argued for defendant-appellant. Also represented by
`CHAD A. READLER, MARK B. STERN.
`
`
`for the Federal Circuit
`______________________
`
`MODA HEALTH PLAN, INC.,
`Plaintiff-Appellee
`
`v.
`
`UNITED STATES,
`Defendant-Appellant
`______________________
`
`2017-1994
`______________________
`
`Appeal from the United States Court of Federal
`Claims in No. 1:16-cv-00649-TCW, Judge Thomas C.
`Wheeler.
`
`______________________
`
`Decided: June 14, 2018
`______________________
`
`STEVEN ROSENBAUM, Covington & Burling LLP,
`
`Washington, DC, argued for plaintiff-appellee. Also
`represented by SHRUTI CHAGANTI BARKER, CAROLINE
`BROWN, PHILIP PEISCH.
`
`ALISA BETH KLEIN, Appellate Staff, Civil Division,
`
`United States Department of Justice, Washington, DC,
`argued for defendant-appellant. Also represented by
`CHAD A. READLER, MARK B. STERN.
`
`
`
`
`
` 2
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`THOMAS G. HUNGAR, Office of General Counsel, Unit-
`
`ed States House of Representatives, Washington, DC, for
`amicus curiae United States House of Representatives.
`Also represented by KIMBERLY HAMM, TODD B. TATELMAN.
`
` WILLIAM LEWIS ROBERTS, Faegre Baker Daniels LLP,
`Minneapolis, MN, for amicus curiae Association for Com-
`munity Affiliated Plans. Also represented by JONATHAN
`WILLIAM DETTMANN, KELLY J. FERMOYLE, NICHOLAS
`JAMES NELSON.
`
`STEVEN ALLEN NEELEY, JR., Husch Blackwell LLP,
`
`Washington, DC, for amicus curiae National Association
`of Insurance Commissioners.
`
`STEPHEN A. SWEDLOW, Quinn Emanuel Urquhart &
`
`Sullivan, LLP, Chicago, IL, for amicus curiae Health
`Republic Insurance Company.
`
` URSULA TAYLOR, Butler Rubin Saltarelli & Boyd LLP,
`Chicago, IL, for amicus curiae Blue Cross Blue Shield
`Association. Also represented by SANDRA J. DURKIN.
`
`BENJAMIN N. GUTMAN, Oregon Department of Justice,
`
`Salem, OR, for amici curiae State of Oregon, State of
`Alaska, State of Connecticut, State of Hawaii, State of
`Illinois, State of Iowa, State of Maryland, State of Massa-
`chusetts, State of Minnesota, State of New Mexico, State
`of North Carolina, State of Pennsylvania, State of Rhode
`Island, State of Vermont, State of Virginia, State of
`Washington, State of Wyoming, District of Columbia.
`______________________
`
`Before PROST, Chief Judge, NEWMAN and MOORE,
`Circuit Judges.
`Opinion for the court filed by Chief Judge PROST.
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`3
`
`Dissenting opinion filed by Circuit Judge NEWMAN.
`PROST, Chief Judge.
`A health insurer contends that the government failed
`to satisfy the full amount of its payment obligation under
`a program designed to alleviate the risk of offering cover-
`age to an expanded pool of individuals. The Court of
`Federal Claims entered judgment for the insurer on both
`statutory and contract grounds. The government appeals.
`We reverse.
`
`BACKGROUND
`This case concerns a three-year “risk corridors” pro-
`gram described in the Patient Protection and Affordable
`Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) (codi-
`fied at 42 U.S.C. §§ 18001 et seq.) (“ACA”), and imple-
`mented by regulations promulgated by
`the U.S.
`Department of Health and Human Services (“HHS”). The
`case also concerns the bills that appropriated funds to
`HHS and the Centers for Medicare & Medicaid Services
`(“CMS”) within HHS for the fiscal years during which the
`program in question operated. We begin with the ACA.
`I. The ACA
`Among other reforms, the ACA established “health
`benefit exchanges”—virtual marketplaces in each state
`wherein individuals and small groups could purchase
`health coverage. 42 U.S.C. § 18031(b)(1). The new ex-
`changes offered centralized opportunities for insurers to
`compete for new customers. The ACA required that all
`plans offered in the exchanges satisfy certain criteria,
`including providing certain “essential” benefits. See 42
`U.S.C. §§ 18021, 18031(c).
`Because insurers lacked reliable data to estimate the
`cost of providing care for the expanded pool of individuals
`seeking coverage via the new exchanges, insurers faced
`significant risk if they elected to offer plans in these
`
`
`
`
`
` 4
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`exchanges. The ACA established three programs de-
`signed to mitigate that risk and discourage insurers from
`setting higher premiums to offset that risk: reinsurance,
`risk adjustment, and risk corridors. 42 U.S.C. §§ 18061–
`63. This case concerns the risk corridors program.
`Section 1342 of the ACA directed the Secretary of
`HHS to establish a risk corridors program for calendar
`years 2014–2016. The full text of Section 1342 is repro-
`duced below:
`(a) In general
`The Secretary shall establish and administer a
`program of risk corridors for calendar years 2014,
`2015, and 2016 under which a qualified health
`plan offered in the individual or small group mar-
`ket shall participate in a payment adjustment
`system based on the ratio of the allowable costs of
`the plan to the plan’s aggregate premiums. Such
`program shall be based on the program for re-
`gional participating provider organizations under
`part D of title XVIII of the Social Security Act [42
`U.S.C. §§ 1395w-101 et seq.].
`(b) Payment methodology
`(1) Payments out
`The Secretary shall provide under the pro-
`gram established under subsection (a) that
`if—
`(A) a participating plan’s allowable costs
`for any plan year are more than 103 per-
`cent but not more than 108 percent of the
`target amount, the Secretary shall pay to
`the plan an amount equal to 50 percent of
`the target amount in excess of 103 percent
`of the target amount; and
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`5
`
`(B) a participating plan’s allowable costs
`for any plan year are more than 108 per-
`cent of the target amount, the Secretary
`shall pay to the plan an amount equal to
`the sum of 2.5 percent of the target
`amount plus 80 percent of allowable costs
`in excess of 108 percent of the target
`amount.
`(2) Payments in
`The Secretary shall provide under the pro-
`gram established under subsection (a) that
`if—
`(A) a participating plan’s allowable costs
`for any plan year are less than 97 percent
`but not less than 92 percent of the target
`amount, the plan shall pay to the Secre-
`tary an amount equal to 50 percent of the
`excess of 97 percent of the target amount
`over the allowable costs; and
`(B) a participating plan’s allowable costs
`for any plan year are less than 92 percent
`of the target amount, the plan shall pay to
`the Secretary an amount equal to the sum
`of 2.5 percent of the target amount plus 80
`percent of the excess of 92 percent of the
`target amount over the allowable costs.
`(c) Definitions
`In this section:
`(1) Allowable costs
`(A) In general
`The amount of allowable costs of a plan for
`any year is an amount equal to the total
`costs (other than administrative costs) of
`
`
`
`
`
` 6
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`the plan in providing benefits covered by
`the plan.
`(B) Reduction for risk adjustment and re-
`insurance payments
`Allowable costs shall [be] reduced by any
`risk adjustment and reinsurance pay-
`ments received under section[s] 18061 and
`18063 of this title.
`(2) Target amount
`The target amount of a plan for any year is an
`amount equal to the total premiums (includ-
`ing any premium subsidies under any gov-
`ernmental
`program),
`reduced
`by
`the
`administrative costs of the plan.
`42 U.S.C. § 18062.
`Briefly, section 1342 directed the Secretary of HHS to
`establish a program whereby participating plans whose
`costs of providing coverage exceeded the premiums re-
`ceived (as determined by a statutory formula) would be
`paid a share of their excess costs by the Secretary—
`“payments out.” Conversely, participating plans whose
`premiums exceeded their costs (according to the same
`formula) would pay a share of their profits to the Secre-
`tary—“payments in.” The risk corridors program “per-
`mit[ted] issuers to lower [premiums] by not adding a risk
`premium to account for perceived uncertainties in the
`2014 through 2016 markets.” HHS Notice of Benefit and
`Payment Parameters for 2014, 78 Fed. Reg. 15,410,
`15,413 (Mar. 11, 2013).
`On March 20, 2010, just three days before Congress
`passed the ACA, the Congressional Budget Office (“CBO”)
`published an estimate of the ACA’s cost. See Letter from
`Douglas Elmendorf, Director, CBO, to Nancy Pelosi,
`Speaker, House of Representatives tbl. 2 (Mar. 20, 2010)
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`7
`
`https://www.cbo.gov/
`Estimate”),
`Cost
`(“CBO
`sites/default/files/111th-congress-2009-2010/costestimate/
`amendreconprop.pdf. The CBO Cost Estimate made no
`mention of the risk corridors program, though it scored
`the reinsurance and risk adjustment programs. Id.
`Overall, CBO predicted the ACA would reduce the federal
`deficit by $143 billion over the 2010–2019 period it evalu-
`ated. Id. at p.2.
`Preambulatory language in the ACA referred to
`CBO’s overall scoring, noting that the “Act will reduce the
`Federal deficit between 2010 and 2019.” ACA § 1563(a).
`II. Implementing Regulations
`In March 2012, HHS promulgated regulations estab-
`lishing the risk corridors program as directed by section
`1342. Standards Related to Reinsurance, Risk Corridors
`and Risk Adjustment, 77 Fed. Reg. 17,220, 17,251–52
`(Mar. 23, 2012) (codified at 45 C.F.R. Pt. 153, Subpart F).
`Those regulations defined terms such as “allowable costs,”
`“administrative costs,” “premiums earned,” and “target
`amount,” all of which would ultimately factor into the
`calculations of payments in and payments out required by
`the statutory formula. E.g., id. at 17,236–39.
`The regulations also provided that insurers offering
`qualified health plans in the exchanges “will receive
`payment from HHS in the following amounts, under the
`following circumstances” and it recited the same formula
`set forth in the statute for payments out. 45 C.F.R.
`§ 153.510(b). The regulations similarly provided that
`insurers “must remit charges to HHS” according to the
`statutory formula for payments in. Id. § 153.510(c).
`In March 2013, after an informal rulemaking proceed-
`ing, HHS published parameters for payments under
`various ACA programs for the first year of the exchanges,
`2014, including the risk corridors program. The parame-
`ters revised certain definitions and added others, notably
`
`
`
`
`
` 8
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`incorporating a certain level of profits as part of the
`allowable administrative costs. 78 Fed. Reg. at 15,530–31
`(codified at 45 C.F.R. § 153.530). The parameters also
`provided that an issuer of a plan in an exchange must
`submit all information required for calculating risk corri-
`dors payments by July 31 of the year following the benefit
`year. Id. HHS also indicated that “the risk corridors
`program is not required to be budget neutral,” so HHS
`would make full payments “as required under Section
`1342 of the Affordable Care Act.” 78 Fed. Reg. at 15,473.
`This constituted the final word from HHS on the risk
`corridors program before the exchanges opened and the
`program began.
`
`III. Transitional Policy
`The ACA established several reforms for insurance
`plans—such as requiring a minimum level of coverage—
`scheduled to take effect on January 1, 2014. ACA § 1255.
`Non-compliant plans in effect prior to the passage of the
`ACA in 2010, however, received a statutory exemption
`from certain requirements. 42 U.S.C. § 18011. This
`meant that insurers expected the pool of participants in
`the exchanges to include both previously uninsured
`individuals as well as individuals whose previous cover-
`age terminated because their respective plans did not
`comply with the ACA and did not qualify for the grandfa-
`thering exemption.
`Individuals and small businesses enrolled in non-
`compliant plans not qualifying for the exemption received
`notice that their plans would be terminated. Many ex-
`pressed concern that new coverage would be “more expen-
`sive than their current coverage, and thus they may be
`dissuaded from immediately transitioning to such cover-
`age.” J.A. 429. In November 2013, after appellee Moda
`Health Plan, Inc. and other insurers had already set
`premiums for the exchanges for 2014, HHS announced a
`one-year transitional policy that allowed insurers to
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`9
`
`continue to offer plans that did not comply with certain of
`the ACA’s reforms even for non-grandfathered plans. J.A.
`429–31. HHS directed state agencies to adopt the same
`policies. J.A. 431.
`This dampened ACA enrollment in states implement-
`ing the policy, especially by healthier individuals who
`elected to maintain their lower level of coverage, leaving
`insurers participating in the exchanges to bear greater
`risk than they accounted for in setting premiums. See
`Milliman, A Financial Post-Mortem: Transitional Policies
`and the Financial Implications for the 2014 Individual
`Market 1 (July 2016) (“Our analysis indicates that issuers
`in states that implemented the transitional policy gener-
`ally have higher medical loss ratios in the individual
`market.”),
`http://www.milliman.com/uploadedFiles/
`insight/2016/2263HDP_20160712(1).pdf.
`HHS acknowledged that “this transitional policy was
`not anticipated by health insurance issuers when setting
`rates for 2014” but noted “the risk corridor program
`should help ameliorate unanticipated changes in premi-
`um revenue.” Id. HHS later extended the transitional
`period to last the duration of the risk corridor program.
`J.A. 448–62.
`After further informal rulemaking (begun soon after
`announcing the transitional policy), HHS informed insur-
`ers that it would adjust the operation of the risk corridors
`program for the 2014 benefit year to “offset losses that
`might occur under the transitional policy as a result of
`increased claims costs not accounted for when setting
`2014 premiums.” HHS Notice of Benefit and Payment
`Parameters for 2015, 79 Fed. Reg. 13,744, 13,786–87
`(Mar. 11, 2014). This included adjustments to HHS’s
`formula for calculating the “allowable costs” and “target
`amount” involved in the statutory formula. Id.
`HHS projected that these new changes (together with
`changes to the reinsurance program) would “result in net
`
`
`
`
`
` 10
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`payments that are budget neutral in 2014” and that it
`“intend[ed] to implement this program in a budget neu-
`tral manner” with adjustments over time with that goal in
`mind. Id. at 13,787.
`In April 2014, CMS, the division of HHS responsible
`for administering the risk corridors program, released
`guidance regarding “Risk Corridors and Budget Neutrali-
`ty.” J.A. 229–30. It explained a new budget neutrality
`policy as follows:
`We anticipate that risk corridors collections will
`be sufficient to pay for all risk corridors payments.
`However, if risk corridors collections are insuffi-
`cient to make risk corridors payments for a year,
`all risk corridors payments for that year will be
`reduced pro rata to the extent of any shortfall.
`Risk corridors collections received for the next
`year will first be used to pay off the payment re-
`ductions issuers experienced in the previous year
`in a proportional manner, up to the point where
`issuers are reimbursed in full for the previous
`year, and will then be used to fund current year
`payments. If, after the obligations for the previ-
`ous year have been met, the total amount of col-
`lections available
`in
`the current year
`is
`insufficient to make payments in that year, the
`current year payments will be reduced pro rata to
`the extent of any shortfall. If any risk corridors
`funds remain after prior and current year pay-
`ment obligations have been met, they will be held
`to offset potential insufficiencies in risk corridors
`collections in the next year.
`J.A. 229.
`As to any shortfall in the final year of payment, CMS
`stated it anticipated payments in would be sufficient, but
`that future guidance or rulemaking would address any
`persistent shortfalls. J.A. 230.
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`11
`
`IV. Appropriations
`In February 2014, after HHS had proposed its ad-
`justments to account for the transitional policy (but before
`HHS had finalized the adjustments), Congress asked the
`Government Accountability Office (“GAO”) to determine
`what sources of funds could be used to make any pay-
`ments in execution of the risk corridors program. See
`Dep’t of Health & Human Servs.—Risk Corridors Pro-
`gram (“GAO Report”), B-325630, 2014 WL 4825237, at *1
`(Comp. Gen. Sept. 30, 2014) (noting request). GAO re-
`sponded that it had identified two potential sources of
`funding in the appropriations for “Program Management”
`for CMS in FY 2014. That appropriation included a lump
`sum in excess of three billion dollars for carrying out
`certain responsibilities, including “other responsibilities”
`of CMS as well as “such sums as may be collected from
`authorized user fees.” Id. at *3 (citing Pub. L. No. 113-76,
`div. H, title II, 128 Stat. 5, 374 (Jan. 17, 2014)).
`GAO concluded that the “other responsibilities” lan-
`guage in the CMS Program Management appropriation
`for FY 2014 could encompass payments to health plans
`under the risk corridors program, and so the lump-sum
`appropriation “would have been available for making
`payments pursuant to section 1342(b)(1).” Id. Further,
`GAO concluded that the payments in from the risk corri-
`dors program constituted “user fees,” and so “any
`amounts collected in FY 2014 pursuant to section
`1342(b)(2) would have been available . . . for making the
`payments pursuant to section 1342(b)(2),” though HHS
`had not planned to make any such collections or pay-
`ments until FY 2015. Id. at *5 & n.7.
`GAO clarified that appropriations acts “are considered
`nonpermanent legislation,” so the language it analyzed
`regarding the lump-sum appropriation and user fees
`“would need to be included in the CMS PM appropriation
`
`
`
`
`
` 12
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`for FY 2015” in order to be available to make any risk
`corridors payments in FY 2015. Id.
`In December 2014, Congress passed its appropriations
`to HHS for FY 2015 (during which the first benefit year
`covered by the risk corridors program would conclude).
`That legislation reenacted the user fee language that
`GAO had analyzed and provided a lump sum for CMS’s
`Program Management account; however, the lump-sum
`appropriation included a rider providing:
`None of the funds made available by this Act from
`the Federal Hospital Insurance Trust Fund or the
`Federal Supplemental Medical Insurance Trust
`Fund, or transferred from other accounts funded
`by this Act to the ‘Centers for Medicare and Medi-
`caid Services—Program Management’ account,
`may be used
`for payments under Section
`1342(b)(1) of Public Law 111–148 (relating to risk
`corridors).
`Consolidated and Further Continuing Appropriations Act,
`2015, Pub. L. No. 113-235, div. G, title II, § 227, 128 Stat.
`2130, 2491.
`Representative Harold Rogers, then-Chairman of the
`House Committee on Appropriations, explained his view
`of the appropriations rider upon its inclusion in the ap-
`propriations bill for FY 2015:
`In 2014, HHS issued a regulation stating that the
`risk corridor program will be budget neutral,
`meaning that the federal government will never
`pay out more than it collects from issuers over the
`three year period risk corridors are in effect. The
`agreement includes new bill language to prevent
`CMS Program Management appropriation ac-
`count from being used to support risk corridors
`payments.
`160 Cong. Rec. H9838 (daily ed. Dec. 11, 2014).
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`13
`
`Congress enacted identical riders in FY 2016 and
`FY 2017. Consolidated Appropriations Act, 2016, Pub. L.
`No. 114-113, div. H, § 225, 129 Stat. 2242, 2624; Consoli-
`dated Appropriations Act, 2017, Pub. L. No. 115-31, div.
`H, title II, § 223, 131 Stat. 135, 543.1
`V. Subsequent Agency Action
`In September 2015, CMS announced that the total
`amount of payments in fell short of the total amount
`requested in payments out. Specifically, it expected
`payments in of approximately $362 million but noted
`requests for payments out totaling $2.87 billion. J.A. 244.
`Accordingly, CMS planned to issue prorated payments at
`a rate of 12.6 percent, with any shortfall to be made up by
`the payments in received following the 2015 benefit year.
`Id.
`A follow-up letter noted that HHS would “explore oth-
`er sources of funding for risk corridors payments, subject
`to the availability of appropriations” in the event of a
`shortfall following the final year of the program. J.A. 245.
`A report from CMS shows that the total amount of
`payments in collected for the 2014–2016 benefit years fell
`short of the total amount of payments out calculated
`according to the agency’s formula by more than $12
`billion. CMS, Risk Corridors Payment and Charge
`Amounts for the 2016 Benefit Year (November 2017),
`https://www.cms.gov/CCIIO/Programs-and-Initiatives/
`Premium-Stabilization-Programs/Downloads/Risk-
`Corridors-Amounts-2016.pdf.
`
`1 Continuing resolutions in advance of the 2017 ap-
`propriations retained the same restrictions on funds.
`Continuing Appropriations Act, 2017, Pub. L. No. 114-
`223, div. C, §§ 103–04, 130 Stat. 857, 908–09; Further
`Continuing and Security Assistance Appropriations Act,
`2017, Pub. L. No. 114-254, § 101, 130 Stat. 1005, 1005–06.
`
`
`
`
`
` 14
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`VI. Procedural History
`Moda commenced this action in the Court of Federal
`Claims under the Tucker Act in July 2016. It seeks the
`balance between the prorated payments it received and
`the full amount of payments out according to section
`1342. The Court of Federal Claims denied the govern-
`ment’s motion to dismiss for lack of jurisdiction and for
`failure to state a claim and granted Moda’s cross-motion
`for partial summary judgment as to liability.
`Both sides stipulated that the government owed Moda
`$209,830,445.79 in accordance with the ruling on liability.
`J.A. 41. The trial court entered judgment for Moda ac-
`cordingly. J.A. 45.
`Dozens of other insurers filed actions alleging similar
`claims, with mixed results from the Court of Federal
`Claims. See, e.g., Molina Healthcare of Cal., Inc. v. Unit-
`ed States, 133 Fed. Cl. 14 (2017) (ruling for the insurer);
`Me. Cmty. Health Options v. United States, 133 Fed. Cl. 1
`(2017) (ruling for the government).
`The Court of Federal Claims had jurisdiction under
`the Tucker Act, 28 U.S.C. § 1491(a)(1).2 We have jurisdic-
`tion under 28 U.S.C. § 1295(a)(3).
`
`2 The government does not appeal the Court of Fed-
`eral Claims’ determination of Tucker Act jurisdiction, and
`it appears to concede that section 1342 is money-
`mandating for jurisdictional purposes (though not on the
`merits). Appellant’s Reply Br. 11. As discussed below, we
`hold that section 1342 initially created an obligation to
`pay the full amount of payments out. We also agree with
`the Court of Federal Claims that the statute is money-
`mandating for jurisdictional purposes. See Greenlee Cty.
`v. United States, 487 F.3d 871, 877 (Fed. Cir. 2007) (con-
`cluding a statute is money-mandating for jurisdictional
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`15
`
`DISCUSSION
`Moda advances claims based on two theories. First,
`Moda contends that section 1342 itself obligates the
`government to pay insurers the full amount indicated by
`the statutory formula for payments out, notwithstanding
`the amount of payments in collected. Second, Moda
`contends that HHS made a contractual agreement to pay
`the full amount required by the statute in exchange for
`Moda’s performance (by offering a compliant plan in an
`exchange), and the government breached that agreement
`by failing to pay the full amount according to the statuto-
`ry formula for payments out.
`We review the Court of Federal Claims’ legal conclu-
`sion that the government was liable on both theories de
`novo. See Starr Int’l Co. v. United States, 856 F.3d 953,
`963 (Fed. Cir. 2017).
`I. Statutory Claim
`Moda argues that section 1342 obligated the govern-
`ment to pay the full amount indicated by the statutory
`formula for payments out, not a pro rata sum of the
`payments in. The government responds that section 1342
`itself contemplated operating the risk corridors program
`in a budget neutral manner (so the total amount of pay-
`ments out due to insurers cannot exceed the amount of
`payments in). In the alternative, the government con-
`tends that appropriations riders on the fiscal years in
`which payments from the risk corridors program came
`due limited the government’s obligation to the amount of
`payments in. Although we agree with Moda that section
`1342 obligated the government to pay the full amount of
`
`purposes if it “can fairly be interpreted” to require pay-
`ment of damages, or if it is “reasonably amenable” to such
`a reading, which does not require the plaintiff to have a
`successful claim on the merits).
`
`
`
`
`
` 16
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`risk corridors payments according to the formula it set
`forth, we hold that the riders on the relevant appropria-
`tions effected a suspension of that obligation for each of
`the relevant years.
`We begin with the statute.
`A. Statutory Interpretation
`The government asserts that Congress designed sec-
`tion 1342 to be budget neutral, funded solely through
`payments in and that the statute carries no obligation to
`make payments at the full amount indicated by the
`statutory formula if payments in fell short.
`Section 1342 is unambiguously mandatory. It pro-
`vides that “[t]he Secretary shall establish and administer”
`a risk corridors program pursuant to which “[t]he Secre-
`tary shall provide” under the program that “the Secretary
`shall pay” an amount according to a statutory formula.
`42 U.S.C. § 18062 (emphases added). Nothing in section
`1342 indicates that the payment methodology is somehow
`limited by payments in. It simply sets forth a formula for
`calculating payment amounts based on a percentage of a
`“target amount” of allowable costs.
`The government reasons that we must nevertheless
`interpret section 1342 to be budget neutral, because
`Congress relied on the CBO Cost Estimate that the ACA
`would decrease the federal deficit between 2010 and 2019,
`without evaluating the budgetary effect of the risk corri-
`dors program. Thus, according to the government, the
`ACA’s passage rested on an understanding that the risk
`corridors program would be budget neutral.
`Nothing in the CBO Cost Estimate indicates that it
`viewed the risk corridors program as budget neutral.
`Indeed, even if CBO had accurately predicted the $12.3
`billion shortfall that now exists, CBO’s overall estimate
`that the ACA would reduce the federal deficit would have
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`17
`
`remained true, since CBO had estimated a reduction of
`more than $100 billion. See CBO Cost Estimate at 2.
`The government’s amicus suggests it is “inconceiva-
`ble” that CBO would have declined to analyze the budget-
`ary impact of the risk corridors program, given its
`obligation to prepare “an estimate of the costs which
`would be incurred in carrying out such bill.” Br. of Ami-
`cus Curiae U.S. House Rep. in Supp. of Appellant at 7
`(quoting 2 U.S.C. § 653). Not so. It is entirely plausible
`that CBO expected payments in would roughly equal
`payments out over the three year program, especially
`since CBO could not have predicted the costly impact of
`HHS’s transitional policy, which had not been contem-
`plated at that time. Without more, CBO’s omission of the
`risk corridors program from its report can be viewed as
`nothing more than a bare failure to speak. Moreover,
`even if CBO interpreted the statute to require budget
`neutrality, that interpretation warrants no deference,
`especially in light of HHS’s subsequent interpretation to
`the contrary. CBO’s silence simply cannot displace the
`plain meaning of the text of section 1342.
`The government also argues that section 1342 created
`no obligation to make payments out in excess of payments
`in because it provided no budgetary authority to the
`Secretary of HHS and identified no source of funds for any
`payment obligations beyond payments in. But it has long
`been the law that the government may incur a debt
`independent of an appropriation to satisfy that debt, at
`least in certain circumstances.
`In United States v. Langston, 118 U.S. 389 (1886),
`Congress appropriated only five thousand dollars for the
`salary of a foreign minister, though a statute provided
`that the official’s salary would be seven thousand five
`hundred dollars. The Supreme Court held that the stat-
`ute fixing the official’s salary could not be “abrogated or
`suspended by the subsequent enactments which merely
`
`
`
`
`
` 18
`
` MODA HEALTH PLAN, INC. v. UNITED STATES
`
`appropriated a less amount” for the services rendered,
`absent “words that expressly, or by clear implication,
`modified or repealed the previous law.” Id. at 393. That
`is, the government’s statutory obligation to pay persisted
`independent of the appropriation of funds to satisfy that
`obligation.
`Our predecessor court noted long ago that “[a]n ap-
`propriation per se merely imposes limitations upon the
`Government’s own agents; it is a definite amount of
`money intrusted to them for distribution; but its insuffi-
`ciency does not pay the Government’s debts, nor cancel its
`obligations, nor defeat the rights of other parties.” Ferris
`v. United States, 27 Ct. Cl. 542, 546 (1892); see N.Y.
`Airways, Inc. v. United States, 369 F.2d 743, 748 (Ct. Cl.
`1966) (“It has long been established that the mere failure
`of Congress to appropriate funds, without further words
`modifying or repealing, expressly or by clear implication,
`the substantive law, does not in and of itself defeat a
`Government obligation created by statute.”).
`It is also of no moment that, as the government notes,
`HHS could not have made payments out to insurers in an
`amount totaling more than the amount of payments in
`without running afoul of the Anti-Deficiency Act. That
`Act provides that “[a]n officer or employee of the United
`States Government . . . may not . . . make or authorize an
`expenditure . . . exceeding an amount available in an
`appropriation . . . for
`the expenditure.”
` 31 U.S.C.
`§ 1341(a)(1)(A). But the Supreme Court has rejected the
`notion that the Anti-Deficiency Act’s requirements some-
`how defeat the obligations of the government. See Sala-
`zar v. Ramah Navajo Chapter, 567 U.S. 182, 197 (2012).
`The Anti-Deficiency Act simply constrains government
`officials. Id.
`For the same reason, it is immaterial that Congress
`provided that the risk corridors program established by
`section 1342 would be “based on the program” establish-
`
`
`
`MODA HEALTH PLAN, INC. v. UNITED STATES
`
`19
`
`ing risk corridors in Medicare Part D yet declined to
`provide “budget authority in advance of appropriations
`acts,” as in the corresponding Medicare statute. See 42
`U.S.C. § 1395w-115.3 Budget authority is not necessary to
`create an obligation of the government; it is a means by
`which an officer is afforded that authority. See 2 U.S.C.
`§ 622(2).
`Here, the obligation is created by the statute itself,
`not by the agency. The government cites no authority for
`its contention that a statutory obligation cannot exist
`absent budget authority. Such a rule would be incon-
`sistent with Langston, where the obligation existed inde-
`pendent of any budget authority and independent of a
`sufficient appropriation to meet the obligation.
`We conclude that the plain language of section 1342
`created an obligation of the government to pay partici-
`pants in the health benefit exchanges the full amount
`indicated by the statutory formula for payments out
`under the risk corridors program. We next consider
`whether, notwithstanding that statutory requirement,
`Congress has suspended or repealed that obligation.
`
`3 The fact that the same provision also “represents
`the obligation of the Secretary to provide for the payment
`of amounts provided under this section” cuts both ways.
`42 U.S.C. § 1395w-115. Although Congress never ex-
`pressly stated that section 1342 represented an obligation
`of the Secretary, it used unambiguous mandatory lan-
`guage that in fact set forth such an obligation, especially
`in light of Congress’s intent to make the risk corrid
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
