Moda Health Plan, Inc. v. United States

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.
-------------------------
LAND OF LINCOLN MUTUAL HEALTH
INSURANCE COMPANY, AN ILLINOIS NON-
PROFIT MUTUAL INSURANCE CORPORATION,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-1224
______________________
2 MODA HEALTH PLAN, INC. v. UNITED STATES
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00744-CFL, Judge Charles F.
Lettow.
-------------------------
BLUE CROSS AND BLUE SHIELD OF NORTH
CAROLINA,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2154
______________________
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00651-LKG, Judge Lydia Kay
Griggsby.
-------------------------
MAINE COMMUNITY HEALTH OPTIONS,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2395
______________________
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00967-EGB, Senior Judge Eric G.
Bruggink.
MODA HEALTH PLAN, INC. v. UNITED STATES 3
_____________________
ON PETITIONS FOR REHEARING EN BANC
______________________
STEVEN ROSENBAUM, Covington & Burling LLP,
Washington, DC, filed a petition for rehearing en banc for
plaintiff-appellee in 2017-1994. Also represented by
BRADLEY KEITH ERVIN; CAROLINE BROWN, PHILIP PEISCH,
Brown & Peisch PLLC, Washington, DC.
DANIEL P. ALBERS, Barnes & Thornburg LLP, Chica-
go, IL, filed a petition for rehearing en banc for plaintiff-
appellant in 2017-1224. Also represented by SCOTT E.
PICKENS, Washington, DC; JONATHAN MASSEY, Massey &
Gail LLP, Washington, DC.
LAWRENCE SHER, Reed Smith LLP, Washington, DC,
filed a combined petition for panel rehearing and rehear-
ing en banc for plaintiff-appellant in 2017-2154. Also
represented by KYLE RICHARD BAHR, JAMES CHRISTOPHER
MARTIN, CONOR MICHAEL SHAFFER, COLIN E. WRABLEY,
Pittsburgh, PA.
STEPHEN JOHN MCBRADY, Crowell & Moring, LLP,
Washington, DC, filed a petition for rehearing en banc for
plaintiff-appellant in 2017-2395. Also represented by
CLIFTON S. ELGARTEN, SKYE MATHIESON, DANIEL WILLIAM
WOLFF.
ALISA BETH KLEIN, Appellate Staff, Civil Division,
United States Department of Justice, Washington, DC,
filed a response to the petitions for defendant-appellee in
2017-1224, 2017-2154, 2017-2395 and defendant-
appellant in 2017-1994. Also represented by JOSEPH H.
HUNT, MARK B. STERN, CARLEEN MARY ZUBRZYCKI.
4 MODA HEALTH PLAN, INC. v. UNITED STATES
WILLIAM LEWIS ROBERTS, Faegre Baker Daniels LLP,
Minneapolis, MN, for amici curiae Association for Com-
munity Affiliated Plans, Alliance of Community Health
Plans in 2017-1994. Also represented by JONATHAN
WILLIAM DETTMANN, NICHOLAS JAMES NELSON.
STEVEN ALLEN NEELEY, JR., Husch Blackwell LLP,
Washington, DC, for amicus curiae National Association
of Insurance Commissioners in 2017-1994. Also repre-
sented by KIRSTEN A. BYRD, Kansas City, MO.
URSULA TAYLOR, Strategic Health Law, Chapel Hill,
NC, for amicus curiae Blue Cross Blue Shield Association
in 2017-1994. Also represented by SANDRA J. DURKIN,
Butler Rubin Saltarelli & Boyd LLP, Chicago, IL.
BENJAMIN N. GUTMAN, Oregon Department of Justice,
Salem, OR, for amici curiae State of Oregon, State of
Alaska, State of California, State of Connecticut, State of
Delaware, State of Hawaii, State of Kentucky, State of
Maryland, State of Massachusetts, State of Minnesota,
State of New Mexico, State of North Carolina, State of
Pennsylvania, State of Rhode Island, State of Vermont,
State of Washington, State of Wyoming, District of Co-
lumbia in 2017-1994. Also represented BY ELLEN F.
ROSENBLUM. State of Oregon also represented by
PEENESH SHAH.
LESLIE BERGER KIERNAN, Akin, Gump, Strauss, Hauer
& Feld, LLP, Washington, DC, for amicus curiae Ameri-
ca’s Health Insurance Plans in 2017-1994, 2017-1224.
Also represented by ROBERT K. HUFFMAN, PRATIK A.
SHAH; RUTHANNE MARY DEUTSCH, HYLAND HUNT, Deutsch
Hunt PLLC, Washington, DC; RALPH C. NASH, George
Washington University Law School, Washington, DC.
STEPHEN A. SWEDLOW, Quinn Emanuel Urquhart &
Sullivan, LLP, Chicago, IL, for amici curiae Health Re-
MODA HEALTH PLAN, INC. v. UNITED STATES 5
public Insurance Company, Common Ground Healthcare
Cooperative, Kate Bundorf, Scott Harrington, Mark
Pauly, Michael Chernew, Thomas McGuire, Leemore
Dafny, Kosali Simon in 2017-1224. Amicus curiae Health
Republic Insurance Company also represented by J. D.
HORTON, ADAM WOLFSON, Los Angeles, CA.
______________________
Before PROST, Chief Judge, NEWMAN, LOURIE, DYK,
MOORE, REYNA, WALLACH, TARANTO, CHEN, HUGHES, and
STOLL, Circuit Judges. ∗
NEWMAN, Circuit Judge, with whom WALLACH, Cir-
cuit Judge, joins, dissents from the denial of the petitions
for rehearing en banc.
WALLACH, Circuit Judge, with whom NEWMAN, Circuit
Judge, joins, dissents from the denial of the petitions for
rehearing en banc.
PER CURIAM.
ORDER
Appellee Moda Health Plan, Inc. and appellants Land
of Lincoln Mutual Health Insurance Company and Maine
Community Health Options each filed petitions for re-
hearing en banc. Appellant Blue Cross and Blue Shield of
North Carolina filed a petition for panel rehearing and
rehearing en banc. A response to the petitions was invit-
ed by the court and filed by the United States. Several
motions for leave to file amici curiae briefs were filed and
granted by the court. The petitions for rehearing, re-
sponse, and amici curiae briefs were first referred to the
panel that heard the appeals, and thereafter to the circuit
judges who are in regular active service. A poll was
requested, taken, and failed.
∗
Circuit Judge O’Malley did not participate.
6 MODA HEALTH PLAN, INC. v. UNITED STATES
Upon consideration thereof,
IT IS ORDERED THAT:
The petitions for panel rehearing are denied.
The petitions for rehearing en banc are denied.
The mandates of the court will issue on November 13,
2018.
FOR THE COURT
November 6, 2018 /s/ Peter R. Marksteiner
Date Peter R. Marksteiner
Clerk of Court
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.
-------------------------
LAND OF LINCOLN MUTUAL HEALTH
INSURANCE COMPANY, AN ILLINOIS NON-
PROFIT MUTUAL INSURANCE CORPORATION,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-1224
______________________
2 MODA HEALTH PLAN, INC. v. UNITED STATES
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00744-CFL, Judge Charles F.
Lettow.
-------------------------
BLUE CROSS AND BLUE SHIELD OF NORTH
CAROLINA,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2154
______________________
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00651-LKG, Judge Lydia Kay
Griggsby.
-------------------------
MAINE COMMUNITY HEALTH OPTIONS,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2395
______________________
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00967-EGB, Senior Judge Eric G.
Bruggink.
MODA HEALTH PLAN, INC. v. UNITED STATES 3
_____________________
NEWMAN, Circuit Judge, with whom WALLACH, Circuit
Judge, joins, dissenting from denial of the petition for
rehearing en banc.
The judiciary’s role is to assure fidelity to law and to
the Constitution. The Federal Circuit has a special
responsibility as a national court, for no other circuit
court is in our jurisdictional loop. Thus when questions of
national impact reach us, it devolves upon us to bring the
full potential of the court to bear.
The national impact of these health insurance cases,
coupled with the role of “appropriations riders” as a
legislative tool, led to a split panel decision; and the
ensuing requests for reconsideration have been accompa-
nied by amicus curiae briefs on behalf of the insurance
industry, state governments, economists and other schol-
ars, and the public, advising us on the law, the Constitu-
tion, the legislative process, and the national interest.
From the court’s denial of rehearing en banc, I respectful-
ly dissent.
The facts are simple; the principle large. The critical
question concerns the methods by which the government
deals with non-governmental entities that carry out
legislated programs. Here, in order to persuade the
nation’s health insurance industry to provide insurance to
previously uninsured or uninsurable persons, and thus to
take insurance risks of unknown dimension, the Afforda-
ble Care Act 1 provided that insurance losses over a desig-
nated percentage would be reimbursed, and comparable
profits would be turned over to the government—the “risk
corridors” program.
1 Patient Protection and Affordable Care Act, Pub.
L. No. 111-148, 124 Stat. 119 (2010).
4 MODA HEALTH PLAN, INC. v. UNITED STATES
With this statutory commitment that the government
“shall pay,” 42 U.S.C. § 18062(b), the nation’s insurance
industry provided the designated health insurance.
However, when large losses were experienced by some
carriers, the government refused to appropriate the funds
to pay the statutory shortfall, and required that existing
funds not be used for this purpose. Thus the insurers,
who had performed their part of the bargain, were denied
the promised compensation. My colleagues now ratify
that denial.
This is a question of the integrity of government. “It
is very well to say that those who deal with the Govern-
ment should turn square corners. But there is no reason
why the square corners should constitute a one-way
street.” Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380,
387–88 (1947) (Jackson, J., dissenting); see also 48 C.F.R.
§ 1.102(b)(3) (“The Federal Acquisition System will . . .
[c]onduct business with integrity, fairness, and open-
ness.”). Our system of public-private partnership depends
on trust in the government as a fair partner. And when
conflicting interests arise, assurance of fair dealing is a
judicial responsibility.
I have previously elaborated on the violations of law
and legislative process that apparently are ratified by the
panel majority, see Moda Health Plan, Inc. v. United
States, 892 F.3d 1311, 1331–40 (Fed. Cir. 2018) (Newman,
J., dissenting). On these petitions for rehearing en banc,
many amici curiae have provided advice. For example,
America’s Health Insurance Plans, a national association
of the insurance industry, states:
The panel majority’s opinion, however, now makes
it a risky business to rely upon the government’s
assurances. That deals a crippling blow to health
insurance providers’ business relationships with
the government, which depend upon the provid-
MODA HEALTH PLAN, INC. v. UNITED STATES 5
ers’ ability to trust that the government will act as
a fair partner.
Br. of America’s Health Ins. Plans, Inc. as Amicus Curiae
in Supp. of Reh’g En Banc at 3, Aug. 20, 2018, ECF No.
111.
The amici report that this government action has
caused significant harm to insurers who participated in
the Affordable Care Act program. The National Associa-
tion of Insurance Commissioners informs the court that
“only six of the 24 CO-OPs operating at peak participation
were still in business,” and that the government’s refusal
to make the promised payments “transformed the Ex-
changes from promising to punitive for the insurance
industry.” Br. of Amicus Curiae The Nat’l Ass’n of Ins.
Comm’rs in Supp. of Pl.-Appellee at 12, 14, Aug. 28, 2017,
ECF No. 51. The Court of Federal Claims put it plainly,
that the government’s position that it can renege on its
legislated and contractual commitments “is hardly worthy
of our great government.” Moda Health Plan, Inc. v.
United States, 130 Fed. Cl. 436, 466 (2017).
In the national interest, there is even more at stake
than these promises to the health insurance industry.
The government’s access to private sector products and
services is undermined if non-payment is readily achieved
after performance by the private sector. The Court has
stated that “[i]f the Government could be trusted to fulfill
its promise to pay only when more pressing fiscal needs
did not arise, would-be contractors would bargain wari-
ly—if at all—and only at a premium large enough to
account for the risk of nonpayment.” Salazar v. Ramah
Navajo Chapter, 567 U.S. 182, 191–92 (2012).
Our national strength is our government ruled by law.
The implementation of that rule has been reinforced in
history: “It is as much the duty of Government to render
prompt justice against itself in favor of citizens as it is to
administer the same between private individuals.” Abra-
6 MODA HEALTH PLAN, INC. v. UNITED STATES
ham Lincoln, First Annual Message to Congress (Dec. 3,
1861), reprinted in James D. Richardson, A Compilation
of the Messages and Papers of the Presidents 1789-1897,
vol. VI 44, 51 (1897).
“It is emphatically the province and duty of the judi-
cial department to say what the law is.” Marbury v.
Madison, 5 U.S. (1 Cranch) 137, 177 (1803). At a mini-
mum, this court should review this matter en banc. From
the denials of rehearing, I respectfully dissent.
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.
-------------------------
LAND OF LINCOLN MUTUAL HEALTH
INSURANCE COMPANY, AN ILLINOIS NON-
PROFIT MUTUAL INSURANCE CORPORATION,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-1224
______________________
2 MODA HEALTH PLAN, INC. v. UNITED STATES
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00744-CFL, Judge Charles F.
Lettow.
-------------------------
BLUE CROSS AND BLUE SHIELD OF NORTH
CAROLINA,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2154
______________________
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00651-LKG, Judge Lydia Kay
Griggsby.
-------------------------
MAINE COMMUNITY HEALTH OPTIONS,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2395
______________________
Appeal from the United States Court of Federal
Claims in No. 1:16-cv-00967-EGB, Senior Judge Eric G.
Bruggink.
MODA HEALTH PLAN, INC. v. UNITED STATES 3
_____________________
WALLACH, Circuit Judge, with whom NEWMAN, Circuit
Judge, joins, dissenting from the denial of the petition for
rehearing en banc.
This case involves the obligation of Appellant United
States (“the Government”) to make so-called “risk corri-
dors payments” to providers of certain health insurance
plans, with the payments designed to help insurers miti-
gate risk when joining the new healthcare exchanges
created by the Patient Protection and Affordable Care Act
(“ACA”). See Pub. L. No. 111-148, 124 Stat. 119 (2010).
The panel majority holds that, although it agrees with
Appellee Moda Health Plan, Inc. (“Moda”) that “the plain
language of section 1342 [of the ACA, i.e., 42 U.S.C.
§ 18062 (2012)] created an obligation of the [G]overnment
to pay participants in the health benefit exchanges the
full amount indicated by the statutory formula for pay-
ments out under the risk corridors program,” Moda
Health Plan, Inc. v. United States, 892 F.3d 1311, 1322
(Fed. Cir. 2018), Congress repealed or suspended the
Government’s obligation to make the risk corridors pay-
ments by subsequently enacting riders to appropriations
bills, see id. at 1322, 1331. However, the majority’s
holding regarding an implied repeal of the Government’s
obligation cannot be squared with Supreme Court prece-
dent, which states that “[t]he doctrine disfavoring repeals
by implication applies with full vigor when the subse-
quent legislation is an appropriations measure.” Tenn.
Valley Auth. v. Hill, 437 U.S. 153, 190 (1978) (internal
quotation marks, ellipsis, and citations omitted). Because
I believe the appropriations riders did not impliedly
repeal the Government’s obligations to make risk corri-
dors payments, I respectfully dissent from the denial of
the petition for rehearing en banc.
4 MODA HEALTH PLAN, INC. v. UNITED STATES
DISCUSSION
I. The Government Is Legally Obligated to Make Risk
Corridors Payments
Section 1342(a) of the ACA provides that the Secre-
tary of the U.S. Department of Health and Human Ser-
vices (“HHS”)
shall establish and administer a program of risk
corridors for calendar years 2014, 2015, and 2016
under which a qualified health plan [(“QHP”)] of-
fered in the individual or small group market
shall participate in a payment adjustment system
based on the ratio of the allowable costs of the
plan to the plan’s aggregate premiums.
42 U.S.C. § 18062(a). The ACA provides a statutory
formula whereby HHS receives “[p]ayments in” from QHP
issuers that have excess profits and makes certain
“[p]ayments out” to QHP issuers with excess losses. Id.
§ 18062(b)(1), (2). “Because insurers lacked reliable data
to estimate the cost of providing care for the expanded
pool of individuals seeking coverage via the new [ACA]
exchanges, insurers faced significant risk if they elected
to offer plans in these exchanges,” and the risk corridors
program was “designed to mitigate that risk and discour-
age insurers from setting higher premiums to offset that
risk.” Moda, 892 F.3d at 1314; see id. at 1315 (“The risk
corridors program permitted issuers to lower premiums
by not adding a risk premium to account for perceived
uncertainties in the 2014 through 2016 markets.” (inter-
nal quotation marks, brackets, and citation omitted)).
HHS explained “[t]he risk corridors program is not statu-
torily required to be budget neutral . . . . HHS will remit
payments as required under [§] 1342.” Patient Protection
and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2014, 78 Fed. Reg. 15,410, 15,473
(Mar. 11, 2013).
MODA HEALTH PLAN, INC. v. UNITED STATES 5
Moda, for example, began participating in the health
care exchanges as an issuer of QHPs in 2014. J.A. 61–62.
As of March 2017, Moda was owed the following payments
out under the risk corridors program: “$75,879,282.72 for
benefit year 2014 and $133,951,163.07 for benefit year
2015, for a total of $209,830,445.79.” J.A. 41 (Joint Status
Report); see J.A. 44 (entering judgment, by Court of
Federal Claims, for the total amount).
I agree with the majority that § 1342 obligates the
Government to make risk corridors payments. I begin
with the plain language of § 1342. See BedRoc Ltd. v.
United States, 541 U.S. 176, 183 (2004) (providing that
statutory interpretation “begins with the statutory text”);
see also Sandifer v. U.S. Steel Corp., 571 U.S. 220, 227
(2014) (“It is a fundamental cannon of statutory construc-
tion that . . . words will be interpreted as taking their
ordinary, contemporary, common meaning.” (internal
quotation marks and citation omitted)). Section 1342
uses the word shall to define HHS’s risk corridors obliga-
tions. See 42 U.S.C. § 18062(a) (reciting that HHS “shall
establish and administer a program of risk corridors”
(emphasis added)), (b)(1) (dictating that HHS “shall
provide under the program” certain payments out (em-
phasis added)), (b)(1)(A) (stating that when “a participat-
ing plan’s allowable costs for any plan year are more than
103 percent but not more than 108 percent of the target
amount, [HHS] shall pay to the plan an amount equal to
50 percent of the target amount in excess of 103 percent of
the target amount” (emphasis added)), (b)(1)(B) (stating
that when “a participating plan’s allowable costs for any
plan year are more than 108 percent of the target amount,
[HHS] 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” (emphasis added)).
The word shall typically sets forth a command. See
1A N. Singer & J. Singer, Sutherland on Statutes and
6 MODA HEALTH PLAN, INC. v. UNITED STATES
Statutory Construction § 32A:11 (7th ed. 2009) (“The use
of the word [shall] as a command is now firmly fixed, both
in common speech, in the second and third persons, and in
legal phraseology.”). “Dictionaries from the era
of . . . enactment,” Sandifer, 571 U.S. at 228, establish
that shall generally imposes a mandatory duty, see Shall,
Black’s Law Dictionary (9th ed. 2009) (defining shall as
“[h]as a duty to; more broadly, is required to” and explain-
ing “[t]his is the mandatory sense that drafters typically
intend and that courts typically uphold”); Shall, Webster’s
New World College Dictionary (4th ed. 2009) (explaining
that shall is often “used . . . to express determination,
compulsion, obligation, or necessity”). Although the
“circumstances, or the context of an act” may indicate that
the word shall is to be interpreted as “merely permissive,
rather than imperative,” Sutherland § 32A:11, nothing in
§ 1342 or the ACA indicates that the use of the word shall
in relation to the Government’s obligation to make risk
corridors payments was intended to be interpreted in the
permissive sense, rather than the imperative, see 42
U.S.C. § 18062. See generally Pub. L. No. 111-148, 124
Stat. 119. Indeed, the Supreme Court has routinely
treated the word shall as an imperative. See SAS Inst.
Inc. v. Iancu, 138 S. Ct. 1348, 1352 (2018) (“The word
‘shall’ generally imposes a nondiscretionary duty . . . .”);
Kingdomware Techs., Inc. v. United States, 136 S. Ct.
1969, 1977 (2016) (“Unlike the word ‘may,’ which implies
discretion, the word ‘shall’ usually connotes a require-
ment.”); Lexecon Inc. v. Milberg Weiss Bershad Hynes &
Lerach, 523 U.S. 26, 35 (1998) (“[T]he mandatory
‘shall[]’ . . . normally creates an obligation impervious to
judicial discretion.” (citation omitted)). Therefore, the
plain language of § 1342 requires HHS to make certain
payments out in accordance with the statutory formula
provided therein. See 42 U.S.C. § 18062(b)(1).
Section 1342 establishes this duty without respect to
budgetary considerations, such as achieving budget
MODA HEALTH PLAN, INC. v. UNITED STATES 7
neutrality or availability of appropriations. See id.
§ 18062; see also Greenlee Cty. v. United States, 487 F.3d
871, 878 (Fed. Cir. 2007) (providing a situation where a
statute subjected Government liability for payments to
the county to amounts appropriated by Congress). There-
fore, as the panel majority found, the statutory text
unambiguously obligates the Government to make the full
risk corridors payments. See Moda, 892 F.3d at 1322
(“We conclude that the plain language of [§] 1342 created
an obligation of the [G]overnment to pay participants in
the health benefit exchanges the full amount indicated by
the statutory formula for payments out under the risk
corridors program.” (emphases added)).
II. The Appropriations Riders Did Not Impliedly Repeal
the Government’s Obligation
“As a general rule, repeals by implication are not fa-
vored. This rule applies with especial force when the
provision advanced as the repealing measure was enacted
in an appropriations bill.” United States v. Will, 449 U.S.
200, 221–22 (1980) (emphases added) (internal quotation
marks and citations omitted). “The whole question de-
pends on the intention of Congress as expressed in the
statutes.” United States v. Mitchell, 109 U.S. 146, 150
(1883). The Supreme Court looks for “words that express-
ly, or by clear implication, modified or repealed the previ-
ous law.” United States v. Langston, 118 U.S. 389, 394
(1886).
When Congress passed an appropriations bill to HHS
in December 2014 for fiscal year 2015, it included an
appropriations rider stating:
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,
8 MODA HEALTH PLAN, INC. v. UNITED STATES
may be used for payments under
[§] 1342(b)(1) . . . (relating to risk corridors).
Consolidated and Further Continuing Appropriations Act,
2015 (“FY 2015 Appropriations”), Pub. L. No. 113-235,
div. G, § 227, 128 Stat. 2130, 2491 (emphases added).
Appropriations riders for fiscal years 2016 and 2017
included identical language. Consolidated Appropriations
Act, 2017 (“FY 2017 Appropriations”), Pub. L. No. 115-31,
div. H, title II, § 223, 131 Stat. 135, 543; Consolidated
Appropriations Act, 2016, Pub. L. No. 114-113, div. H,
§ 225, 129 Stat. 2242, 2624. 1
These appropriations riders do not clearly establish
that Congress intended to repeal the Government’s obli-
gation to make risk corridors payments. The riders do not
address whether the obligation remains payable and, at
most, only address from whence the funds to pay the
obligation may come. See, e.g., FY 2015 Appropriations §
227. The present case is similar to Langston, in which the
Supreme Court held that “a statute fixing the annual
salary of a public officer at a named sum, without limita-
tion as to time,” was not “deemed abrogated or suspended
by subsequent enactments which merely appropriated a
less amount . . . and which contained no words that
1 The majority’s holding was limited to the appro-
priations riders for fiscal years 2015 and 2016 because the
appropriations rider for fiscal year 2017 “had not yet been
enacted before this case completed briefing.” Moda, 892
F.3d at 1322 n.4. The majority explained that “[t]he
[G]overnment’s argument [for an implied repeal] applies
equally” to the 2017 appropriations rider. Id. That
appropriations rider became law in May 2017. See gener-
ally FY 2017 Appropriations. The majority’s opinion,
therefore, has the effect of repealing risk corridor pay-
ments for each of the years obligated by § 1342, i.e., 2014–
2016. See 42 U.S.C. § 18062(a).
MODA HEALTH PLAN, INC. v. UNITED STATES 9
expressly, or by clear implication, modified or repealed
the previous law.” 118 U.S. at 394. There, the claimant
held a position, for which a statute indicated a person
serving in that position “shall be entitled to a salary of
$7,500 a year.” Id. at 390 (internal quotation marks and
citation omitted). While in some subsequent appropria-
tions acts Congress appropriated the full $7,500, Congress
appropriated only $5,000 for that particular position in
appropriations acts for fiscal years 1883 and 1884. See id.
at 391. The Supreme Court held the claimant was still
due $7,500 for 1883 and 1884 because the salary “was
originally fixed at the sum of $7,500,” and “[n]either of the
acts appropriating $5,000 . . . contains any language to
the effect that such sum shall be ‘in full compensation’ for
those years” nor did either contain “an appropriation of
money ‘for additional pay,’ from which it might be in-
ferred that [C]ongress intended to repeal the act fixing his
annual salary at $7,500.” Id. at 393. The Supreme Court
found it “not probable that [C]ongress” would “make a
permanent reduction of [claimant’s] salary, without
indicating its purpose to do so, either by express words of
repeal, or by such provisions as would compel the courts
to say that harmony between the old and the new statute
was impossible.” Id. at 394.
Similarly, the appropriations riders at issue, enacted
after Congress imposed the risk corridors payment obliga-
tion in the ACA, appropriated a lower amount. The riders
do not state that this lower amount serves as full satisfac-
tion of the Government’s obligation under § 1342. See,
e.g., FY 2015 Appropriations § 227. Nor do the appropria-
tions riders cut off all sources of funding for the risk
corridors program. See, e.g., id. (specifying particular
funds from which risk corridors payments may not be
made). In Gibney v. United States, our predecessor court
held that appropriations language similar to the riders
here was “a mere limitation on the expenditure of a
particular fund,” and “d[id] not have the effect of either
10 MODA HEALTH PLAN, INC. v. UNITED STATES
repealing or even suspending an existing statutory obliga-
tion any more than the failure to pay a note in the year in
which it was due would cancel the obligation stipulated in
the note.” 114 Ct. Cl. 38, 50–51 (1949); see N.Y. Airways,
Inc. v. United States, 369 F.2d 743, 752 (Ct. Cl. 1966)
(explaining “the failure of Congress . . . to appropriate or
make available sufficient funds does not repudiate the
obligation”).
Akin to the situation here, the appropriations bill in
Gibney stated “none of the funds appropriated for the
Immigration and Naturalization Service shall be used to
pay compensation for overtime services.” 114 Ct. Cl. at 48
(emphases added); see FY 2015 Appropriations § 227
(“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 trans-
ferred from other accounts funded by this Act to the
‘Centers for Medicare and Medicaid Services—Program
Management’ account, may be used for payments under
[§] 1342(b)(1) . . . .” (emphases added)); see also Beer v.
United States, 696 F.3d 1174, 1185 (Fed. Cir. 2012) (en
banc) (holding that a 2001 amendment to an appropria-
tions bill did not impliedly repeal a 1989 law that guaran-
teed judicial cost of living adjustments). Because I believe
§ 1342 is “reasonabl[y] constru[ed]” as setting forth the
Government’s obligation to make risk corridors payments
out and the appropriations riders as simply designating
from which funds the payments out may not be made, I
believe we must “give effect to the provisions of each,”
rather than finding the statutory obligation impliedly
repealed. Langston, 118 U.S. at 393.
Although the majority points to a single statement
made during legislative debates for the 2015 appropria-
tions rider to support its position that each appropriations
rider intended to make the risk corridors program budget
neutral, see Moda, 892 F.3d at 1325, this statement
hardly provides the requisite clear legislative intent for
MODA HEALTH PLAN, INC. v. UNITED STATES 11
an implied repeal. Then-Chairman of the House Commit-
tee on Appropriations Harold Rogers stated:
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
the [Centers for Medicare and Medicaid Services]
Program Management appropriation account from
being used to support risk corridors payments.
160 Cong. Rec. H9838 (daily ed. Dec. 11, 2014). However,
the Supreme Court has indicated “[t]he whole question
depends on the intention of [C]ongress as expressed in the
statutes.” Mitchell, 109 U.S. at 150. It is not appropriate
to rely on Chairman Rogers’s statement to inject ambigui-
ty into the appropriations riders’ plain meaning. See
Gibney, 114 Ct. Cl. at 53 (“We must take what the [appro-
priations bill] says and not what one member of [Con-
gress] might have been under the impression it
contained.”). Even if it is appropriate to look beyond the
text of the statutes, the above statement does not support
the majority’s position. Chairman Rogers did not say that
the 2015 appropriations rider sought to make the risk
corridors program budget neutral; instead, he said that
such was the goal of an HHS regulation and that the 2015
appropriations rider sought to designate from which funds
the payments out may not be made. See 160 Cong. Rec.
H9838 (daily ed. Dec. 11, 2014). Chairman Rogers said
nothing about the 2015 appropriations rider’s effect on
the Government’s obligation to make payments out. See
id.
If anything, I believe it is more probative of legislative
intent that Congress, eight months before it passed the
first appropriations rider, introduced legislation to repeal
the Government’s obligation to make full risk corridors
12 MODA HEALTH PLAN, INC. v. UNITED STATES
payments by requiring budget neutrality, but failed to
pass that legislation. See Obamacare Taxpayer Bailout
Protection Act, S. 2214, § 2, 113th Cong. (2014) (proposing
to add to § 1342 a subsection that states that HHS “shall
ensure that payments out and payments in . . . are pro-
vided for in amounts that [HHS] determines are neces-
sary to reduce to zero the cost”); see also Sinclair Refining
Co. v. Atkinson, 370 U.S. 195, 210 (1962) (“When the
repeal of a highly significant law is urged upon [Congress]
and that repeal is rejected after careful consideration and
discussion, the normal expectation is that courts will be
faithful to their trust and abide by that decision.”), over-
ruled on other grounds by Boys Mkts., Inc. v. Retail Clerks
Union, Local 770, 398 U.S. 235 (1970). Less than two
months after enacting the first of the appropriations
riders, Congress considered but did not pass legislation
solely meant to make the risk corridors program budget
neutral. See Taxpayer Bailout Protection Act, H.R. 724,
§ 2, 114th Cong. (2015) (providing that payments out
should not exceed payments in); Taxpayer Bailout Protec-
tion Act, S. 359, § 2, 114th Cong. (2015) (same). While we
are generally “reluctant to draw inferences from the
failure of Congress to act,” Pac. Gas & Elec. Co. v. State
Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190,
220 (1983), I understand these facts to support a finding
that Congress did not intend the appropriations riders
either to repeal the Government’s obligation to make risk
corridors payments or to decrease the Government’s
exposure to liability by temporarily capping the amount of
payments by making the program budget neutral, see id.
(stating “it would . . . appear improper for us to give a
reading to [an a]ct that Congress considered and reject-
ed”).
While the majority attempts to cast its opinion as
holding “that Congress enacted temporary measures
capping risk corridor payments out at the amount of
payments in,” Moda, 892 F.3d at 1327 (emphasis added),
MODA HEALTH PLAN, INC. v. UNITED STATES 13
this characterization does not withstand scrutiny. Under
the majority’s holding, the appropriations riders have
substantively altered the Government’s § 1342 obligations
for every year of the risk corridors program by no longer
requiring the Government to make payments out subject
to the statutory formula. See id. at 1322; see also 42
U.S.C. § 18062(b)(1) (providing the statutory formula for
payments out). For instance, in the case of Moda, the
Government has not made the full payments out in 2014,
as calculated by the formula, and has not made a single
payment out in 2015. See Moda Health Plan, Inc. v.
United States, 130 Fed. Cl. 436, 448 (2017). Accordingly, I
believe the majority erred in its consideration of the
appropriations riders.
III. This Case Raises an Exceptionally Important Issue
Regarding the Government’s Reliability as an Honest
Broker
The majority’s holding casts doubt on the Govern-
ment’s continued reliability as a business partner in all
sectors. The Government induced health insurance
providers to enter the risky health exchanges through,
inter alia, the risk corridors program. See Bundorf et al.
Amicus Br. (“Economists & Professors Amicus Br.”) 2 3–7,
Land of Lincoln Health Ins. Co. v. United States, No.
2017-1224, ECF No. 188. As the majority acknowledges,
“[b]ecause insurers lacked reliable data to estimate the
cost of providing care for the expanded pool of individuals
seeking coverage via the new [ACA] exchanges, insurers
faced significant risk if they elected to offer plans in these
exchanges.” Moda, 892 F.3d at 1314. The risk corridors
program was “designed to mitigate that risk and discour-
age insurers from setting higher premiums to offset that
2 This amicus brief was submitted by “distinguished
economists and professors of health policy, economics, and
management.” Economists & Professors Amicus Br. 1.
14 MODA HEALTH PLAN, INC. v. UNITED STATES
risk” by “permit[ting] issuers to lower premiums by not
adding a risk premium to account for perceived uncertain-
ties in the 2014 through 2016 markets.” Id. at 1314, 1315
(internal quotation marks, brackets, and citation omit-
ted). Therefore, “[b]y reducing the risk of participating in
a newly created market, the Government encouraged
firms to enter a new market[, i.e., the health care ex-
changes,] characterized by considerable uncertainty in the
risk profile of potential enrollees (and, thus, profitabil-
ity).” Economists & Professors Amicus Br. 6.
QHP issuers, like Moda, entered the health care ex-
changes and set premiums with the belief that they would
receive risk corridors payments, see J.A. 61–62, and
Congress, subsequently, passed the relevant appropria-
tions riders, see, e.g., FY 2015 Appropriations § 227. To
hold that the Government can abrogate its obligation to
pay through appropriations riders, after it has induced
reliance on its promise to pay, severely undermines the
Government’s credibility as a reliable business partner.
For example, the ACA also “clearly and unambiguously
imposes an obligation on . . . HHS to make payments to
health insurers that have implemented cost-sharing
reductions on their covered plans,” Montana Health Co-
Op v. United States, No. 18-143C, 2018 WL 4203938, at *5
(Fed. Cl. Sept. 4, 2018), but the Government refused to
make those payments for reasons similar to those here,
see id. at *1.
The Government’s refusal to honor its obligation has
important consequences. “Based on the Government’s
own official calculations, QHP [i]ssuers are owed about
$12.3 billion dollars for the 2014–2016 plan years.”
Health Republic Ins. Co. & Common Ground Healthcare
Cooperative’s Amicus Br. (“Health Republic Amicus
Br.”) 9, Land of Lincoln Health Ins. Co. v. United States,
No. 2017-1224, ECF No. 189; see Moda, 892 F.3d at 1319
(acknowledging that the Government’s shortfall of pay-
ments out equaled “more than $12 billion”). These short-
MODA HEALTH PLAN, INC. v. UNITED STATES 15
falls have negatively affected not only health insurance
providers but also health insurance recipients. For in-
stance, by the end of 2016, eighteen of twenty-four health
cooperatives that were participating in the exchanges
were no longer in business because a lack of capital, in
part, due to the lack of risk corridors payments. Nat’l
Ass’n of Ins. Comm’rs Amicus Br. 12–13, Moda Health
Plan, Inc. v. United States, No. 2017-1994, ECF No. 51.
Several health insurance companies “withdrew from the
ACA exchanges entirely,” and others still offering plans
“had to compensate for this uncertainty in payment by
offering health plans at higher prices than before.”
Health Republic Amicus Br. 11 (emphasis added). These
consequences, which impact the cost of health care insur-
ance for virtually all Americans, make this case fit for en
banc consideration.
CONCLUSION
Rather than faithfully applying Supreme Court and
our precedent disfavoring repeals by implication, see, e.g.,
Tenn. Valley Auth., 437 U.S. at 190, the majority holds
that Congress clearly manifested its intent to repeal the
Government’s statutory obligation to make risk corridors
payments pursuant to the ACA’s formula, see 42 U.S.C.
§ 18062, through appropriations riders. I believe this
conclusion is unsound. Thus, I respectfully dissent from
the court’s denial of the petition for rehearing en banc as
to all of the above-captioned cases.