Moda Health Plan, Inc. v. United States , 892 F.3d 1311 ( 2018 )

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.
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
(“CBO Cost Estimate”), https://www.cbo.gov/
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 corridors
program in the ACA “based on” Medicare’s obligatory
program. The government offers no basis for concluding
that stating the “obligation of the Secretary” outright is
the sine qua non of finding an obligation here. The plain
language of the statute controls.
20 MODA HEALTH PLAN, INC. v. UNITED STATES
B. The Effect of the Appropriations Riders
The government next argues the riders in the appro-
priations bills for FY 2015 and FY 2016 repealed or
suspended its obligation to make payments out in an
aggregate amount exceeding payments in. 4 We agree.
Repeals by implication are generally disfavored, but
“when Congress desires to suspend or repeal a statute in
force, ‘[t]here can be no doubt that . . . it could accomplish
its purpose by an amendment to an appropriation bill, or
otherwise.’” United States v. Will, 449 U.S. 200, 221–22
(1980) (quoting United States v. Dickerson, 310 U.S. 554,
555 (1940)). Whether an appropriations bill impliedly
suspends or repeals substantive law “depends on the
intention of [C]ongress as expressed in the statutes.”
United States v. Mitchell, 109 U.S. 146, 150 (1883). The
central issue on Moda’s statutory claim, therefore, is
whether the appropriations riders adequately expressed
Congress’s intent to suspend payments on the risk corri-
dors program beyond the sum of payments in. We con-
clude the answer is yes.
Moda contends, however, this issue is also controlled
by Langston. There, as discussed above, the Supreme
Court held that a bare failure to appropriate funds to
meet a statutory obligation could not vitiate that obliga-
tion because it carried no implication of Congress’s intent
to amend or suspend the substantive law at issue. Lang-
ston, 118 U.S. at 394.
Just three years before Langston, however, the Su-
preme Court held that a statute that had set the salaries
of certain interpreters at a fixed sum “in full of all emol-
uments whatsoever” had been impliedly amended, where
4 The government’s argument applies equally to FY
2017, though that appropriations bill had not yet been
enacted before this case completed briefing.
MODA HEALTH PLAN, INC. v. UNITED STATES 21
Congress appropriated funds less than the fixed sum set
by statute, with a separate sum set aside for additional
compensation at the discretion of the Secretary of the
Interior. Mitchell, 109 U.S. at 149. The Court held:
This course of legislation . . . distinctly reveal[ed]
a change in the policy of [C]ongress on the subject,
namely that instead of establishing a salary for
interpreters at a fixed amount, and cutting off all
other emoluments and allowances, [C]ongress in-
tended to reduce the salaries and place a fund at
the disposal of the [S]ecretary of the [I]nterior,
from which, at his discretion, additional emolu-
ments and allowances might be given to the inter-
preters.
Id. at 149–50. Thus, “for the time covered by those”
appropriations bills, the intent of Congress was “plain on
the face of the statute.” Id. at 150.
Langston expressly distinguished Mitchell because
the appropriations bills in Mitchell implied “that
[C]ongress intended to repeal the act” setting a fixed
salary, with “additional pay” to be provided at the Secre-
tary’s discretion. Langston, 118 U.S. at 393. By contrast,
Congress had “merely appropriated a less amount” for
Langston’s salary. Id. at 394.
The question before us, then, is whether the riders on
the CMS Program Management appropriations supplied
the clear implication of Congress’s intent to impose a new
payment methodology for the time covered by the appro-
priations bills in question, as in Mitchell, or if Congress
merely appropriated a less amount for the risk corridors
program, as in Langston.
The Supreme Court has noted Langston “expresses
the limit in that direction.” Belknap v. United States, 150
U.S. 588, 595 (1893). The jurisprudence in the century
and a half since Langston has cemented that decision’s
22 MODA HEALTH PLAN, INC. v. UNITED STATES
place as an extreme example of a mere failure to appro-
priate. 5 Our case falls clearly within the core of subse-
quent decisions wherein appropriations bills carried
sufficient implication of repeal, amendment, or suspen-
sion of substantive law to effect that purpose, as in Mitch-
ell.
In United States v. Vulte, 233 U.S. 509 (1914), the Su-
preme Court considered a series of enactments concerning
bonuses for Marine Corps officers serving abroad. A 1902
act established a ten percent bonus for all such officers
and appropriated funds accordingly. In 1906 and 1907,
appropriations for the payment of that bonus carried a
rider specifying that the funds could be used to pay offic-
ers serving “beyond the limits of the states comprising the
Union of the territories of the United States contiguous
thereto (except P[ue]rto Rico and Hawaii).” Id. at 512–13
(emphasis added) (citations omitted). The appropriations
for 1908 contained no such rider and stated the increase
of pay for officers serving abroad “shall be as now provid-
ed by law.” Id. at 513 (citation omitted).
An officer serving in Puerto Rico in 1908 sought com-
pensation accounting for the ten percent bonus enacted in
1902. The Supreme Court rejected the government’s
position that the exception in the appropriations bills of
1906 and 1907 impliedly repealed the 1902 act, noting
that the appropriations riders lacked any “words of pro-
spective extension” indicating a permanent change in the
law. Id. at 514. Nevertheless, the Supreme Court
acknowledged the appropriation riders did indicate Con-
5 Contrary to the suggestion of the dissent, dissent
at 8, we do not discard Langston due to its age, rather, we
simply acknowledge the extensive body of decisions since
it was decided that treat it as an outer bound, consistent
with the Supreme Court’s view in Belknap.
MODA HEALTH PLAN, INC. v. UNITED STATES 23
gress’s intent to “temporarily suspend as to P[ue]rto Rico
and Hawaii” the ten percent bonus in 1906 and 1907. Id.
In Dickerson, the Supreme Court considered the effect
of various appropriations riders on a reenlistment bonus
authorized by Congress in 1922. 310 U.S. at 555–56.
After several years in force, an appropriations rider
expressly suspended the bonus for the fiscal years ending
in 1934–1937. Id. at 556. The text of the rider changed in
the appropriations bill for the fiscal year ending in 1938.
That bill omitted the express suspension, noting only that
“no part of any appropriation contained in this or any
other Act for the fiscal year ending June 30, 1938, shall be
available for the payment” of, inter alia, the reenlistment
bonus. Id.
The appropriations bill for the fiscal year ending in
1939 repeated that language. Id. at 555. Floor debates
showed that Congress intended the new language to carry
the same restriction expressed in the earlier appropria-
tions bills. Id. at 557–61. The Supreme Court held that
the appropriations bill for the fiscal year ending in 1939
evinced Congress’s intent to suspend the reenlistment
bonus in light of persuasive evidence to that effect. Id. at
561.
Finally, in Will, the Supreme Court considered the ef-
fect of appropriations riders on a set of statutes establish-
ing annual pay raises for certain officials, including
federal judges. 449 U.S at 204–05 (citing 5 U.S.C.
§ 5505). Over a span of four years, Congress passed
appropriations acts with riders limiting the use of funds
to pay the increases for federal judges, among others. See
id. at 205–09. The first such rider provided that “no part
of the funds appropriated in this Act or any other Act
shall be used to pay the salary of an individual in a posi-
tion or office referred to in” the act providing for the pay
raises for federal judges. Id. at 206 (quoting Legislative
24 MODA HEALTH PLAN, INC. v. UNITED STATES
Branch Appropriation Act, 1977, Pub. L. 94-440, 90 Stat.
1439, Title II).
The dispute in Will concerned whether the effect of
the appropriations riders ran afoul of the Compensation
Clause of the Constitution. Before reaching that issue,
however, the Supreme Court first rejected the judges’
contention that the appropriations bills did “no more than
halt funding for the salary increases.” Id. at 221. Ac-
knowledging the general rule disfavoring repeals by
implication and its “especial force” when the alleged
repeal occurred in an appropriations bill, the Court held
that in each of the four appropriations acts in question,
“Congress intended to repeal or postpone previously
authorized increases.” Id. at 221–22. This was true
although the riders in years 1, 3, and 4 were “phrased in
terms of limiting funds.” Id. at 223. The Court’s conclu-
sion was bolstered by floor debates occurring in year 3 of
the appropriations riders as well as language expressly
suspending the pay raises in year 2, but it concluded the
rider in year 1 indicated that same clear intent:
These passages indicate[d] clearly that Congress
intended to rescind these rates entirely, not simp-
ly to consign them to the fiscal limbo of an account
due but not payable. The clear intent of Congress
in each year was to stop for that year the applica-
tion of the Adjustment Act.
Id. at 224.
Congress clearly indicated its intent here. It asked
GAO what funding would be available to make risk corri-
dors payments, and it cut off the sole source of funding
identified beyond payments in. It did so in each of the
three years of the program’s existence. And the explana-
tory statement regarding the amendment containing the
first rider of House Appropriations Chairman Rogers
confirms that the appropriations language was added
with the understanding that HHS’s intent to operate the
MODA HEALTH PLAN, INC. v. UNITED STATES 25
risk corridors program as a budget neutral program
meant the government “will never pay out more than it
collects from issuers over the three year period risk corri-
dors are in effect.” 160 Cong. Rec. H9838 (daily ed. Dec.
11, 2014). Plainly, Congress used language similar to the
appropriations riders in Vulte, Dickerson, and Will (and
quite clearer than the language in Mitchell) to temporari-
ly cap the payments required by the statute at the
amount of payments in for each of the applicable years—
just as those decisions altered statutory payment method-
ologies. 6
What else could Congress have intended? It clearly
did not intend to consign risk corridors payments “to the
fiscal limbo of an account due but not payable.” See Will,
449 U.S. at 224.
Moda contends that notwithstanding the similarities
between our case and the foregoing authority, Congress
simply intended to limit the use of a single source of
funding while leaving others available. Moda points out
that the appropriations riders in Dickerson and Will
foreclosed the use of funding provided by that appropria-
tions act “or any other act,” while the riders here omit
that global restriction. Compare Dickerson, 310 U.S. at
556, and Will, 449 U.S. at 206, with Consolidated and
Further Continuing Appropriations Act, 2015, § 227, 128
Stat. at 2491. But the Supreme Court never considered
the impact of that language in Dickerson or Will, and it
6 We do not “ratif[y] an ‘indefinite suspension’ of
payment,” dissent at 7, or a “permanent postponement,”
id. at 16. We hold only that Congress effected a suspen-
sion applicable to the fiscal years covered by each appro-
priations bill containing the rider, which corresponded to
each fiscal year in which risk-corridor payments came
due.
26 MODA HEALTH PLAN, INC. v. UNITED STATES
found effective suspensions-by-appropriations in Mitchell
and Vulte even absent that language.
Moda suggests that restricting access to funds from
“any other act” was necessary to foreclose HHS from
using funds that remained available. It points to the
CMS Program Management appropriation for FY 2014
(before the risk corridors program began and before any
appropriations riders had been enacted) as well as the
Judgment Fund, a standing appropriation for the purpose
of paying certain judgments against the government. We
address each in turn.
In response to a request of Congress, GAO concluded
that the FY 2014 CMS Program Management fund “would
have been available for risk-corridors payments.” See
GAO Report at *3. According to Moda, this means HHS
could have used funds from the FY 2014 appropriation to
make risk corridors payments for the 2015 benefit year
(which concluded in FY 2015). Not so. GAO’s opinion
only addressed what funds from FY 2014 would have been
available for risk corridors payments had any such pay-
ments been among the “other responsibilities” of CMS for
that fiscal year. That appropriation expired in FY 2014.
See 128 Stat. at 5 (“The following sums in this Act are
appropriated . . . for the fiscal year ending September 30,
2014.”). GAO specifically noted that “for funds to be
available for this purpose in FY 2015, the CMS PM ap-
propriation for FY 2015 must include language similar to
the language included in the CMS PM appropriation for
FY 2015.” Id. at *5. Of course, Congress enacted the
rider for FY 2015 instead.
GAO’s opinion was correct. Under section 1342, HHS
could not have collected or owed payments out or pay-
ments in during FY 2014 because the statute required
calculations based on allowable costs for a plan year and
the program was to run for calendar years 2014, 2015,
and 2016. Thus, HHS could not have been responsible for
MODA HEALTH PLAN, INC. v. UNITED STATES 27
payments out until, at the earliest, the end of calendar
year 2014, which occurred during FY 2015.
Likewise, the CMS Program Management appropria-
tions in the continuing resolutions enacted at the end of
calendar year 2014 (during FY 2015) expired in December
2014, when Congress enacted the FY 2015 appropriations
act (and the first rider in question)—still before HHS
could have even calculated the payments in and payments
out under the risk corridors program.
Moda’s reliance on the Judgment Fund is also mis-
placed. The Judgment Fund is a general appropriation of
“[n]ecessary amounts” in order “to pay final judgments”
and other amounts owed via litigation against the gov-
ernment, subject to several conditions. 31 U.S.C.
§ 1304(a). The Judgment Fund “does not create an all-
purpose fund for judicial disbursement.” Office of Pers.
Mgmt. v. Richmond, 496 U.S. 414, 431 (1990). Rather,
access to the Judgment Fund presupposes liability.
Moda’s contention that the government’s liability persists
because it could pay what it owed under the statutory
scheme from the Judgment Fund reverses the inquiry.
The question is what Congress intended, not what funds
might be used if Congress did not intend to suspend
payments in exceeding payments out.
As discussed above, Congress’s intent to temporarily
cap payments out at the amount of payments in was clear
from the appropriations riders and their legislative histo-
ry. It did not need to use Moda’s proposed magic words,
“or any other act,” to foreclose resort to the Judgment
Fund. We simply cannot infer, as Moda’s position would
require, that upon enacting the appropriations riders,
Congress intended to preserve insurers’ statutory enti-
tlement to full risk corridors payments but to require
insurers to pursue litigation to collect what they were
entitled to. That theory cannot displace the plain implica-
28 MODA HEALTH PLAN, INC. v. UNITED STATES
tion of the language and legislative history of the appro-
priations riders.
Moda points out that Congress’s intent regarding the
appropriations riders must be understood with the con-
text of other legislative efforts surrounding the ACA and
the risk corridors program in particular. For example,
Moda points to Congress’s failed attempt to enact legisla-
tion requiring budget neutrality for the risk corridors
program. See, e.g., Obamacare Taxpayer Bailout Protec-
tion Act, S. 2214, 113th Cong. (2014). But we need not
and do not conclude that Congress achieved through
appropriations riders what it failed to do with permanent
legislation. Rather, we only hold that Congress enacted
temporary measures capping risk corridor payments out
at the amount of payments in, and it did so for each year
the program was in effect. (We need not address, for
example, what would have occurred if Congress had failed
to include the rider in one of the acts appropriating funds
for the fiscal years in which payments came due or if it
had affirmatively appropriated funds through some other
source.)
It is also irrelevant that the President signed the bills
containing the appropriations riders, even as he threat-
ened to veto any bill rolling back the ACA, as Moda points
out. See, e.g., Gregory Korte, Obama Uses Veto Pen
Sparingly, But Could That Change?, USA TODAY, Nov. 19,
2014 (noting that President Obama had threatened to
veto twelve different bills that would have repealed or
amended the ACA), http://www.usatoday.com/story/news/
politics/2014/11/19/obama-veto-threats/19177413/. Again,
we do not hold that the appropriations riders effected any
permanent amendment. Moreover, Moda has offered no
evidence that President Obama expressed any specific
views of the implications of these appropriations riders
before or after signing, much less evidence that could
overcome the clear implication of the text of the riders
and the surrounding legislative history.
MODA HEALTH PLAN, INC. v. UNITED STATES 29
Moda also contends that two decisions from our pre-
decessor court, New York Airways, 369 F.2d at 743, and
Gibney v. United States, 114 Ct. Cl. 38 (1949), demon-
strate that the appropriations riders here do not carry
such strong implications. In New York Airways, our
predecessor court held that Congress’s failure to appro-
priate sufficient funds to pay for services at a rate set by a
government agency did not defeat the obligation to pay
the full amount. 369 F.2d at 746. Floor debates indicated
that “Congress was well-aware that the Government
would be legally obligated to pay . . . even if the appropri-
ations were deficient.” Id. The court noted that Congress
viewed the obligation “as a contractual obligation enforce-
able in the courts which could be avoided only by chang-
ing the substantive law under which the Board set the
rates, rather than by curtailing appropriations,” and the
agency made its similar view of the obligation clear to
Congress. Id. at 747.
Here, the risk corridors program is an incentive pro-
gram, not a quid pro quo exchange for services rendered
like that in New York Airways. Moreover, it is much
clearer here that Congress understood the appropriations
riders to suspend substantive law, inasmuch as the ap-
propriations riders directly responded to GAO’s identifica-
tion of only two sources of funding for the program.
In Gibney, a statute provided that certain employees
of the Immigration and Naturalization Service would be
paid overtime at a particular rate. Two subsequent
statutes extended a more stringent overtime rate to other
federal employees, while expressly leaving the prior rate
for INS in place. A rider in an appropriations bill provid-
ed that “none of the funds appropriated for the Immigra-
tion and Naturalization Service shall be used to pay
compensation for overtime services other than as provided
in” the latter two acts. 114 Ct. Cl. at 48–49. INS agents
who received overtime payments at the more stringent
30 MODA HEALTH PLAN, INC. v. UNITED STATES
rate fixed in the latter acts sought payment at the earlier
rate.
That rider, according to the Gibney court, constituted
“a mere limitation on the expenditure of a particular fund
and had no other effect,” so it could not limit the overtime
rate available to an INS agent. Id. at 51. But the court’s
holding ultimately rested on a different point—that
limiting overtime payments “as provided in” the new acts
had no effect on the rate for INS agents, since the new
acts expressly preserved their special overtime rate. The
appropriations rider did “not even purport to affect the
right of immigration inspectors to overtime pay as provid-
ed in the” earlier act. Id. at 55. The interpretation of the
appropriations riders in Gibney cannot be viewed in
isolation of its alternative holding, and there is no safety
valve built into the ACA to preserve the government’s
obligation notwithstanding Congress’s suspension of it.
Accordingly, Gibney is inapposite.
After oral argument in this case had occurred, Moda
filed a citation of supplemental authority as permitted by
Rule 28(j) of the Federal Rules of Appellate Procedure,
indicating that HHS had released a proposed budget for
FY 2019, including a proposal indicating an $11.5 billion
outlay for risk corridors payments in FY 2018 (reflective
of the effect of sequestration on the total $12.3 billion
outstanding) and noting a “legislative proposal to fully
fund the Risk Corridors Program.” See Appellee’s Fed. R.
App. P. 28(j) Notice Suppl. Auth. (“Moda 28(j) Letter”)
(Feb. 16, 2018), ECF No. 83, Exh. A (Putting America’s
Health First, FY 2019 President’s Budget for HHS at 51 &
n.5 & n.7, 54, 93 n.7 (2018)). 7
7 A revised budget, released just days after Moda
submitted the initial draft to the court, omitted the lan-
guage Moda referred to. See generally Putting America’s
MODA HEALTH PLAN, INC. v. UNITED STATES 31
According to Moda, this refutes the government’s po-
sitions on its statutory claims. In particular, Moda states,
“if the appropriation riders had substantively amended
the ACA, the government would have no basis now to be
proposing to appropriate funds to fulfill the entirety of its
[risk corridor] obligations.” Moda 28(j) Letter at 2.
Moda again misunderstands the inquiry. The ques-
tion is what intent was communicated by Congress’s
enactments in the appropriations bills for FY 2015–2017.
It is irrelevant that a subsequent Administration pro-
posed a budget that set aside funds to make purported
outstanding risk corridors payments. Of course, Congress
could conceivably reinstate an obligation to make full
payments, even now after the program has concluded.
But the proposed budget does not place that question
before us.
The intent of Congress remains clear. After GAO
identified only two sources of funding for the risk corri-
dors program—payments in and the CMS Program Man-
agement fund—Congress cut off access to the only fund
drawn from taxpayers. A statement discussing that
enactment acknowledged “that the federal government
will never pay out more than it collects from issuers over
the three year period risk corridors are in effect.” 160
Cong. Rec. H9838. Congress could have meant nothing
else but to cap the amount of payments out at the amount
Health First, FY 2019 President’s Budget for HHS (2018)
(rev. Feb. 19, 2018), https://www.hhs.gov/sites/default/
files/fy2019-budget-in-brief.pdf. The budget released by
the White House, however, included remnants of HHS’s
initial draft. An American Budget, Budget of the U.S.
Government, Fiscal Year 2019 at 132, 141 (2018), OMB
https://www.whitehouse.gov/wp-content/uploads/2018/02/
budget-fy2019.pdf.
32 MODA HEALTH PLAN, INC. v. UNITED STATES
of payments in for each of the three years it enacted
appropriations riders to that effect.
Moda contends that this result is inconsistent with
the purpose of the risk corridors program. Perhaps. But
it also seems that Congress expected the program to have
minimal, if any, budget impact (even though we hold the
text of section 1342 allowed for unbounded budget im-
pact). Congress could not have predicted the shifting
sands of the transitional policy implemented by HHS,
which Moda blames for the higher costs it and other
insurers bore through their participation in the exchang-
es. In response to that turn of events, Congress made the
policy choice to cap payments out, and it remade that
decision for each year of the program. We do not sit in
judgment of that decision. We simply hold that the ap-
propriations riders carried the clear implication of Con-
gress’s intent to prevent the use of taxpayer funds to
support the risk corridors program.
Thus, Moda’s statutory claim cannot stand.
II. Contract Claim
Moda also asserts an independent claim for breach of
an implied-in-fact contract that purportedly promised
payments of the full amount indicated by the statutory
formula in exchange for participation in the exchanges.
The requirements for establishing a contract with the
government are the same for express and implied con-
tracts. Trauma Serv. Grp. v. United States, 104 F.3d
1321, 1325 (Fed. Cir. 1997). They are (1) “mutuality of
intent to contract,” (2) “consideration,” (3) “lack of ambi-
guity in offer and acceptance,” and (4) “actual authority”
of the government representative whose conduct is relied
upon to bind the government. Lewis v. United States, 70
F.3d 597, 600 (Fed. Cir. 1995).
Absent clear indication to the contrary, legislation
and regulation cannot establish the government’s intent
MODA HEALTH PLAN, INC. v. UNITED STATES 33
to bind itself in a contract. Nat’l R.R. Passenger Corp. v.
Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451, 465–
66 (1985). We apply a “presumption that ‘a law is not
intended to create private contractual or vested rights but
merely declares a policy to be pursued until the legisla-
ture shall ordain otherwise.’” Id. (quoting Dodge v. Board
of Educ., 302 U.S. 74, 79 (1937)). This is because the
legislature’s function is to make laws establishing policy,
not contracts, and policies “are inherently subject to
revision and repeal.” Id. at 466.
Moda does not contend that the government mani-
fested intent via the text of section 1342 alone. Indeed,
the statute contains no promissory language from which
we could find such intent. Instead, Moda alleges a con-
tract arising “from the combination of [the statutory] text,
HHS’s implementing regulations, HHS’s preamble state-
ments before the ACA became operational, and the con-
duct of the parties, including relating to the transitional
policy.” Appellee’s Br. 55.
The centerpiece of Moda’s contract theory (and the
foundation for the trial court’s decision in this case) is
Radium Mines, Inc. v. United States, 153 F. Supp. 403
(Ct. Cl. 1957). There, the Atomic Energy Commission
issued regulations titled “Ten Year Guaranteed Minimum
Price,” in order “[t]o stimulate domestic production of
uranium.” Id. at 404–05. The regulations established
guaranteed minimum prices for uranium delivered to the
commission, with specific conditions required for entitle-
ment to the minimum price. Id.
The court observed that the title of the regulation in-
dicated that the government would “guarantee” the prices
recited and that the regulation’s “purpose was to induce
persons to find and mine uranium,” when, due to re-
strictions on private transactions in uranium, “no one
could have prudently engaged in its production unless he
was assured of a Government market.” Id. at 405–06.
34 MODA HEALTH PLAN, INC. v. UNITED STATES
The court rejected the government’s position that the
regulations constituted a mere invitation to make an
offer, holding instead that the regulation itself constituted
“an offer, which ripened into a contract when it was
accepted by the plaintiff’s putting itself into a position to
supply the ore or the refined uranium described in it.” Id.
at 405.
Moda contends that here, the statute, its implement-
ing regulations, and HHS’s conduct all evinced the gov-
ernment’s intent to induce insurers to offer plans in the
exchanges without an additional premium accounting for
the risk of the dearth of data about the expanded market,
in reliance on the presence of a fairly comprehensive
safety net. But the overall scheme of the risk corridors
program lacks the trappings of a contractual arrangement
that drove the result in Radium Mines. There, the gov-
ernment made a “guarantee,” it invited uranium dealers
to make an “offer,” and it promised to “offer a form of
contract” setting forth “terms” of acceptance. Id. at 404–
05; see N.Y. Airways, 369 F.2d at 752 (finding intent to
form a contract where Congress specifically referred to
“Liquidation of Contract Authorization”). Not so here.
The risk corridors program is an incentive program
designed to encourage the provision of affordable health
care to third parties without a risk premium to account
for the unreliability of data relating to participation of the
exchanges—not the traditional quid pro quo contemplated
in Radium Mines. Indeed, an insurer that included that
risk premium, but nevertheless suffered losses for a
benefit year as calculated by the statutory and regulatory
formulas would still be entitled to seek risk corridors
payments.
Additionally, the parties in Radium Mines, one of
which was the government, never disputed that the
government intended to form some contractual relation-
ship at some time throughout the exchange. The only
MODA HEALTH PLAN, INC. v. UNITED STATES 35
question there was whether the regulations themselves
constituted an offer, or merely an invitation to make
offers. Radium Mines is only precedent for what it decid-
ed. See Orenshteyn v. Citrix Sys., Inc., 691 F.3d 1356,
1360 (Fed. Cir. 2012) (“Generally, when an issue is not
discussed in a decision, that decision is not binding prece-
dent.”).
Here, no statement by the government evinced an in-
tention to form a contract. The statute, its regulations,
and HHS’s conduct all simply worked towards crafting an
incentive program. These facts cannot overcome the
“well-established presumption” that Congress and HHS
never intended to form a contract by enacting the legisla-
tion and regulation at issue here.
Accordingly, Moda cannot state a contract claim.
* * *
Because we conclude that the government does not
owe Moda anything in excess of its pro rata share of
payments in, we need not address whether payments
were due annually or only at the end of the three-year
period covered by the risk corridors program.
CONCLUSION
Although section 1342 obligated the government to
pay participants in the exchanges the full amount indi-
cated by the formula for risk corridor payments, we hold
that Congress suspended the government’s obligation in
each year of the program through clear intent manifested
in appropriations riders. We also hold that the circum-
stances of this legislation and subsequent regulation did
not create a contract promising the full amount of risk
corridors payments. Accordingly, we hold that Moda has
failed to state a viable claim for additional payments
under the risk corridors program under either a statutory
or contract theory.
36 MODA HEALTH PLAN, INC. v. UNITED STATES
REVERSED
COSTS
The parties shall bear their own costs.
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.
______________________
NEWMAN, Circuit Judge, dissenting.
The United States and members of the health insur-
ance industry, in connection with the program referred to
as “Obamacare,” agreed to a three-year plan that would
mitigate the risk of providing low-cost insurance to previ-
ously uninsured and underinsured persons of unknown
health risk. This risk-abatement plan is included in the
Patient Protection and Affordable Care Act, Pub. L. No.
111-148, 124 Stat. 119 (2010) (ACA). As described by the
2 MODA HEALTH PLAN, INC. v. UNITED STATES
Court of Federal Claims, 1 the “risk corridors” provision
accommodates the unpredictable risk of the extended
healthcare programs. By this provision, the government
will “‘share in profits or losses resulting from inaccurate
rate setting from 2014 to 2016.’” Fed. Cl. Op., 130 Fed.
Cl. at 444 (quoting HHS Notice of Benefit and Payment
Parameters for 2014, 77 Fed. Reg. 73,118, 73,121 (Dec. 7,
2012)). The risk corridors program was enacted as Sec-
tion 1342 of the Affordable Care Act, and is codified in
Section 18062 of Title 42. Subsection (a) is as follows:
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 [the Medicare Act].
42 U.S.C. § 18062(a). The statute contains a detailed
formula for this risk corridors sharing of profits and
losses. Healthcare insurers throughout the nation, in-
cluding Moda Health Plan, accepted and fulfilled the new
healthcare procedures, in collaboration with administra-
tion of the ACA by the Centers for Medicare and Medicaid
Services (CMS) in the Department of Health and Human
Services (HHS).
Many health insurers soon experienced losses, at-
tributed at least in part to a governmental action called
1 Moda Health Plan, Inc. v. United States, 130 Fed.
Cl. 436 (2017) (“Fed. Cl. Op.”).
MODA HEALTH PLAN, INC. v. UNITED STATES 3
the “transitional policy.” Reassurance was presented, and
Moda (and others) continued to perform their obligations.
Although the government continued to collect “payments
in” from insurers who more accurately predicted risk, the
government has declined to pay its required risk corridors
amounts, by restricting the funds available for the “pay-
ments out.”
The Court of Federal Claims held the government to
its statutory and contractual obligations to Moda. My
colleagues do not. I respectfully dissent.
The Court of Federal Claims interpreted the statute
in accordance with its terms
The ACA provides the risk corridors formula, estab-
lishing that the insurer will make “payments in” to the
government for the insurer’s excess profits as calculated
by the formula, and “payments out” from the government
for the insurer’s excess losses. The formula was enacted
into statute:
The Secretary shall provide under the program
established under subsection (a) that if—
(A) a participating plan’s allowable costs for any
plan year are more than 103 percent but not more
than 108 percent of the target amount, the Secre-
tary shall pay to the plan an amount equal to 50
percent of the target amount in excess of 103 per-
cent of the target amount; and
(B) a participating plan’s allowable costs for any
plan year are more than 108 percent of the target
amount, the Secretary shall pay to the plan an
amount equal to the sum of 2.5 percent of the tar-
get amount plus 80 percent of allowable costs in
excess of 108 percent of the target amount.
42 U.S.C. § 18062(b). In March 2012, HHS issued regula-
tions for the risk corridors program, stating that Qualified
4 MODA HEALTH PLAN, INC. v. UNITED STATES
Health Plans (QHPs) “will receive payment” or “must
remit charges” depending on their gains or losses. 45
C.F.R. § 153.510(b), (c). In March 2013, HHS stated:
The risk corridors program is not statutorily re-
quired to be budget neutral. Regardless of the
balance of payments and receipts, HHS will remit
payments as required under section 1342 of the
Affordable Care Act.
HHS Notice of Benefit and Payment Parameters for 2014,
78 Fed. Reg. 15410, 15473 (Mar. 11, 2013) (JA565). Moda
cites this reassurance, as Moda continued to offer and
implement healthcare policies in accordance with the
Affordable Care Act.
The “transitional policy” resulted in a change in the
risk profile of participants in the Affordable Care Act.
Moda states that “many individuals who had previously
passed medical underwriting, and were considerably
healthier than the uninsured population, maintained
their existing insurance and did not enroll in QHPs,”
Moda Br. 7–8, thereby reducing the amount of premiums
collected from healthier persons. HHS stated, in an-
nouncing the transitional policy, that “the risk corridor
program should help ameliorate unanticipated changes in
premium revenue.” Letter from Gary Cohen, Dir., CMS
Ctr. for Consumer Info. and Ins. Oversight (“CCIIO”), to
State Ins. Comm’rs at 3 (Nov. 14, 2013) (JA431).
The transitional policy was initially announced as ap-
plying only until October 1, 2014. Id. at 1 (JA429).
However, it was renewed throughout the period here at
issue. Memorandum from Kevin Counihan, Dir., CMS
CCIIO (Feb. 29, 2016) (JA457).
The risk corridors obligations were not cancelled by
the appropriations riders
In April 2014, HHS-CMS issued an “informal bulle-
tin” stating, “We anticipate that risk corridors collections
MODA HEALTH PLAN, INC. v. UNITED STATES 5
will be sufficient to pay for all risk corridors payments.
However, if risk corridors collections are insufficient 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.” Memorandum from CMS CCIIO,
Risk Corridors and Budget Neutrality (Apr. 11, 2014)
(JA229). HHS also stated “that the Affordable Care Act
requires the Secretary to make full payments to issuers,”
and that it was “recording those amounts that remain
unpaid . . . [as an] obligation of the United States Gov-
ernment for which full payment is required.” Memoran-
dum from CMS CCIIO, Risk Corridors Payments for the
2014 Benefit Year (Nov. 19, 2015) (JA245).
The issue on this appeal is focused on the interpreta-
tion and application of the “rider” that was attached to
the omnibus annual appropriations bills. This rider
prohibits HHS from using its funds, including its bulk
appropriation, to make risk corridors payments. My
colleagues hold that this rider avoided or indefinitely
postponed the government’s risk corridors obligations.
The Court of Federal Claims, receiving this argument
from the United States, correctly discarded it.
Meanwhile, the risk corridors statute was not re-
pealed or the payment regulations withdrawn, despite
attempts in Congress. Moda continued to perform its
obligations in accordance with its agreement with the
CMS’s administration of the Affordable Care Act.
A statute cannot be repealed or amended by infer-
ence
To change a statute, explicit legislative statement and
action are required. Nor can governmental obligations be
eliminated by simply restricting the funds that might be
used to meet the obligation. The appropriation riders
that prohibited the use of general HHS funds to pay the
government’s risk corridors obligations did not erase the
6 MODA HEALTH PLAN, INC. v. UNITED STATES
obligations. The Court of Federal Claims correctly so
held.
The mounting problems with the Affordable Care Act
did not go unnoticed. In September 2014, the General
Accountability Office (GAO) responded to an inquiry from
Senator Jeff Sessions and Representative Fred Upton,
and stated that “the CMS PM [Centers for Medicare
Services-Program Management] appropriation for FY
2014 would have been available for making the payments
pursuant to section 1342(b)(1).” Letter from Susan A.
Poling, GAO Gen. Counsel, to Sen. Jeff Sessions and Rep.
Fred Upton 4 (Sept. 30, 2014) (JA237) (“Poling Letter”).
The GAO also stated that “payments under the risk
corridors program are properly characterized as user fees”
and could be used to make payments out. Id. at 6
(JA239). This review also cited the available recourse to
the general CMS assessment. However, in December
2014, the appropriations bill for that fiscal year contained
a rider that prohibited HHS from using various funds,
including the CMS PM funds, for risk corridors payments.
The rider stated:
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 Med-
icaid Services-Program Management” account,
may be used for payments under section
1342(b)(1) of [the ACA] (relating to risk corridors).
Pub. L. No. 113-235, § 227, 128 Stat. 2130, 2491 (2014).
Similar riders were included in the omnibus appropria-
tions bills for the ensuing years. As the Court of Federal
Claims recited, by September 2016, after collecting all
payments in for the 2015 year, it was clear that all pay-
ments in would be needed to cover 2014 losses, and that
no payments out would be made for the 2015 plan year.
MODA HEALTH PLAN, INC. v. UNITED STATES 7
Moda states: “The Government owed Moda $89,426,430
for 2014 and $133,951,163 for 2015, but only paid
$14,254,303 for 2014 and nothing for 2015, leaving a
$209,123,290 shortfall.” Moda Br. 10.
The panel majority ratifies an “indefinite suspension”
of payment, stating that this was properly achieved by
cutting off the funds for payment. The majority correctly
states that “the government’s statutory obligation to pay
persisted independent of the appropriation of funds to
satisfy that obligation.” Maj. Op. at 18. However, the
majority then subverts its ruling, and holds that the
government properly “indefinitely suspended” compliance
with the statute. 2
In United States v. Will, the Court explained that
“when Congress desires to suspend or repeal a statute in
force, ‘[t]here can be no doubt that . . . it could accomplish
its purpose by an amendment to an appropriation bill, or
otherwise.’” 449 U.S. 200, 222 (1980) (citing United States
v. Dickerson, 310 U.S. 554, 555 (1940)). However, this
intent to suspend or repeal the statute must be expressed:
“The whole question depends on the intention of Congress
as expressed in the statutes.” United States v. Mitchell,
109 U.S. 146, 150 (1883).
“The cardinal rule is that repeals by implication are
not favored.” Posadas v. Nat’l City Bank, 296 U.S. 497,
2 The panel majority, responding to this dissent,
states that it is not ratifying an indefinite suspension of
payment. Maj. Op. at 25, n.6. However, payment has not
been made, and the majority finds “the clear implication
of Congress’s intent to prevent the use of taxpayer funds
to support the risk corridors program.” Maj. Op. at 32.
Thus Moda, and the other participating insurers, have
been forced into the courts.
8 MODA HEALTH PLAN, INC. v. UNITED STATES
503 (1936). “The doctrine disfavoring repeals by implica-
tion ‘applies with full vigor when . . . the subsequent
legislation is an appropriations measure,’” as here. Tenn.
Valley Auth. v. Hill, 437 U.S. 153, 190 (1978) (citing
Comm. for Nuclear Responsibility, Inc. v. Seaborg, 463
F.2d 783, 785 (D.C. Cir. 1971)). As the Court of Federal
Claims observed:
Repealing an obligation of the United States is a
serious matter, and burying a repeal in a stand-
ard appropriations bill would provide clever legis-
lators with an end-run around the substantive
debates that a repeal might precipitate.
Fed. Cl. Op., 130 Fed. Cl. at 458..
The classic case of United States v. Langston, 118 U.S.
389 (1886), speaks clearly, that the intent to repeal or
modify legislation must be clearly stated, in “words that
expressly or by clear implication modified or repealed the
previous law.” Id. at 394. The Court explained that a
statute should not be deemed abrogated or suspended
unless a subsequent enactment contains words that
“expressly, or by clear implication, modified or repealed
the previous law.” Id.
My colleagues dispose of Langston as an “extreme ex-
ample,” stating that subsequent decisions are more useful
since Langston is a “century and a half” old. Maj. Op. at
21–22. Indeed it is, and has stood the test of a century
and a half of logic, citation, and compliance. Nonetheless
discarding Langston, the panel majority finds intent to
change the government’s obligations under the risk corri-
dors statute. The majority concludes that “Congress
clearly indicated its intent” to change the government’s
obligations, reciting two factors:
First, the majority concludes that the appropriations
riders were a response to the GAO’s guidance that there
were two available sources of funding for the risk corri-
MODA HEALTH PLAN, INC. v. UNITED STATES 9
dors program, and that Congress intended to remove the
GAO-suggested source of funds from the HHS-CMS
program management funds. My colleagues find that, by
removing access to the HHS-CMS funds, Congress stated
its clear intent to amend the statute and abrogate the
payment obligation if the payments in were insufficient.
See Poling Letter at 4-6 (JA237-39). Maj. Op. at 24.
However, they point to no statement in the legislative
history suggesting that the rider was enacted in response
to the GAO’s report.
Next, my colleagues look to the remarks of Chairman
Harold Rogers to discern intent. He 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
CMS Program Management appropriation ac-
count from being used to support risk corridors
payments.
160 Cong. Rec. H9307, H9838 (daily ed. Dec. 11, 2014)
(explanatory statement submitted by Rep. Rogers,
Chairman of the House Comm. on Appropriations, regard-
ing the House Amendment to the Senate Amendment on
H.R. 83, the Consolidated and Further Continuing Appro-
priations Act, 2015). Chairman Rogers is referring to the
April 2014 “guidance,” where HHS stated that they
“anticipate that risk corridors collections will be sufficient
to pay for all risk corridors payments.” Memorandum
from CMS CCIIO, Risk Corridors and Budget Neutrality
(Apr. 11, 2014) (JA229). In that guidance, HHS was
stating its understanding that “risk corridors collections
[might be] insufficient to make risk corridors payments
for a year.” Id.
10 MODA HEALTH PLAN, INC. v. UNITED STATES
In 2014, a bill to require budget neutrality in the op-
eration of the risk corridors program was introduced.
Obamacare Taxpayer Bailout Protection Act, S. 2214,
113th Cong. (2014). The proposed legislation sought to
amend Section 1342(d) of the ACA to ensure budget
neutrality of payments in and payments out. The bill
stated:
In implementing this section, the Secretary shall
ensure that payments out and payments in under
paragraphs (1) and (2) of subsection (b) are pro-
vided for in amounts that the Secretary deter-
mines are necessary to reduce to zero the cost . . .
to the Federal Government of carrying out the
program under this section.
Id. at § 2(d). The proposal, introduced by Senator Marco
Rubio on April 7, 2014, was an effort to change the risk
corridors program. The change was proposed, but not
enacted, providing an indication of legislative intent. 3
We have been directed to no statement of abrogation
or amendment of the statute, no disclaimer by the gov-
ernment of its statutory and contractual commitments.
3 The panel majority argues that “we need not” con-
sider Congress’ refusal to enforce budget neutrality in the
risk corridors program. Maj. Op. at 28. The Court has
stated otherwise: “When the repeal of a highly significant
law is urged upon that body 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.” Sinclair Refining Co. v.
Atkinson, 370 U.S. 195, 210 (1962), overruled on other
grounds by Boys Mkts., Inc. v. Retail Clerks Union, Loc.
770, 398 U.S. 235 (1970).
MODA HEALTH PLAN, INC. v. UNITED STATES 11
However, the government has not complied with these
commitments—leading to this litigation.
The standard is high for intent to cancel or amend a
statute. The standard is not met by the words of the
riders. “[T]he intention of the legislature to repeal must
be clear and manifest.” Posadas, 296 U.S. at 503. “In the
absence of some affirmative showing of an intention to
repeal, the only permissible justification for a repeal by
implication is when the earlier and later statutes are
irreconcilable.” Morton v. Mancari, 417 U.S. 535, 550
(1974) (citing Georgia v. Pennsylvania R.R. Co., 324 U.S.
439, 456–57 (1945)). Here, where there is no irreconcila-
ble statute, repeal by implication is devoid of any support.
The panel majority does not suggest that intent to re-
peal can be found in the rider itself. Nor can intent be
inferred from any evidence in the record. It is clear that
Congress knew what intent would have looked like,
because members of Congress tried, and failed, to achieve
budget neutrality in the risk corridors program.
Instead, my colleagues hold that the statutory obliga-
tion was not repealed, but only “temporarily suspended.”
The unenacted text of the proposed “Bailout Act,” repro-
duced supra, would have accomplished the result of
budget neutrality that the majority finds was achieved by
the riders. Congress’ decision to forego this proposed
repeal is highly probative of legislative intent.
Precedent does not deal favorably with repeal by im-
plication—the other ground on which my colleagues rely.
The panel majority relies heavily on United States v.
Vulte, 233 U.S. 509 (1914). However, Vulte supports,
rather than negates, the holding of the Court of Federal
Claims. The facts are relevant: Lt. Vulte’s pay as a lieu-
tenant in the Marine Corps for service in Porto Rico was
initially based on the Army’s pay scale, and in 1902
Congress implemented a ten percent bonus for officers of
his pay grade. In the appropriations acts for foreign
12 MODA HEALTH PLAN, INC. v. UNITED STATES
service, for 1906 and 1907, Congress excluded officers
serving in Porto Rico from receiving the bonus. In the act
for 1908, the appropriations act continued the 10% bonus
but did not mention an exclusion for service in Porto Rico.
Lieutenant Vulte sought the bonus for 1908. The gov-
ernment argued that the 1906 and 1907 acts effectively
repealed the 1902 bonus. The Court disagreed, and held
that although the bonus was restricted for 1906 and 1907,
the 1902 act was not repealed, and he was entitled to the
1908 bonus. Id. at 514.
The panel majority concludes that Vulte established a
rule of “effective suspensions-by-appropriations.” Maj.
Op. at 26. That is not a valid conclusion. The Court held
that, by altering the bonus for 1906 and 1907, Congress
cannot have intended to effectuate a permanent repeal of
the 1902 statute. Vulte, 233 U.S. at 514-15. And Vulte
did not retroactively strip the officers of pay for duties
they had performed while subject to the higher pay. On
the question of whether an annual appropriations rider
can permanently abrogate a statute, the Vulte Court
stated:
‘Nor ought such an intention on the part of the
legislature to be presumed, unless it is expressed
in the most clear and positive terms, and where
the language admits of no other reasonable inter-
pretation.’ This follows naturally from the nature
of appropriation bills, and the presumption hence
arising is fortified by the rules of the Senate and
House of Representatives.
Id. at 515 (quoting Minis v. United States, 40 U.S. 423,
445 (1841)). The panel majority’s contrary position is not
supported.
The panel majority also relies on United States v.
Mitchell, 109 U.S. 146 (1883), to support the majority’s
ruling of “temporary suspension.” Again, the case does
not support the position taken by my colleagues. In
MODA HEALTH PLAN, INC. v. UNITED STATES 13
Mitchell an appropriations act initially set the salaries of
interpreters at $400 or $500. A subsequent appropria-
tion, five years later, set “the appropriation for the annual
pay of interpreters [at] $300 each, and a large sum was
set apart for their additional compensation, to be distrib-
uted by the secretary of the interior at his discretion.” Id.
at 149. The Court stated, “[t]he whole question depends
on the intention of congress as expressed in the statutes,”
id. at 150, and observed that the statute clearly stated the
number of interpreters to be hired, the salary for those
interpreters, and the appropriation of an additional
discretionary fund to cover additional compensation. Id.
at 149.
The relevance of Mitchell is obscure, for the Court
found the clear intent to change interpreters’ pay for the
subsequent years. There is no relation to the case at bar,
where the majority holds that an appropriations rider can
change the statutory obligation to compensate for past
performance under an ongoing statute. However, Mitchell
does reinforce the rule that repeal or suspension of a
statute must be manifested by clearly stated intent to
repeal or suspend. Also, like Vulte, the act that in Mitch-
ell was “suspended” by a subsequent appropriation was
itself an appropriation, not legislation incurring a statu-
tory obligation. The appropriation rider in Mitchell
simply modified an existing appropriation. In Moda’s
situation, however, the panel majority holds that the
appropriation rider can suspend the authorizing legisla-
tion. No such intent can be found in the statute, as
Mitchell requires and as the statute in that case provided.
The panel majority’s theory is not supported by
Mitchell and Vulte, for the statutes in both cases contain
the clearly stated intent to modify existing appropria-
tions. Moda’s situation is more like that in Langston,
where the Court stated:
14 MODA HEALTH PLAN, INC. v. UNITED STATES
it is not probable that congress . . . should, at a
subsequent date, make a permanent reduction of
his salary, without indicating its purpose to do so,
either by express words of repeal, or by such pro-
visions as would compel the courts to say that
harmony between the old and the new statute was
impossible.
Langston, 118 U.S. at 394. Similarly, it is not probable
that Congress would abrogate its obligations under the
risk corridors program, undermining a foundation of the
Affordable Care Act, without stating its intention to do so.
The appropriations riders did not state that the govern-
ment would not and need not meet its statutory commit-
ment.
Precedent supports the decision of the Court of
Federal Claims
In New York Airways, Inc. v. United States, the Court
of Claims held that the “mere failure of Congress to
appropriate funds, without further words modifying or
repealing, expressly or by clear implication, the substan-
tive law, does not in and of itself defeat a Government
obligation created by statute.” 369 F.2d 743, 748 (Ct. Cl.
1966) (citing Vulte, supra). The Civil Aeronautics Board
had provided subsidies to helicopter carriers according to
a statute whose appropriation provision stated:
For payments to air carriers of so much of the
compensation fixed and determined by the Civil
Aeronautics Board under section 406 of the Fed-
eral Aviation Act of 1958 (49 U.S.C. § 1376), as is
payable by the Board, including not to exceed
$3,358,000 for subsidy for helicopter operations
during the current fiscal year, $82,500,000, to re-
main available until expended.
Id. at 749 (citing 78 Stat. 640, 642 (1964)). However, the
appropriation cap was not sufficient to cover the statutory
MODA HEALTH PLAN, INC. v. UNITED STATES 15
obligation. The Court of Claims held that the insufficient
appropriation did not abrogate the government’s obliga-
tions to make payments. The court stated that “the
failure of Congress or an agency to appropriate or make
available sufficient funds does not repudiate the obliga-
tion; it merely bars the accounting agents of the Govern-
ment from disbursing funds and forces the carrier to a
recovery in the Court of Claims.” Id. at 817.
Precedent also illustrates the circumstances in which
intent to repeal or suspend may validly be found. In
Dickerson, Congress had in 1922 enacted a reenlistment
bonus for members of the armed forces who reenlisted
within three months. For each year between 1934 and
1937 an appropriations rider stated that the reenlistment
bonus “is hereby suspended.” Dickerson, 310 U.S. at 556.
For fiscal year 1938, the appropriations rider did not
contain the same language, but stated that:
no part of any appropriation contained in this or
any other Act for the fiscal year ending June 30,
1939, shall be available for the payment’ of any
enlistment allowance for ‘reenlistments made dur-
ing the fiscal year ending June 30, 1939 . . . .’
Id. at 555. The rider in Dickerson cut off funding from all
sources, stating “no part of any appropriation contained in
this or any other Act . . . shall be available.” Id. The
Court held that the new language continued to suspend
the bonus statute, for the words, and the accompanying
Congressional Record, display the clear intent to discon-
tinue the bonus payment. The Record stated: “We have
not paid [the enlistment bonus] for 5 years, and the latter
part of this amendment now before the House is a Senate
amendment which discontinues for another year the
payment of the reenlistment allowances.” 83 Cong. Rec.
9677 (1938) (statement of Rep. Woodrum). The Record
and the statutory language left no doubt of congressional
intent to continue the suspension of reenlistment bonuses.
16 MODA HEALTH PLAN, INC. v. UNITED STATES
The panel majority recognizes that the Court in Dickerson
found “persuasive evidence” of “Congress’s intent to
suspend the reenlistment bonus.” Maj. Op. at 23.
In United States v. Will, the Court considered statutes
setting the salary of government officials including federal
judges. 449 U.S. at 202. In four consecutive years, ap-
propriations statutes had held that these officials would
not be entitled to the cost-of-living adjustments otherwise
paid to government employees. The annual blocking
statutes were in various terms. In one year, the statute
stated that the cost-of-living increase “shall not take
effect” for these officials. Id. at 222. For two additional
years, the appropriations statutes barred the use of funds
appropriated “by this Act or any other Act,” as in Dicker-
son. See Will, 449 U.S. at 205-06, 207. The fourth year’s
appropriation contained similar language, stating that
“funds available for payments . . . shall not be used.” Id.
at 208. In each year, the language stated the clear intent
that federal funds not be used for these cost-of-living
adjustments.
The panel majority finds support in Will, and states
that “the Supreme Court never considered the impact of
that language in Dickerson or Will.” Maj. Op. at 25.
However, in Dickerson the Court twice repeated the “any
other Act” language, Dickerson, 310 U.S. at 555, 556, in
concluding that the language supported the intentional
suspension. And in Will, the Court explicitly stated that
the statutory language was “intended by Congress to
block the increases the Adjustment Act otherwise would
generate.” Will, 449 U.S. at 223.
The Court found legislative intent clear in these cas-
es. In contrast, the appropriations rider for risk corridors
payments does not purport to change the government’s
statutory obligation, even as it withholds a source of
funds for the statutory payment. My colleagues’ ratifica-
tion of some sort of permanent postponement denies the
MODA HEALTH PLAN, INC. v. UNITED STATES 17
legislative commitment of the government and the con-
tractual understanding between the insurer and HHS-
CMS.
The riders cannot have retroactive effect after in-
ducing participation
The creation of the risk corridors program as an in-
ducement to the insurance industry to participate in the
Affordable Care Act, and their responses and perfor-
mance, negate any after-the-fact implication of repudia-
tion of the government’s obligations.
The government argued before the Court of Federal
Claims that its obligations to insurers did not come due
until the conclusion of the three year risk corridors pro-
gram, and that “HHS has until the end of 2017 to pay
Moda the full amount of its owed risk corridors payments,
and Moda’s claims are not yet ripe because payment is not
yet due.” Fed. Cl. Op., 130 Fed. Cl. at 451. We have
received no advice of payments made at the end of 2017 or
thereafter.
The appropriations rider cannot have retroactive ef-
fect on obligations already incurred and performance
already achieved. Retroactive effect is not available to
“impair rights a party possessed when he acted, increase
a party’s liability for past conduct, or impose new duties
with respect to transactions already completed. If the
statute would operate retroactively, our traditional pre-
sumption teaches that it does not govern absent clear
congressional intent favoring such a result.” Landgraf v.
USI Film Prods., 511 U.S. 244, 280 (1994). Such clear
intent is here absent.
Removal of Moda’s right to risk corridors payments
would “impair rights a party possessed when [it] acted,” a
“disfavored” application of statutes, for “a statute shall
not be given retroactive effect unless such construction is
required by explicit language or by necessary implica-
18 MODA HEALTH PLAN, INC. v. UNITED STATES
tion.” Fernandez-Vargas v. Gonzales, 548 U.S. 30, 37
(2006) (quoting United States v. St. Louis, S.F. & Tex. Ry.
Co., 270 U.S. 1, 3 (1926)). Such premises are absent here.
Moda has recourse in the Judgment Fund
The Government does not argue that the Judgment
Fund would not apply if judgment is entered against the
United States, in accordance with Section 1491:
The United States Court of Federal Claims shall
have jurisdiction to render judgment upon any
claim against the United States founded either
upon the Constitution, or any Act of Congress or
any regulation of an executive department, or up-
on any express or implied contract with the Unit-
ed States, or for liquidated or unliquidated
damages in cases not sounding in tort.
28 U.S.C. § 1491.
The Judgment Fund is established “to pay final judg-
ments, awards, compromise settlements, and interest and
costs specified in the judgments or otherwise authorized
by law when . . . payment is not otherwise provided for
. . . .” 31 U.S.C. § 1304(a); see also 28 U.S.C. §2517 (“Ex-
cept as provided by chapter 71 of title 41, every final
judgment rendered by the United States Court of Federal
Claims against the United States shall be paid out of any
general appropriation therefor.”).
The contract claim is also supported
The Court of Federal Claims also found that the risk
corridors statute is binding contractually, for the insurers
and the Medicare administrator entered into mutual
commitments with respect to the conditions of perfor-
mance of the Affordable Care Act. The Court of Federal
Claims correctly concluded that an implied-in-fact con-
tract existed between Moda and the government. I do not
MODA HEALTH PLAN, INC. v. UNITED STATES 19
share my colleagues’ conclusion that “Moda cannot state a
contract claim.” Maj. Op. at 35.
CONCLUSION
The government’s ability to benefit from participation
of private enterprise depends on the government’s reputa-
tion as a fair partner. By holding that the government
can avoid its obligations after they have been incurred, by
declining to appropriate funds to pay the bill and by
dismissing the availability of judicial recourse, this court
undermines the reliability of dealings with the govern-
ment.
I respectfully dissent from the panel majority’s hold-
ing that the government need not meet its statutory and
contractual obligations established in the risk corridors
program.