Blue Cross and Blue Shield of North Carolina v. United States , 131 Fed. Cl. 457 ( 2017 )

In the United States Court of Federal Claims
No. 16-651C
Filed: April 18, 2017
FOR PUBLICATION
)
BLUE CROSS AND BLUE SHIELD OF )
NORTH CAROLINA, )
)
Plaintiff, ) The Patient Protection and Affordable
) Care Act; Risk Corridors; RCFC 12(b)(1),
v. ) Subject-matter Jurisdiction; RCFC
) 12(b)(6), Failure to State a Claim;
THE UNITED STATES, ) Ripeness.
)
Defendant. )
)
Lawrence S. Sher, Counsel of Record, Reed Smith LLP, Washington, DC; Kyle R. Bahr,
Of Counsel, Conor M. Shaffer, Of Counsel, Reed Smith LLP, Pittsburgh, PA, for plaintiff.
Charles E. Cantor, Counsel of Record, L. Misha Preheim, Trial Attorney, Frances M.
McLaughlin, Trial Attorney, Marc S. Sacks, Trial Attorney, Terrance A. Mebane, Trial Attorney,
Kirk T. Manhardt, Deputy Director, Ruth A. Harvey, Director, Chad A. Readler, Acting Assistant
Attorney General, Commercial Litigation Branch, Civil Division, United States Department of
Justice, Washington, DC, for defendant.
MEMORANDUM OPINION AND ORDER
GRIGGSBY, Judge
I. INTRODUCTION
Plaintiff, Blue Cross and Blue Shield of North Carolina (“Blue Cross”), brings this
action alleging statutory, breach of contract and takings claims against the United States to
recover certain payments allegedly due under the Patient Protection and Affordable Care Act,
Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010) (the “ACA”). See generally Compl. The
government has moved to dismiss this action for lack of subject-matter jurisdiction and for
failure to state a claim upon which relief can be granted, pursuant to Rules 12(b)(1) and
12(b)(6) of the Rules of the United States Court of Federal Claims (“RCFC”). See generally
Def. Mot. For the reasons discussed below, the Court GRANTS-IN-PART and DENIES-IN-
PART the government’s motion to dismiss.
Cross contends that the government also breached implied-in-fact contracts with Blue Cross to
make full, annual Risk Corridors Program Payments. Id. at ¶¶ 180-98.
In addition, Blue Cross contends that the government breached the covenant of good
faith and fair dealing implied in its alleged express and implied contracts with the government,
by failing to make these payments. Id. at ¶¶ 199-210. Lastly, Blue Cross alleges that the
government has improperly taken its property interest in a statutory, regulatory and contractual
right to receive full, annual Risk Corridors Program Payments, in violation of the Fifth
Amendment of the United States Constitution. Id. at ¶¶ 211-18. Blue Cross also requests that
the Court declare that the government must make full, annual Risk Corridors Program Payments
for calendar years 2015 and 2016. Compl. at Prayer for Relief.
2. The Affordable Care Act
As background, Congress enacted the Patient Protection and Affordable Care Act in
2010. See Pub. L. No. 111-148. The goal of the ACA is to increase access to affordable,
quality health insurance coverage for all Americans. King v. Burwell, 135 S. Ct. 2480, 2485
(2015).
The ACA contains three key reforms to the health insurance system: (1) to prohibit
health insurance companies from denying coverage or setting premiums based upon health
status or medical history; (2) to require individuals to maintain health insurance coverage or
make a payment to the Internal Revenue Service; and (3) to provide federal insurance subsidies
in the form of premium tax credits and cost sharing reductions to make insurance more
affordable to eligible consumers. Id. at 2486-87 (citing 42 U.S.C. §§ 300gg, 300gg–1(a),
18081-82, 18091 (2016); 26 U.S.C. §§ 36B, 5000A (2016)); see also 42 U.S.C. § 18071(2016). To implement the aforementioned reforms, the ACA creates American Health Benefit
Exchanges (“Exchanges”), which are virtual marketplaces in each state where individuals and
small groups can purchase health insurance coverage. 42 U.S.C. §§ 18031-41 (2016). The
Exchanges provide, among other things, a centralized location for consumers to enroll in
qualified health plans and competitive marketplaces for insurers to compete for business. Id.All plans offered through the Exchanges must be QHPs, meaning that such a plan must
provide “essential health benefits” and comply with other regulatory parameters such as provider
network requirements, benefit design rules, and cost sharing limitations. See 42 U.S.C. § 18021;
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45 C.F.R. §§ 155-56. As part of the process to ensure that issuers that participate in the
Exchanges comply with the ACA’s requirements, HHS requires issuers to, among other things,
execute an agreement known as a “Qualified Health Plan Certification Agreement and Privacy
and Security Agreement” (the “QHP Agreement”). 45 C.F.R. § 155.260(b)(2). In the QHP
Agreement, QHP issuers agree to, among other things, adhere to certain privacy and security
standards when conducting transactions on the federally-facilitated Exchanges. Id.; see e.g.,
Compl. at Exs. 2-4.
3. The Risk Corridors Program
Because the ACA introduced millions of previously uninsured individuals into the
insurance markets, pricing uncertainties arose from the unknown health status of these
additional enrollees and the fact that insurers could no longer charge higher premiums or deny
coverage based upon an enrollee’s health. See 42 U.S.C. §§ 300gg, 300gg-1; 45 C.F.R. §§
147.104-147.110; 78 Fed. Reg. 13406-01, 13432-33, 2013 WL 685066 (Feb. 27, 2013);
Compl. at ¶¶ 4-5. To mitigate the pricing risk and incentives for adverse selection arising from
these changes, the ACA establishes three premium stabilization programs (the “3Rs”) that have
been modeled upon similar programs established under the Medicare Program. See Compl. at
¶¶ 5, 7, 21. The 3Rs began in 2014 and consist of the reinsurance, risk adjustment, and risk
corridors programs. See generally 42 U.S.C. §§ 18061-63. The reinsurance and risk corridors
programs expire after the third year of the new ACA Marketplace. Pl. Opp. at 7.
Specifically relevant to this case, the Risk Corridors Program is authorized under Section
1342 of the ACA, which directs the Secretary of Health and Human Services (the “Secretary”) to
establish and administer the program under which qualifying health plans either pay money to, or
receive money from, HHS based upon the ratio of insurance premiums to claims costs. 42
U.S.C. § 18062. This program seeks to reduce financial uncertainty for QHP issuers during the
initial years of the ACA. See Compl. at ¶ 21.
Section 1342 provides, in pertinent part, that:
(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 market
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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 regional
participating provider organizations under part D of title XVIII of
the Social Security Act [42 U.S.C. 1395w–101 et seq.].
42 U.S.C. § 18062(a) (brackets in original). With respect to the methodology for making the
Risk Corridors Program Payments, Section 1342 also provides that:
(b) Payment methodology
(1) Payments out
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 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
(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 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 program 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
Secretary 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
5
percent of the excess of 92 percent of the target
amount over the allowable costs.
42 U.S.C. § 18062(b). Under the payment methodology set forth in Section 1342, if a QHP
issuer’s allowable costs exceed the target amount by more than three percent, the issuer will
receive a percentage of the difference in the form of a payment from HHS. 42 U.S.C.
§ 18062(b)(1). Conversely, if a QHP issuer’s allowable costs are less than the target amount by
more than three percent, an issuer must pay a percentage of the difference in the form of a
payment to HHS. 42 U.S.C. § 18062(b)(2).
HHS has also promulgated regulations to implement the Risk Corridors Program. With
regards to the Risk Corridors Program Payments made to QHP issuers, these regulations provide
that:
§ 153.510 Risk corridors establishment and payment
methodology.
(a) General requirement. A QHP issuer must adhere to the
requirements set by HHS in this subpart and in the annual HHS
notice of benefit and payment parameters for the establishment
and administration of a program of risk corridors for calendar
years 2014, 2015, and 2016.
(b) HHS payments to health insurance issuers. QHP issuers will
receive payment from HHS in the following amounts, under the
following circumstances:
(1) When a QHP's allowable costs for any benefit year are
more than 103 percent but not more than 108 percent of the
target amount, HHS will pay the QHP issuer an amount
equal to 50 percent of the allowable costs in excess of 103
percent of the target amount; and
(2) When a QHP's allowable costs for any benefit year are
more than 108 percent of the target amount, HHS will pay to
the QHP issuer 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.
45 C.F.R. § 153.510(a)-(b). Under these regulations, QHP issuers must compile and submit
premium and cost data and other information underlying their risk corridors calculations to HHS
after the close of each benefit year, and no later than July 31 of the next calendar year. 45 C.F.R.
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§ 153.530(a)-(d). HHS uses the data provided to calculate the charges and payments due to, and
from, each issuer for the preceding benefit year under the Risk Corridors Program. See 45
C.F.R. § 153.530(a)-(c); HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed. Reg.
15,410-01, 15,473-74, 2013 WL 865946 (Mar. 11, 2013). Although HHS’s regulations provide
that QHP issuers must submit the Risk Corridors Program Payments to HHS within 30 days of
HHS’s announcement of final charge amounts, neither Section 1342 nor its implementing
regulations provide a specific deadline for HHS to make the Risk Corridors Program Payments
to QHP issuers. See generally 42 U.S.C. § 18062; 45 C.F.R. § 153.510.
4. HHS’s Rulemaking On The Risk Corridors Program Payments
Congress did not include an appropriation or an authorization of funding for the Risk
Corridors Program in the ACA. Def. Mot. at 8; Def. Reply at 13 (citation omitted); see also 42
U.S.C. § 18062; United States Government Accountability Office, Opinion Letter on Department
of Health & Human Services-Risk Corridors Program to former Senator Jeff Sessions and
Congressman Fred Upton, 2014 WL 4825237, at *2 (Sept. 30, 2014) (“Section 1342, by its
terms, did not enact an appropriation to make the payments specified in section 1342(b)(1).”).
And so, HHS has addressed funding for the program through rulemaking. See, e.g., Standards
Related to Reinsurance, Risk Corridors and Risk Adjustment, 76 Fed. Reg. 41,930-01, 2011 WL
2728043 (proposed July 15, 2011); Standards Related to Reinsurance, Risk Corridors and Risk
Adjustment, 77 Fed. Reg. 17,220-01, 2012 WL 959270 (Mar. 23, 2012); HHS Notice of Benefit
and Payment Parameters for 2014, 78 Fed. Reg. 15,410-01, 2013 WL 865946 (Mar. 11, 2013);
HHS Notice of Benefit and Payment Parameters for 2015, 79 Fed. Reg. 13,744-01, 13,787, 2014
WL 909454 (Mar. 11, 2014); Exchange and Insurance Market Standards for 2015 and Beyond
Final Rule, 79 Fed. Reg. 30,240-01, 30,260, 2014 WL 2171429 (May 27, 2014); HHS Notice of
Benefit and Payment Parameters for 2016, 80 Fed. Reg. 10,750-01, 10,779, 2015 WL 799390(Feb. 27, 2015).
In this regard, the Secretary has interpreted Section 1342 to not require that HHS make
full Risk Corridors Program Payments until the end of the three-year Risk Corridors Program.
Def. Mot. at 17. Specifically, in July 2011, HHS published a proposed rule observing that the
Congressional Budget Office (“CBO”) “assumed [risk corridors] collections would equal
payments to plans in the aggregate,” when the CBO performed a cost estimate
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contemporaneously with ACA’s passage. Standards Related to Reinsurance, Risk Corridors and
Risk Adjustment, 76 Fed. Reg. at 41,948. In the same proposed rule, HHS considered
establishing deadlines for the Risk Corridors Program Payments made to issuers, as well as for
the payments made to HHS. Id. at 41,943. But, in a final rule published on March 11, 2013,
HHS established a 30-day deadline for only the Risk Corridors Program Payments that QHP
issuers make to HHS. See HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed.
Reg. 15410-01, 15,531, 2013 WL 865946 (Mar. 11, 2013) (codified at 45 C.F.R. § 153.510(d)).
HHS has also issued rulemaking on how to address the circumstance where payments
owed by HHS exceed the collections received under the Risk Corridors Program. As
background, in February 2014, the CBO issued a report providing that: “[i]n contrast [to the
reinsurance and risk adjustment programs], payments and collections under the risk corridors
program will not necessarily equal one another . . . .” CBO, The Budget and Economic Outlook:
2014 to 2024, at 59 (Feb. 2014), available at https://www.cbo.gov/sites/default/files/113th-
congress-2013-2014/reports/45010-outlook2014feb0.pdf. While the CBO projected that the Risk
Corridors Program would result in $8 billion in net gain to the government, the CBO’s report
also acknowledged that “[i]f insurers’ costs exceed their expectations, on average, the risk
corridor program will impose costs on the federal budget . . . .” Id. at 110.
On March 11, 2014, HHS issued a final rule stating that “[w]e intend to implement th[e]
[risk corridors] program in a budget neutral manner, and may make future adjustments, either
upward or downward to this program . . . to the extent necessary to achieve this goal.” HHS
Notice of Benefit and Payment Parameters for 2015 Final Rule, 79 Fed. Reg. at 13,787; see also
id. at 13,829 (“HHS intends to implement this program in a budget neutral manner.”); Exchange
and Insurance Market Standards for 2015 and Beyond Proposed Rule, 79 Fed. Reg. 15,808-01,
15,822, 2014 WL 1091600 (proposed Mar. 21, 2014) (same). And so, HHS issued guidance
explaining that it would make the Risk Corridors Program Payments to QHP issuers to the extent
that these payments could be satisfied by the collections under the Risk Corridors Program.
Compl. at Ex. 20; see also Exchange and Insurance Market Standards for 2015 and Beyond, 79
Fed. Reg. at 30,260; HHS Notice of Benefit and Payment Parameters for 2016, 80 Fed. Reg. at
10,779. On April 11, 2014, HHS also advised that any shortfall in payments would result in a
pro-rata reduction of all the Risk Corridors Program Payments to QHP issuers. Compl. at Ex.
20.
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5. Relevant Appropriations Legislation
In September 2014, the United States Government Accountability Office (“GAO”)
responded to an inquiry from former Senator Jeff Sessions and Representative Fred Upton
regarding the availability of appropriations to make the Risk Corridors Program Payments.
United States Government Accountability Office, Opinion Letter on Department of Health &
Human Services-Risk Corridors Program to former Senator Jeff Sessions and Congressman Fred
Upton, 2014 WL 4825237, at *1 (Sept. 30, 2014). The GAO’s response to this inquiry provided
that “the CMS [Program Management] appropriation for FY 2014 would have been available for
making the payments pursuant to section 1342(b)(1).” Id. at *3.
On December 9, 2014, Congress enacted the Consolidated and Further Continuing
Appropriations Act, 2015 (the “2015 Appropriations Act”), which addressed the budget
authority for the Risk Corridors Program. Pub. L. No. 113-235, div. G, title II (2014). The
2015 Appropriations Act expressly limited the availability of Program Management funds for
the Risk Corridors Program, as follows:
None of the funds made available by this Act from [CMS trust
funds], or transferred from other accounts funded by this Act to the
“Centers for Medicare and Medicaid Services—Program
Management” account, may be used for payments under section
1342(b)(1) of Public Law 111–148 (relating to risk corridors).
Id. at § 227. On December 18, 2015, Congress enacted an identical funding limitation with
respect to the Risk Corridors Program in the Consolidated and Further Continuing
Appropriations Act, 2016 (the “2016 Appropriations Act”). See Pub. L. No. 114-113, div. H,
title II, § 225 (2015).
6. Pro-Rata Reduction Of The Risk Corridors Program Payments
Due to the spending limitations imposed by Congress, HHS reduced the amount of its
Risk Corridors Program Payments to QHP issuers. Specifically, on October 1, 2015, HHS
announced that collections under the Risk Corridors Program for 2014 were expected to total
$362 million, while payments calculated for the program totaled $2.87 billion. Def. Mot. at 13
(citing Centers for Medicare & Medicaid Services, Risk Corridors Payment Proration Rate for
2014 (Oct. 1, 2015)). Because the amount of payments exceeded the collections, HHS also
announced that the government would pay 12.6% of the Risk Corridors Program Payments
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during the 2015 payment cycle. Id. In late 2015, HHS also issued a guidance explaining that
HHS would make pro-rata Risk Corridors Program Payments, with “[t]he remaining 2014 risk
corridors payments . . . made from 2015 risk corridors collections [in 2016], and if necessary,
2016 collections [in 2017].” Def. Mot. at 13 (citing Centers for Medicare & Medicaid Services,
Risk Corridors Payments for the 2014 Benefit Year (Nov. 19, 2015)); Compl. at Ex. 17
In November 2015, HHS began collecting the Risk Corridors Program Payments from
QHP issuers for the 2014 benefit year. Def. Mot. at 13. In December 2015, HHS began
remitting its pro-rata Risk Corridors Program Payments to QHP issuers, including Blue Cross.
Id. at 13-14.
Although HHS is currently making pro-rata payments to QHP issuers under the Risk
Corridors Program, HHS appears to have interpreted Section 1342 to require that full payments
must be made. See 45 C.F.R. § 153.510(b) (“QHP issuers will receive payment from HHS
. . . .”) (emphasis supplied); Exchange and Insurance Market Standards for 2015 and Beyond,
79 Fed. Reg. at 30,260 (“HHS recognizes that the Affordable Care Act requires the Secretary to
make full payments to issuers.”); Compl. at Ex. 17 (same). And so, HHS has committed to
using funding sources other than the risk corridors collections to satisfy these outstanding
payments, subject to the availability of appropriations at the conclusion of the program. Def.
Mot. at 9-10; see also HHS Notice of Benefit and Payment Parameters for 2016, 80 Fed. Reg. at
10,779; Exchange and Insurance Market Standards for 2015 and Beyond, 79 Fed. Reg. at
30,260; HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed. Reg. at 15,473. To
that end, on September 9, 2016, HHS announced that:
As we have said previously, in the event of a shortfall for the 2016
benefit year, HHS will explore other sources of funding for risk
corridors payments, subject to the availability of appropriations.
This includes working with Congress on the necessary funding for
outstanding risk corridors payments. HHS recognizes that the
Affordable Care Act requires the Secretary to make full payments
to issuers. HHS will record risk corridors payments due as an
obligation of the United States Government for which full payment
is required.
Def. App. at A248; id. at A144.
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7. Blue Cross’s Risk Corridors Program Payments
To date, Blue Cross has received approximately $25 million of the Risk Corridors
Program Payments that it is owed for 2014. Compl. at ¶¶ 135-38. Blue Cross submitted its
calendar year 2014 risk corridors data to the Centers for Medicare and Medicaid Services
(“CMS”) in July 2015, and this data reflects that the government owes Blue Cross more than
$140 million in Risk Corridors Program Payments for 2014. Pl. Opp. at 12. On November 2,
2015, Kevin J. Counihan, Director of CMS’s Center for Consumer Information & Insurance
Oversight and Chief Executive Officer of the ACA Marketplace, sent a letter to Blue Cross
stating that, because the $362 million in risk corridors collections could not match the payment
requests of $2.87 billion:
[T]he remaining 2014 risk corridors claims will be paid out of 2015
risk corridors collections, and if necessary, 2016 collections. . . . .
[W]e will not know the total loss or gain for the program until the
fall of 2017 when the data from all three years of the program can
be analyzed and verified. In the event of a shortfall for the 2016
program year, HHS will explore other sources of funding for risk
corridors payments, subject to the availability of appropriations.
This includes working with Congress on the necessary funding for
outstanding risk corridors payments.
Compl. at Ex. 18. Mr. Counihan also stated that HHS “recognizes that the [ACA] requires the
Secretary to make full payments to issuers, and that HHS is recording those amounts that remain
unpaid following our 12.6% payment this winter as fiscal year 2015 obligations of the United
States government for which full payment is required.” Id.
B. Relevant Procedural Background
Plaintiff commenced this action on June 2, 2016. See generally Compl. On September
30, 2016, the government moved to dismiss the complaint for lack of subject-matter jurisdiction,
pursuant to RCFC 12(b)(1) or, in the alternative, for failure to state a claim upon which relief can
be granted, pursuant to RCFC 12(b)(6). See generally Def. Mot.
On October 31, 2016, plaintiff filed an opposition to the government’s motion to dismiss.
See generally Pl. Opp. The government filed a reply in support of its motion to dismiss on
November 22, 2016. See generally Def. Reply. On December 6, 2016 plaintiff, filed a sur-reply
in support of its opposition to the government’s motion to dismiss. See generally Pl. Sur-Reply.
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On February 13, 2017, the Court directed the parties to file supplemental briefs on the
following issues: (1) whether the purpose of the Risk Corridors Program may only be fulfilled by
the full, annual payment of the Risk Corridors Program Payments; (2) whether HHS’s proposed
rule dated March 23, 2012, 77 Fed. Reg. 17220-01, 17238, 2012 WL 959270 (Mar. 23, 2012),
requires that HHS provide full, annual payment of the Risk Corridors Program Payments; (3)
whether the Court should dismiss Count I of the complaint pursuant to RCFC 12(b)(6), if the
Court concludes that plaintiff is not entitled to “presently due money damages” under Section
1342; and (4) whether the Court should dismiss Counts II-IV of the complaint, pursuant to RCFC
12(b)(6), if the Court concludes that plaintiff is not entitled to “presently due money damages”
under Section 1342.3 See generally Scheduling Order, Feb. 13, 2017.
On March 3, 2017, Blue Cross and the government filed their respective initial
supplemental briefs. Pl. Supp. Br.; Def. Supp. Br. On March 17, 2017, Blue Cross and the
government filed their respective responsive supplemental briefs. Pl. Supp. Resp.; Def. Supp.
Resp. The Court held oral argument on the government’s motion to dismiss on April 11, 2017.
The aforementioned matter having been fully briefed, the Court resolves the pending
motion to dismiss.
III. LEGAL STANDARDS
A. Jurisdiction And RCFC 12(b)(1)
When deciding a motion to dismiss upon the ground that the Court does not possess
subject-matter jurisdiction pursuant to RCFC 12(b)(1), this Court must assume that all
undisputed facts alleged in the complaint are true and must draw all reasonable inferences in the
non-movant’s favor. Erickson v. Pardus, 551 U.S. 89, 94 (2007); see also RCFC 12(b)(1). But,
plaintiff bears the burden of establishing subject-matter jurisdiction, and plaintiff must do so by a
preponderance of the evidence. Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748
(Fed. Cir. 1988). And so, should the Court determine that “it lacks jurisdiction over the subject
matter, it must dismiss the claim.” Matthews v. United States, 72 Fed. Cl. 274, 278 (2006)
(citations omitted); see also RCFC 12(h)(3).
3
HHS’s rule dated March 23, 2012, is a final rule. See Standards Related to Reinsurance, Risk Corridors
and Risk Adjustment, 77 Fed. Reg. 17220-01, 17238, 2012 WL 959270 (Mar. 23, 2012).
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In this regard, the United States Court of Federal Claims is a court of limited jurisdiction
and “possess[es] only that power authorized by Constitution and statute . . . .” Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The Tucker Act grants the Court
jurisdiction over:
[A]ny claim against the United States founded either upon the
Constitution, or any Act of Congress or any regulation of an
executive department, or upon any express or implied contract with
the United States, or for liquidated or unliquidated damages in cases
not sounding in tort.
28 U.S.C. § 1491(a)(1). The Tucker Act, however, is a “jurisdictional statute; it does not create
any substantive right enforceable against the United States for money damages. . . . [T]he Act
merely confers jurisdiction upon [the United States Court of Federal Claims] whenever the
substantive right exists.” United States v. Testan, 424 U.S. 392, 398 (1976) (citation omitted).
And so, to pursue a claim against the United States under the Tucker Act, a plaintiff must
identify and plead a money-mandating constitutional provision, statute, or regulation; an express
or implied contract with the United States; or an illegal exaction of money by the United States.
Cabral v. United States, 317 F. App’x 979, 981 (Fed. Cir. 2008) (citing Fisher v. United States,
402 F.3d 1167, 1172 (Fed. Cir. 2005)); Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir.
2005). “[A] statute or regulation is money-mandating for jurisdictional purposes if it ‘can fairly
be interpreted as mandating compensation for damages sustained as a result of the breach of the
duties [it] impose[s].’” Fisher, 402 F.3d at 1173 (quoting United States v. Mitchell, 463 U.S.
206, 217 (1983)) (brackets in original).
B. Ripeness
Even when the Court’s jurisdiction over a claim has been established, the Court may not
adjudicate a claim if the claim is not ripe for judicial review. See, e.g., Health Republic Ins. Co.
v. United States, 129 Fed. Cl. 757, 772 (2017); Morris v. United States, 392 F.3d 1372, 1375
(Fed. Cir. 2004) (citing Howard W. Heck & Assocs., Inc. v. United States, 134 F.3d 1468 (Fed.
Cir. 1998)). To that end, “[r]ipeness is a justiciability doctrine that prevents the courts, through
avoidance of premature adjudication, from entangling themselves in abstract disagreements.”
Shinnecock Indian Nation v. United States, 782 F.3d 1345, 1348 (Fed. Cir. 2015) (citations and
internal punctuation omitted). This Court has also recognized that, while the ripeness doctrine
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has been developed through Article III courts, the doctrine’s principles are equally applicable in
this Court. See CW Gov’t Travel, Inc. v. United States, 46 Fed. Cl. 554, 557–58 (2000). And so,
[a] court should dismiss a case for lack of ripeness when the case is
abstract or hypothetical. . . . A case is generally ripe if any
remaining questions are purely legal ones; conversely, a case is not
ripe if further factual development is required.
Rothe Dev. Corp. v. DOD, 413 F.3d 1327, 1335 (Fed. Cir. 2005) (quoting Monk v. Houston, 340
F.3d 279, 282 (5th Cir. 2003)) (ellipsis existing).
In determining whether a dispute is ripe for review, the Court must evaluate two factors:
“(1) the ‘fitness’ of the disputed issues for judicial resolution; and (2) ‘the hardship to the parties
of withholding court consideration.’” Shinnecock, 782 F.3d at 1348 (citing Abbott Labs. v.
Gardner, 387 U.S. 136, 149 (1967), abrogated on other grounds by Califano v. Sanders, 430
U.S. 99 (1977); Sys. Application & Techs., Inc. v. United States, 691 F.3d 1374, 1383-84 (Fed.
Cir. 2012)). Under the first prong, “an action is fit for judicial review where further factual
development would not ‘significantly advance [a court’s] ability to deal with the legal issues
presented.’” Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1295 (Fed. Cir.
2008) (citing Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803, 812 (2003))
(bracket existing). Under the second prong, “withholding court consideration of an action causes
hardship to the plaintiff where the complained-of conduct has an ‘immediate and substantial
impact’ on the plaintiff.” Id. (citing Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 171 (1967)).
C. RCFC 12(b)(6)
When deciding a motion to dismiss based upon failure to state a claim upon which relief
can be granted pursuant to RCFC 12(b)(6), this Court must assume that all undisputed facts
alleged in the complaint are true and draw all reasonable inferences in the non-movant’s favor.
Erickson, 551 U.S. at 94; see also RCFC 12(b)(6). To survive a motion to dismiss pursuant to
RCFC 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). And so, when the complaint fails to “state a
claim to relief that is plausible on its face,” the Court must dismiss the complaint. Iqbal, 556
U.S. at 678 (citation omitted). On the other hand, “[w]hen there are well-pleaded factual
14
allegations, a court should assume their veracity” and determine whether it is plausible, based
upon these facts, to find against defendant. Id. at 679.
D. Statutory Interpretation
When interpreting a statute, the Court must “start[] with the plain language.” Barela v.
Shinseki, 584 F.3d 1379, 1382-83 (Fed. Cir. 2009) (citation omitted). Statutes are not, however,
interpreted in a vacuum and the Court “must consider not only the bare meaning of each word
but also the placement and purpose of the language within the statutory scheme.” Id. at 1383(citation omitted). And so, a statute’s meaning, regardless of whether the language is “plain or
not, thus depends on context.” Id. (citation omitted)
Generally, this Court must defer to an agency’s interpretation of ambiguous statutory
provisions, provided that the interpretation is reasonable. Chevron U.S.A., Inc. v. Natural Res.
Defense Council, Inc., 467 U.S. 837, 842-43 (1984). When the Court reviews an agency’s
construction of a statute which it administers, the Court is confronted with two questions. First,
the Court examines “whether Congress has directly spoken to the precise question at issue.” Id.
at 842. If so, the Court “must give effect to the unambiguously expressed intent of Congress.”
Id. at 842-43; see also Cathedral Candle Co. v. U.S. Int’l Trade Comm’n, 400 F.3d 1352, 1362
(Fed. Cir. 2005). If the statute is ambiguous, the Court must proceed to step two and examine
“whether the agency responsible for filling a gap in the statute has rendered an interpretation that
is based on a permissible construction of the statute.” Doe v. United States, 372 F.3d 1347, 1358
(Fed. Cir. 2004) (citations omitted); see also Cathedral Candle Co., 400 F.3d at 1364-65. And
so, this standard of deference should apply, where “Congress either leaves a gap in the
construction of the statute that the administrative agency is explicitly authorized to fill, or
implicitly delegates legislative authority, as evidenced by ‘the agency’s generally conferred
authority and other statutory circumstances.’” Cathedral Candle Co., 400 F.3d at 1361 (quoting
United States v. Mead Corp., 533 U.S. 218, 229 (2001)).
In addition, courts generally accord Chevron deference when Congress has authorized an
administrative agency to engage in rulemaking or adjudication that produces regulations or
rulings for which the deference is claimed. Chevron, 467 U.S. at 1361. And so, in this instance,
an agency’s interpretation of its own regulations is also entitled to broad deference from the
Court. Id. at 1363-64.
15
E. Contract Claims Against The Government
To bring a valid contract claim against the United States in this Court, the underlying
contract must be either express or implied-in-fact. Aboo v. United States, 86 Fed. Cl. 618, 626-
27 (2009). In addition, plaintiff bears the burden of proving the existence of a contract with the
United States, and a plaintiff must show that there is “something more than a cloud of evidence
that could be consistent with a contract to prove a contract and enforceable contract rights.” D &
N Bank v. United States, 331 F.3d 1374, 1377 (Fed. Cir. 2003). To establish the existence of
either an express or implied-in-fact contract with the United States, a plaintiff must show: (1)
mutuality of intent; (2) consideration; (3) lack of ambiguity in the offer and acceptance; and (4)
actual authority to bind the government in contract on the part of the government official whose
conduct is relied upon. Kam-Almaz v. United States, 682 F.3d 1364, 1368 (Fed. Cir. 2012); see
also Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1325 (Fed. Cir. 1997). A government
official’s authority to bind the United States must be express or implied. Roy v. United States, 38
Fed. Cl. 184, 188-89, dismissed, 124 F.3d 224 (Fed. Cir. 1997). And so, “the [g]overnment,
unlike private parties, cannot be bound by the apparent authority of its agents.” Id. at 187.
In this regard, a government official possesses express actual authority to bind the United
States in contract “only when the Constitution, a statute, or a regulation grants it to that agent in
unambiguous terms.” Jumah v. United States, 90 Fed. Cl. 603, 612 (2009) aff'd, 385 F. App’x
987 (Fed. Cir. 2010) (internal citations omitted); see also City of El Centro v. United States, 922
F.2d 816, 820 (Fed. Cir. 1990) (citation omitted). On the other hand, a government official
possesses implied actual authority to bind the United States in contract “when the employee
cannot perform his assigned tasks without such authority and when the relevant agency’s
regulations do not grant the authority to other agency employees.” SGS-92-X003 v. United
States, 74 Fed. Cl. 637, 652 (2007) (citations omitted); see also Aboo, 86 Fed. Cl. at 627 (implied
actual authority “is restricted to situations where ‘such authority is considered to be an integral
part of the duties assigned to a [g]overnment employee.’”) (quoting H. Landau & Co. v. United
States, 886 F.2d 322, 324 (Fed. Cir. 1989)). In addition, when a government agent does not
possess express or implied actual authority to bind the United States in contract, the government
16
can still be bound by contract if the contract was ratified by an official with the necessary
authority. Janowsky v. United States, 133 F.3d 888, 891–92 (Fed. Cir. 1998).4
F. Takings Claims
Lastly, this Court may consider takings claims under the Fifth Amendment of the United
States Constitution. See 28 U.S.C. § 1491; U.S. CONST. amend. V; Morris v. United States, 392
F.3d 1372, 1375 (Fed. Cir. 2004) (“[T]he Tucker Act provides the Court of Federal Claims
exclusive jurisdiction over takings claims for amounts greater than $10,000.”); see also Jan’s
Helicopter Serv., Inc. v. FAA, 525 F.3d 1299, 1304 (Fed. Cir. 2008) (citing E. Enters. v. Apfel,
524 U.S. 498, 520 (1998)). The Takings Clause of the Fifth Amendment guarantees just
compensation whenever private property is “taken” for public use. U.S. CONST. amend. V. And
so, the purpose of the Fifth Amendment is to prevent the “[g]overnment from forcing some
people alone to bear public burdens which, in all fairness and justice, should be borne by the
public as a whole.” Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 123 (1978)
(quoting Armstrong v. United States, 364 U.S. 40, 49 (1960)); see also Florida Rock Indus., Inc.
v. United States, 18 F.3d 1560, 1571 (Fed. Cir. 1994).
To have a cause of action for a Fifth Amendment takings, a plaintiff must point to a
protectable property interest that is asserted to be the subject of the takings. See Phillips v.
Wash. Legal Found., 524 U.S. 156, 164 (1998) (“Because the Constitution protects rather than
creates property interests, the existence of a property interest is determined by reference to
‘existing rules or understandings that stem from an independent source such as state law.’”)
(citation omitted). In this regard, contract rights can be the subject of a takings action. See e.g.,
Lynch v. United States, 292 U.S. 571, 579 (1934) (“Valid contracts are property, whether the
obligor be a private individual, a municipality, a state, or the United States.”); see also United
4
Ratification may take place at the individual or institutional level. SGS-92-X003, 74 Fed. Cl. at 653-54.
Individual ratification occurs when a supervisor: (1) possesses the actual authority to contract; (2) fully
knew the material facts surrounding the unauthorized action of his or her subordinate; and (3) knowingly
confirmed, adopted, or acquiesced to the unauthorized action of the subordinate. Id. at 654 (quoting
Leonardo v. United States, 63 Fed. Cl. 552, 560 (2005)). In contrast, institutional ratification occurs
when the government “seeks and receives the benefits from an otherwise unauthorized contract.” SGS-
92-X003, 74 Fed. Cl. at 654; see also Janowsky v. United States, 133 F.3d 888, 891–92 (Fed. Cir.
1998).
17
States v. Petty Motor Co., 327 U.S. 372, 380-81 (1946) (holding that plaintiff was entitled to
compensation for government’s takings of an option to renew a lease).
IV. LEGAL ANALYSIS
The government has moved to dismiss this matter for several reasons. First, the
government argues that the Court should dismiss Blue Cross’s claim based upon Section 1342
and its implementing regulations upon the ground that Blue Cross has no right to “presently
due” money damages under these provisions, pursuant to RCFC 12(b)(1) or, alternatively,
pursuant to RCFC 12(b)(6). Def. Mot. at 14-31; Def. Supp. Br. at 5-8. Second, the government
argues that the Court should dismiss Blue Cross’s statutory, breach of contract and takings
claims upon the ground that these claims are not ripe, because HHS has not yet determined the
total amount of the Risk Corridors Program Payments that Blue Cross will receive. Def. Mot. at
21-22.
In addition, the government has moved to dismiss Blue Cross’s statutory claim for
failure to state a claim upon which relief can be granted, because Section 1342 does not
mandate the Risk Corridors Program Payments in excess of amounts collected, or impose a
contractual obligation upon the government. Id. at 22-31; Def. Supp. Br. at 5-8. The
government has also moved to dismiss Blue Cross’s contract and takings claims for failure state
a claim upon which relief can be granted, because: (1) HHS has no contractual obligation to
make the Risk Corridors Program Payments and (2) Blue Cross has no vested property right to
full, annual Risk Corridors Program Payments. Def. Mot. at 32-44. Lastly, the government
also seeks the dismissal of Blue Cross’s request for declaratory relief in this matter, because
such relief would not be collateral or incidental to a money judgment in this action. Id. at 44.
For the reasons discussed below, the Court possess subject-matter jurisdiction to entertain
Blue Cross’s statutory, contract and takings claims. But, Blue Cross fails to state plausible
claims for relief with respect to these claims. And so, the Court must dismiss these claims
pursuant to RCFC 12(b)(6).
In addition, the Court must dismiss Blue Cross’s request for declaratory relief because the
relief that Blue Cross seeks is neither incidental nor collateral to any judgment for monetary
relief in this matter. RCFC 12(b)(1). And so, the Court GRANTS-IN-PART and DENIES-IN-
PART the government’s motion to dismiss.
18
A. The Court Possesses Jurisdiction To Consider Plaintiff’s Claims
1. The Court May Consider Blue Cross’s Statutory Claim
As an initial matter, the Court possesses jurisdiction to consider Blue Cross’s claim
alleging a violation of Section 1342 and its implementing regulations. See generally Compl. at
¶¶ 154-165. In the complaint, Blue Cross alleges that HHS has violated Section 1342 and its
implementing regulations, by failing to make full, annual Risk Corridors Program Payments. Id.;
42 U.S.C. § 1342; 45 C.F.R. § 153.510. Because Section 1342 and its implementing regulations
are money-mandating sources of law, the Court possesses jurisdiction to consider Blue Cross’s
claim.
It is well established that to pursue a claim for monetary relief against the government,
Blue Cross must plead a money-mandating source of law. See Cabral v. United States, 317 F.
App’x 979, 981 (Fed. Cir. 2008) (citing Fisher, 402 F.3d at 1172). A source is money-
mandating when it “can fairly be interpreted as mandating compensation by the [government].”
United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003) (citing Mitchell, 463
U.S. at 217). And so, a source is money-mandating if it is “reasonably amenable to the reading
that it mandates a right of recovery in damages.” ARRA Energy Co. I v. United States, 97 Fed.
Cl. 12, 19 (2011) (quoting White Mountain Apache Tribe, 537 U.S. at 473). In contrast, a source
is not money-mandating when it provides the government with “complete discretion” regarding
whether it will make payments. Doe v. United States, 463 F.3d 1314, 1324 (Fed. Cir. 2006)
(citations omitted); see ARRA Energy Co. I, 97 Fed. Cl. at 19 (noting that the determination of
whether a source is money-mandating “generally turns on whether the government has discretion
to refuse to make payments under that [source].”).
In this case, Section 1342 provides that if “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
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.” 42 U.S.C. § 18062(b)(1) (emphasis supplied). This statute
further provides that if “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 target amount plus 80 percent of allowable costs in excess of 108 percent of
the target amount.” Id. (emphasis supplied).
19
Section 1342’s implementing regulations also provide that “[w]hen a QHP's allowable
costs for any benefit year are more than 103 percent but not more than 108 percent of the target
amount, HHS will pay the QHP issuer an amount equal to 50 percent of the allowable costs in
excess of 103 percent of the target amount” and that “[w]hen a QHP's allowable costs for any
benefit year are more than 108 percent of the target amount, HHS will pay to the QHP issuer 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.” 45 C.F.R. § 153.510(b) (emphasis supplied).
The aforementioned provisions are plainly money-mandating. Indeed, the Federal Circuit
has “repeatedly recognized that the use of the word ‘shall’ generally makes a statute money-
mandating.” Agwia v. United States, 347 F.3d 1375, 1380 (Fed. Cir. 2003) (citing McBryde v.
United States, 299 F.3d 1357, 1361 (Fed. Cir. 2002); Huston v. United States, 956 F.2d 259, 261-
62 (Fed. Cir. 1992); Grav v. United States, 886 F.2d 1305, 1307 (Fed. Cir. 1989)); see also
Lummi Tribe of the Lummi Reservation v. United States, 99 Fed. Cl. 584, 594 (2011). Because
Section 1342 and its implementing regulations provide that the government “shall pay” and “will
pay” the Risk Corridors Program Payments, these provisions mandate compensation by the
government. 42 U.S.C. § 18062(b)(1); 45 C.F.R. § 153.510(b). And so, Section 1342 and its
implementing regulations are money-mandating sources of law upon which Blue Cross may rely
to establish jurisdiction.
The Court is also not persuaded by the government’s argument that that the Court should
dismiss plaintiff’s statutory claim for lack of subject-matter jurisdiction, because Blue Cross has
no right to “presently due money damages” under Section 1342 and its implementing
regulations. Def. Mot. at 15-20. As the government correctly states in its motion to dismiss, the
Supreme Court held in United States v. King, that this Court’s predecessor did not possess
jurisdiction to consider a claim for declaratory relief because such a claim was not limited to
“actual, presently due money damages from the United States.” 395 U.S. 1, 3 (1969). But, King
is distinguishable from this case because King involved a claim for equitable, rather than
monetary, relief. King, 395 U.S. at 2-3; Compl. at ¶¶ 154-218.
In addition, as this Court recently recognized in Land of Lincoln Mut. Health Ins. Co. v.
United States, the Federal Circuit’s decisions in Todd and Annuity Transfers similarly do not
support dismissal of Blue Cross’s statutory claim for want of jurisdiction. Land of Lincoln Mut.
20
Health Ins. Co. v. United States, 129 Fed. Cl. 81, 97-98 (2016); see also Todd v. United States,
386 F.3d 1091, 1093-94 (Fed. Cir. 2004) (holding the Court has jurisdiction under the Tucker
Act only when the money damages are “actual” and “presently due”) (citing Testan, 424 U.S. at
398); Annuity Transfers, Ltd. v. United States, 86 Fed. Cl. 173, 179 (2009) (holding the Court
has jurisdiction under the Tucker Act only if the settlement agreement upon which plaintiff’s
claim rests seeks “actual, presently due money damages from the United States”) (citation
omitted). Todd and Annuity Transfers both involve claims against the United States based upon
contracts, rather than money-mandating statutes or regulations. See Todd, 386 F.3d at 1093-94;
Annuity Transfers, Ltd., 86 Fed. Cl. at 179.5 And so, the Court does not read these cases to
require that Blue Cross establish a right to actual, presently due money damages with respect to
its claim pursuant to Section 1342 and its implementing regulations to establish jurisdiction.
Because Blue Cross has identified a money-mandating statute and money-mandating
regulations to support its claim here, Blue Cross has no further obligation to establish
jurisdiction. And so, the Court denies the government’s motion to dismiss plaintiff’s statutory
claim for lack of subject-matter jurisdiction. RCFC 12(b)(1).
2. The Court May Consider Blue Cross’s Contract And Takings Claims
The Court may also consider Blue Cross’s contract and takings claims. Indeed, to the
extent that Blue Cross asserts non-frivolous allegations of an express or implied-in-fact contract
with the government, the Court may entertain these claims so long as the claims are for “actual,
presently due money damages.” Speed v. United States, 97 Fed. Cl. 58, 66 (2011) (quoting King,
395 U.S. at 3).6
5
In Todd, the appellants sought back pay based upon alleged breaches of a collective bargaining
agreement and memorandum of understanding. Todd v. United States, 386 U.S. 1091, 1093 (Fed. Cir.
2004). Similarly, in Annuity Transfers, the plaintiff alleged a breach of a settlement agreement with the
government. Annuity Transfers, Ltd. v. United States, 86 Fed. Cl. 163, 179 (2009) (finding jurisdiction
lacking under “presently due money damages” because the plaintiff brought suit to recover a lump-sum
payment instead of periodic payments as provided for in the agreement with the government); see also
United States v. Testan, 424 U.S. 392 (1976) (holding that the plaintiffs were not entitled to “presently
due money damages” absent first obtaining equitable relief in the form of a retroactive classification to a
higher pay grade).
6
Unlike plaintiff’s statutory claim, plaintiff’s contract claims require a showing of presently due
money damages to establish jurisdiction. See Speed v. United States, 97 Fed. Cl. 58, 66 (2011).
21
In Count II of the complaint Blue Cross alleges that it “entered into a valid written QHP
agreement with CMS” regarding the Risk Corridors Program Payments. Compl. at ¶ 167. Blue
Cross further alleges that it has implied-in fact contracts with the government regarding the Risk
Corridors Program Payments, and that the government is “in breach of an implied covenant of
good faith and fair dealing” under its express and implied-in-fact contracts, in Counts III and IV
of the complaint. Id. at ¶¶ 183, 202. It is well established that the Court possesses jurisdiction to
consider such claims under the Tucker Act. 28 U.S.C. § 1491(a)(1) (The Tucker Act grants this
Court jurisdiction to consider claims based “upon any express or implied contract with the
United States.”); Aboo, 86 Fed. Cl. at 626-27.
The Court may similarly entertain Blue Cross’s claim that the government’s failure to
make full, annual Risk Corridors Program Payments “constitutes a deprivation and taking of
Plaintiff’s property interests.” Compl. at ¶ 217; see 28 U.S.C. § 1491(a)(1); Morris v. United
States, 392 F.3d 1372, 1375 (Fed. Cir. 2004) (“[T]he Tucker Act provides the Court of Federal
Claims exclusive jurisdiction over takings claims for amounts greater than $10,000.”) (citation
omitted); see also Jan’s Helicopter Serv., Inc., 525 F.3d at 1304 (citing Eastern Enters., 524 U.S.
at 520). And so, the Court denies the government’s motion to dismiss Blue Cross’s contract and
takings claims for lack of subject-matter jurisdiction.
B. Plaintiff’s Claims Are Also Ripe
While Blue Cross has established that the Court possesses jurisdiction to consider its
statutory, contract and takings claims, the Court may not adjudicate any of these claims if the
claims are not ripe for judicial review. See, e.g., Health Republic Ins. Co. v. United States, 129
Fed. Cl. 757, 772 (2017). The government argues in its motion to dismiss that Blue Cross’s
claims are unripe, because no money is presently due to Blue Cross under Section 1342 and
because HHS has not yet completed the data analysis for the 2015 and 2016 Risk Corridors
Program Payments. Def. Mot. at 21-22. Similar to its arguments with respect to jurisdiction, the
government’s ripeness arguments are unavailing.
It is well established that in determining whether a dispute is ripe for review, the Court
must evaluate two factors: “(1) the ‘fitness’ of the disputed issues for judicial resolution; and (2)
‘the hardship to the parties of withholding court consideration.’” Shinnecock, 782 F.3d at 1348
(citing Abbott Labs., 387 U.S. at 149; Sys. Application & Techs., Inc., 691 F.3d at 1383-84);
22
Caraco Pharm. Labs., Ltd., 527 F.3d at 1295 (“[A]n action is fit for judicial review where further
factual development would not ‘significantly advance [a court’s] ability to deal with the legal
issues presented.’”) (citing Nat’l Park Hospitality Ass’n v. DOI, 538 U.S. 803, 812 (2003)). In
this case, Blue Cross seeks to recover all of its Risk Corridors Program Payments for calendar
year 2014. Compl. at Prayer for Relief. There is no dispute that HHS has completed the data
analysis for the Risk Corridors Program Payments owed to Blue Cross for that year. Compl. at
¶¶ 135-38; Def. Mot. at 22. It is also without dispute that HHS has already made a portion of the
payments owed to Blue Cross for 2014. Def. Mot. at 13-14; Compl. at ¶¶ 135-36. Given this,
plaintiff’s claims seeking to recover the full amount of the 2014 Risk Corridors Program
Payments are neither hypothetical nor in need of further factual development. And so, this
matter is fit for judicial review.
Withholding the Court’s consideration of Blue Cross’s claims would also cause a
hardship to Blue Cross. As Blue Cross argues in its opposition to the government’s motion to
dismiss, Blue Cross is owed almost $130 million in Risk Corridors Program Payments for
calendar year 2014. Pl. Opp. at 27. This outstanding sum certainly imposes an immediate
financial hardship on Blue Cross. See Caraco Pharm. Labs., 527 F.3d at 1295 (citing Gardner,
387 U.S. at 171) (A hardship exists where the complained-of conduct has an “immediate and
substantial impact” on a party.). And so, Blue Cross’s claims are ripe and appropriate for
judicial review.
C. Blue Cross Fails To State Plausible Claims
1. Blue Cross Fails To State A Plausible Statutory Claim
While ripe for judicial review, Blue Cross’s claim pursuant to Section 1342 and its
implementing regulations fails to state a plausible claim for relief. In the complaint, Blue Cross
alleges that it is “entitled under Section 1342(b)(1) of the ACA and 45 C.F.R. § 153.510(b) to
recover full and timely mandated risk corridor payments from the Government for CY 2014.”
Compl. at ¶ 160. During oral argument, Blue Cross further clarified that it maintains that the
deadline for this payment was December 2015. Tr. 37:14-18. And so, Blue Cross argues that
“[t]he Government’s failure to make full and timely risk corridor payments [by this deadline] . . .
constitutes a violation and breach of the Government’s mandatory payment obligations” under
Section 1342(b)(1) and its implementing regulations. Id. at ¶ 164; see also Pl. Opp. at 21-23.
23
The Government argues in its motion to dismiss that the Court should dismiss Blue
Cross’s statutory claim pursuant to RCFC 12(b)(6), because Section 1342 and its implementing
regulations do not impose “a deadline for HHS to tender full risk corridor payments to [qualified
health plain issuers].” Def. Mot. at 16; 22-31. The Court agrees that neither Section 1342 nor its
implementing regulations impose an annual deadline for making the Risk Corridors Program
Payments in full. And so, the Court dismisses this claim pursuant to RCFC 12(b)(6).
A plain reading of Section 1342 demonstrates that Congress has not directly addressed
the question of the timing of the Risk Corridors Program Payments in this statute. Specifically,
Section 1342(a) provides, in relevant part, that:
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 market
shall participate in a payment adjustment system based on the ratio
of the allowable costs of the plan to the plan’s aggregate premiums.
Such program shall be based on the program for regional
participating provider organizations under part D of title XVIII of
the Social Security Act [Medicare Part D, 42 U.S.C. 1395w–101, et
seq.].
42 U.S.C. § 18062(a). Section 1342 also provides with respect to the payment methodology
under the statute that:
Payments out
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 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
(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 target amount plus 80 percent of allowable
costs in excess of 108 percent of the target amount.
24
Id. § 18062(b)(1). The above provisions demonstrate that Section 1342 neither addresses, nor
establishes, a deadline for the payment of the Risk Corridors Program Payments. And so, this
statute is silent and, thus, ambiguous with respect to the timing of the Risk Corridors Program
Payments.
When it enacted the ACA, Congress delegated authority to HHS to implement Section
1342. 42 U.S.C. § 18041 (“The Secretary shall, as soon as practicable after March 23, 2010,
issue regulations setting standards for meeting the requirements under this title. . . .”). And so,
HHS has filled the gap in Section 1342 regarding the timing of the Risk Corridors Program
Payments through agency regulations and policy.
Specifically relevant to Blue Cross’s claim here, HHS has promulgated regulations to
implement the government’s obligation to make the Risk Corridors Program Payments to issuers.
45 C.F.R. § 153.510. These regulations provide, in relevant part, that:
§ 153.510 Risk corridors establishment and payment
methodology.
(b) HHS payments to health insurance issuers. QHP issuers will
receive payment from HHS in the following amounts, under the
following circumstances:
(1) When a QHP's allowable costs for any benefit year are
more than 103 percent but not more than 108 percent of the
target amount, HHS will pay the QHP issuer an amount
equal to 50 percent of the allowable costs in excess of 103
percent of the target amount; and
(2) When a QHP's allowable costs for any benefit year are
more than 108 percent of the target amount, HHS will pay to
the QHP issuer 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.
45 C.F.R. § 153.510(b).
A plain reading of the above regulations makes clear that HHS did not establish an
annual deadline for the payment of the Risk Corridors Program Payments to insurers. In fact,
these regulations simply provide that HHS will make the Risk Corridors Program Payments to
issuers if certain criteria are met regarding costs. 45 C.F.R. § 153.510(b). And so, like Section
25
1342, these regulations provide no deadline with respect to when HHS must make the Risk
Corridors Program Payments to issuers.7
Although Section 1342 and its implementing regulations are silent with respect to the
timing of Risk Corridors Program Payments owed to issuers, HHS has addressed this issue
through other agency policy. In this regard, a Risk Corridors and Budget Neutrality Bulletin
from HHS, dated April 11, 2014, addresses the methodology that HHS will employ to make the
Risk Corridors Program Payments owed to issuers in the event that the Risk Corridors Program
collects less money than it is required to pay out under the program. Compl. at Ex. 20; Def. Mot.
at 18-19. This bulletin provides, in relevant part, that:
[I]f 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. Risk corridors
collections received for the next year will first be used to pay off the
payment reductions 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.
Compl. at Ex. 20. The bulletin also provides that:
If, after obligations for the previous year have been met, the total
amount of collections 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 payment obligations have
been met, they will be held to offset potential insufficiencies in risk
corridors collections in the next year.
Id. This policy allows HHS to make pro-rata Risk Corridors Program Payments to issuers during
a particular program year. But, the policy also requires that the agency to make up any shortfall
in those payments during the subsequent years of the program, as additional funds are collected.
7
It is also notable that although HHS has established a 30-day deadline for issuers to make Risk
Corridors Program Payments to HHS, HHS declined to establish such a deadline for the Risk Corridors
Program Payments that are owed to issuers. See 45 C.F.R. § 153.510(d) (“A QHP issuer must remit
charges to HHS within 30 days after notification of such charges.”). The absence of such a deadline with
respect to the payments owed to issuers indicates that HHS did not intend to establish an annual deadline
for its payment of the Risk Corridors Program Payments.
26
Given Congress’s express and broad delegation of authority to HHS to implement the
Risk Corridors Program, HHS’s policy regarding the timing of the Risk Corridors Program
Payments is reasonable and consistent with Section 1342. 42 U.S.C §§ 18041, 18062. The
policy affords HHS the full three years of this temporary program to make up any shortfall in the
Risk Corridors Program Payments as funds become available. Given the absence of a statutory
deadline for making the Risk Corridors Program Payments to issuers—and the temporary nature
of the Risk Corridors Program—HHS’s policy is sound and consistent with Section 1342.
Chevron, 467 U.S. at 842-43. And so, the Court concludes that HHS has no obligation under
Section 1342 or its implementing regulations to pay the full amount of Blue Cross’s 2014 Risk
Corridors Program Payments until, at a minimum, the agency completes its calculations for
payments due for the final year of the Risk Corridors Program. During oral argument, the parties
acknowledged that this deadline will not occur until December 2017 or January 2018. Tr. 26:
19-25.
The Court is also not persuaded by Blue Cross’s argument that the government’s pro-rata
Risk Corridors Program Payments pursuant to the aforementioned policy undermine the purpose
of the Risk Corridors Program. Pl. Opp. at 21-23; Pl. Supp. Br. at 5-10. As the government
argues in its reply brief, pro-rata Risk Corridors Program Payments satisfy the stated purpose and
objectives of the Risk Corridors Program, by protecting issuers from uncertainties regarding the
cost of health insurance claims during the first three years of the ACA’s Exchanges. See Def.
Reply at 9-10. In fact, Blue Cross acknowledges in the complaint that it decided to continue to
participate in the Risk Corridors Program despite HHS’s announcement that the government
would provide only pro-rata Risk Corridors Program Payments if the collections for a particular
year could not satisfy the payments due. Compl. at ¶¶ 42-43; see also Compl. at Ex. 3-4.
Blue Cross’s argument that Section 1342 and its implementing regulations require full,
annual Risk Corridors Program Payments because Section 1342 is based upon Medicare Part D
is equally unavailing. Compl. at ¶¶ 7, 30; Pl. Opp. at 21-22, 30. While there is no dispute that
the Risk Corridors Program is based upon Medicare Part D, this fact, alone, does not demonstrate
that Congress intended for HHS to pay the Risk Corridors Program Payments owed to issuers in
full, upon an annual basis. In fact, the Court is not aware of—and plaintiff has not cited to—any
requirement in Section 1342 or elsewhere in the ACA that HHS must administer the Risk
Corridors Program in the same manner as the Medicare Part D risk corridors program.
27
In addition, the fact that HHS calculates the amount of Risk Corridors Program Payments
due and owed for each year under the three-year Risk Corridors Program similarly fails to
establish the existence of an obligation upon the part of HHS to make full Risk Corridors
Program Payments upon an annual basis. Pl. Opp. at 22. Rather, as both parties acknowledged
during oral argument, any deadline for making the Risk Corridors Program Payments to issuers
could be no earlier than the December of the following year, because HHS must accommodate
state-operated reinsurance and risk adjustment programs and include risk adjustment and
reinsurance payments received in the calculation of risk corridors charges and payments. Tr.
14:16-24, 37:14-18; Def. Mot. at 17. And so, HHS has reasonably exercised its discretion with
respect to the timing of Risk Corridors Program Payments to issuers, by making a pro-rata
payment and requiring that the government make up any outstanding payments owed during the
subsequent years of the program.
In sum, the plain language of Section 1342 and its implementing regulations provides no
deadline for HHS to make the Risk Corridors Program Payments to Blue Cross. Blue Cross
conceded this point, as it must, during oral argument. Tr. 45:23-25, 46:1-2. Rather, HHS has
acted reasonably and consistent with Section 1342 and its implementing regulations by making
pro-rata Risk Corridors Program Payments and committing to make up any shortfall in those
payments during subsequent program years. Given this, the Risk Corridors Program Payments
owed to Blue Cross for calendar year 2014 are not “presently due.” For this reason, the Court
must dismiss Count I of the complaint. RCFC 12(b)(6).
2. Blue Cross Fails To State A Plausible Express Contract Claim
The Court must also dismiss Count II of the complaint, because Blue Cross fails to state a
plausible express contract claim. In Count II of the complaint, Blue Cross alleges that its QHP
Agreement with CMS requires that HHS make full, annual Risk Corridors Program Payments.
Compl. at ¶¶ 166-79. But, a plain reading of the complaint and the QHP Agreement shows, that
Blue Cross’s express contract claim fails as a matter of law.
First, to the extent that Blue Cross alleges that the government is contractually obligated
to make full, annual Risk Corridors Program Payments, because Section 1342 and its
implementing regulations have been incorporated into its QHP Agreement, this claim is not
28
viable. As discussed above, neither Section 1342, nor its implementing regulations, require that
HHS make full, annual Risk Corridors Program Payments.
In addition, the contractual provisions that Blue Cross relies upon to show that HHS is
contractually obligated to make full, annual Risk Corridors Program Payments cannot be
reasonably read to create such an obligation. Specifically, Blue Cross relies upon section II,
paragraph d of its QHP Agreement, which pertains to the acceptance of standard rules of conduct
for QHP issuers and provides in relevant part, that:
CMS will undertake all reasonable efforts to implement systems and
processes that will support QHPI functions. In the event of a major
failure of CMS systems and processes, CMS will work with QHPI
in good faith to mitigate any harm caused by such failure.
Compl. at Ex. 2 at § II, ¶ d. But, this provision plainly does not require that HHS make the Risk
Corridors Program Payments.
Section V, paragraph g of the QHPI Agreement, upon which Blue Cross also relies,
similarly fails to address, or to require full, annual Risk Corridors Program Payments. Rather,
this provision pertains to governing law and provides, in relevant part, that:
This Agreement will be governed by the laws and common law of
the United States of America, including without limitation such
regulations as may be promulgated from time to time by the
Department of Health and Human Services or any of its constituent
agencies, without regard to any conflict of laws statutes or rules.
Compl. at Ex. 2 at § V, ¶ g. Again, to the extent that this provision can be read to incorporate
Section 1342 and its implementing regulations, these legal provisions do not require full, annual
Risk Corridors Program Payments. And so, because no reasonable reading of the contractual
provisions that Blue Cross cites would show a contractual obligation upon the part of HHS to
make full, annual Risk Corridors Program Payments, the Court must dismiss Count II of the
complaint. RCFC 12(b)(6).
3. Blue Cross Fails To State A Plausible Implied-In-Fact Contract Claim
Blue Cross similarly fails to state a viable implied-in-fact contract claim. In this regard,
Blue Cross alleges that “the combination of [Section] 1342, 45 C.F.R. § 153.510, and the
Government’s conduct before and after Plaintiff agreed to become a QHP for CY 2014, all
29
support a reasonable inference that the Government entered into implied-in-fact contracts
obligating it to pay CY 2014 risk corridors payments in full by the end of CY 2015.” Pl. Opp. at
46; see also Compl. at ¶¶ 180-98. And so, Blue Cross maintains that the government materially
breached these implied-in-fact contracts by failing to make full, annual Risk Corridors Program
Payments. Id. at ¶ 197. Blue Cross’s implied-in-fact contract claim is not plausible.
As an initial matter, Blue Cross’s implied-in-fact contract claim is based upon Section
1342, and Blue Cross cannot overcome the general presumption that Congress did not intend for
the statutory obligations set forth in Section 1342 to contractually bind the government. To
allege a plausible implied-in-fact contract claim here, Blue Cross must show, among other
things, mutual intent on the part of the parties to contract with respect to the Risk Corridors
Program Payments. Kam-Almaz, 682 F.3d at 1368 (To establish the existence of either an
express or implied-in-fact contract with the United States, a plaintiff must show: (1) mutuality of
intent; (2) consideration; (3) lack of ambiguity in the offer and acceptance; and (4) actual
authority to bind the government in contract on the part of the government official whose
conduct is relied upon.).
This Court has also long recognized that “[t]here is a general presumption that statutes
are not intended to create any vested contractual rights.” ARRA Energy Co. I, 97 Fed. Cl. at 27
(2011). And so, to determine whether Blue Cross can overcome such a presumption here, the
Court must look to the text of Section 1342 to determine whether this statute contains specific
language that creates a contract. Brooks v. Dunlop Mfg. Inc., 702 F.3d 624, 631 (Fed. Cir. 2012).
If not, the Court may also look to whether the circumstances surrounding the passage of Section
1342 manifest such an intent to bind the government contractually. Id.Neither Section 1342 nor its implementing regulations contain language that creates a
contractual obligation with respect to the Risk Corridors Program Payments. Section 1342 and
its implementing regulations do mandate the payment of the Risk Corridors Program Payments
under the ACA’s Risk Corridors Program. But, these provisions do not contain any language to
create a contractual obligation for HHS to make these payments. And so, the Court must look to
the circumstances surrounding the enactment of the ACA to determine whether there is any
evidence that Congress, nonetheless, intended to contractually bind the government with respect
to the Risk Corridors Program Payments. Id.30
In this regard, Blue Cross does not identify any circumstances surrounding the enactment
of the ACA that would manifest an intent upon the part of Congress to contractually bind the
government. Rather, Blue Cross points to “the Government’s conduct before and after [Blue
Cross] agreed to become a QHP for CY 2014” to show that the parties entered into implied-in-
fact contracts regarding the Risk Corridors Program Payments. Pl. Sur-Reply at 17.
When this Court has previously examined whether the circumstances surrounding a
statute passage manifest an intent to contract, the Court has looked to the conduct of Congress
and the President in enacting and signing that statute. For example, in ARRA Energy, the Court
considered whether Congress’s intent to contract could be inferred from the conduct of Congress
and the President in enacting and signing the American Recovery and Reinvestment Act. ARRA
Energy Co. I, 97 Fed. Cl. at 27. Similarly, in Brooks, the Federal Circuit looked to the legislative
history and other evidence during the passage of the Leahy-Smith America Invents Act, Pub. L.
112-29, 125 Stat 284 (2011), to determine whether the circumstances surrounding the passage of
that statute manifested Congressional intent to contractually bind the government. Brooks, 702
F.3d at 631.
But, here, the alleged conduct and statements that Blue Cross relies upon to establish
implied-in-fact contracts with the government occurred several years after the enactment of the
ACA. Compl. at ¶¶ 89-105, 182; Pl. Opp. at 21-22. For example, Blue Cross alleges that the
statements, letters and emails that it received from CMS in 2015 manifest Congressional intent to
contractually bind the government. Compl. at ¶¶ 99-105, 182.8
8
The government also argues persuasively that Blue Cross’s reliance upon the United States Claims
Court’s decision in New York Airways v. United States to support its implied-in-fact contract claim is
misplaced. In New York Airways, our predecessor Court held that the actions of the parties in that case
could support the existence of an implied-in-fact contract requiring the United States Federal Aviation
Administration to make certain subsidy payments to compensate helicopter companies for the transport of
U.S. mail. New York Airways v. United States, 369 F.2d 743, 751-52 (1966). The Claims Court also held
that Congressional intent to contractually bind the government for these payments could be inferred from
the Independent Offices Appropriation Act and the Second Supplemental Appropriation Act for fiscal
year 1965. Id. at 752 (“That Congress recognized the contract nature of the subsidy payments is inferred
by the title ‘Payments to Air Carriers (Liquidation of Contract Authorization),’ which was given to the
subsidy appropriations in [the appropriations legislation].”). New York Airways is, however, factually
distinguishable from this case, because the Risk Corridors Program Payments are made in connection
with administering the Risk Corridors Program, rather than payments for particular goods or services.
31
More importantly, even if the Court were to accept Blue Cross’s allegation that it has
entered into implied-in-fact contracts with the government regarding the Risk Corridors Program
Payments as true, Blue Cross cannot show that the government breached such contracts in this
case. As discussed above, neither Section 1342 nor its implementing regulations set an annual
deadline for the Risk Corridors Program Payments. Given this, Blue Cross has not–and cannot–
establish that the government breached an implied-in-fact contract based upon Section 1342 by
failing to make full, annual 2014 Risk Corridors Program Payments. Def. Supp. Br. at 9; Tr.
62:18-25, 63: 1-2; RCFC 12(b)(6).
4. Blue Cross Fails To State A Plausible Implied Covenant Claim
Because the Court concludes that Blue Cross has not alleged plausible express or
implied-in-fact contract claims in the complaint, the Court must also dismiss Blue Cross’s claim
for breach of the implied covenant of good faith and fair dealing. The Federal Circuit has
recognized that every contract imposes upon the parties a duty of good faith and fair dealing and
that the failure to fulfill that duty constitutes a breach of that contract. Metcalf Constr. Co. v.
United States, 742 F.3d 984, 990. (Fed. Cir. 2014) (citations omitted). But, such an implied
covenant cannot expand the parties’ contractual duties beyond those existing in the contract, or
create duties that are inconsistent with that contract. Id. at 991 (citation omitted).
Blue Cross alleges in Count IV of the complaint that “[b]y failing to make full and timely
CY 2014 risk corridor payments to [Blue Cross], the United States . . . [is] in breach of an
implied covenant of good faith and fair dealing” under its alleged express and implied-in-fact
contracts. Compl. at ¶ 202. But, the absence of either an express or implied contractual
obligation upon the part of HHS to make the Risk Corridors Program Payments in full, upon an
annual basis, precludes Blue Cross from establishing any right under an implied covenant of
good faith and fair dealing. And so, the Court must also dismiss Count IV of the complaint.
RCFC 12(b)(6).
5. Blue Cross Fails To State A Plausible Takings Claim
The Court must also dismiss Blue Cross’s takings claim, because Blue Cross cannot
demonstrate that it has a cognizable property interest in full, annual Risk Corridors Program
Payments. In this regard, the Federal Circuit has long held that a plaintiff must have a
cognizable property interest to state a viable Fifth Amendment takings claim. Adams v. United
32
States, 391 F.3d 1212, 1218 (Fed. Cir. 2004) (In evaluating a takings claim, the Court first
determines whether the claimant possessed a cognizable property interest in the subject of the
alleged taking for purposes of the Fifth Amendment.) (citations omitted). While Blue Cross
alleges that it “has a vested property interest in its contractual, statutory, and regulatory rights to
receive” full, annual Risk Corridors Program Payments, neither Section 1342 nor its
implementing regulations—nor any alleged contract by and between Blue Cross and the
government—obligates the government to make full, annual Risk Corridors Program Payments.
Compl. at ¶ 213. And so, Blue Cross simply cannot show that it has a cognizable contractual,
statutory, or regulatory right to receive full, annual Risk Corridors Program Payments. RCFC
12(b)(6).
D. The Court May Not Consider Blue Cross’s Claim For Declaratory Relief
As a final matter, the Court must also dismiss Blue Cross’s request “that the Court
declare, as incidental to [a] monetary judgment, that based on the Court’s legal determinations as
to the Government’s CY 2014 risk corridor payment obligations, the Government must make full
and timely CY 2015 and CY 2016 risk corridor payments to Plaintiff if Plaintiff experiences
losses during those years.” Compl. at Prayer for Relief. Such relief is not incident of, or
collateral to, any monetary judgment related to Blue Cross’s 2014 Risk Corridors Program
Payments.
This Court has long recognized that the Tucker Act provides the Court with jurisdiction
to grant equitable or declaratory relief in limited circumstances. See Annuity Transfers, 86 Fed.
Cl. at 181. Relevant to the present matter, the Court may “issue orders directing restoration to
office or position, placement in appropriate duty or retirement status, and correction of
applicable records” as an “incident of and collateral to” a monetary judgment. 28 U.S.C.
§ 1491(a)(2). But, the declaratory relief that Blue Cross seeks here is not incident of or collateral
to a monetary judgment regarding its 2014 Risk Corridors Program Payments. Rather, such
declaratory relief pertains to Risk Corridors Program Payments for 2015 and 2016, and those
payments are not at issue in this litigation.9 In addition, the Court has determined that Blue
9
During oral argument, Blue Cross informed the Court that it withdraws its claim for declaratory relief
with respect to the 2016 Risk Corridors Program Payments. Tr. 101:7-13. Blue Cross further advised
33
Cross has no right to full, annual Risk Corridors Program Payments under Section 1342 and its
implementing regulations. Given this, the declaratory relief that Blue Cross seeks is also
unwarranted based upon the circumstances of this case. And so, the Court must also dismiss
plaintiff’s claim for declaratory relief.10
V. CONCLUSION
In sum, while the Court possesses jurisdiction to consider Blue Cross’s statutory, contract
and takings claims to recover the full amount of its Risk Corridors Program Payments for 2014
in this action, Blue Cross fails to state plausible claims for relief. As Blue Cross acknowledged
during oral argument, there is no requirement in Section 1342 or its implementing regulations
that HHS make these payments in full by December 2015. As a result, Blue Cross fails to show
that it is entitled to presently due money damages from the government.
In reaching the decision to dismiss this action, the Court concludes only that the
government has no obligation to make full, annual Risk Corridors Program Payments and that
the government may continue to make up any shortfall in plaintiff’s 2014 Risk Corridors
Program Payments until HHS completes its data calculations and collections for the final year of
the Risk Corridors Program. And so, the Court does not reach the question of whether the
government may, ultimately, limit such payments to the amount of collections under that
program.
Because Blue Cross’s claim for declaratory relief regarding its 2015 Risk
Corridors Program Payments is not incidental of or collateral to plaintiff’s claim for
monetary relief in this action, the Court also dismisses this claim.
that it would seek to amend the complaint with regards to plaintiff’s request for declaratory relief
regarding the 2015 Risk Corridors Program Payments. Tr. 101:13-18.
10
Although the Court does not reach the question of whether the Risk Corridors Program Payments are
an obligation to pay money under a statutory benefits program, the Federal Circuit has held that an
obligation to pay money under a statutory benefit program does not create a cognizable property interest.
Adams v. United States, 391 F.2d 1212, 1223-24 (Fed. Cir. 2004). Because the Court concludes that the
government has no obligation to make full, annual Risk Corridors Program Payments under Section 1342
and its implementing regulations, and that HHS’s policy with respect to the timing of those payments is
reasonable and consistent with Section 1342, the Court does not reach the issue of whether Section 1342
mandates Risk Corridors Program Payments in excess of collections.
34
And so, for the foregoing reasons, the Court:
1. GRANTS-IN-PART and DENIES-IN-PART the government’s
motion to dismiss; and
2. DISMISSES the complaint.
The Clerk shall enter judgment accordingly.
The parties shall bear their own costs.
IT IS SO ORDERED.
s/ Lydia Kay Griggsby
LYDIA KAY GRIGGSBY
Judge
35