[00:00:03] Speaker 02: So the first two cases we have for argument, we're hearing them argued separately, although there's obviously an overlap. [00:00:10] Speaker 02: First case is 171224, Land of Lincoln, Mutual Health versus United States. [00:00:16] Speaker 02: Mr. Massie. [00:00:20] Speaker 03: Thank you. [00:00:21] Speaker 03: Good morning, and may it please the court. [00:00:23] Speaker 03: Jonathan Massie for Appellant Land of Lincoln. [00:00:25] Speaker 03: And with the court's permission, I'd like to reserve five minutes for rebuttal. [00:00:29] Speaker 03: I'd like to address two points. [00:00:30] Speaker 03: First, section 1342 is money mandating. [00:00:33] Speaker 03: And second, the government's obligation was not vitiated by the appropriation writers beginning in December 2014. [00:00:40] Speaker 02: Well, you agreed that there's a possibility, a legal possibility, that that obligation, to the extent it exists, could be obviated by subsequent appropriations. [00:00:50] Speaker 02: So you're just saying that the clarity or the lack thereof in the language of these writers does not do that. [00:00:55] Speaker 03: That's correct, Your Honor. [00:00:56] Speaker 03: We have four points on that. [00:00:58] Speaker 03: First is that Your Honor correctly stated the legal test. [00:01:01] Speaker 03: It has to be a clear statement under cases like New York Airways and the Supreme Court's decision in TVA v Hill in 1978, which as we presume, Congress does not do substantive things in the appropriation laws. [00:01:13] Speaker 02: So we know one thing. [00:01:14] Speaker 02: At one extreme, we know silence is not sufficient. [00:01:16] Speaker 02: Just a failure to appropriate money by itself is not sufficient. [00:01:20] Speaker 03: That's correct. [00:01:20] Speaker 02: But beyond that, the cases are kind of [00:01:23] Speaker 03: Well, they're dice, but I think they're actually clear. [00:01:27] Speaker 03: I mean, if you look at cases like Dickerson and Will, those cases have quite elaborate language explaining what it takes to, to vitiate a money-mandating obligation. [00:01:36] Speaker 02: I mean, if you look at the- Well, Will, it seems to me, tell me why I'm wrong or if I'm wrong. [00:01:40] Speaker 02: The difference in Will is that Will has this language and other statutes, right? [00:01:45] Speaker 03: Well, it has a whole, it has four consecutive years of appropriation writers, which were all construed together. [00:01:51] Speaker 03: And so one of them said no fund, [00:01:52] Speaker 03: no part of the funds appropriate in this act or any other act shall be used then the next provision the next year said the salary increase that would be made after the day of enactment shall not take effect [00:02:02] Speaker 03: Another one said, no part of the funds appropriated by this act or any other act may be used. [00:02:07] Speaker 02: Yes, so that's one point. [00:02:08] Speaker 02: I mean, one of the salient differences between that and this case is that it says in any other act. [00:02:14] Speaker 02: Why would that matter? [00:02:15] Speaker 02: I mean, I don't recall that the court in Will referenced that language in other act, and specifically called that out as being significant. [00:02:24] Speaker 03: I think it looked at all four together. [00:02:26] Speaker 03: And the fourth one, just to complete, is funds available for payment shall not be used. [00:02:30] Speaker 03: So there were four riders coming that were being construed together. [00:02:33] Speaker 03: I don't think the court said that using this act or any other act by itself would have been sufficient. [00:02:40] Speaker 03: It was looking at all four together. [00:02:42] Speaker 03: Of course, the appropriation riders here do not say, or any other act. [00:02:46] Speaker 02: And what do we mean by that? [00:02:47] Speaker 02: So what's the other act in this case? [00:02:49] Speaker 02: Are we talking about the judgment bond? [00:02:51] Speaker 03: That might be one source, but I don't think we know exhaustively what funds were available. [00:02:55] Speaker 03: In other words, we know at least four sources of funds were available, even under the appropriation writers, just to list them. [00:03:01] Speaker 03: First would be payments in, $484 million. [00:03:05] Speaker 03: The government concedes. [00:03:06] Speaker 03: payments in would have been available to pay, even though there's no specific appropriation for that. [00:03:10] Speaker 03: I mean, I think there's an inconsistency in the government's position, frankly, where they admit, they acknowledge payments in are available. [00:03:16] Speaker 03: There's not a specific appropriation. [00:03:17] Speaker 02: But you don't have to allocate money for that. [00:03:19] Speaker 02: If it's payments in, the government is just being conduit. [00:03:23] Speaker 03: Of course, the government here is more than a conduit. [00:03:25] Speaker 03: It was sharing in the risk. [00:03:26] Speaker 03: I'll get to that point in a moment. [00:03:28] Speaker 03: So payments in are available. [00:03:29] Speaker 03: The fiscal year 2014 money was available even under the appropriation riders. [00:03:34] Speaker 03: because under our view, it's reply brief 2425. [00:03:36] Speaker 03: And the GAO looked at that and said that money, using the 2014 appropriations language, that money would have been available. [00:03:46] Speaker 03: The GAO may or may not have been exhaustive, because after the GAO report issued, we know that Judge Wheeler looked in footnote 13 in the mode opinion and found $750 million in continuing appropriations under the fiscal 2015 language. [00:04:02] Speaker 03: And then there's also some money from user fees and sales of data. [00:04:05] Speaker 03: That's appendix 9, footnote 10. [00:04:07] Speaker 03: So all of that money was available even under the appropriation writers. [00:04:10] Speaker 03: So the appropriation writers did not cut off even all funds. [00:04:14] Speaker 03: Even if they had cut off all funds, all the writers did was basically Gibney language. [00:04:19] Speaker 03: That was the language in Gibney. [00:04:20] Speaker 03: Gibney eliminated the only source of payments for the INS overtime employees. [00:04:25] Speaker 03: And the court still said, this court's predecessor still said, [00:04:28] Speaker 03: that judgment could be entered against the United States in this court, or in this court's predecessor, notwithstanding the elimination of the only available money. [00:04:37] Speaker 03: And of course, there are other cases where there was no appropriation at all. [00:04:41] Speaker 03: In the Collins case, going back to 1879, there was also the Strong and Danforth cases. [00:04:45] Speaker 02: No, but we understand. [00:04:46] Speaker 02: Right. [00:04:47] Speaker 02: Exactly. [00:04:47] Speaker 03: We're all on the same page. [00:04:48] Speaker 03: Silence means we win. [00:04:50] Speaker 03: And here, we think there's not even silence. [00:04:52] Speaker 03: There's actually affirmative appropriation. [00:04:54] Speaker 03: going on. [00:04:55] Speaker 03: So clearly, the appropriation riders. [00:04:57] Speaker 02: What about the argument? [00:04:57] Speaker 02: And I think Judge Wheeler relied on this, which is the judgment fund. [00:05:02] Speaker 02: That's another appropriations, and that's available. [00:05:05] Speaker 02: So the cut up would have to be for that. [00:05:06] Speaker 02: I think he relied on that in his opinion right there. [00:05:09] Speaker 02: That strikes me as a little unusual. [00:05:12] Speaker 02: I mean, I don't know of any instance where appropriators have talked about the judgment fund. [00:05:16] Speaker 02: Do you? [00:05:17] Speaker 03: Well, I don't think you need to. [00:05:19] Speaker 03: Well, let me just say two things. [00:05:21] Speaker 03: Yes, there are cases, I think Rama Navajo being the primary one in page [00:05:25] Speaker 03: 198 and footnote nine, the court says the judgment fund is available to pay this judgment. [00:05:31] Speaker 03: That's why it does not run afoul of the appropriations clause. [00:05:33] Speaker 02: The judgment fund, I mean, most of the Supreme Court cases we're looking at are in the 1890s or shortly thereafter. [00:05:39] Speaker 02: The judgment fund didn't even come into effect until the 1950s, right? [00:05:43] Speaker 03: That's correct. [00:05:43] Speaker 03: 1956. [00:05:44] Speaker 03: I think actually Judge Newman's opinion in Slattery is the most exhaustive, best explanation of the history of the judgment fund. [00:05:50] Speaker 03: And the history is that Congress increasingly relaxed the constraints on the judgment fund. [00:05:55] Speaker 03: in 1956, made it a standing indefinite appropriation. [00:05:59] Speaker 03: And in 1977, it eliminated the $100,000 cap on the Judgment Fund. [00:06:03] Speaker 03: So Congress has basically recognized that this Court is the entity that is most, that's in charge of the Judgment Fund. [00:06:11] Speaker 03: And there doesn't, we don't need now specific congressional appropriation. [00:06:14] Speaker 03: So we think the history of the Judgment Fund, frankly, cuts in our favor because it shows that Congress has delegated to this Court [00:06:21] Speaker 03: the obligation of entering judgment against the United States. [00:06:24] Speaker 02: And so if no payment were to be made, it would be necessary for the appropriators to specifically cut off any payments being made from the judgment fund as well as through the appropriations there? [00:06:35] Speaker 03: Well, that would be, if they, if there, that could be, yes. [00:06:40] Speaker 03: But we think actually beyond that, there needs to be a substantive modification of 1342, just [00:06:46] Speaker 03: I think if this Court entered judgment in Congress and did something to the Judgment Fund, there would be an interesting takings question about that. [00:06:54] Speaker 03: And I don't think you have to decide that today in order to enter judgment. [00:06:58] Speaker 03: But I do think that Ramon Navajo, and frankly, the government's position in the Burwell case, which is cited at footnote at page 8 of our reply brief, the government, until this case, the government was taking the position that the Judgment Fund was an available source of payment. [00:07:13] Speaker 03: for these kinds of obligations. [00:07:15] Speaker 03: So there's plenty of authority to look to the judgment fund. [00:07:20] Speaker 03: I don't think the court has to decide that question today. [00:07:22] Speaker 03: But let me just talk about the clear statement test and why nobody at the time of the appropriation writers understood those writers as having the effect that the government says they had. [00:07:33] Speaker 03: And I don't think you can meet a clear statement test [00:07:35] Speaker 03: when none of the relevant actors at the time understood it that way. [00:07:39] Speaker 03: I mean, President Obama signed the appropriation writers with no signing statement, even though he had standing veto promises. [00:07:46] Speaker 02: It's a little problematic if we start looking at not even legislative history, but just what was going on. [00:07:51] Speaker 02: Because in the other case, [00:07:52] Speaker 02: At least Moda concedes that when Congress enacted this statutory requirement, we'll say, for your purposes, in the first instance, they didn't contemplate, given the situation, that there was going to be any additional appropriations necessary. [00:08:05] Speaker 02: But it's only when the transitional policy came in a year later that that kind of created [00:08:12] Speaker 02: that resulted in this. [00:08:13] Speaker 02: So I don't know if you want to go there if it's helpful to start with. [00:08:16] Speaker 03: Okay, I won't go there, but let me just put a light touch on it because I do think that when you have a clear statement rule, it's relevant evidence. [00:08:23] Speaker 03: Did anyone notice? [00:08:24] Speaker 03: And the President didn't notice. [00:08:25] Speaker 03: HHS didn't notice. [00:08:27] Speaker 03: HHS kept issuing statements until September of 2016, recognizing that these were obligations of the United States. [00:08:34] Speaker 03: Actually, it's interesting because Chevron, the government, has run away from Chevron the whole case. [00:08:39] Speaker 03: And that's because HHS always saw the statute as a money-mandating one. [00:08:43] Speaker 02: Can I touch up, though, because your time is running out, and I want you to reach at least something on the contract claim. [00:08:48] Speaker 03: On the contract claim, certainly. [00:08:50] Speaker 03: OK. [00:08:50] Speaker 03: And I'd like to, right, before I leave, though, can I just say the appropriation writers come in in December of 2014. [00:08:57] Speaker 03: Land of Lincoln was obligated already to provide insurance on the exchange through 2016. [00:09:04] Speaker 03: It's contract with the government. [00:09:06] Speaker 03: This dovetails with a contract argument. [00:09:08] Speaker 03: contract, the loan agreement that it entered into in December 2012 obligated it to stay on the exchange and provide insurance through 2016. [00:09:16] Speaker 03: And so the appropriation riders have this retroactive effect, especially for the land of Lincoln, because, you know, everyone had already signed up, had already provided insurance in 2014. [00:09:26] Speaker 03: The benefit year was almost over. [00:09:27] Speaker 03: Everyone had already agreed to provide insurance contractually through 2015, because you sign your [00:09:33] Speaker 03: your QHP agreements in the fall. [00:09:35] Speaker 03: So by the time the rioters came in in December of 2014, everyone was already on the hook for 2015. [00:09:41] Speaker 03: Lincoln was also on the hook for 2016. [00:09:43] Speaker 03: And so to apply the appropriation rioters, as the government does, has this very unfair retroactive effect. [00:09:49] Speaker 01: And obviously, there's a... So it would only affect whether it's a taking or not. [00:09:52] Speaker 03: Well, I think there's a presumption against a retroactive legislation. [00:09:57] Speaker 03: And I think there's an implied contract claim when the government pulls the rug out from underneath you and [00:10:03] Speaker 03: and changes after you've already performed. [00:10:06] Speaker 01: So I think the retroactive impact is relevant to all of our claims. [00:10:14] Speaker 01: isn't even an appropriation, it's only an authorizing statute. [00:10:19] Speaker 01: And they point, and I've looked at every one of them, at page 19 in the red brief, in the footnote four, not only the Medicare part portion of the ACA statute, but more than several dozen other statutory sections. [00:10:34] Speaker 01: And we pulled every one of them. [00:10:36] Speaker 01: And in every one of them, they have not just authorizing language, but clear appropriation language, unequivocal appropriation language. [00:10:44] Speaker 01: This is the same statute as yours. [00:10:46] Speaker 01: Under the canons of statutory interpretation, your section doesn't have similar appropriation language. [00:10:53] Speaker 01: Wouldn't that weigh against the idea that 1342 included both authorization and appropriation? [00:10:59] Speaker 03: Well, let me address that in two ways. [00:11:01] Speaker 03: One, there doesn't need to be an appropriation from money-mandating statute. [00:11:04] Speaker 03: The government concedes that at page 27. [00:11:06] Speaker 03: It was what we were talking about. [00:11:07] Speaker 03: I was talking about a chief judge. [00:11:08] Speaker 01: You think there doesn't need to be? [00:11:10] Speaker 01: Correct. [00:11:10] Speaker 01: Here's the problem for you. [00:11:12] Speaker 01: This statute chose to do it in dozens and dozens of places. [00:11:17] Speaker 01: So is it simply superfluous in all of those places? [00:11:21] Speaker 03: Well, no. [00:11:22] Speaker 03: Let's look at those footnotes. [00:11:23] Speaker 03: The footnote four, because I pulled those two. [00:11:25] Speaker 03: There's two categories. [00:11:26] Speaker 03: First, there's language that says there's authorized to be appropriated. [00:11:29] Speaker 03: And that's actually the vast majority of cases that the government cites. [00:11:33] Speaker 03: That language actually means nothing. [00:11:34] Speaker 03: When Congress says it's authorized to be appropriated, it would still have to go back and actually appropriate. [00:11:39] Speaker 03: But there are four cases where there's actual money given to programs. [00:11:43] Speaker 01: So when it says authorized to be appropriated, there would have to be an appropriation or there's no authorization. [00:11:48] Speaker 01: But here, since it only says authorized and not authorized to be appropriated, there's both an authorization and an appropriation? [00:11:55] Speaker 03: No, no. [00:11:55] Speaker 03: I'm not claiming there's an appropriation for us. [00:11:57] Speaker 03: I'm just saying that in many of the cases the government cites where it says authorized to be appropriated, that's actually not a big deal because Congress would still have to appropriate. [00:12:05] Speaker 03: That's a placeholder, essentially, that doesn't guarantee appropriations anyway. [00:12:09] Speaker 03: There are four instances in Footnote 4 where there's actually money provided in the statute. [00:12:14] Speaker 03: In all of those cases, there are programs that need to begin right away, like financial assistance to states, technical and financial assistance, to create the exchanges in the first place. [00:12:23] Speaker 03: So the ACA is enacted in 2010, and Congress knows that it needs to get some programs off the ground immediately. [00:12:29] Speaker 03: So those are the funds it funds. [00:12:31] Speaker 03: In Footnote 4, the government cites, those are the programs that actually have funding now. [00:12:36] Speaker 03: The risk corridor program, the government says, and we agree, it wasn't going to start for several years. [00:12:40] Speaker 03: So Congress did not need to appropriate in the ACA directly money for the risk corridor program yet. [00:12:47] Speaker 03: It did not need to program it. [00:12:48] Speaker 01: That's a lot of asking me to surmise the basis behind why statutory language differs, based on absolutely no textual evidence. [00:12:58] Speaker 03: Well, I think the textual evidence here is the language of 1342b, which creates a shall pay obligation. [00:13:05] Speaker 03: And it says in mathematically determined amounts what the government shall pay. [00:13:10] Speaker 03: It will pay based on the ratio of allowable plan costs to the target. [00:13:16] Speaker 03: It will share in the risk. [00:13:17] Speaker 03: And it will pay if it's above 3%. [00:13:19] Speaker 01: Does the statutory section 1563a also adopt expressly Congress adopted [00:13:25] Speaker 01: and made statutory the CBO report results, which said payments in would equal payments out and this would be budget neutral? [00:13:31] Speaker 03: Well, Your Honor, with respect, the CBO scored the bill as a whole. [00:13:34] Speaker 03: It did not look at risk corridors. [00:13:36] Speaker 03: So 1563A said the law as a whole would have this budgetary effect. [00:13:42] Speaker 03: And not the risk corridor program in particular. [00:13:44] Speaker 03: 1563A is not about the risk corridor program in particular. [00:13:47] Speaker 03: The only time CBO scored risk corridor was in February of 2014, and it concluded it was not budget neutral. [00:13:53] Speaker 03: That's Appendix 54 in the appendix. [00:13:55] Speaker 03: So I think the CBO is strongly on our side, frankly. [00:13:58] Speaker 03: The CBO, the only time it looked at risk corridors said it was not budget neutral. [00:14:04] Speaker 03: But with respect, I do think that the text of 1342B and the way it's different from the reinsurance program [00:14:10] Speaker 03: and the risk adjustment program, 1341 and 1343. [00:14:14] Speaker 03: The reinsurance program is clearly budget neutral because 1341 B1B says that it will be monies so used. [00:14:23] Speaker 03: In other words, the reinsurance program is payments and payments out. [00:14:26] Speaker 01: Even though this annual report included budget numbers for any programs, including the other 3R programs, which it thought would have deficits, [00:14:33] Speaker 03: It didn't score risk corridors until February 2014. [00:14:37] Speaker 03: It just didn't. [00:14:39] Speaker 03: And Appendix 390 says that. [00:14:41] Speaker 03: And it may have assumed it. [00:14:43] Speaker 03: It may have assumed budgets, may have made certain assumptions. [00:14:48] Speaker 03: But it didn't score it until February 2014. [00:14:50] Speaker 01: Well, you're almost out of time, so you should probably turn to the contract question, because I think our chief judge had to make an address. [00:14:56] Speaker 03: Yes. [00:14:56] Speaker 03: OK. [00:14:57] Speaker 03: So the contract question, I think, as I said, is bolstered by the [00:15:01] Speaker 03: the fact that we were on the exchange until 2016. [00:15:05] Speaker 03: And the contract is an applied-in-fact contract. [00:15:07] Speaker 03: It's a promissory contract. [00:15:09] Speaker 02: What is it derived from? [00:15:11] Speaker 02: The statutory language, on the appropriations, or on regulations? [00:15:16] Speaker 03: I would say a combination. [00:15:17] Speaker 03: Statute, regulations, statements of the parties, the QHP agreements that we entered into that made an Appendix 66 risk corridors mentioned in the QHP agreements. [00:15:27] Speaker 03: It was part of the contemplation of the parties. [00:15:30] Speaker 03: And the implied contract is just like the Radium Mines case or the New York Airways case, where when there's a promissory scheme that offers a party the opportunity to perform and the promises the government will pay, that creates an implied, in fact, contract. [00:15:47] Speaker 03: So we think Judge Wheeler was right in the way he analyzed it in Moda and Molina. [00:15:50] Speaker 03: And we think the Radium Mines and New York Airways are the primary cases that we rely on. [00:15:55] Speaker 02: Thank you. [00:15:55] Speaker 02: We'll let you store three minutes. [00:15:57] Speaker 03: Thank you, Your Honor. [00:16:05] Speaker 00: May it please the court, Elisa Klein for the United States. [00:16:08] Speaker 00: Going back to where the conversation began, the controlling issue is Congress's intent in enacting the appropriations legislation that it enacted first in December 2014 and repeatedly reenacted years after that. [00:16:22] Speaker 00: There is no serious dispute that Congress has the power [00:16:25] Speaker 00: through appropriations, legislation, or otherwise to cap the payments under the risk accord. [00:16:31] Speaker 02: So let's just get down to some of the details. [00:16:34] Speaker 02: What about your friend's argument that the rider language was quite explicit and there were other sources of funding beyond that, leaving aside the judgment fund, which is kind of a separate deal? [00:16:44] Speaker 00: Exactly. [00:16:44] Speaker 00: Yes, Your Honor. [00:16:45] Speaker 00: Judge Brugink in the Maine Community Health Options addresses all of these arguments, and he's exactly right. [00:16:51] Speaker 00: The way this court and the Supreme Court look at funding legislation, appropriations legislation, to determine Congress's intent is they look at the provision in context, what had been going on along with the legislative history. [00:17:04] Speaker 00: Here, as the court knows, Congress, in anticipation of the appropriations process, asked the GAO, identify the universe of funds that are potentially available to make risk corridors payments, [00:17:17] Speaker 00: when the time to make those payments comes due, which would not be until calendar year 2015. [00:17:23] Speaker 00: GAO says, I have identified two potential pots of money. [00:17:28] Speaker 00: One are the payments in that the insurers would start making in calendar year 2015. [00:17:34] Speaker 00: That's what it's referred to as user fees, but it's a specific kind of user fees. [00:17:39] Speaker 00: And the other, the GAO says, potentially a lump sum for CMS program management [00:17:47] Speaker 00: But only, Congress, if you reenact the same language of the Annual Appropriations Act for future fiscal years, because otherwise those acts are annual only. [00:17:56] Speaker 00: And Congress, thank you GAO, says, I am reenacting the user fee language, which is the appropriation that allowed HHS to take money in and distribute it to make payments out. [00:18:11] Speaker 00: You needed that appropriation. [00:18:13] Speaker 00: But Congress, in the same appropriations legislation, said, [00:18:17] Speaker 00: None of the other funds that GAO identified may be used for risk corridors payments. [00:18:23] Speaker 02: Why was it not necessary for the Congress to also explicitly rule out the judgment fund? [00:18:28] Speaker 00: Because the judgment fund exists only to pay final judgments. [00:18:32] Speaker 00: It has nothing to do with whether a judgment should be entered in the first place. [00:18:38] Speaker 00: That's a question of statutory interpretation, Congress's intent [00:18:42] Speaker 00: when it legislates with respect to the particular program. [00:18:45] Speaker 00: And that includes the appropriations legislation. [00:18:48] Speaker 02: Can I ask you a technical question? [00:18:50] Speaker 02: Yes. [00:18:50] Speaker 02: And this is that we have lots of terms. [00:18:52] Speaker 02: I think I understand appropriations and authorization and all of that. [00:18:55] Speaker 02: But there's the other term that I think comes out of the Medicare stuff, which is budget authority. [00:19:00] Speaker 02: And I think there are some arguments made about budget authority. [00:19:02] Speaker 02: Can you explain to me what that is and what's necessary? [00:19:05] Speaker 00: Yes. [00:19:06] Speaker 00: So budget authority is a defined term in that statute. [00:19:10] Speaker 00: It's 2 USC 622. [00:19:13] Speaker 00: This is the way Congress has implemented its appropriations clause power through a whole series of statutes, and one of which lays out different types of budget authority that it can give to an agency. [00:19:25] Speaker 00: And then the other statutes, including the Anti-Deficiency Act, make clear that an agency may not spend a penny unless and until Congress either appropriates it or [00:19:36] Speaker 00: What it did in the Medicare Part D statute was explicitly it gave HHS authority to spend money in advance. [00:19:45] Speaker 02: Is the government's position that that has some effect on this case? [00:19:48] Speaker 02: Beyond, I mean, we know it. [00:19:50] Speaker 00: It doesn't matter. [00:19:51] Speaker 00: Our position is Judge Bruggen is 100% correct in that even if you assume for the sake of argument that 1342 of the ACA said insurers are entitled to 100% payment, [00:20:02] Speaker 00: It doesn't matter, because that's just a statute. [00:20:04] Speaker 00: It's a statutory right. [00:20:05] Speaker 00: It's not a contract. [00:20:06] Speaker 00: And I will address the contract claim. [00:20:08] Speaker 00: Statutes, as the Supreme Court emphasized in the Amtrak decision, that National Railroad Passenger Corporation decision, statutes do not fine later Congresses, which is, later Congress is entirely free to amend the terms of a prior statute and including through appropriations legislation that- So what would you say that the amendments made clear [00:20:31] Speaker 04: that the government's intention was that if there was a shortfall in this balance, that it would not. [00:20:37] Speaker 04: There would be no compensation, and that all of the participants are charged with understanding that. [00:20:44] Speaker 00: Yes, Your Honor. [00:20:44] Speaker 00: Congress's intent was clear when it enacted the appropriations legislation in 2015. [00:20:51] Speaker 04: You don't think that if there's a dramatic change, something had to be said? [00:20:56] Speaker 00: Something was said. [00:20:57] Speaker 00: This is not a mere omission case. [00:21:01] Speaker 00: in the way that term has been used, Congress did not merely fail to appropriate a sufficient amount. [00:21:08] Speaker 00: Congress affirmatively appropriated the amounts that were paid in and explicitly barred HHS from spending the only other funds that were potentially available. [00:21:20] Speaker 04: That was done subsequently. [00:21:22] Speaker 04: So your position also has to be that retroactivity of a change in the relationship needs to be applied. [00:21:30] Speaker 04: because of the legislation? [00:21:33] Speaker 00: We do not agree that there is any issue of retroactivity here. [00:21:36] Speaker 00: But yes, even if there were, that is the holding of the Supreme Court's Amtrak decision and the other cases that say a statute [00:21:44] Speaker 00: does not bind a later Congress. [00:21:46] Speaker 00: Congress can legislate retroactively. [00:21:49] Speaker 00: And the only question would be, did Congress intend to cut off or cap payments? [00:21:55] Speaker 01: And here- Just to be clear, the reason the government argues there would be no retroactivity, if I understand it, is the riders are September fiscal year. [00:22:03] Speaker 01: And the total amount, whether the insurance companies came up short or had an overage, was not decided until December. [00:22:11] Speaker 01: Is that right? [00:22:12] Speaker 01: They were calendar year? [00:22:13] Speaker 00: It was. [00:22:14] Speaker 00: So I think Lincoln on page 31 of its own opening brief makes the point correctly, which is that the first appropriations legislation was December 2014 and no obligation could possibly accrue until calendar year 2015, as they emphasize, five years after the ACA was enacted in 2010. [00:22:35] Speaker 00: And then just to turn back to the colloquy Your Honor was having, [00:22:40] Speaker 00: Congress did not appropriate any funds in the Affordable Care Act for the Risk Corridors Program. [00:22:47] Speaker 01: It authorized the program, but... Is it your view that every statutory section that authorizes and details payments has to include magic language about appropriations? [00:22:57] Speaker 00: No, Your Honor. [00:22:57] Speaker 01: Is it something unique about this statute? [00:23:00] Speaker 00: Really, neither. [00:23:01] Speaker 00: It's that for there to be an appropriation, there has to be certain specific language. [00:23:07] Speaker 00: It's established that a shall pay directive [00:23:10] Speaker 00: without identifying a source of funds is not an appropriation. [00:23:13] Speaker 00: That's just black letter appropriations law. [00:23:16] Speaker 00: We quote the GAO Red Book for that proposition. [00:23:18] Speaker 00: I don't believe the other side is claiming that there was any appropriation in section 1342. [00:23:23] Speaker 00: That was not Judge Wheeler's conclusion. [00:23:26] Speaker 01: I don't think they're claiming there was an appropriation, but there was an obligation, nonetheless. [00:23:31] Speaker 00: And in that respect, Judge Leto was correct in this case. [00:23:36] Speaker 00: Congress did not. [00:23:37] Speaker 01: You say Judge Leto was correct. [00:23:38] Speaker 01: You seem to have abandoned his entire rationale. [00:23:40] Speaker 01: So I guess you mean he was correct on judgment? [00:23:42] Speaker 00: No, we're saying it doesn't matter if Judge Leto was correct when he said that Section 1342 did not make these payments an obligation of the government, because Judge Brugging was correct when he said, even assuming, arguendo, that 1342 had made [00:24:00] Speaker 00: risk orders payments, you know, an entitlement, 100% payment. [00:24:05] Speaker 00: Even assuming that, Congress has the power later to change its mind, to modify the earlier legislation to cap payments. [00:24:13] Speaker 00: And the only question is one of congressional intent. [00:24:16] Speaker 00: And there are no magic words required. [00:24:18] Speaker 00: You can see that from the Supreme Court's decisions in Dickerson and Wellesley. [00:24:21] Speaker 01: You really have abandoned the Leto analysis here on appeal. [00:24:26] Speaker 01: So do you now agree [00:24:27] Speaker 01: that if you don't prevail on the appropriation riders taking back whatever obligation 1342 created in excess of the payments in, that the government does not win? [00:24:40] Speaker 00: No, Your Honor. [00:24:41] Speaker 00: And there were two sections to our brief. [00:24:43] Speaker 00: I believe it was A and B. One was Judge Leto's correct reasoning, which is that in the first instance, 1342 did not make the taxpayer, the guarantor, [00:24:55] Speaker 00: of insurance industry losses. [00:24:57] Speaker 01: All it did was... He based his reasoning entirely on deference. [00:25:00] Speaker 00: We do not agree with the deference rationale, but as a matter of law, Congress has the power of appropriations and just looking at the statute, it was generally modeled on Medicare Part D, but unlike Medicare Part D, there's no appropriation, there's no budget authority in advance of appropriations, and there's no language that says the payments are an obligation of the government. [00:25:22] Speaker 00: And therefore, it's no surprise that CBO did not score risk corridors when it was giving Congress advice before Congress passed the Affordable Care Act. [00:25:31] Speaker 02: Do you want to get back to Judge Newman's? [00:25:33] Speaker 02: OK, go ahead. [00:25:33] Speaker 02: I wanted her to get back to your point. [00:25:35] Speaker 04: All right. [00:25:37] Speaker 04: What is the government's explanation for this massive reliance on what you now tell us is meaningless? [00:25:45] Speaker 04: That all of these entities that suffered [00:25:48] Speaker 04: very large, substantial, and were not forced into bankruptcy losses in operating under this system. [00:25:57] Speaker 04: You're saying that they misinterpreted the legislation, should not have relied on what seemed to be apparent in the legislation, that they misread it. [00:26:12] Speaker 04: How do you explain what happened, the consequences that we now have? [00:26:19] Speaker 00: As the Supreme Court and this court have repeatedly held, even if there were reasonable reliance on agency statements, that does not in any way impair Congress's appropriations power. [00:26:31] Speaker 00: So in schism, this en banc court said, yes, military recruiters made promises to recruits saying you'll get free lifetime medical care. [00:26:43] Speaker 04: Let's stick with this case and tell us why all of these [00:26:46] Speaker 04: major advisors, lawyers, and all else were wrong in apparently appearing to rely on the statute? [00:26:56] Speaker 00: Again, we don't even understand the reliance. [00:26:59] Speaker 00: Even after HHS said repeatedly, March 2014, April 2014, May 2014, we will implement this program in a budget-neutral manner, the insurers continued to sell plans. [00:27:12] Speaker 00: They decided how to price their plans, how to design their plans. [00:27:15] Speaker 00: They sold for 2015, they sold for 2016. [00:27:18] Speaker 02: And they had said still contrary stuff the year before that. [00:27:26] Speaker 00: So there's no question HHS said inconsistent things. [00:27:30] Speaker 00: However, as a matter of law, if HHS says we will remit payments regardless of receipts, that is necessarily [00:27:38] Speaker 00: subject to Congress's appropriations. [00:27:40] Speaker 00: It would be a crime for HHS to pay out money that Congress hadn't appropriated. [00:27:45] Speaker 00: And it would not be reasonable to infer from that statement that HHS was going to act in derogation of Congress's appropriations power. [00:27:53] Speaker 00: But even this is why I was talking about the other cases. [00:27:56] Speaker 04: Really, I do want an answer to this. [00:27:58] Speaker 04: You say that it was not reasonable to rely on the legislation? [00:28:04] Speaker 00: We say two things. [00:28:06] Speaker 00: even if there had been reasonable reliance on statements by an executive branch agency that would be legally irrelevant under OPM versus Richmond and schism and FCIC versus Merrill because as the Supreme Court and this court have emphasized [00:28:22] Speaker 00: The appropriations power belongs to Congress. [00:28:25] Speaker 02: But Judge Newman's question, as I understand it, is not statements made. [00:28:28] Speaker 02: It's that the statute, let's assume we read the statute as saying shall pay and creating at least an authorization obligation. [00:28:36] Speaker 02: I think that's Judge Newman's point. [00:28:37] Speaker 00: Thank you, Your Honor. [00:28:38] Speaker 00: There we have the Supreme Court precedent that says statutes do not bind Congress. [00:28:45] Speaker 00: And particularly here, you have shall pay language. [00:28:48] Speaker 00: That's relevant for jurisdiction. [00:28:50] Speaker 00: We don't dispute the court's jurisdiction. [00:28:52] Speaker 00: But it in no way committed Congress to a particular funding level. [00:28:57] Speaker 00: It did not appropriate funds at all. [00:28:59] Speaker 00: So nothing could happen under this program until Congress enacted appropriations legislation. [00:29:04] Speaker 00: Until Congress appropriated funds in December 2014, insurers had at most a hope that Congress would appropriate certain funds. [00:29:14] Speaker 00: And they may well have had a hope [00:29:16] Speaker 00: that the payments in would cover payments out. [00:29:18] Speaker 01: Imagine we don't view it that way. [00:29:19] Speaker 01: Imagine we view 1342 as authorizing and obligating the government to make these payments, not create some hope that they'll make the payments, but actually do so. [00:29:29] Speaker 01: But then imagine we view the appropriation as taking that hope away, except it's not really hope, it's an actual obligation. [00:29:36] Speaker 01: Now why don't you move into their contract and takings claims and tell me why they don't at least have some sort of cause of action for the period [00:29:44] Speaker 01: that they were lured into committing to this program and operating under it at a loss with the belief the government was going to share in any losses that they had. [00:29:53] Speaker 01: And then the government came along later and said, I've changed my mind. [00:29:55] Speaker 01: I'm not going to share in it. [00:29:57] Speaker 01: So imagine that that's our view of the statute. [00:30:00] Speaker 01: 1342, authorized and obligated, appropriation cut it away. [00:30:03] Speaker 01: But these people were stuck already in the program and then suffered losses in reliance on the original statutory language. [00:30:10] Speaker 01: Why isn't there either a contract or a takings cause of action? [00:30:13] Speaker 00: because under the Supreme Court's Amtrak decision, this Court's Brooks decision, before you can infer an intent that the legislature bound itself in contract, as opposed to just saying this is an obligation, which I'm assuming for argument's sake Congress had said, you need a clear indication that the legislature intended to bind itself, legally bind itself in contract. [00:30:40] Speaker 00: The Supreme Court in the Amtrak decision gives an example from an earlier case where the statute said, the states hereby covenant and agree. [00:30:48] Speaker 00: And the Supreme Court says, that's the language of contract. [00:30:51] Speaker 00: And they look at the Amtrak statute and said, it doesn't matter if you railroad entered into arrangements with Amtrak thinking that this statute entitled your employees to ride for free, which is the issue in the Amtrak case. [00:31:05] Speaker 00: Congress is presumed to enact statutes, not contracts, and there is nothing in 1342 that uses any language of contract and nothing in the circumstances. [00:31:16] Speaker 00: Radium, the provision explicitly said, if you offer uranium, we will forward a contract. [00:31:25] Speaker 00: I mean, they use the language of contract. [00:31:28] Speaker 00: New York also, which is their other case, and these both predate the Supreme Court's Amtrak decision, but New York [00:31:33] Speaker 00: The claims court emphasized that Congress itself referred to liquidation of contract authorization and repeatedly recognized in the congressional debates that these were contractual obligations. [00:31:45] Speaker 00: There's nothing like that here. [00:31:46] Speaker 01: They weren't at least contractual obligations of some sort even implied versus expressed. [00:31:52] Speaker 01: Tell me now about why they're not takings, why there hasn't been a taking. [00:31:56] Speaker 00: There can't be a taking unless there is a contract. [00:31:59] Speaker 01: This is the point of the Supreme Court's Amtrak decision. [00:32:11] Speaker 00: The point is Congress, the legislature, is assumed to enact policies that Congress can change. [00:32:18] Speaker 00: It's at absolute liberty to change. [00:32:21] Speaker 00: That's why we don't lightly infer that statutes are contracts, because Congress doesn't have the same freedom to override the government's contracts. [00:32:31] Speaker 00: That would raise takings questions. [00:32:33] Speaker 00: So this is the dichotomy. [00:32:34] Speaker 00: The whole point is, Section 1342, it just said, the secretary shall establish and administer a program of risk corridors in which qualified health plans shall participate in a risk adjustment system. [00:32:47] Speaker 01: It also said it shall pay. [00:32:49] Speaker 00: The payment methodology set out shall pay. [00:32:51] Speaker 00: Yes, but there's no contract. [00:32:53] Speaker 00: Again, this is just like in Brooks where the statute says if you bring a successful key TAM action for false patent marketing, then you get half of the damages. [00:33:07] Speaker 00: And Congress later took that right away. [00:33:09] Speaker 00: And this court said there's no contract. [00:33:10] Speaker 00: That's not the language of contract. [00:33:12] Speaker 00: And no one gets to rely on the continued existence of a statute. [00:33:20] Speaker 00: and a statute under the Supreme Court's Amtrak decision, which this Court has correctly applied in Brooks, said, we do not presume, absent a clear indication that Congress meant to bind itself in contract. [00:33:33] Speaker 00: And there's nothing like that here. [00:33:39] Speaker 03: Anything else? [00:33:44] Speaker 03: Thank you, Your Honors. [00:33:45] Speaker 03: Three points. [00:33:46] Speaker 03: First, to clarify the appropriations language, [00:33:48] Speaker 03: The appropriations writers did not cut off all money. [00:33:52] Speaker 03: Even if they had, we still would have our argument. [00:33:54] Speaker 03: But they left $4.4 billion in fiscal year 2014 and 2015 money that was available for five years. [00:34:02] Speaker 03: That's what we point out in reply brief 24 to 25. [00:34:06] Speaker 03: Plus, the appendix 9 footnote 10 points out that user fees collected in 2014 were also available for five years. [00:34:13] Speaker 03: So the riders didn't even cut off all money. [00:34:15] Speaker 03: Even if they had, it was not enough under Dickerson and Will. [00:34:19] Speaker 03: It was just Gibney language. [00:34:20] Speaker 03: Second, the government says that Congress's intent was clear. [00:34:23] Speaker 03: As I said, the language is not clear and is not sufficient under Dickerson and Will, Gibney, and New York Airways. [00:34:29] Speaker 03: They face a high standard here, a clear statement rule, to show that the appropriation riders not just withdrew money, but substantively abrogated the promise to pay in 1342. [00:34:40] Speaker 03: And if the Congress intent were clear, it would not have kept trying to repeal risk corridor or amend it to make it budget neutral. [00:34:48] Speaker 03: We point out in our reply brief of page 21, Congress, even after 2015 and 2016, kept trying to mandate budget neutrality. [00:34:56] Speaker 03: So clearly, not even Congress itself thought that it had achieved that through the appropriation writers. [00:35:02] Speaker 03: And of course, HHS kept recording these as obligations. [00:35:05] Speaker 03: It's true that HHS, as my friend on the other side said, [00:35:08] Speaker 03: announced that it would implement the risk corridor program in a budget-neutral manner over three years. [00:35:14] Speaker 03: But it kept saying that these were obligations until September 2016. [00:35:19] Speaker 03: And if they want to read HHS as, if they want to read the appropriation writers as working a substantive abrogation of 1342, then they're making another, they're giving force to a chevron argument in terms of what HHS was saying. [00:35:34] Speaker 03: HHS was not reading the appropriation writers that way. [00:35:37] Speaker 03: If their argument is that the appropriation writers worked a substantive change in 1342, they're just giving you more reason to defer to HHS's determinations under Chevron. [00:35:48] Speaker 03: And finally, the contract point. [00:35:50] Speaker 03: Congress can change its mind. [00:35:52] Speaker 03: Judge Moore is completely correct that Congress, whatever that does to the statutory claim, that gives rise to the implied contractor takings claim. [00:36:00] Speaker 03: Just like in Winstar, which is an express contract, [00:36:03] Speaker 03: But nonetheless, it was a change in mind by Congress that nonetheless created contractual liability for the United States. [00:36:10] Speaker 01: I'm really struggling with the contractual liability part. [00:36:14] Speaker 01: So recently, new legislation was enacted in the tax area. [00:36:20] Speaker 01: I bought a house. [00:36:20] Speaker 01: I got a mortgage. [00:36:22] Speaker 01: I counted on that mortgage interest being deductible. [00:36:26] Speaker 01: The government's taking that away from me. [00:36:28] Speaker 01: Do I now have an implied and fact contract with the government that I have 30-year deductibility of my mortgage interest? [00:36:34] Speaker 03: No, Your Honor. [00:36:35] Speaker 01: Why not? [00:36:35] Speaker 01: How is that any different from what you're arguing? [00:36:36] Speaker 03: Well, because we're not just talking about the statute by itself. [00:36:39] Speaker 03: The government's argument was 1342 is not a contract. [00:36:42] Speaker 03: We're not arguing the statute by itself is the contract. [00:36:46] Speaker 03: It's the implied and fact contract claim arises, as I think I said, from the whole constellation of factors. [00:36:53] Speaker 03: It is the statute, but it's also the regulations that HHS will pay and the QHPs will receive. [00:36:59] Speaker 03: It's the course of dealings with the parties. [00:37:01] Speaker 03: It's the constant promises by our contractual counterparty. [00:37:05] Speaker 03: CMS kept telling us, yes, you will be paid. [00:37:08] Speaker 03: And all of that would at least make a claim for an implied and in fact contract. [00:37:12] Speaker 03: It's different from the Brooks case or the Amtrak case. [00:37:16] Speaker 03: because those cases are just about the statute. [00:37:19] Speaker 03: Our implied contract claim is not just about the statute. [00:37:22] Speaker 03: And Brooks is a Ketam statute, which the Court went out of its way to say has a long history of not creating vested rights. [00:37:30] Speaker 03: So I think Brooks is really limited to the Ketam context. [00:37:33] Speaker 03: And the Radium Mines case, just one last thing. [00:37:36] Speaker 03: The plaintiff in that case did not have a contract with the government. [00:37:40] Speaker 03: Yes, the word contract appeared in the statute. [00:37:44] Speaker 03: But the Radium Mines theory was much broader, that there was a promissory structure or framework created. [00:37:51] Speaker 03: And even though that plaintiff did not have a contract, it was still entitled to money. [00:37:54] Speaker 03: It did not have an express contract. [00:37:56] Speaker 03: It had an implied in fact contract, just like we have. [00:37:58] Speaker 03: And so 50,000 people in Illinois lost their health insurance in the middle of the year. [00:38:02] Speaker 03: when the government broke its promise. [00:38:04] Speaker 03: And this court should enforce the normal rules. [00:38:09] Speaker 03: If this were a small value case, it would be easy, because the law is clearly on our side, and we urge the court to enter judgment against the government. [00:38:15] Speaker 02: Thank you. [00:38:17] Speaker 02: We thank both sides. [00:38:18] Speaker 02: This case is submitted, and we now turn to 171994 motor health plan. [00:38:26] Speaker 02: We don't need to play music with chairs, so the government can stay with us. [00:38:30] Speaker 00: I think that was my question.