[00:00:19] Speaker 04: Ms. [00:00:19] Speaker 04: Klein. [00:00:21] Speaker 00: May it please the court, Elisa Klein for the United States. [00:00:23] Speaker 04: No need to obviously repeat what you've already said. [00:00:25] Speaker 00: Thank you, Your Honor. [00:00:27] Speaker 00: Just focus on some of the particular errors in Judge Wheeler's analysis here. [00:00:32] Speaker 00: In some ways, build upon what was being said before. [00:00:36] Speaker 00: There's no clear statement requirement as the insurers are using that term. [00:00:42] Speaker 00: When you're looking at appropriations legislation, as in Highland Falls and Dickerson and Will, [00:00:49] Speaker 00: The only question is a fair inference about Congress's intent. [00:00:53] Speaker 00: And if you look at the way this court in Highland Falls looked at the appropriations legislation and the Supreme Court in the prior cases, they looked at, you know, didn't require any magic words, looked in context at what Congress was doing. [00:01:08] Speaker 00: and concluded in each of those cases that the legislation capped payments. [00:01:15] Speaker 04: Well, there is a standard. [00:01:16] Speaker 04: I mean, the standard that I think has come out of at least the early Supreme Court cases is expressly or by clear implication. [00:01:23] Speaker 00: Yes, and by clear implication, we can see from the mode of analysis used by the Supreme Court in Dickerson and Will means we're going to look at the legislative history. [00:01:34] Speaker 00: We're going to look at what had just happened before. [00:01:36] Speaker 00: So for example, in both Dickerson and Will, the Supreme Court examined the legislative history. [00:01:43] Speaker 00: And in Dickerson, reversing the claims court, which had said this is merely a restriction on funding, the Supreme Court said, no, we can tell in context and from the legislative history that Congress was in fact suspending the military reenlistment bonus for the fiscal years at issue. [00:02:00] Speaker 00: It was not just an accounting restriction. [00:02:05] Speaker 00: just to address the or any other act language. [00:02:09] Speaker 00: That language, it made perfect sense in the Dickerson context because the proviso, the rider that suspended the military reenlistment bonus was appended to appropriations legislation for the rural electrification administration, which is obviously not the only or primary source of military reenlistment funding. [00:02:33] Speaker 00: And so Congress said, [00:02:34] Speaker 00: No funds from this act or any other act can be used to pay the military enlistment bonuses. [00:02:40] Speaker 00: But there is no magic to that language. [00:02:42] Speaker 00: It's certainly not a reference to the judgment fund, which didn't even exist at the time of Dickerson. [00:02:47] Speaker 00: In Will, the Supreme Court walks through four different years of appropriations legislation. [00:02:53] Speaker 00: Year four did not have any other act language. [00:02:57] Speaker 00: And that had absolutely no significance for the Supreme Court. [00:03:01] Speaker 00: the question, and again in Will, as in Dickerson, the Supreme Court looked at the legislative history and said, we can tell Congress meant to modify the prior cost of living increases for judges' salaries, not merely to consign them to fiscal limbo. [00:03:21] Speaker 00: So it brings us back to what Judge Brugink said in the Maine community health options case, which is that Congress was presented by GAO with [00:03:31] Speaker 00: two potential pools of money from which risk corridors payments could be made. [00:03:36] Speaker 00: Congress eliminated one of them, leaving only payments in. [00:03:41] Speaker 00: And that is the end of the matter, because Congress has plenary control over the appropriations process. [00:03:49] Speaker 00: And Congress thereby capped payments out at the total amounts collected as payments in. [00:03:57] Speaker 04: Any further discussion of the contract? [00:04:01] Speaker 00: Contract again to be precise. [00:04:03] Speaker 00: We I think Lincoln's Council correctly conceded that section 1342 does not create a contract All right. [00:04:10] Speaker 00: Okay. [00:04:10] Speaker 00: Well Moda may not concede that over. [00:04:12] Speaker 00: I believe Moda also does not suggest that the language of 1342 has any indicia of Binding Congress and I understood the argument to be as you take everything in totality of the regulations and the statutory So I'll move on but first, you know we we disagree insofar as [00:04:31] Speaker 00: Congress did not choose to create risk corridors contracts, nor did it give HHS authority to enter into risk corridors contracts. [00:04:40] Speaker 00: But in any event, if you pull up the HHS regulations, the various statements in the Federal Register, none uses the language of contract. [00:04:48] Speaker 00: There are no risk corridors contracts. [00:04:51] Speaker 00: The QHP agreements that were referred to have to do with data security and privacy. [00:04:56] Speaker 00: They have nothing to do with risk corridors. [00:04:58] Speaker 03: So even if HHS thought there was an obligation to pay out that was a contractual obligation, in their view, it was at best a statutory obligation. [00:05:07] Speaker 00: Exactly. [00:05:08] Speaker 00: And then going back to the central point made by Judge Brugink is Congress has untethered power to modify a statutory obligation. [00:05:17] Speaker 00: So even assuming, for the sake of argument, [00:05:19] Speaker 00: that there ever were such an obligation. [00:05:22] Speaker 00: Congress got rid of it in 2014, 2015, 2016, when it repeatedly enacted appropriations legislation that appropriated monies in, but explicitly barred HHS from using the only other funding source available. [00:05:37] Speaker 00: Just a little bit of technical cleanup. [00:05:39] Speaker 00: There, I think, was some confusion about user fees. [00:05:43] Speaker 00: What GAO said, correctly, is [00:05:46] Speaker 00: To the extent insurers make payments in pursuant to 1342 and those payments are then used to make payments out under 1342, they meet the definition of a user fee. [00:05:58] Speaker 00: So those payments in from insurers when they started coming in, in 2015, 2016, 2017, could be used to make payments out. [00:06:07] Speaker 00: There are other unrelated user fees and no one has ever suggested that [00:06:12] Speaker 00: those monies could be used to make risk corridors payments out. [00:06:15] Speaker 00: That's just a misunderstanding of what GAO said. [00:06:17] Speaker 00: And to the extent that Judge Wheeler in the Moda opinion that we retreated from this in Molina had suggested that monies from 2014 could have been used to make risk corridors payments in 2014. [00:06:33] Speaker 00: Again, that chronologically makes no sense. [00:06:37] Speaker 00: There could not be any risk corridors payments [00:06:40] Speaker 00: until 2015 by statute, just because the payments depended upon transactions from the entire 2014 calendar year. [00:06:49] Speaker 00: And GAO was just addressing a counterfactual saying, Congress, if you reenacted the same language from the Fiscal Year 2014 Appropriations Act in subsequent years, that will allow HHS to use payments in to make payments out, potentially to use the lump sum, [00:07:08] Speaker 00: except that Congress extinguished any access to the lump sum, thereby leaving only payments in. [00:07:16] Speaker 01: So you're asking us to assume that Congress was innocent of the shortfalls that were occurring when they enacted the later legislation, which said that it's going to be limited to what comes in in terms of what goes out, and that that was not an amendment [00:07:38] Speaker 01: of the prior legislation, what you called a technical cleanup? [00:07:43] Speaker 00: No, the technical cleanup was just on certain lingering points. [00:07:46] Speaker 00: We're saying, even if you assume that when Congress passed the Affordable Care Act, it intended to appropriate taxpayer funds to make sure there were no shortfalls, it doesn't matter. [00:07:58] Speaker 00: Because Congress clearly and deliberately in 2014, 2015, 2016 enacted legislation that [00:08:06] Speaker 00: made payments in the sole source of funding. [00:08:12] Speaker 01: The initial legislation doesn't matter. [00:08:20] Speaker 00: It is also true that the initial legislation did not appropriate any money for risk quarters payments, did not authorize appropriations [00:08:28] Speaker 04: Well, let's assume we think it was kind of a clear authorization. [00:08:32] Speaker 04: Your position remains, though, that under the case law, even if it was a clear authorization, Congress can repeal, amend, or suspend a prior authorization. [00:08:45] Speaker 00: Exactly. [00:08:46] Speaker 00: No, it's exactly the point Judge Brugink made. [00:08:48] Speaker 00: It directly follows from Dickerson, Will, and also Highland Falls, where this court [00:08:54] Speaker 00: inferred from an earmark alone an intent to modify an earlier spending formula. [00:09:00] Speaker 00: And so yes, basically Congress's intent in enacting the appropriations legislation and repeatedly reenacting it is dispositive. [00:09:08] Speaker 00: There are no magic words required and Congress's intent was abundantly clear here. [00:09:18] Speaker 04: Thank you. [00:09:19] Speaker 04: Mr. Rosemont. [00:09:25] Speaker 02: May it please the court, Stephen Rosenbaum from Moda Health. [00:09:29] Speaker 02: I want to take the issue sequentially, starting with 1342. [00:09:33] Speaker 02: Did it make a promise, an enforceable statutory promise? [00:09:38] Speaker 02: We believe the answer is clearly yes. [00:09:40] Speaker 02: And let me start by saying, everyone whose opinion ought to matter agrees with us. [00:09:45] Speaker 02: By that, I mean the agency itself, CMS said in 2012, before we had decided to join the program, explicitly, and I quote, [00:09:55] Speaker 02: The Risk Corridors Program is not statutorily required to be budget neutral. [00:10:00] Speaker 02: Regardless of the balance of payments and receipts, HHS will remit payments as required. [00:10:06] Speaker 03: GAO is on our side on the issue, too. [00:10:19] Speaker 02: And so I go then to your particular discussion of the language of the various provisions in the Act. [00:10:26] Speaker 02: We regard the promise made as to risk corridors to be the strongest of all. [00:10:30] Speaker 02: There is no limitation whatsoever imposed on the shell pay obligation. [00:10:35] Speaker 02: With respect to some of the things the government was doing, they put a specific appropriations cap. [00:10:40] Speaker 02: We will only spend X amount of money. [00:10:42] Speaker 02: that was not done with respect to risk orders. [00:10:48] Speaker 03: Let me go with that. [00:10:53] Speaker 02: If we assume, as we believe is clearly the case, that that obligation is there, let's go to the appropriations writers. [00:11:00] Speaker 02: Our view is that this case is controlled by the language of Gibney because the language of Gibney is exactly the same as the language in the appropriations writers here. [00:11:11] Speaker 02: In Gibney, [00:11:12] Speaker 02: This court faced language that said, quote, none of the funds appropriated for the Immigration and Naturalization Service shall be used to pay compensation for overtime services other than is provided in two general statutes, thereby excluding the statute under which the claim was being made. [00:11:30] Speaker 02: This court held, this court's predecessor held, that language was not sufficient to vitiate the statutory promise made in the other statutes. [00:11:41] Speaker 02: The language at issue here is exactly the same. [00:11:44] Speaker 02: None of the funds made available by this act from various sources may be used for payments under risk orders. [00:11:53] Speaker 04: What about Will? [00:11:53] Speaker 04: It seems like the language is similar to Will. [00:11:55] Speaker 04: And the difference, the distinction that I think you make in your brief with respect to Will is only that it said, or other staff. [00:12:03] Speaker 02: No. [00:12:05] Speaker 02: Will said many things, because there were different provisions and different [00:12:10] Speaker 02: sequential statutes, but they were all interpreted by the court as things that ought to be read together. [00:12:15] Speaker 02: They specifically said that the pre-existing statutory obligation, quote, shall not take effect. [00:12:24] Speaker 02: They vitiated the pre-existing statutory obligation explicitly. [00:12:28] Speaker 02: That obligation, quote, shall not take effect. [00:12:31] Speaker 04: But do you agree, do you not, that the writers could still trump the statute, even if the statute is left in effect? [00:12:39] Speaker 04: That Congress could, through appropriation, say, we're just not appropriating any money to fund that authorization? [00:12:45] Speaker 02: They could vitiate a statutory obligation, not a contractual obligation. [00:12:49] Speaker 02: We believe the statutory... But before you move to the contractual stuff, with respect to the statutory obligation... And the question is whether the language here meets the clearly manifest test [00:13:01] Speaker 02: that the Supreme Court established in TVA. [00:13:04] Speaker 02: And as this court held in Gibney, the specific language used simply is not enough. [00:13:11] Speaker 04: Am I wrong? [00:13:11] Speaker 04: I asked your friend on the other side. [00:13:13] Speaker 04: The language that I took out of some of the earlier Supreme Court cases is expressly or by clear implication. [00:13:21] Speaker 04: Do you disagree with that being the standard? [00:13:24] Speaker 04: I know, obviously, there's a lot of squoosh in those. [00:13:26] Speaker 02: Well, I think the Supreme Court in TVA said clearly manifest. [00:13:28] Speaker 02: And we think that's the appropriate test. [00:13:30] Speaker 02: And it's important to recognize that in Gibney, this court looked at legislative history that might well have indicated Congress hoped to cut off the pre-existent statutory obligation, but both the majority and the concurrence made absolutely explicit. [00:13:47] Speaker 02: That's not the test. [00:13:49] Speaker 02: The test is whether the statute has the language that makes it clear. [00:13:52] Speaker 02: And what this court said in Gibney was, we quote, no of no case in which any of the courts have held [00:13:58] Speaker 02: that a simple imitation of an appropriations bill on the use of funds has been held to suspend a statutory obligation," end quote. [00:14:05] Speaker 02: That's still good law. [00:14:08] Speaker 02: In Will, the language talked about that the pre-existing statutory obligation shall not take effect. [00:14:15] Speaker 02: In Dickerson, the court said that the statutory obligation court is hereby suspended. [00:14:21] Speaker 02: The statutory obligation is hereby suspended. [00:14:23] Speaker 02: In Highland Falls, the Department of Justice [00:14:27] Speaker 02: is wrong to rely upon Highland Falls at all, because Highland Falls was not a money manning statute to begin with. [00:14:33] Speaker 02: So the court was not grappling with the question. [00:14:35] Speaker 03: So here is a 1949 case. [00:14:37] Speaker 03: That's what I was looking for to figure out what year it was. [00:14:39] Speaker 03: 1949. [00:14:40] Speaker 03: Yes. [00:14:41] Speaker 03: There are many cases that have occurred since then, including in 1980, the United States versus Will, which have the expressly and by clear implication language in it. [00:14:48] Speaker 03: And that's a Supreme Court decision. [00:14:50] Speaker 03: So you've got this court of claims decision from 1949. [00:14:53] Speaker 03: Are you now telling me whatever standard was articulated in that trumps the later Supreme Court decision? [00:14:58] Speaker 02: No, I don't. [00:14:59] Speaker 02: I think the standards are all consistent. [00:15:00] Speaker 02: And I was the manifest test. [00:15:02] Speaker 02: standard that I'm quoting from. [00:15:08] Speaker 03: That's a Supreme Court test. [00:15:16] Speaker 02: If I said that, I overstated. [00:15:20] Speaker 02: My point here is that the language used is not sufficient to meet the standard that has been consistently applied when looking at these questions. [00:15:29] Speaker 02: In Highland Falls, [00:15:31] Speaker 02: the question was not presented because it was not a money-managing statute. [00:15:34] Speaker 02: Now, the government in the reply brief says, quote, although plaintiffs assert that the statute of issue in Highlands Falls was not money-managing, this court said no such thing. [00:15:44] Speaker 02: That is inconsistent with what the Department of Justice told this court when it was briefing Highland Falls, when it said, quote, as the Court of Federal Claims found, and as appellants evidently concede on this appeal, the impact aid program [00:15:59] Speaker 02: that's what was at issue in Highland Falls, is a discretionary spending program, not a mandatory spending program. [00:16:07] Speaker 02: Well, if it's not a mandatory spending program, then all of these, then it's a completely different analysis. [00:16:18] Speaker 02: But here it is a mandatory spending program. [00:16:21] Speaker 02: The shall pay language is what this Court has held is clearly sufficient to establish a mandatory [00:16:28] Speaker 02: payment obligation. [00:16:29] Speaker 04: So you want to move on to your contract case if you're trying to claim a draft claim? [00:16:32] Speaker 02: Yes, Your Honor. [00:16:33] Speaker 02: The government relies principally on two cases that are not breach of contract cases, but due process cases. [00:16:40] Speaker 02: One of them involved an agreement, the Amtrak case, where the court found that the government retained power to act as regulator with respect to contracts between railroads and Amtrak. [00:16:54] Speaker 02: Amtrak is not a governmental entity. [00:16:57] Speaker 02: So we were not dealing with the government's own contracts. [00:17:01] Speaker 02: And so the court understandably held that if we weren't dealing with the government's own contracts, the government retained its normal regulatory powers. [00:17:11] Speaker 02: But when you look at the cases of this court that deal specifically or other courts that deal specifically with breach of contract claims, we think the indicia are here. [00:17:24] Speaker 02: that were sufficient to find contracts in those cases. [00:17:26] Speaker 02: Radium mines is an example where the court said that if the government in regulation and statute said, if you mine uranium, we will buy it for price S. And that was clearly much more of a guarantee and offer through the regulations. [00:17:41] Speaker 04: It was contemplated a direct exchange of uranium to the government for money. [00:17:47] Speaker 04: That's a lot more specific. [00:17:51] Speaker 04: in terms of a contract case than what's going on here. [00:17:54] Speaker 02: Well, your honor, I in this, I think it is a contract case here in the sense that we were being insurers had no obligation to participate in the Affordable Care Act program. [00:18:05] Speaker 02: They had no obligation to provide qualified health plans. [00:18:09] Speaker 02: They were being told if you agree to provide qualified health plans to take on these obligations to provide the insurance coverage for these people, [00:18:18] Speaker 02: we will provide you certain things in return. [00:18:20] Speaker 04: So what is the source of the contract claim? [00:18:23] Speaker 04: Are you suggesting it's predominantly the statute and combining? [00:18:27] Speaker 02: I think it's a combination. [00:18:28] Speaker 02: I think the statute, I think it's the regulation, which is even clearer than the statute perhaps, although the statute is clear enough to begin with, that the government will make those payments. [00:18:39] Speaker 02: I think it's the statements made in the preamble where they made explicit that the payments would be made regardless of whether payments in were sufficient to make them. [00:18:47] Speaker 02: I think it's the adjustments that were made once it was certain potential enrollees were no longer going to have to enroll, that the government stepped in and made adjustments to the risk corridor program to address that. [00:19:04] Speaker 02: I think it's the totality of those conditions that are sufficient to create a contract. [00:19:10] Speaker 04: But even in your brief, you point out, and you say it has no legal consequence, but you point out and acknowledge, which I appreciate, that when Congress enacted this, presumably nobody in the world thought this was going to result in heavy payments owed by the government. [00:19:27] Speaker 04: that they thought it would end up being kind of neutral with pay in and pay out. [00:19:31] Speaker 04: And it was really predominantly this transition policy that occurred later, not through statute, but through the agency, that kind of threw this all on a tailspin. [00:19:42] Speaker 04: So if that's the history and that's the context in which we were all operating, why shouldn't that be probative of whether there was a contract here? [00:19:49] Speaker 02: Well, I think because the contract was one that promised us these risk corridor payments, regardless of what it would [00:19:56] Speaker 02: what events would trigger those payments having to be made. [00:20:01] Speaker 02: The CBO may have initially estimated, to use their term of art, that it would be roughly budget neutral. [00:20:09] Speaker 02: But the CBO made explicit that that was not a requirement. [00:20:14] Speaker 02: And so from our perspective, whether someone when the government was hoping that it was going to be budget neutral or not, [00:20:22] Speaker 02: was perhaps interesting, but had nothing to do with what promise had been made. [00:20:27] Speaker 02: The promise that had been made was made with clarity that these payments shall be made. [00:20:35] Speaker 02: And we therefore relied upon that going forward, as contractual parties do. [00:20:43] Speaker 02: I would mention Judge Brugink did not have a contract claim before him, so he never addressed this issue. [00:20:50] Speaker 02: But here it is addressed. [00:20:52] Speaker 02: clearly. [00:20:53] Speaker 02: And we do see that the necessary elements are all present for there to be a contract. [00:21:02] Speaker 02: The case law is clear that authority to enter into a contract is assumed if it falls within the scope of what the powers are, general powers are, that have been provided to the agency in question. [00:21:18] Speaker 02: Here, the statute [00:21:20] Speaker 02: expressly gives the Secretary of HHS the power to administer the Affordable Care Act, to establish the exchanges, to establish a risk corridor program. [00:21:32] Speaker 02: And obviously, these payment obligations are part of those risk corridor program obligations, and to make risk corridor payments. [00:21:40] Speaker 02: So all of those powers combined fall within what this court in the Landau case said was sufficient, namely, [00:21:50] Speaker 02: Authority to obligate, excuse me, authority to contract is implied when what's being done is an integral part of the duties assigned. [00:22:00] Speaker 02: And this court has applied that in many circumstances. [00:22:04] Speaker 02: In the Fifth Third Bank, the court said that there was a right to contractually obligate to allow goodwill to be treated in a certain manner, because that was an essential tool for the program that was being carried out by the government you're going to see at issue there. [00:22:19] Speaker 02: That's just one of many examples. [00:22:21] Speaker 02: But here, there was a mutuality of exchange, of intent, of benefits, going in both directions. [00:22:29] Speaker 02: These are all the critical indicia of a implied, in fact, contract. [00:22:35] Speaker 02: And for those reasons, we think we do have a contract claim. [00:22:39] Speaker 02: And of course, if we do, the appropriations riders [00:22:46] Speaker 02: leave our rights unaffected in the sense that we have the right to pursue our claims here because government action, congressional action, that vitiates our contractual rights give rights to a breach of contract claim. [00:22:58] Speaker 04: Now one of the cases today had a takings claim and the other didn't. [00:23:02] Speaker 04: Was yours? [00:23:03] Speaker 02: Mine does not have a takings claim. [00:23:05] Speaker 02: No, we feel comfortable that we have an applied in fact contract. [00:23:07] Speaker 02: We also feel comfortable we have statutory rights and those are the claims that we pursue. [00:23:17] Speaker 02: Going back even to the Collins case in 1879, this court has enforced statutory obligations, regardless of whether Congress made an appropriation with respect thereto. [00:23:30] Speaker 04: Well, that's true if there's silence or failure to appropriate. [00:23:34] Speaker 04: But you've got Mitchell and Fisher, which were early cases around the same time as Langston, where they acknowledged that there was a basis for [00:23:42] Speaker 04: repealing or suspending the authorization. [00:23:47] Speaker 02: And we do not deny that from a statutory perspective, Congress has certain powers. [00:23:53] Speaker 02: But the question is, what specificity is necessary for those powers to have been exercised? [00:24:01] Speaker 02: And there is nothing in Will or Dickerson or Highland Falls that suggests that Gibney has been modified, overturned, or anything else. [00:24:12] Speaker 02: And that is the statute that has the language that is clearly analogous to the language of the appropriations riders issue here. [00:24:22] Speaker 02: Thank you. [00:24:25] Speaker 00: I'll be brief. [00:24:27] Speaker 00: Just on Gibney, we explain this in our brief. [00:24:30] Speaker 00: The appropriations legislation had an explicit carve out [00:24:34] Speaker 00: that benefited the plaintiff in Gibney. [00:24:37] Speaker 00: It said, no funds shall be paid essentially for overtime except in accordance with the federal employee's pay act. [00:24:44] Speaker 00: And as the Gibney court itself explained, the federal employee pay act carved out the 1931 act, which was the basis for Gibney's cause of action. [00:24:53] Speaker 00: So Gibney is [00:24:55] Speaker 00: completely unremarkable on its holding if there's dictum that's inconsistent with the later Supreme Court precedents. [00:25:02] Speaker 00: Of course, the Supreme Court precedents are controlling. [00:25:05] Speaker 00: The standard, as the Court has noted, is just, did Congress by clear implication limit spending to the amounts that were taken in? [00:25:17] Speaker 00: And for all the reasons described by Judge Brugink, Congress was at least as clear, if not clearer, [00:25:25] Speaker 00: in this context in risk corridors as Congress was in Dickerson, Will, and Highland Falls. [00:25:32] Speaker 00: Just to explain that sentence in Highland Falls from the government's brief that council quoted, the point was just that the statute in Highland Falls was discretionary spending in the sense that annual appropriations were used to fund it, which was relevant in Highland Falls, as opposed to [00:25:50] Speaker 00: the type of program for which there's a permanent appropriation, mandatory entitlement programs. [00:25:56] Speaker 00: Nothing in this court's opinion suggested that the court lacked jurisdiction, that there was no money-mandating statute. [00:26:05] Speaker 00: The court affirmed the dismissal for failure to state a claim because earmarks in subsequent appropriations legislation superseded a 100% [00:26:18] Speaker 00: funding formula in the organic earlier legislation. [00:26:26] Speaker 04: Unless there are further questions, I'll rest and I'll read. [00:26:32] Speaker 04: Thank you.