Maine Community Health Options v. United States
206 L. Ed. 2d 764, 140 S. Ct. 1308 (2020)
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Rule of Law:
A statute's mandatory language that the government "shall pay" a specified amount creates a binding financial obligation enforceable through a damages suit under the Tucker Act, which is not nullified by a subsequent failure of Congress to appropriate sufficient funds.
Facts:
- In 2010, Congress passed the Patient Protection and Affordable Care Act (ACA), which included the 'Risk Corridors' program to encourage insurers to participate in new health insurance marketplaces.
- Section 1342 of the ACA established a formula for a three-year period (2014-2016), stating that if an insurer's plan made profits above a certain threshold, it 'shall pay' the government, and if it incurred losses below a threshold, the government 'shall pay' the insurer.
- The Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) publicly and repeatedly assured insurers that the ACA required the Secretary to make full payments, regardless of whether collections from profitable plans were sufficient.
- Relying on these statutory promises and agency assurances, health insurance companies including Maine Community Health Options, Moda Health Plan, Inc., Blue Cross and Blue Shield of North Carolina, and Land of Lincoln Mutual Health Insurance Company participated in the ACA exchanges.
- Over the three years of the program, the unprofitable plans incurred losses far exceeding the payments collected from profitable plans, resulting in a deficit of over $12 billion.
- The government paid only a fraction of the amounts owed to the unprofitable insurers, citing insufficient collections from profitable plans.
Procedural Posture:
- Four health insurance companies (petitioners) separately sued the federal government in the U.S. Court of Federal Claims, a trial-level court.
- The insurers invoked the Tucker Act, seeking monetary damages for the government's failure to make full payments under the Risk Corridors program.
- The Court of Federal Claims issued mixed rulings, with one insurer prevailing while the others had their cases dismissed.
- The losing parties in each case appealed to the U.S. Court of Appeals for the Federal Circuit, the intermediate appellate court.
- A divided panel of the Federal Circuit ruled for the government in all cases, holding that Congress's appropriations riders had impliedly repealed the government's payment obligation.
- The Federal Circuit denied the insurers' petitions for rehearing en banc.
- The insurance companies then filed petitions for a writ of certiorari with the U.S. Supreme Court, which were granted.
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Issue:
Does the government have an enforceable statutory obligation under § 1342 of the Affordable Care Act to pay the full amounts calculated by the Risk Corridors program's formula, even though Congress later passed appropriations riders restricting the funds available for such payments?
Opinions:
Majority - Justice Sotomayor
Yes, the government has an enforceable obligation to pay the full amounts owed under the Risk Corridors program. The plain text of § 1342, with its repeated use of the mandatory term 'shall pay,' created a binding financial obligation on the United States. This obligation is distinct from the appropriation of funds; a failure by Congress to appropriate money does not cancel a pre-existing government debt. The appropriations riders passed by Congress did not impliedly repeal this obligation because repeals by implication are strongly disfavored, especially in appropriations bills, and the riders' language was not sufficiently 'clear and manifest' to do so. Finally, because § 1342 is a 'money-mandating' statute that provides compensation for past services, the insurers have a right to sue the government for damages in the Court of Federal Claims under the Tucker Act.
Dissenting - Justice Alito
No, while the statute may have created an obligation, it did not create an enforceable private right of action for damages. The Court improperly infers a private right to sue where Congress did not expressly create one, which contradicts the Court's recent and consistent refusal to create such causes of action. This decision provides a massive bailout to insurance companies that took a calculated business risk and lost, using billions of taxpayer dollars that Congress pointedly declined to appropriate. The 'money-mandating' test used by the majority has an uncertain legal foundation and is in tension with the Court's modern jurisprudence, which demands that the creation of a private remedy be a deliberate act of Congress, not an inference by the judiciary.
Analysis:
This decision solidifies the principle that the government must honor its explicit financial obligations created by statute, reinforcing the separation between the creation of a government debt and the appropriation of funds to pay it. It sets a high bar for Congress to extinguish such obligations, requiring more than just a failure to appropriate funds or ambiguous language in an appropriations rider. The case strengthens the legal standing of private entities that enter into financial arrangements with the government based on statutory promises, affirming that 'money-mandating' statutes provide a clear path to recovery through the Tucker Act. This precedent will likely make government agencies and private partners more confident in the enforceability of statutory financial commitments in public-private programs.
