Columbus Regional Hosp. v. Fed. Emergency Mgmt. Agency

• Decision Date: 20 February 2013
• Docket Number: No. 12–2007.,12–2007.
• Citation: 708 F.3d 893
• Parties: COLUMBUS REGIONAL HOSPITAL, Plaintiff–Appellant, v. FEDERAL EMERGENCY MANAGEMENT AGENCY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

708 F.3d 893

COLUMBUS REGIONAL HOSPITAL, Plaintiff–Appellant,

v.FEDERAL EMERGENCY MANAGEMENT AGENCY, Defendant–Appellee.

No. 12–2007.

United States Court of Appeals,Seventh Circuit.

Argued Sept. 26, 2012.

Decided Feb. 20, 2013.

Brent W. Huber (argued), Brian J. Paul, Attorneys, Ice Miller LLP, Indianapolis, IN, for Plaintiff–Appellant.

Debra G. Richards (argued), Attorney, Office of the United States Attorney, Indianapolis, IN, for Defendant–Appellee.

Before EASTERBROOK, Chief Judge, and WOOD and WILLIAMS, Circuit Judges.

EASTERBROOK, Chief Judge.

After a flood on June 6, 2008, in southern Indiana, the President authorized the Federal Emergency Management Agency to provide disaster relief. The Stafford Act, 42 U.S.C. §§ 5121–5207, establishes the terms on which financial aid is available. Columbus Regional Hospital was awarded approximately $70 million. It contends in this suit that it is entitled to about $20 million more. The district judge thought not and granted FEMA's motion for summary judgment.

The Hospital, the agency, and the district judge all assumed that a suit seeking money from the United States belongs in a district court. That was not clear to us, however, because the Tucker Act, 28 U.S.C. §§ 1346, 1491, allocates to the Court of Federal Claims any suit seeking more than $10,000 in money damages. (There is an exception for statutes that contain their own remedial provisions, see United States v. Bormes, ––– U.S. ––––, 133 S.Ct. 12, 184 L.Ed.2d 317 (2012), but the Stafford Act is silent on remedies.) We issued an order directing the parties to file post-argument memoranda about subject-matter jurisdiction.

The Hospital told us that it has come to conclude that the Court of Federal Claims is the right forum, and it asks us to transfer the suit there. FEMA, by contrast, contends that the district court has jurisdiction. We agree with that view, which is consistent with 5 U.S.C. § 702 and Bowen v. Massachusetts, 487 U.S. 879, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988), though both the statute and the Supreme Court's opinion leave room for legitimate disagreement.

Section 702, which was added to the Administrative Procedure Act in 1976, waives sovereign immunity for a suit “seeking relief other than money damages and stating a claim that an agency ... acted or failed to act” in conformity with law. Such a claim may proceed in a district court; only a request for “money damages” falls under the Tucker Act and is allocated to the Court of Federal Claims. But what does “money damages” mean? Bowen holds that a suit can seek money without seeking “money damages.” Massachusetts asserted that it had received less than its entitlement under the Medicaid program. The Supreme Court concluded that “damages” for the purpose of § 702 and the Tucker Act are a “substitute for a suffered loss, whereas specific remedies [even if financial] ‘are not substitute remedies at all, but attempts to give the plaintiff the very thing to which he was entitled.’ ” 487 U.S. at 895, 108 S.Ct. 2722 (quoting from Maryland Department of Human Resources v. Department of Health and Human Services, 763 F.2d 1441 (D.C.Cir.1985)). So compensation for breach of contract is outside the scope of § 702, see Great–West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 212, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), while a demand for full payment under a grant-in-aid program such as Medicaid is a request for specific performance rather than damages. See also Department of the Army v. Blue Fox, Inc., 525 U.S. 255, 119 S.Ct. 687, 142 L.Ed.2d 718 (1999) (§ 702 does not cover claims that seek a financial substitute for the legally required performance by the agency); Veluchamy v. FDIC, 706 F.3d 810, 814–17 (7th Cir.2013) (same).

Where does disaster relief under the Stafford Act stand? The Hospital wants money, but not as compensation for FEMA's failure to perform some other obligation. Instead the Hospital, like the state in Bowen, wants money as “the very thing to which he was entitled” under the disaster-relief program. The Hospital resists this conclusion, telling us that what mattered in Bowen was not the status of Medicaid as a grant-in-aid program, but the fact that the grants would continue. Thus resolving the state's dispute with the Secretary about one year's allocation would govern future conduct as well. That's true enough, see 487 U.S. at 905, 108 S.Ct. 2722, but the Court did not say that only a dispute about one year's component of a multi-year program could be raised under § 702. Instead it distinguishedbetween money as compensation for an injury, and money as the entitlement under a grant program. The Hospital asserts an entitlement to money under the Stafford Act. FEMA disagrees with the Hospital's substantive position, but if its claim fails on the merits that does not retroactively divest the district court of jurisdiction. See Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946).

To the extent practical considerations matter, they favor jurisdiction in the district court. The Hospital invokes not only the Stafford Act but also the APA and the Federal Tort Claims Act, 28 U.S.C. §§ 2671–80. The Court of Federal Claims has no jurisdiction over torts; a FTCA suit must be pursued in a district court. 28 U.S.C. §§ 1402(b), 2679. The Hospital's motion to transfer suggested that it could split its claim, with the Stafford Act proceeding in the Court of Federal Claims and the FTCA proceeding in a district court, and the APA theory attached to one or both of these via the doctrine of ancillary jurisdiction. But that's a dud: 28 U.S.C. § 1500 requires a party to elect between proceeding in the district court and proceeding in the claims court. Once a proceeding is under way in the Court of Federal Claims, any other suit based on the same operative facts must be dismissed. See United States v. Tohono O'odham Nation, ––– U.S. ––––, 131 S.Ct. 1723, 179 L.Ed.2d 723 (2011). Only the district court can serve as a forum for all of the Hospital's legal theories.

One last snag: the Hospital invokes the due process clause of the fifth amendment as a source of recovery. To the extent that this constitutional theory demands money as a remedy, it belongs in the Court of Federal Claims. To the extent that it seeks prospective relief, such as another hearing, it is within the scope of § 702. This complicates the jurisdictional analysis, but we can simplify it again because the claim is so weak. The Hospital seems to think that the Constitution requires federal agencies to implement statutes and regulations correctly. That's wrong. See, e.g., United States v. Caceres, 440 U.S. 741, 749–55, 99 S.Ct. 1465, 59 L.Ed.2d 733 (1979). FEMA's internal appeals apparatus afforded the Hospital all the process the Constitution demands, and to spare. The Hospital's “due process” claim could be relabeled “due substance”, which tracks its claim under the Stafford Act. If we were to transfer the suit to the claims court just because of a constitutional theory carelessly appended to the complaint, at a time when neither side had given the Tucker Act a moment's thought, legitimate theories might be vaporized. We think it better to say that the Hospital's constitutional claim is so feeble that it does not invoke any federal court's jurisdiction—not the district court's, not the claims court's. See, e.g., Hagans v. Lavine, 415 U.S. 528, 542–43, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974). With the due process theory gone, we deny the motion to transfer and proceed to the merits.

FEMA contends that the Hospital's suit fails at the threshold because of 42 U.S.C. § 5148, which reads:

The Federal Government shall not be liable for any claim based upon the exercise or performance of or the failure to exercise or perform a discretionary function or duty on the part of a Federal agency or an employee of the Federal Government in carrying out the provisions of this chapter.

According to FEMA, everything it does is “a discretionary function,” so there can never be an obligation to pay more than the agency decides is due. Some functions undoubtedly are discretionary—for example, the President must decide when to declare a disaster and, if he does so, set its temporal and geographic boundaries. Many other activities under the statute, such as establishing the value of damaged property, also entail discretionary elements. But to leap from this to the proposition that everything FEMA does is discretionary would be unwarranted. The Hospital believes that its claim rests on mandatory rules, whether in the statute or created by regulation. (FEMA may establish duties where the Act is open-ended; that's how the Administrator can control the conduct of the staff in the field.) Section 5148 does not tell us whether the Hospital is right or wrong in believing that some rules tie the agency's hands. We must take up the Hospital's claims on the merits.

It has two. First, it contends that FEMA must cover the replacement cost of equipment and supplies destroyed by the flood. (Here the Hospital assumes that FEMA has discretion to decide which property has been damaged by flood waters; the Hospital's argument is limited to the choice between depreciated market value and replacement cost for property that FEMA itself deems covered.) Second, it contends that FEMA should not have allocated any of its insurance proceeds to property damage. We consider these in turn.

FEMA reimburses disaster victims for value of the property lost—which FEMA calculates as cost (basis) less depreciation. That's the standard economic measure of loss. The Hospital deems it insufficient because, it says, FEMA's stance would compel it to buy used equipment to replace the lost gear, yet insurers and regulators (and prudent management) call for new medical equipment. Since it must replace the damaged equipment with new equipment, the Hospital contends, it is entitled to the cost of new equipment.

Perhaps FEMA...