969 F.3d 1370 (Fed. Cir. 2020), 2019-1290, Sanford Health Plan v. United States

Docket Nº:2019-1290, 2019-1302
Citation:969 F.3d 1370
Opinion Judge:Taranto, Circuit Judge.
Party Name:SANFORD HEALTH PLAN, Montana Health CO-OP, Plaintiffs-Appellees v. UNITED STATES, Defendant-Appellant.
Attorney:Daniel William Wolff, Crowell & Moring, LLP, Washington, DC, argued for plaintiffs-appellees. Also represented by Stephen John McBrady, Skye Mathieson, Charles Baek . Alisa Beth Klein, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appel...
Judge Panel:Before Dyk, Bryson, and Taranto, Circuit Judges.
Case Date:August 14, 2020
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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969 F.3d 1370 (Fed. Cir. 2020)

SANFORD HEALTH PLAN, Montana Health CO-OP, Plaintiffs-Appellees


UNITED STATES, Defendant-Appellant.

Nos. 2019-1290, 2019-1302

United States Court of Appeals, Federal Circuit

August 14, 2020.

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Appeals from the United States Court of Federal Claims in Nos. 1:18-cv-00136-EDK, 1:18-cv-00143-EDK, Judge Elaine Kaplan.

Daniel William Wolff, Crowell & Moring, LLP, Washington, DC, argued for plaintiffs-appellees. Also represented by Stephen John McBrady, Skye Mathieson, Charles Baek .

Alisa Beth Klein, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by Mark B. Stern, Ethan P. Davis .

Lawrence Sher, Reed Smith LLP, Washington, DC, for amici curiae Blue Cross Blue Shield of North Dakota, Blue Cross and Blue Shield of Vermont, Local Initiative Health Authority for L.A. County, Molina Healthcare of California, Inc. Also represented by Colin E. Wrabley, Pittsburgh, PA.

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Stephen A. Swedlow, Quinn Emanuel Urquhart & Sullivan, LLP, Chicago, IL, for amicus curiae Common Ground Healthcare Cooperative.

Before Dyk, Bryson, and Taranto, Circuit Judges.

Taranto, Circuit Judge.

In the Patient Protection and Affordable Care Act (the ACA), Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended, Congress directed each State to establish an online exchange through which insurers may sell health plans if the plans meet certain requirements. One such requirement is that insurers must agree to reduce the "cost-sharing" burdens—such as the burdens of making co-payments and meeting deductibles—of certain of their customers. When insurers meet that requirement, the ACA says, the Secretary of Health and Human Services (HHS) shall reimburse them for the required cost-sharing reductions they have provided to their customers. 42 U.S.C. § 18071(c)(3)(A) ("the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions"). This reimbursement seeks to make the insurers whole for the increased payments they make to healthcare providers when customers do not pay the providers unreduced cost-sharing amounts.

In October 2017, the Secretary stopped making reimbursement payments, due to determinations that such payments were not within the congressional appropriation that the Secretary had, until then, been invoking to pay the reimbursements. In January 2018, Sanford Health Plan—a seller of insurance through the North Dakota, South Dakota, and Iowa exchanges—and Montana Health CO-OP—a seller of insurance through the Montana and Idaho exchanges—brought materially identically actions against the United States in the Court of Federal Claims. The two plaintiffs alleged that they were entitled to damages because the government had violated its statutory obligation—or, in the alternative, breached an implied-in-fact contract—by failing to reimburse them for the cost-sharing reductions they made during the final months of 2017.

The trial court granted summary judgment for the plaintiffs. Sanford Health Plan v. United States, 139 Fed.Cl. 701 (2018); Montana Health CO-OP v. United States, 139 Fed.Cl. 213 (2018). In materially identical opinions, the court concluded that the ACA provision on reimbursement of cost-sharing reductions is "money-mandating" and that the government is liable for money damages for its failure to make reimbursements for the 2017 reductions. Sanford, 139 Fed.Cl. at 702, 706-09; Montana, 139 Fed.Cl. at 214, 218-21. The court did not reach the contract claim in either case. Sanford, 139 Fed.Cl. at 704 n.4; Montana, 139 Fed.Cl. at 216 n.4. Based on stipulations as to the amounts due, the court ultimately entered final judgments of $360,254.00 for Sanford and $1,234.058.79 for Montana.

The government appeals. We consolidated the appeals, and we now affirm. After initial briefing and argument, the Supreme Court decided Maine Community Health Options v. United States, ___ U.S. ___, 140 S.Ct. 1308, 206 L.Ed.2d 764 (2020), addressing a different payment-obligation provision of the ACA. We conclude that Maine Community makes clear that the cost-sharing-reduction reimbursement provision imposes an unambiguous obligation on the government to pay money and that the obligation is enforceable through a damages action in the Court of Federal

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Claims under the Tucker Act, 28 U.S.C. § 1491(a)(1). We see no persuasive basis for distinguishing these cases from Maine Community.


Under the ACA, each State was to "establish an American Health Benefit Exchange." 42 U.S.C. § 18031(b)(1).1 Exchanges are "virtual health-insurance markets," Maine, 140 S.Ct. at 1315, that are designed to "facilitate[] the purchase of qualified health plans," 42 U.S.C. § 18031(b)(1)(A). A "qualified health plan" must provide certain "essential health benefits" and, based on the "full actuarial value of the benefits provided under the plan," is designated as providing one of four "levels of coverage": bronze, silver, gold, or platinum, which differ in the percent of the plan benefits that the insurer pays. Id., § 18022(a), (d). A silver plan "is designed to provide benefits that are actuarially equivalent to 70 percent of the full actuarial value of the benefits provided under the plan," leaving 30% for the enrollee (or someone else) to pay. Id., § 18022(d)(1)(B). To sell plans on an exchange, an insurer must "offer at least one qualified health plan in the silver level and at least one plan in the gold level." Id., § 18021(a)(1)(C)(ii).

In addition to providing for the basic exchange infrastructure, the ACA, as relevant here, includes two mechanisms to help certain enrollees in exchange-offered insurance plans bear the cost of obtaining healthcare through such plans. One is directly at issue, the other asserted by the government to be indirectly relevant. We describe them in turn.


The mechanism directly at issue involves reductions in "cost-sharing"—the contributions to healthcare providers' charges that enrollees must make by way of "deductibles, coinsurance, copayments, or similar charges" or "any other expenditure required of an insured individual" for defined medical expenses. 42 U.S.C. § 18022(c)(3)(A). Specifically, section 1402 of the ACA, which is codified at 42 U.S.C. § 18071, states that the Secretary of HHS "shall" notify an insurer offering a plan on an exchange if an "eligible insured" is "enrolled in a qualified health plan" and, for such an enrollment, that the insurer "shall reduce the cost-sharing under the plan" as specified in subsection (c). Id., § 18071(a)(2). An "eligible insured" must be enrolled in a silver-level plan. Id., § 18071(b)(1). The "eligible insured" must also be an individual "whose household income exceeds 100 percent but does not exceed 400 percent of the poverty line." Id., § 18071(b). The amount of the required cost-sharing reduction varies based on relevant family income. Id., § 18071(c)(1)(A); see also id., § 18071(c)(2) (additional cost-sharing reductions for lower income enrollees).

Of critical importance for purposes of the present appeals, the ACA guarantees reimbursement to insurers of the mandated cost-sharing reductions so that the mandate's burden falls on the federal government, not the insurers that otherwise would pay healthcare providers amounts not paid to them by enrollees when cost sharing is reduced: An issuer of a qualified health plan making reductions under this subsection

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shall notify the Secretary [of HHS] of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions.

Id., § 18071(c)(3)(A) (emphasis added). The ACA reinforces that payment commitment by providing for the government to make advance payments of amounts due. See id., § 18082(c)(3) (directing the Secretary of the Treasury, upon receiving notice from the Secretary of HHS "if an advance payment of the cost-sharing reductions ... is to be made to the [insurer]," to "make such advance payment at such time and in such amount as the Secretary [of HHS] specifies in the notice").

As confirmed by the regulations adopted by the Secretary of HHS, advance payments are merely provisional transfers, with the government's payment obligation ultimately fixed by looking back to what cost-sharing reductions a relevant insurer has actually provided to an eligible insured (with accompanying increased payments the insurer made to healthcare providers). See 45 C.F.R. § 156.430. Thus, "the regulations specify that such insurers `will receive periodic advance payments based on the advance payment amounts calculated in accordance' with a regulatory formula." Sanford, 139 Fed.Cl. at 703 (quoting 45 C.F.R. § 156.430(b)(1)); Montana, 139 Fed.Cl. at 215 (same). And "[t]he regulations further provide that HHS will reconcile the amounts paid in advance and the actual cost-sharing reductions made." Sanford, 139 Fed.Cl. at 703 n.2; Montana, 139 Fed.Cl. at 215 n.2 (same); see 45 C.F.R. § 156.430(d) (stating that "HHS will perform periodic reconciliations of any advance payments of cost-sharing reductions provided to" an insurer against "[t]he actual amount of cost-sharing reductions provided to enrollees and reimbursed to providers" by the insurer) (emphasis added); id., § 156.430(e) (providing that if "the actual amounts of cost-sharing reductions" described in (d) are "[l]ess than the amount of advance payments provided," the insurer "must repay the difference to HHS"; similarly, if advance payments were too low to reflect actual amounts under (d), "HHS will reimburse [the insurer] for the difference").

Despite the payment command regarding cost-sharing reduction...

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