Cardiosom v. United States

• Decision Date: 31 August 2011
• Docket Number: No. 2010–5109.,2010–5109.
• Citation: 656 F.3d 1322
• Parties: CARDIOSOM, L.L.C., Plaintiff–Appellant,v.UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

656 F.3d 1322

CARDIOSOM, L.L.C., Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2010–5109.

United States Court of Appeals, Federal Circuit.

Aug. 31, 2011.

Jerry Stouck, Greenberg Traurig, LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Gregory J. Morical, Dormir, Inc., of Carmel, Indiana, and Elena B. Gobeyn, of Zionsville, Indiana.Anuj Vohra, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Mark A. Melnick, Assistant Director.

Before LINN, PLAGER, and DYK, Circuit Judges.PLAGER, Circuit Judge.

This case calls on us to determine whether, as Plaintiff–Appellant argues, the United States Court of Federal Claims (“Court of Federal Claims”) has subject matter jurisdiction under the Tucker Act, 28 U.S.C. § 1491(a)(1), over a breach of contract claim, when a statute related to the claim was read by that court to bar judicial review.

Congress, in 2008, enacted a revision to part of the Medicare statutes, known as the Medicare Improvements for Patients and Providers Act of 2008, Pub.L. 110–275, codified at 42 U.S.C. § 1395w–3 (the “2008 Amendment”). The 2008 Amendment unilaterally terminated a number of medical equipment and supplies contracts that had been made previously with individual providers by the United States (the “Government”) under an earlier version of the statutes. The same amendment purported to deny “an independent cause of action or right to administrative or judicial review with regard to the termination[s]....” 42 U.S.C. § 1395w–3(a)(1)(D)(i). Plaintiff, whose contracts were terminated as a consequence of the 2008 Amendment, sued the Government in the Court of Federal Claims on the grounds that the termination unlawfully breached its contract, entitling plaintiff to damages for the breach. The Court of Federal Claims, at the behest of the Government, dismissed the suit, holding that Congress in the above-noted language had effectively withdrawn the court's subject matter jurisdiction over such a claim. Cardiosom v. United States, 91 Fed.Cl. 659, 662–63 (2010).

For the reasons we shall explain, we hold that the 2008 Amendment did not withdraw traditional contract jurisdiction under the Tucker Act; plaintiff states a claim over which the Court of Federal Claims has jurisdiction. The judgment of the Court of Federal Claims is reversed, and the matter is remanded for further proceedings consistent with this opinion.

Background

Title XVIII of the Social Security Act, commonly known as Medicare, establishes a federally funded health insurance program for the elderly and disabled. 42 U.S.C. § 1395. The Medicare program is divided into Part A, which provides insurance coverage for inpatient hospital treatment and related post-hospital expenses, and Part B, which is a voluntary program that provides beneficiaries with supplemental medical insurance benefits. In December 2003, Congress modified Medicare Part B through the Medicare and Prescription Drug, Improvement, and Modernization Act of 2003 (“2003 MMA”), Pub.L. No. 108–173. The 2003 MMA, in part, created a competitive acquisition program (“CAP”) for items such as durable medical equipment and medical supplies. See 42 U.S.C. § 1395w–3(a)(2).

Plaintiff Cardiosom, L.L.C. (“Cardiosom”) supplies oxygen and respiratory equipment and supplies for the treatment of sleep disorders. In July 2007, Cardiosom submitted a bid for the first round of the CAP to supply its equipment and supplies in nine of the ten areas designated by the Government. Cardiosom won its bid in all nine designated areas and was awarded a supplier contract for a three-year term beginning on July 1, 2008. Cardiosom, 91 Fed.Cl. at 661. Congress, however, modified the acquisition program by enacting the 2008 Amendment on July 15, 2008. The 2008 Amendment terminated all existing contracts, including Cardiosom's, which were in effect prior to the date of the enactment. See 42 U.S.C. § 1395w–3(a)(1)(D)(i)(I).

In a letter dated July 21, 2008, the Government notified Cardiosom that its contract was terminated effective June 30, 2008. Cardiosom promptly filed a complaint in the Court of Federal Claims alleging that the contract termination resulted in a breach of contract, or alternatively, that it resulted in an uncompensated taking of property prohibited by the Fifth Amendment. Cardiosom, 91 Fed.Cl. at 661–62. The trial court dismissed the complaint for lack of subject matter jurisdiction, relying upon the last sentence in 42 U.S.C. § 1395w–3(a)(1)(D)(i), which states that “[n]othing in subclause (I) [the clause stating that the contracts were terminated] shall be construed to provide an independent cause of action or right to administrative or judicial review with regard to the termination provided under such subclause.” Id. The trial judge concluded that the plain words of the statute “prohibit contractors from bringing any suit arising from the contract termination, such as claims for damages resulting from the termination.” Id. at 662.

Cardiosom timely appealed the decision of the Court of Federal Claims; we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

Discussion

1.

The Tucker Act, 28 U.S.C. § 1491, provides the Court of Federal Claims with subject matter jurisdiction over a large body of causes that can be brought against the Government, and provides a comparably broad waiver of that remnant of unlimited privilege the English Kings exercised over subjects known as “sovereign immunity.” United States v. Mitchell, 463 U.S. 206, 217–19, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983). Included in the jurisdictional grant and waiver under the Tucker Act are claims for breach of contract, such as the one at issue in this case.

Sovereign immunity was thought to be a part of the common law that was incorporated into the United States when we became a nation, though the respect given that doctrine, a continuing source of dispute and litigation, has varied with time and circumstance. See Vicki C. Jackson, Suing the Federal Government: Sovereignty, Immunity, and Judicial Independence, 35 Geo. Wash. Int'l L.Rev. 521 (2003). With regard to Congress's withholding subject matter jurisdiction from a court that already has had it established, our law is clear—such a re-invocation of sovereign immunity by Congress must be done unambiguously. Preseault v. Interstate Commerce Comm'n, 494 U.S. 1, 12, 110 S.Ct. 914, 108 L.Ed.2d 1 (1990) (“The proper inquiry is not whether the statute expresses an affirmative showing of congressional intent to permit recourse to a Tucker Act remedy, but rather whether Congress has in the statute withdrawn the Tucker Act grant of jurisdiction to the Claims Court to hear a suit involving the statute.”) (internal citations omitted); Slattery v. United States, 635 F.3d 1298, 1301 (Fed.Cir.2011) (en banc) (“[A] claim that is within the subject matter of the Tucker Act is not excluded from the jurisdiction of the Court of Federal Claims, or jurisdiction of the district courts under the ‘Little’ Tucker Act, unless such jurisdiction has been unambiguously withdrawn or withheld by a statute specifying such exclusion.”).

When in 2003 Congress enacted the 2003 MMA, it included an explicit provision prohibiting the administrative or judicial review of specified steps and procedures in the competitive acquisition process:

There shall be no administrative or judicial review under section 1395ff of this title, section 1395oo of this title, or otherwise, of—

(A) the establishment of payment amounts under paragraph (5);

(B) the awarding of contracts under this section;

(C) the designation of competitive acquisition areas under subsection (a)(1)(A) of this section and the identification of areas under subsection (a)(1)(D)(iii) of this section; ...

(E) the selection of items and services for competitive acquisition under subsection (a)(2) of this section;

(F) the bidding structure and number of contractors selected under this section....

42 U.S.C. § 1395w–3(b)(11).

Congress clearly intended that Medicare could proceed with these initial administrative processes without risk of litigation blocking the execution of the program. When Congress clearly expresses its intent, as it did here, courts honor Congress's wishes. See, e.g., Painter v. Shalala, 97 F.3d 1351, 1356 (10th Cir.1996) (finding that the district court did not have jurisdiction when Congress clearly indicated its intent to preclude administrative and judicial review of the conversion factors specified for Medicare Part B claims); All Fla. Network Corp. v. United States, 82 Fed.Cl. 468, 474 (2008) (concluding that the Medicare statute specifically precluded judicial review of the eligibility determinations and qualifying mechanisms used by the Government to award competitive acquisition contracts); Carolina Med. Sales, Inc. v. Leavitt, 559 F.Supp.2d 69, 78–79 (D.D.C.2008) (granting the Government's motion to dismiss because the decision to include mail-order diabetic supplies constituted a selection of items and services for which judicial review is not available).

The purpose of withholding judicial review in these instances is to insulate these management decisions by the Medicare Administration from the potential of inordinate delays that would transpire if every such management decision were open to an upfront challenge by some disappointed group. If there were to be legal challenges, they would have to be made after the fact. See, e.g., H.R.Rep. No. 108–391, at 576–77, 2003 U.S.C.C.A.N. 1808, 1944–46 (2003) (Conf.Rep.) (explaining that the CAP in the 2003 MMA provides for flexibility on the part of the Department of Health and Human Services Secretary (the “Secretary”) “to waive certain provisions of the Federal Acquisition Regulation that are necessary for the...