Moda Health Plan, Inc. v. United States

• Decision Date: 06 November 2018
• Docket Number: 2017-1224,2017-1994,2017-2395,2017-2154
• Citation: 908 F.3d 738 (Mem)
• Parties: MODA HEALTH PLAN, INC., Plaintiff-Appellee v. UNITED STATES, Defendant-Appellant Land of Lincoln Mutual Health Insurance Company, an Illinois Non-profit Mutual Insurance Corporation, Plaintiff-Appellant v. United States, Defendant-Appellee Blue Cross and Blue Shield of North Carolina, Plaintiff-Appellant v. United States, Defendant-Appellee Maine Community Health Options, Plaintiff-Appellant v. United States, Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

908 F.3d 738 (Mem)

MODA HEALTH PLAN, INC., Plaintiff-Appellee

v.UNITED STATES, Defendant-Appellant

Land of Lincoln Mutual Health Insurance Company, an Illinois Non-profit Mutual Insurance Corporation, Plaintiff-Appellant

v.United States, Defendant-Appellee

Blue Cross and Blue Shield of North Carolina, Plaintiff-Appellant

v.United States, Defendant-Appellee

Maine Community Health Options, Plaintiff-Appellant

v.United States, Defendant-Appellee

2017-1994

2017-1224

2017-2154

2017-2395

United States Court of Appeals, Federal Circuit.

Date November 6, 2018

Steven Rosenbaum, Covington & Burling LLP, Washington, DC, filed a petition for rehearing en banc for plaintiff-appellee in 2017-1994. Also represented by Bradley Keith Ervin ; Caroline Brown, Philip Peisch, Brown & Peisch PLLC, Washington, DC.

Daniel P. Albers, Barnes & Thornburg LLP, Chicago, IL, filed a petition for rehearing en banc for plaintiff-appellant in 2017-1224. Also represented by Scott E. Pickens, Washington, DC; Jonathan Massey, Massey & Gail LLP, Washington, DC.

Lawrence Sher, Reed Smith LLP, Washington, DC, filed a combined petition for panel rehearing and rehearing en banc for plaintiff-appellant in 2017-2154. Also represented by Kyle Richard Bahr, James Christopher Martin, Conor Michael Shaffer, Colin E. Wrabley, Pittsburgh, PA.

Stephen John McBrady, Crowell & Moring, LLP, Washington, DC, filed a petition for rehearing en banc for plaintiff-appellant in 2017-2395. Also represented by Clifton S. Elgarten, Skye Mathieson, Daniel William Wolff.

Alisa Beth Klein, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, filed a response to the petitions for defendant-appellee in 2017-1224, 2017-2154, 2017-2395 and defendant-appellant in 2017-1994. Also represented by Joseph H. Hunt, Mark B. Stern, Carleen Mary Zubrzycki.

William Lewis Roberts, Faegre Baker Daniels LLP, Minneapolis, MN, for amici curiae Association for Community Affiliated Plans, Alliance of Community Health Plans in 2017-1994. Also represented by Jonathan William Dettmann, Nicholas James Nelson.

Steven Allen Neeley, Jr., Husch Blackwell LLP, Washington, DC, for amicus curiae National Association of Insurance Commissioners in 2017-1994. Also represented by Kirsten A. Byrd, Kansas City, MO.

Ursula Taylor, Strategic Health Law, Chapel Hill, NC, for amicus curiae Blue Cross Blue Shield Association in 2017-1994. Also represented by Sandra J. Durkin, Butler Rubin Saltarelli & Boyd LLP, Chicago, IL.

Benjamin N. Gutman, Oregon Department of Justice, Salem, OR, for amici curiae State of Oregon, State of Alaska, State of California, State of Connecticut, State of Delaware, State of Hawaii, State of Kentucky, State of Maryland, State of Massachusetts, State of Minnesota, State of New Mexico, State of North Carolina, State of Pennsylvania, State of Rhode Island, State of Vermont, State of Washington, State of Wyoming, District of Columbia in 2017-1994. Also represented By Ellen F. Rosenblum. State of Oregon also represented by Peenesh Shah.

Leslie Berger Kiernan, Akin, Gump, Strauss, Hauer & Feld, LLP, Washington, DC, for amicus curiae America’s Health Insurance Plans in 2017-1994, 2017-1224. Also represented by Robert K. Huffman, Pratik A. Shah ; Ruthanne Mary Deutsch, Hyland Hunt, Deutsch Hunt PLLC, Washington, DC; Ralph C. Nash, George Washington University Law School, Washington, DC.

Stephen A. Swedlow, Quinn Emanuel Urquhart & Sullivan, LLP, Chicago, IL, for amici curiae Health Republic Insurance Company, Common Ground Healthcare Cooperative, Kate Bundorf, Scott Harrington, Mark Pauly, Michael Chernew, Thomas McGuire, Leemore Dafny, Kosali Simon in 2017-1224. Amicus curiae Health Republic Insurance Company also represented by J. D. Horton, Adam Wolfson, Los Angeles, CA.

Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges.^*

Newman, Circuit Judge, with whom Wallach, Circuit Judge, joins, dissents from the denial of the petitions for rehearing en banc.

Wallach, Circuit Judge, with whom Newman, Circuit Judge, joins, dissents from the denial of the petitions for rehearing en banc.

ORDER

Per Curiam.

Appellee Moda Health Plan, Inc. and appellants Land of Lincoln Mutual Health Insurance Company and Maine Community Health Options each filed petitions for rehearing en banc. Appellant Blue Cross and Blue Shield of North Carolina filed a petition for panel rehearing and rehearing en banc. A response to the petitions was invited by the court and filed by the United States. Several motions for leave to file amici curiae briefs were filed and granted by the court. The petitions for rehearing, response, and amici curiae briefs were first referred to the panel that heard the appeals, and thereafter to the circuit judges who are in regular active service. A poll was requested, taken, and failed.

Upon consideration thereof,

IT IS ORDERED THAT :

The petitions for panel rehearing are denied.

The petitions for rehearing en banc are denied.

The mandates of the court will issue on November 13, 2018.

The judiciary’s role is to assure fidelity to law and to the Constitution. The Federal Circuit has a special responsibility as a national court, for no other circuit court is in our jurisdictional loop. Thus when questions of national impact reach us, it devolves upon us to bring the full potential of the court to bear.

The national impact of these health insurance cases, coupled with the role of "appropriations riders" as a legislative tool, led to a split panel decision; and the ensuing requests for reconsideration have been accompanied by amicus curiae briefs on behalf of the insurance industry, state governments, economists and other scholars, and the public, advising us on the law, the Constitution, the legislative process, and the national interest. From the court’s denial of rehearing en banc, I respectfully dissent.

The facts are simple; the principle large. The critical question concerns the methods by which the government deals with non-governmental entities that carry out legislated programs. Here, in order to persuade the nation’s health insurance industry to provide insurance to previously uninsured or uninsurable persons, and thus to take insurance risks of unknown dimension, the Affordable Care Act¹ provided that insurance losses over a designated percentage would be reimbursed, and comparable profits would be turned over to the government—the "risk corridors" program.

With this statutory commitment that the government "shall pay," 42 U.S.C. § 18062(b), the nation’s insurance industry provided the designated health insurance. However, when large losses were experienced by some carriers, the government refused to appropriate the funds to pay the statutory shortfall, and required that existing funds not be used for this purpose. Thus the insurers, who had performed their part of the bargain, were denied the promised compensation. My colleagues now ratify that denial.

This is a question of the integrity of government. "It is very well to say that those who deal with the Government should turn square corners. But there is no reason why the square corners should constitute a one-way street." Fed. Crop Ins. Corp. v. Merrill , 332 U.S. 380, 387–88, 68 S.Ct. 1, 92 L.Ed. 10 (1947) (Jackson, J., dissenting); see also 48 C.F.R. § 1.102(b)(3) ("The Federal Acquisition System will ... [c]onduct business with integrity, fairness, and openness."). Our system of public-private partnership depends on trust in the government as a fair partner. And when conflicting interests arise, assurance of fair dealing is a judicial responsibility.

I have previously elaborated on the violations of law and legislative process that apparently are ratified by the panel majority, see Moda Health Plan, Inc. v. United States, 892 F.3d 1311, 1331–40 (Fed. Cir. 2018) (Newman, J., dissenting). On these petitions for rehearing en banc, many amici curiae have provided advice. For example, America’s Health Insurance Plans, a national association of the insurance industry, states:

The panel majority’s opinion, however, now makes it a risky business to rely upon the government’s assurances. That deals a crippling blow to health insurance providers’ business relationships with the government, which depend upon the providers’ ability to trust that the government will act as a fair partner.

Br. of America’s Health Ins. Plans, Inc. as Amicus Curiae in Supp. of Reh’g En Banc at 3, Aug. 20, 2018, ECF No. 111.

The amici report that this government action has caused significant harm to insurers who participated in the Affordable Care Act program. The National Association of Insurance Commissioners informs the court that "only six of the 24 CO-OPs operating at peak participation were still in business," and that the government’s refusal to make the promised payments "transformed the Exchanges from promising to punitive for the insurance industry." Br. of Amicus Curiae The Nat’l Ass’n of Ins. Comm’rs in Supp. of Pl.-Appellee at 12, 14, Aug. 28, 2017, ECF No. 51. The Court of Federal Claims put it plainly, that the government’s position that it can renege on its legislated and contractual commitments "is hardly worthy of our great government." Moda Health Plan, Inc. v. United States , 130 Fed.Cl. 436, 466 (2017).

In the national interest, there is even more at stake than these promises to the health insurance industry. The government’s access to private sector products and services is undermined if non-payment is readily achieved after performance by the private sector. The Court has stated that "[i]f the Government could be trusted to fulfill its promise to pay only when more pressing fiscal needs did not arise, would-be contractors would bargain warily—if at all—and only at a premium large enough to account for the risk of nonpayment." Salazar v. Ramah Navajo Chapter , 567 U.S. 182, 191–92, 132 S.Ct. 2181, 183 L.Ed.2d 186 (2012).

Our national strength is our government ruled by law. The...