Ingham Regional Medical Center v. United States

In the United States Court of Federal Claims

No. 13-821

(Filed: 13 December 2022) *

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INGHAM REG. MED. CENTER, *

n/k/a MCLAREN GREATER LANSING, *

et al., *

*

Plaintiffs, * Breach of Contract; Mutual Mistake of Fact;

* Class Certification; Summary Judgment;

v. * TRICARE Reimbursement; Medicare

* Reimbursement; Duty; Breach; Damages;

THE UNITED STATES, * Negative Implication Canon; Risk-shifting.

*

Defendant. *

*

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Alexander J. Pires, Jr., Pires Cooley, of Washington, DC, with whom was Gregory A.

Brodek, Duane Morris LLP, of Bangor, ME, for plaintiffs.

A. Bondurant Eley, Senior Trial Counsel, with whom were Steven J. Gillingham,

Assistant Director, Patricia M. McCarthy, Director, Commercial Litigation Branch, and Brian

M. Boynton, Principal Deputy Assistant Attorney General, Civil Division, U.S. Department of

Justice, all of Washington, DC, for defendant.

OPINION AND ORDER

HOLTE, Judge.

Plaintiffs are six hospitals purporting to represent a class of approximately 1,610

hospitals across the United States in a suit requesting amongst other things the Court interpret

what the Federal Circuit has deemed an “extremely strange” contract. This contract arose when

hospitals complained the government underpaid reimbursements for Department of Defense

Military Health System, TRICARE, outpatient services rendered between 2003 and 2009. After

running a data analysis, in 2011, the government voluntarily entered a discretionary payment

process contract with plaintiffs, offering net adjusted payments to reflect the Medicare blended

rate for outpatient radiology claims. On 9 June 2022, after nine years of litigation and one

Federal Circuit appeal, this Court heard oral argument regarding the government’s motion for

summary judgment reviewing three issues: (1) breach of contract; (2) mutual mistake of fact;

*

This Opinion was initially filed under seal on 28 November 2022 pursuant to the protective order in this case. The

Court provided the parties the opportunity to submit proposed redactions on or before 12 December 2022. On 12

and 13 December 2022, the parties confirmed by email they did not have any proposed redactions. This Opinion is

now reissued for publication in its original form.

and (3) class certification. For the reasons detailed in this opinion, the Court: (1) grants in part

and denies in part the government’s motion for summary judgment as to plaintiffs’ breach of

contract claim; (2) grants the government’s motion for summary judgment as to plaintiffs’

mutual mistake of fact claim; and (3) defers ruling on plaintiffs’ motion for class certification.

As explained infra, the Court holds the government did not have a duty to obtain and

adjust original native data from plaintiff hospitals, see infra Section IV.A, the government did

have a duty to correctly adjust data from the government’s TMA database, see infra Section

IV.B, the government did have a duty to correctly consider zip codes for plaintiff hospital

locations not provided by the hospitals in their discretionary payment submissions, see infra

Section IV.C, the government breached its duty to correctly adjust data from TMA’s database,

see infra Section IV.D, plaintiffs were not obligated to pre-check TMA’s data, see infra Section

IV.E.1, the government did not prove the discretionary payment agreement shifted the risk of all

data issues to plaintiff hospitals, see infra Section IV.E.2, and there was no mutual mistake of

fact, see infra Section V. The Court declines to rule on class certification at this time. See infra

Section VI. As the only surviving breach of contract claim is the government’s duty to extract,

analyze, and adjust line items from its database, the parties shall next file a joint status report

regarding scheduling for updated class certification briefing.

Finally, as the parties confirmed in the 11 May 2022 pre-oral argument status conference,

several pending evidentiary motions were not consequential for summary judgment and the

Court accordingly stays: the government’s motion to exclude inadmissible evidence pursuant to

Rule 408; plaintiffs’ motion to exclude expert opinions of Jane Jerzak; plaintiffs’ motion to

exclude expert opinions of Anthony Fay; the government’s motion to strike “Rule 408 Evidence

Relied on by Plaintiffs in Summary Judgment Briefing”; the government’s motion to strike

“Paragraphs 3 - 10 of the Dale Thompson Declaration”; the government’s motion to strike

“Paragraphs 7 and 18 of the Declaration of Sere Allen, and Associated Briefing”; and plaintiffs’

motion to exclude expert opinions of David Kennell.

I. Relevant Background

A. Factual History

TRICARE is a “military health care system” which “provides medical and dental care for

current and former members of the military and their dependents.” Ingham Reg’l Med. Ctr. v.

United States, 874 F.3d 1341, 1342 (Fed. Cir. 2017). TRICARE Management Activity

(“TMA”), a “field office in the Defense Department [‘DoD’],” managed the TRICARE system. 1

N. Mich. Hosps., Inc. v. Health Net Fed. Servs., LLC, 344 F. App’x 731, 734 (3d Cir. 2009).

Hospitals providing TRICARE services are reimbursed according to DoD guidelines. In 2001,

Congress amended the TRICARE statute to require DoD to follow Medicare rules when

reimbursing outside healthcare providers. Ingham Reg’l Med. Ctr., 874 F.3d at 1343 (citing 32

C.F.R. § 199.14). Due to “the lack of TRICARE cost report data comparable to Medicare’s”

figures, TMA, however, found it impracticable to immediately adopt Medicare reimbursement

rules. Id. (citation omitted). To facilitate transition to Medicare rules, in 2005, DoD issued a

Final Rule “which provided a more detailed explanation of the payment rules for hospital-based

1

TMA is now known as the Defense Health Agency.

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outpatient services.” Id. The rule specified “[f]or most outpatient services, hospitals would

receive payments ‘based on the TRICARE-allowable cost method in effect for professional

providers or the [Civilian Health and Medical Program of the Uniformed Services]

(“CHAMPUS”) Maximum Allowable Charge (CMAC).’” Id. (citation omitted). The

TRICARE-allowable cost method “applied until 2009, when TRICARE introduced a new

payment system for hospital outpatient services that was similar to the Medicare [Outpatient

Prospective Payment System (‘OPPS’)] rules.” Id.

On 23 January 2007, two hospitals “filed their first amended complaint in the [United

States District Court for the District of Delaware] asserting claims for breach of contract implied

in fact and breach of quasi-contract/unjust enrichment” against TRICARE’s

intermediary-managed care support contractors (“intermediaries”). N. Mich. Hosps., Inc., 344 F.

App’x at 735. “The Hospitals alleged [the intermediaries] refused to pay the Hospitals’ facility

charges for certain outpatient services rendered by the Hospitals to TRICARE beneficiaries,

despite the fact that the Hospitals submitted claims to [the intermediaries] which included such

charges.” Id. (footnote omitted). The district court dismissed the complaint because the

hospitals failed to first exhaust their administrative remedies, id. at 739, and the Third Circuit

affirmed. Id. at 740. The Third Circuit determined, “Without question, the regulations state that

certain services are reimbursed based on a maximum allowable charge calculation and that

facility charges, which are not subject to a maximum allowable charge, are paid as billed.” Id. at

737 (citing 32 C.F.R. § 199.14(a)(5)(i)–(xi)). The Third Circuit added “the regulations are

equally clear that the Hospitals are not allowed to simply submit bills for any amount and then

claim that they are entitled to reimbursement for the full amount charged because any amount

above the CMAC represents their ‘facilities’ expenses.” Id. In dicta, the court stated, “The

dispute at issue is not a purely legal one, but rather requires factual determinations such as

whether expenses that qualify as facility charges were incurred, whether such charges were

properly billed, and how much is owed if they were incurred and properly billed.” N. Mich.

Hosps., Inc., 344 F. App’x at 737. “Therefore, what is required by the underlying dispute in this

case is an application of the TRICARE regulations to the Hospitals’ specific claims for

reimbursement.” Id. After the Third Circuit affirmed, “the parties to that suit exchanged email

communications regarding further steps and potential readjustment with TRICARE.” Op. &

Order (“14 Jan. 2020 Op. & Order”) at 3 n.2, ECF No. 125.

In response to hospital complaints, TRICARE hired Kennell and Associates, a consulting

firm, to “undertake a study [(‘Kennell study’)] of the accuracy of its payments to the hospitals.”

Ingham Reg’l Med. Ctr., 874 F.3d at 1343–44. The Kennell study “compared CMAC payments

to the payments that would have been made using Medicare payment principles, and determined

that DoD ‘(1) underpaid hospitals for outpatient radiology but, (2) correctly paid hospitals for all

other outpatient services.’” Id. at 1344 (emphasis removed).

From the Kennell study findings, “DoD created a discretionary payment process

[(‘DPP’)],” and, on 25 April 2011, DoD notified hospitals by letter of the process for them to

“request a review of their TRICARE reimbursements (the ‘Letter’).” 2 Id. The DoD also

2

The Letter states, in pertinent part:

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“published a document titled ‘NOTICE TO HOSPITALS OF POTENTIAL ADJUSTMENT TO

PAST PAYMENTS FOR OUTPATIENT RADIOLOGY SERVICES’ (the ‘Notice’)” on the

TRICARE website. Def.’s MSJ App. at A3–A9 [hereinafter DPP Contract Notice], ECF No.

203-1. 3 Like the Letter, the Notice stated any submission would be treated as “an untimely but

discretionary appeal under 32 CFR 199.10(a)(5) and (c) provided it is received no later than 23

June 2011.” Id. at A7. The Notice also indicated: “Based on the request and subject to the

availability of funds, each hospital will receive adjusted payments in return for acceptance of

DoD’s offer of additional payment based on criteria established by the agency,” and “payment of

the discretionary adjustments will also be conditioned on the execution of a release by the

hospital of any hospital outpatient service claims against the agency, TRICARE beneficiaries

and the TRICARE [intermediaries].” Id. The Notice described a nine-step methodology by

which hospitals could “request an analysis of their claims data for possible discretionary

For purposes of this process, DoD will treat your submission as an untimely but discretionary appeal

under 32 Code of Federal Regulations 199.10(a)(5) and (c), provided it is received no later than 60

days from the date of this letter. Based on the request, your hospital may be paid an adjustment,

subject to the availability of appropriations, in return for your acceptance of DoD’s offer of

additional payment based on criteria established by the agency. . . . In order to bring closure to any

concerns regarding payment of hospital outpatient services under the TRICARE regulation prior to

implementation of OPPS, payment of the discretionary adjustments will also be contingent on the

execution of a release by the hospital of any hospital outpatient service claims against the agency,

TRICARE beneficiaries, and TRICARE [intermediaries]. We value your hospital as a partner in

this effort and remain committed to working with you to complete the analysis of claims data and

determine if any additional payments may be allowed.

Def.’s MSJ App. at A1–A2 (DPP Contract Letter), ECF No. 203-1.

3

The Notice explained in relevant part:

The TRICARE regulation provisions on hospital outpatient services, in the absence of adoption of

the Medicare OPPS methodology, adopted comparable Medicare payments for similar services

provided in other sites (i.e., physician offices). That is, TRICARE looked to the similarity of

services being provided, not the site of services, in adopting a reimbursement methodology for

hospital outpatient services. . . .

[I]n reviewing payments for hospital services, DoD has determined that, for radiology services . . .

the technical component of the allowable charge did not approximate the Medicare fair payment for

such hospital services as well as it could have. That is, looking at the Medicare reimbursement

methodologies in existence prior to adoption of Medicare OPPS in 2000, . . . some radiology services

were underpaid in comparison. . . . Thus, although payments to hospitals for radiology services

were consistent with the duly promulgated regulation, there is a basis for TRICARE to provide an

opportunity to make some discretionary net payment adjustments to approximate more closely

Medicare payment methods. . . .

General TRICARE policy is that payment methodologies follow to the extent practicable Medicare

payments. Prior to adopting [OPPS], Medicare used a blended rate that factored in a percentage of

hospital costs and a percentage of the global physician fee schedule to reimburse hospital outpatient

radiology services. In contrast, TRICARE regulation limited reimbursement to hospitals for

individual outpatient radiology services to the technical component portion of the [CMAC], which

was one component of Medicare’s physician fee schedule. Consistent with TRICARE policy under

statute to pay similar to Medicare, we have determined that discretionary adjusted payments may

better reflect the Medicare payment amounts for outpatient radiology claims.

DPP Contract Notice at A5–A7.

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adjustment” and to “govern the review of payments for hospital outpatient radiology services and

payment of any discretionary net adjustments.” Id.

Step 1 instructed hospitals to “submit[] a request for analysis of their claims data for

hospital outpatient department radiology charges” for the period before TRICARE OPPS took

effect. Id. Step 2 in relevant part expounded on submitting claims data, contact information, and

questions. The second step described the process for determining necessary claims data:

“[H]ospital[s] submit[] data with [their] name, address, zip code, Tax ID number, TRICARE

sub ID number, the 6-digit Medicare OSCAR provider number [also known as the provider

identification number], and [National Provider Identification (‘NPI’) number].” Id. Step 2 also

directed hospitals to provide contact names and addresses “to be used by TMA for formal

response to the request.” DPP Contract Notice at A7. Each hospital compiled the required

information in “[a] separate Excel spreadsheet . . . in the TMA-specified format.” Id. Step 2

also specified the method to ask TMA questions noting, “Questions of general interest to all

hospitals will be posted with answers on the TMA website.” DPP Contract Notice at A7; see

Def.’s MSJ App. at A10–A15 [hereinafter DPP Contract FAQs].

Steps 3–6 disclose how TMA would extract, exclude, and analyze claims data. DPP

Contract Notice at A7–A9. Specifically, Step 3 explained “TMA w[ould] extract the claims for

each hospital for claims for outpatient radiology services during the relevant period.” Id. at A7.

Step 3 also indicated which of the extracted claims TMA would exclude from consideration,

such as “if the [Technical Component (‘TC’)] CMAC amount is less than the global CMAC and

the claim does not have a TC modifier. Id. at A7–A8. Step 4 presented the “‘Medicare’

method” TMA used to “calculate what would have been paid under the approach that Medicare

used to pay hospital outpatient radiology claims prior to [Centers for Medicare & Medicaid

Services (‘CMS’)] implement[ing] . . . the Medicare OPPS in 2000.” Id. at A8. Step 5 detailed

how TMA “adjust[ed] the ‘Medicare’ amount calculated [through the Medicare Method] in Step

4 on each claim using the ratio of the actual allowed amount (the amount that a health plan has

determined to be a fair price for a given medical treatment) on the claim to the TRICARE

Standard allowed amount (the technical component of the CMAC).” Id. Step 6 explained how

TMA “then compare[d] the adjusted ‘Medicare’ amount for each claim with the actual allowed

amounts on that claim” and “calculate[d] the difference between the two amounts.” Id. at A9.

The difference between the Medicare method calculation and the payment from TMA “w[as]

used in determining the level of additional payment to the hospital.” DPP Contract Notice at A9.

If the resulting difference was more or equal to TMA’s payment, “no additional payment shall be

made.” Id. Step 7 clarified “[i]f the calculations in Step 6 [comparing the actual allowed amount

and the Medicare method amount] indicate that an additional payment shall be made to the

hospital, then a hospital-specific offset for cost sharing shall be calculated.” Id.

Step 8 notified hospitals “[a] written response [at] the hospital’s request w[ould] be sent

to the individual at the address provided by the hospital [and] provide the calculated

discretionary adjusted payment and the calculations from which the adjustment was derived.”

Id. Step 8 added “[w]hile the methodology for calculating the adjustment is not subject to

questions, any questions regarding the data used in the calculations should be received by TMA

within 30 days . . . of TMA’s response . . . . Any questions should be accompanied by detailed

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explanation of the alleged errors and the proposed corrections with supporting documentation.”

Id. at A9; see Def.’s MSJ App. at A16 (DPP Contract Sample Response).

Finally, Step 9 specified TMA’s written response mentioned in Step 8 included “a release

and agreement to accept the discretionary adjusted payment by the hospital.” DPP Contract

Notice at A9. Per Step 9, “[t]he signed release and agreement should be returned to TMA within

30 days of the date of initial response or TMA response to any questions raised in [S]tep 8,

whichever date is later.” Id. After TMA received “the signed release and agreement, payment

w[ould] be made to the hospital.” Id.

Plaintiffs estimate several thousand hospitals submitted requests for discretionary

payment, including the six named plaintiffs in this case (“plaintiffs”): McLaren Greater Lansing

(Ingham Regional Medical Center), INTEGRIS Baptist Regional Health Center (Miami),

INTEGRIS Bass Baptist Health Center, INTEGRIS Grove Hospital, INTEGRIS Baptist Medical

Center (Integris Baptist), and INTEGRIS Canadian Valley Hospital. See Ingham Reg’l Med.

Ctr. v United States, 126 Fed. Cl. 1, 16 (2016), aff’d in part, rev’d in part, 874 F.3d at 1348. The

Court previously “determined that plaintiffs in this lawsuit have appropriately pled that a

contract was formed between TMA and plaintiffs through: (1) the April 25, 2011 letter, (2) the

Notice, (3) the FAQs, (4) the spreadsheets that hospitals submitted to TMA to provide their

identifying information and indicate their interest in receiving the adjustment, (5) the payment

adjustment worksheets that TMA provided to hospitals to show the amount of TMA’s proposed

adjustment, and (6) the release of claims that hospitals executed to receive their adjustment

payments (‘the Release’).” Def.’s MSJ at 17 (citing Ingham Reg’l Med. Ctr., 126 Fed. Cl. at

31–32).

B. Regulatory Scheme

The relevant provisions of the regulatory scheme of 32 C.F.R. § 199.14(a)(5) provide:

(5) Hospital outpatient services. This paragraph (a)(5) identifies and clarifies

payment methods for certain outpatient services, including emergency services,

provided by hospitals . . . .

(iv) Radiology services. TRICARE payments for hospital outpatient radiology

services are based on the allowable charge method under paragraph (j)(1) of the

section. In the case of radiology services for which the CMAC rates are established

under that paragraph, a payment rate for the technical component of the radiology

services is provided. Hospital charges for an outpatient radiology service are

reimbursed using the CMAC technical component rate. . . .

(xi) Facility charges. TRICARE payments for hospital outpatient facility charges

that would include the overhead costs of providing the outpatient service would be

paid as billed. For the definition of facility charge, see § 199.2(b).

C. Procedural History

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On 21 October 2013, plaintiffs brought this action claiming the government underpaid

them for certain outpatient medical services they provided between 1 August 2003 and 1 May

2009. See Ingham Reg’l Med. Ctr., 126 Fed. Cl. at 9. Plaintiffs allege the approximately six

years of underpayment breached two contracts and violated various statutory and regulatory

provisions. Id. Plaintiffs seek to represent a class of approximately 1,610 similarly situated

hospitals. See Pls.’ Mot. to Certify, ECF No. 76.

On 13 January 2015, the government filed a motion to dismiss plaintiffs’ complaint for

failure to state a claim pursuant to Rule 12(b)(6) of the Rules of the United States Court of

Federal Claims (“RCFC”), Def.’s Mot. to Dismiss, ECF No. 41. The government argued

plaintiffs “fail[ed] to allege facts” sufficient to establish a binding contract with the government

or that any contract was breached, and absent a valid contract, “there [could] be no mutual

mistake or breach of the covenant of good faith and fair dealing.” Id. at 1. On 22 March 2016,

this Court dismissed plaintiffs’ complaint for failure to state a claim. See Ingham Reg’l Med.

Ctr., 874 F.3d at 1346. Plaintiffs appealed three claims: the “(1) breach of express contract

between Ingham and DoD based on the [DPP]; (2) revision of Ingham’s contract based on

mutual mistake, in light of the errors in the calculations of radiology outpatient services and the

Kennell study; and (3) violations of money-mandating statutes and regulations.” Id. On 3

November 2017, the Federal Circuit “reverse[d] the dismissal of [plaintiff] Ingham’s breach of

contract claim, affirm[ed] the dismissal of [plaintiffs’] money-mandating claim, and [did] not

reach the claim for mutual mistake.” Id. at 1348. Although the Federal Circuit found the

Release does not bar Ingham from bringing a breach of contract claim, it did not further interpret

the contract. See id. at 1346. The Federal Circuit remanded the case “for further proceedings on

the breach of contract claim.” Id. at 1348. On remand, plaintiffs filed an amended complaint,

the government filed its answer, and the parties engaged in discovery, ECF Nos. 74, 79. This

case was transferred to the undersigned Judge on 29 July 2019. See Order, ECF No. 114.

On 14 January 2020, the Court issued an order ruling on five motions regarding the

government’s effort to “claw back” purportedly privileged documents it inadvertently sent

plaintiffs. 14 Jan. 2020 Op. & Order. The Court held these communications were not privileged

by analogizing the DPP to “an insurer’s claim investigation” as “DoD investigated hospitals’

underpayment claims further before making a payment determination.” Id. at 18. The Court

stated, “When [one of the allegedly privileged documents] was created, the government’s

primary focus was the calculation, and recalculation, of TRICARE payments which became the

government’s business during the [DPP].” Id. at 22. “While there may have been

communication exchange between the parties regarding ‘settlement’ after the Notice, the

comments were related to calculation review regarding repayment” and the parties aimed to

“avoid litigation.” Id. at 19, 21. The Court found “the term ‘settlement’ in this context refers to

a negotiated business settlement, not the settlement of a legal action, because the government

sought to correct payment errors and avoid litigation.” Id. at 20. The Court thus held the

documents in question could not “constitute preparation for litigation,” and the DPP Contract

was a “negotiated business settlement to agree on a recalculation figure.” Id. at 20, 22.

On 5 June 2020, plaintiffs filed a renewed motion to certify class and appoint class

counsel (“Pls.’ Class Cert.”), ECF No. 146. The government filed a response to plaintiffs’

renewed motion for class certification on 26 August 2021 (“Def.’s Class Cert. Resp.”), ECF No.

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207, and on 4 February 2022, plaintiffs filed a reply in support of their renewed motion to certify

class action and appoint counsel, (“Pls.’ Class Cert. Reply”), ECF No. 226. On 26 August 2021,

the government filed a motion for summary judgment (“Def.’s MSJ”), ECF No. 203. Plaintiffs

filed an opposition to government’s motion for summary judgment on 4 February 2022 (“Pls.’

MSJ Resp.”), ECF No. 225, and on 11 March 2022, the government filed a reply in support of its

motion for summary judgment (“Def.’s MSJ Reply”), ECF No. 234.

The parties then filed seven evidentiary motions and one motion for leave to file amended

briefs. On 26 August 2021, the government filed a motion to exclude inadmissible evidence

relied upon in plaintiffs’ motion for class certification, ECF No. 204, under Rule 408 of the

Federal Rules of Evidence (“FRE”). The same day, the government filed a motion to exclude the

expert opinion of Jane Jerzak, ECF No. 205, and a motion to exclude the expert opinion of

Anthony Fay, EFC No. 206. On 11 March 2022, the government filed a motion to strike

inadmissible evidence under FRE 408 relied upon in plaintiffs’ response to the government’s

motion for summary judgment and plaintiffs’ response to the government’s motion to exclude

the expert opinion of Jane Jerzak, ECF No. 238. The next day, the government moved to strike

paragraphs 7 and 18 of the declaration of Sere Allen, ECF No. 239. On 14 March 2022, the

government moved to strike paragraphs 3 through 10 of Dale Thompson’s declaration, ECF No.

240. The next day, plaintiffs filed a motion for leave to file amended briefs and appendices, ECF

No. 242. On 5 April 2022, plaintiffs filed a motion to exclude the expert opinion and continued

participation of David L. Kennell and Kennell and Associates, ECF No. 251. 4 The Court

considers plaintiffs’ amended briefs and appendices, ECF No. 242, to the extent they are relevant

to this Opinion and Order.

D. Scope of Questions Presently at Issue

The Court held a status conference on 11 May 2022 to discuss at length all ten motions

pending before the Court, ECF No. 241. The Court discussed whether there were material

disputes of fact to preclude summary judgment and whether the Court should resolve the

government’s summary judgment motion with plaintiffs’ motion for class certification. 11 May

2022 Status Conference Tr. (“SC Tr.”) at 6:23–7:2, ECF No. 257. All parties agreed “the

interpretation of the contract . . . and [the] interpretation of 32 C.F.R. § 199.14 [are] question[s]

of law,” and decisions in conjunction with class certification would be “a great benefit to clarity

in the case and a preservation of resources” if adverse to plaintiffs. SC Tr. at 116:12–19. At the

parties’ request, the Court also considered whether mediation might be appropriate. SC Tr. at

7:3–4. Plaintiffs preferred mediation, but the government opposed mediation at the time. See

SC Tr. at 112:17–114:23. The parties discussed their various evidentiary motions and motion for

leave to file—specifically the materiality of each motion to the government’s motion for

summary judgment and plaintiffs’ motion for class certification. SC Tr. at 7:5–8.

During oral argument on 9 June 2022, both parties confirmed there are no disputes of

material fact on the issues of: (1) TMA’s duties under the contract; and (2) whether there was a

mutual mistake of fact. 9 June 2022 Oral Argument Tr. (“Tr.”) at 78:11–19, ECF No. 259. The

parties also agreed their various pending evidentiary motions are not necessary to resolve the two

4

The parties also filed response and reply briefs in opposition to these motions and in support of these motions,

respectively. See ECF Nos. 212, 220, 223, 243, 244, 245, 247, 248, 250, 252, and 253.

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summary judgment issues: (1) contract interpretation; and (2) class certification. Tr. at

78:20–79:4. Thus, the 9 June 2022 oral argument and this opinion and order do not contemplate

the parties’ evidentiary motions, as the motions to exclude expert opinions, ECF. Nos. 205, 206,

and 251, and strike certain portions from certain filings, ECF Nos. 238, 239, and 240, are

contingent upon the Court determining the appropriate interpretation of the DPP Contract. SC

Tr. at 122:13–16 (THE COURT: “[W]e proceed to summary judgment on the two items

generally described as . . . CFR 32-199 and the clarification of what’s released as part of the

DPP, as well as class certification[.]”). In turn, the Court assesses: (1) the extent of TMA’s

contractual duties under the DPP; and (2) the availability of the defense of mistake regarding 32

CFR 199.14(a)(5)’s CHAMPUS discount rates. See Tr. 77:6–14 (THE COURT: “Issue 1, if the

Court finds that the government only had a duty to use the data that it had, that plaintiffs did not

know about, in order to plug into the DPP, and that they did that, and then on Issue 2, the Court

finds that there was no mistake with respect to 32 CFR 199.14(a)(5), what issues still remain in

the case? [PLAINTIFFS]: I don’t think there would be issues remaining[.]”).

II. Parties’ Arguments on the Government’s Motion for Summary Judgment

The government argues plaintiffs’ breach of contract claim fails as a matter of law

“because the parties’ contract assigned the ultimate responsibility for identifying any errors in

the adjustment calculation to the plaintiffs, and provided them a hard and fast 30-day deadline for

doing so.” Def.’s MSJ at 31. For plaintiffs’ mutual mistake of fact claim, the government

argues “there is no mistake to begin with.” Id. at 32. The government adds “plaintiffs bear the

risk of the mistakes that they now allege, and . . . the reformation that they seek is legally

unavailable because TMA specifically explained in the parties’ contract that it was not offering

any such adjustment.” Id.

Plaintiffs argue the “Government is liable to Plaintiffs on the following two bases: (1)

the Government breached the DPP by failing to properly extract and adjust all of Plaintiffs’

radiology claims[;] and (2) the Parties committed a mutual mistake of fact upon entering the DPP

by believing that the Government had properly reimbursed Plaintiffs for all categories of

outpatient services (except for radiology), including by appropriately paying for facility

charges.” Pls.’ MSJ Resp. at 17. “First, as to the Plaintiffs’ breach of contract claim, the plain

language of the DPP shows that the Government breached what was a clear contractual duty to

extract and adjust all of the Plaintiffs’ radiology claims.” Id. at 18. “Second, as to the Plaintiffs’

claim for mutual mistake, the plain language of § 199.14(a)(5) shows that the Government must

reimburse hospitals for the overhead costs of providing outpatient services, as billed, including

for all facility charges.” Id.

III. Summary Judgment Standard

Summary judgment is proper when the evidence fails to reveal a “genuine issue as to any

material fact and that the moving party is entitled to a judgment as a matter of law.” Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). “Genuine” issues exist if “the evidence is such

that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248. Facts are

“material” if they “might affect the outcome of the suit” and do not include “irrelevant or

unnecessary” factual disputes. Id. Inferences “must be viewed in the light most favorable” to

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the nonmoving party when considering summary judgment. Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party “always bears the initial

responsibility” of presenting evidence which “demonstrate[s] the absence of a genuine issue of

material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If this burden is met, the

nonmovant must “set forth specific facts showing that there is a genuine issue for trial.”

Anderson, 477 U.S. at 256.

IV. Analysis of Plaintiffs’ Breach of Contract Claim

The government argues: (1) TMA had no contractual duty to extract, analyze, and adjust

radiology claims data from the hospitals 5 under the contract; and (2) plaintiffs bore the risk of

any data discrepancy. See generally Def.’s MSJ. The government asserts plaintiffs’ breach of

contract claim “fails as a matter of law . . . because the parties’ contract assigned the ultimate

responsibility for identifying any errors in the adjustment calculation to the plaintiffs, and

provided them a hard and fast 30-day deadline for doing so.” Id. at 31. The government states,

“[t]he contract provided that TMA would first extract data with certain contractually-specified

identifiers from its own records, and use the methodology specified in the parties’ contract to

generate a proposed adjustment amount[.]” Id. (citing DPP Contract Notice at A7–A8). Then,

“once TMA presented this proposed adjustment amount to the hospitals, the hospitals were

required to raise ‘any questions regarding the data used in the calculations’ and provide a

‘detailed explanation of the alleged errors and the proposed corrections with supporting

documentation’ within 30 days.” Id. (citing DPP Contract Notice at A8). The government adds

plaintiffs “received years ago exactly what they bargained for, i.e., a quick payment of a definite

adjustment amount that they accepted with full knowledge that they had not examined the

provenance of that number using their own data, and, accordingly, with full acceptance of any

associated risk.” Id.

Plaintiffs argue: (1) TMA had a contractual duty to extract, analyze, and adjust plaintiffs’

radiology claims data under the contract; (2) TMA had a duty to extract line items from its

database; and (3) TMA bore the risk of any data discrepancy, not plaintiffs. See generally Pls.’

MSJ Resp. Plaintiffs add “[t]he Government’s attempt to shirk its contractual duty fails as (a)

the evidence proves that the Government breached the DPP, (b) the Government was responsible

for ensuring the accuracy of its data, not Plaintiffs, and (c) the Government cannot prove any

affirmative defense, as is required, to avoid liability.” Id. at 23.

5

The Court refers to the data not in TMA’s records as “hospital” data because plaintiffs’ mention of “all of the

radiology line items,” Pls.’ MSJ Resp. at 27, relates to their argument TMA’s databases were missing certain records

which the hospitals submitted. See id. at 30 (“The Government does not explain why some of the data did not exist

in its systems . . . .”); see also Tr. at 101:7–102:3 (“THE COURT: . . . Plaintiffs read [Step 3 as stating] TMA will

extract the claims for each hospital’s submitted claims for outpatient radiology services? [PLAINTIFFS]: I think

that’s the only way to fairly interpret that language . . .” (emphasis added)). As a factual matter, the government

admits records were missing from TMA’s database, but the government contends it was not required under the

contract to find additional data as a legal matter. Tr. at 13:14–22 (“[THE GOVERNMENT:] . . . [W]e discovered

that there were 139 line items in the INTEGRIS data set that TMA could not find in its records. So, . . . the

INTEGRIS data set does contain records that are missing from ours. I don’t think that changes our legal position on

the motion for summary judgment . . . because . . . there is no contract requirement for us to adjust records that we

don’t own because the contract’s cast in terms of extraction.”).

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There are four elements to a breach of contract claim: “(1) a valid contract between the

parties, (2) an obligation or duty arising out of the contract, (3) a breach of that duty, and (4)

damages caused by the breach.” San Carlos Irrigation & Drainage Dist. v. United States, 877

F.2d 957, 959 (Fed. Cir. 1989) (citations omitted). For the first element, the court previously

found “a valid contract between the parties,” and the parties do not dispute this finding. Ingham

Reg. Med. Ctr., 126 Fed. Cl. at 22, 31–32 (2016), aff’d in part, rev’d in part on other grounds,

874 F.3d 1341 (Fed. Cir. 2017); Def.’s MSJ at 17; Pls.’ MSJ Resp. at 13; see San Carlos

Irrigation & Drainage Dist., 877 F.2d at 959; Def.’s MSJ App. at A1–A2 [hereinafter DPP

Contract Letter]; DPP Contract Notice at A3–A9; DPP Contract FAQs at A10–A15; Def.’s MSJ

App. at A17 [hereinafter DPP Contract Release]. The Court accordingly considers: (1) whether

the contract obligates TMA as plaintiffs allege; (2) if TMA had contractual duties, whether it

breached those duties; (3) if TMA breached, whether any breach caused plaintiffs’ damage; and

(4) whether the government proves any viable defenses to plaintiffs’ breach of contract claim.

See San Carlos Irrigation & Drainage Dist., 877 F.2d at 959.

A. Whether TMA Had a Contractual Duty to Extract, Analyze, and Adjust

Hospital Radiology Data

The government concedes the DPP required TMA to fulfill certain contractual

obligations it owed to plaintiffs. Def.’s MSJ at 34 (noting “TMA’s duties toward the plaintiffs”).

To determine the extent of the obligations, the Court looks to the DPP’s plain language and gives

the words their plain and ordinary meaning, unless the language is ambiguous. See United

Cmtys., LLC v. United States, 154 Fed. Cl. 676, 681 (2021). The Court first narrows the contract

provisions to plaintiffs’ radiology data before then determining its ambiguity (or lack thereof)

and analyzing the plain meaning of the DPP language.

Missing data is the central problem to the issue of what data the government had a duty to

correctly adjust. Between hospitals submitting their claims data to intermediaries, intermediaries

processing the data and submitting it to TMA, and TMA storing the data in its database, some

claims data was miscategorized or lost. For example, eighty-two line items from

plaintiff-Ingham were all together missing from TMA’s database. Some of the data loss was due

to programming errors and records conversion issues with intermediaries between 2003 and 2009

after original submission, but the extent, timing, and exact causes of the loss are unknown.

Plaintiffs’ expert report did not opine regarding how much data was missing. 6 The question the

Court addresses now is whether the government had a duty to find and correct this missing data

6

This explanation is based on the parties’ statements at oral argument. See Tr. at 12:7–11 (“[THE

GOVERNMENT]: . . . Plaintiffs, because of the way they structured their expert report, did not actually address

that issue specifically, trying to quantify or identify why line items may have been missing or anything to that

effect.”), 50:12–15 (“THE COURT: . . . [W]hen we were just talking about Ingham as an example, there were 82

that were missing? [THE GOVERNMENT]: Yes.”), 50:23–51:4 (“[THE GOVERNMENT]: . . . [H]ow this

particular error manifested itself was the hospital would appropriately code it. It would be a CPT code for an x-ray

of your arm. It would forward that information to the fiscal intermediary. There’s some crazy data cross-walking

problem on the part of Healthnet that—a programming error which caused those CPT codes to be rerecorded as

generic codes.”), 74:9–16 (“[PLAINTIFFS]: . . . [I]t’s not part of our interpretation that there has to be a

reevaluation of the hospital’s claims, just that the thing that is being extracted is the hospital’s claim and not

something that the government or its fiscal intermediaries . . . have changed in some way that’s unknown to

plaintiff[s].”), 257:19–24 (“[THE GOVERNMENT]: . . . [T]he issue is that the fiscal intermediary doesn’t have

those claims. Right? There was a records conversion issue, and so . . . . I don’t know that we still have them.”).

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under the DPP, or whether the government could re-calculate the payments under the DPP

utilizing the data as it existed in 2011 in the government’s possession.

The government argues, “Plaintiffs fail to cite any provision of their contracts that

contain” an explicit duty for the government to extract and adjust the hospitals’ radiology data.

Def.’s MSJ Reply at 6. The government adds, “TMA had no obligation to adjust line items that

were not in its physical possession.” Tr. at 12:3–5. In response, plaintiffs argue “the plain

language of the DPP shows that the Government breached what was a clear contractual duty to

extract and adjust all of the Plaintiffs’ radiology claims.” Pls.’ MSJ Resp. at 18. Plaintiffs assert

“the Government itself concedes that it did not follow the methodology in the DPP under which

the Government expressly promised that it would extract and adjust all of the radiology line

items.” Id. at 27. To support the contention the DPP required TMA “to extract, analyze, and

adjust all of Plaintiffs’ radiology claims data,” plaintiffs cite several contractual provisions,

including: the Letter; Step 1; Step 3; Step 4; Step 5; Step 6; Step 7; FAQ 2; and FAQ 14. Id. at

24–28. Plaintiffs assert “[i]t would be unreasonable to expect a hospital reading the plain

language of the DPP to infer that only some of the required claims would be included.” Id. at 28.

The original hospital submissions comprise “all” of plaintiffs’ radiology claims. See Tr. at

74:9–16 (“[PLAINTIFFS]: . . . [I]t’s not part of our interpretation that there has to be a

reevaluation of the hospital’s claims, just that the thing that is being extracted is the hospital’s

claim and not something that the government or its fiscal intermediaries . . . have changed in

some way that’s unknown to plaintiff[s].”)

Contract interpretation is a question of law. 7 See Jowett, Inc. v. United States, 234 F.3d

1365, 1367–68 (Fed. Cir. 2000). The court “must interpret the contract in a manner that gives

meaning to all of its provisions and makes sense.” Id. at 1368 (quoting McAbee Constr., Inc. v.

United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996)). Beginning with the “plain language,” the

court must “give the words of the agreement their ordinary meaning unless the parties mutually

intended and agreed to an alternative meaning.” Id. (first quoting McAbee Constr., Inc., 97 F.3d

at 1435, and then quoting Harris v. Dep’t of Veterans Affairs, 142 F.3d 1463, 1467 (Fed. Cir.

1998)). The court must also determine “the intent of the parties at the time they contracted, as

evidenced by the contract itself.” Greco v. Dep’t of the Army, 852 F.2d 558, 560 (Fed. Cir.

1988). If multiple interpretations of contract provisions exist, they “should be construed most

strongly against the drafter.” United States v. Seckinger, 397 U.S. 203, 210 (1970).

As a threshold matter, both parties agree the relevant contract language is unambiguous,

though they disagree as to the interpretation. See Tr. at 72:24–25 (“[PLAINTIFFS]: . . . We

don’t think there’s an ambiguity.”); 103:13–14 (“[PLAINTIFFS]: . . . I don’t necessarily allege

that Step 3 is ambiguous.”); Def.’s MSJ Reply at 1 (“In our opening brief, we demonstrated that

the contracts . . . are simple, straightforward, and fundamentally unambiguous instruments.”).

As the parties agree the contract is unambiguous, the Court now considers the various terms as

they relate to TMA’s duties under the contract. First, the Court assesses the role of

intermediaries who were “made aware of th[e] DoD initiative [to calculate the net adjustments

7

As the nonmovant, plaintiffs agree “interpreting [TMA’s] contractual duties is purely an issue of law.” Tr. at

72:21–23. The Court accordingly need not determine whether the evidence reveals a “genuine issue as to any

material fact” and must only consider whether the government “is entitled to judgment as a matter of law.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986).

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itself], but [would] not otherwise be involved in the calculation of net adjustments.” DPP

Contract Letter at A1. The Court then analyzes TMA’s obligations in Step 1 instructing

hospitals to “submit a request for analysis of their claims data” and in Step 2 directing hospitals

to enter basic identifying information in a provided Excel spreadsheet as part of the Step-1

request. DPP Contract Notice at A7. In Step 3, the Court reviews whether “TMA extract[ing]

the claims for each hospital for claims for outpatient radiology services” provided in the Excel

spreadsheet requires TMA to consider data not included in the spreadsheet. Id. at A7–A8. Next,

the Court must determine if “each” qualifying “hospital” or “claim” throughout the CHAMPUS

methodology—as well as FAQ 14, which clarifies the DPP analysis was performed on a service

line basis—requires TMA to examine all plaintiffs’ radiology data in the aggregate or just

claims-level data individually. Id. at A5–A7; DPP Contract FAQs at A12. If the Court

determines the DPP Contract obligates TMA to inspect the hospitals’ data as opposed to just

claims data in TMA’s database, the Court must determine whether TMA had a contractual duty

to verify its data.

The government first argues regardless of how the steps are calculated in the

methodology, the government only has the data previously provided by intermediaries. See

Def.’s MSJ at 38 (“It was important that individual hospitals provide complete identifying

information that TMA did not have in order to establish the unique, agreed-upon parameters of

TMA’s records search for that hospital.”). The Letter provides: “Because this issue affects all

three TRICARE regions and multiple years of claimed services, DoD has decided to calculate

the net adjustments itself, rather than through the [intermediaries], which have been made aware

of this DoD initiative, but will not otherwise be involved in the calculation of net

adjustments . . . .” DPP Contract Letter at A1. Plaintiffs contend the plain language of the DPP

explicitly required TMA to extract all the radiology claim data, including data from the hospitals

not in the database, and to examine its data for errors. Pls.’ MSJ Resp. at 23. To argue the

government was obligated to analyze the hospitals’ radiology data, plaintiffs emphasize “DoD

has decided to calculate the net adjustments itself.” Id. at 25 (emphasis removed) (quoting DPP

Contract Letter at A1). Plaintiffs argue in TMA claiming it would calculate the net adjustments

itself, “[t]he government impliedly warrant[ed] the accuracy of matters set forth in contract

documents.” Id. at 23–24 (citing D.F.K. Enters., Inc. v. United States, 45 Fed. Cl. 280, 285

(1999)).

To illustrate the differences in language and meaning between the Letter and plaintiffs’

interpretation, the Court first reads the Letter through the lens of plaintiffs’ interpretation.

Plaintiffs’ interpretation of the Letter to input “the hospitals’ data” within the calculations

essentially requires adding the words “with the hospitals’ data” to read “DoD has decided to

calculate the net adjustments itself with the hospitals’ data.” See DPP Contract Letter at A1. As

can be seen from considering the additional limitation, the inclusion of the additional words

expands the scope of the obligation on the government. The plain meaning of the original

sentence from the Letter—“DoD has decided to calculate the net adjustments itself, rather than

through the [intermediaries]”—is TMA would not involve intermediaries in the DPP calculation

process or use the hospitals’ data from the intermediaries. Id.; see also Tr. at 106:3–11 (“[THE

GOVERNMENT]: If the [intermediarie]s are not going to be involved with this process, they

are the repository of the plaintiffs’ submitted hospital data. So . . . we are clearly signaling that

we are not going back to the clearinghouse, we are not going back to the hospital data. That

- 13 -

leaves the only thing to be extracted would be the records in the government’s official record of

payment in Step 3.”). This original sentence from the Letter does not provide TMA would

analyze plaintiffs’ data by performing the analysis itself—in fact, the provision lacks any

mention of data, plaintiffs’ or otherwise. DPP Contract Letter at A1. The Court cannot change

the plain meaning of the Letter by adding language. See Antonin Scalia & Bryan A. Garner,

Reading Law: The Interpretation of Legal Texts 174 (2012) (“[I]t is no more the court’s function

to revise by subtraction than by addition.”). The Court finds plaintiffs’ interpretation

inapplicable because the interpretation requires the addition of words to support plaintiffs’

preferred meaning. See id.

As part of the DPP, DoD further clarified the decision not to use intermediaries in the

DPP was made for administrative efficiency. See DPP Contract Letter at A1. Intermediaries

were not involved “[b]ecause this issue affects all three TRICARE regions and multiple years of

claimed services[.]” Id. This explanation further put plaintiffs on notice TMA planned to

process its data itself to perform the adjustments rather than expending time and resources

involving numerous outside parties or finding the hospitals’ data to process. The plain meaning

of the Letter undermines plaintiffs’ argument the government had to analyze the hospitals’ data.

See Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr., Inc., 97 F.3d at 1435); DPP

Contract Letter at A1.

It is also important to understand the calculation outcome is dependent on which data is

processed. While the government describes a DPP calculation, plaintiffs confuse the described

calculation with a calculation outcome which requires utilizing the hospitals’ data. The Letter

clarifies TMA is only extracting, analyzing, and adjusting the data previously furnished by

intermediaries—and the Letter clarifies only TMA is doing so. See DPP Contract Letter at A1

(“DoD has decided to calculate the net adjustments itself, rather than through the

[intermediaries] . . . .”). Plaintiffs seemingly infer from the government’s responsibility to

perform calculations a promise the calculations will be perfectly accurate and use the hospitals’

data to achieve that perfection: “DoD has decided to calculate the net adjustments itself, rather

than through the [intermediaries],” DPP Contract Letter at A1, according to plaintiffs is

“unambiguous, and make[s] clear that the duty to extract, analyze, and adjust all of Plaintiffs’

radiology claims data were [sic] not discretionary tasks, and rested solely with the Government.”

Pls.’ MSJ Resp. at 26 (emphasis added). The cited sentence of the Letter references who is

involved in the payment process—DoD, not intermediaries—rather than what is involved in the

payment process. See DPP Contract Letter at A1. Plaintiffs read in a nonexistent warranty

regarding the process by asserting the government, as sole arbiter of the calculations, must utilize

the hospitals’ data. See id. The plain language does no more than exclude intermediaries from

the process. See Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr., Inc., 97 F.3d at 1435);

DPP Contract Letter at A1.

In summary, the Court does not read the government’s statement intermediaries would

not be involved in DPP calculations as making a promise to adjust specific data. The language

of the Letter refers only to the involvement of intermediaries—or lack thereof—in the DPP

process and does not imply a guarantee of perfect calculations using the hospitals’ data. The

plain meaning of the Letter does not bind the government to analyze the hospitals’ data but rather

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clarifies intermediaries would not be involved for efficiency’s sake. See Jowett, Inc., 234 F.3d at

1368 (quoting McAbee Constr., Inc., 97 F.3d at 1435); DPP Contract Letter at A1.

1. Whether Step 1 and 2’s Plain Meaning Instructing Hospitals to

“submit[] a request for analysis of their claims data” Obligates TMA

to Any Performance

As part of the DPP, the 2-page Letter made hospitals aware more detailed procedures

would follow. The Letter stated “[d]etailed instructions will be posted on the [TMA] Web Site”

and noted these instructions would “explain[] the manner in which a hospital may request th[eir]

claims data be reviewed for appropriate discretionary adjusted payments.” DPP Contract Letter

at A1. These instructions were the Notice and “answers to certain Frequently Asked Questions

(DPP Contract FAQs).” Def.’s MSJ at 11 (citing DPP Contract Notice & FAQs at A3–A15).

Rather than detailing the methodology or defining the extent of data TMA would use, the Letter

directs the hospitals to the 7-page Notice and 20-question FAQs. Extrinsic evidence cannot

change the plain meaning of a writing, but meaning can almost never be plain except in context.

Restatement (Second) Contracts cmt. b (Am. L. Inst. 1981). Contextualizing the Letter with the

Notice and FAQs “gives meaning to all . . . provisions and makes sense[,]” allowing the Letter to

be read as a whole. See Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr., Inc., 97 F.3d at

1435). The Court accordingly next addresses the Notice and FAQs.

Steps 1 and 2 of the Notice outlined the process for requesting analysis of claims data:

Step 1: Hospital submits a request for analysis of their claims data (process defined

in Step 2) for hospital outpatient department radiology charges during the period

from August 1, 2003, to April 30, 2009, which is the last day before TRICARE’s

OPPS became effective on May l, 2009. Small rural hospitals not subject to

TRICARE’s OPPS until January 1, 2010, shall submit a request for the August 1,

2003-December 31, 2009 period. Critical Access Hospitals (CAHs) are not subject

to TRICARE’s OPPS and shall submit a request for the August 1, 2003-November

30, 2009 period. As of December 1, 2010, CAHs are reimbursed 101 percent of

reasonable costs. Hospitals not subject to OPPS (such as Cancer and Children’s

hospitals) shall submit a request for the August 1, 2003-December 31, 2010 period.

Step 2: As part of the request, hospital submits data with its name, address, zip

code, Tax ID number, TRICARE sub ID number, the 6-digit Medicare OSCAR

provider number, and NPI number. If multiple Tax ID or Medicare provider

numbers were used during this period, hospitals will submit these data. The request

shall also include the name and address to be used by TMA for formal response to

the request. A separate Excel spreadsheet must be completed for each hospital in

the TMA-specified format. An example is posted on the TMA website . . . .

Hospitals will also submit the name of a contact and a phone number to resolve any

questions. The request will be submitted to the following address: [omitted]. Any

questions should be submitted to the following email address: [omitted]. Questions

of general interest to all hospitals will be posted with answers on the TMA website.

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DPP Notice at A7. Plaintiffs argue Step 1 of the Notice “provides the hospital submit[] a request

for analysis of their claims data,” and plaintiffs noted Step 1 “is at the very beginning of the

hierarchy.” Tr. at 127:16–24. Step 1 required hospitals to submit a request to begin the DPP and

provided the relevant time period of adjustable claims depending on the type of hospital. The

plain meaning of Step 1 provided hospitals initiate the “analysis” by “submit[ting] a request”;

hospitals are the subject of Step 1, and the provision does not obligate TMA to any performance.

DPP Contract Notice at A7. The FAQs expressly foreclose plaintiffs’ argument TMA should

have provided its granular data to the hospitals. See DPP Contract FAQs at A11 (“Claims-level

detail will not be provided due to the number of adjustments over this 7-year period.”). TMA is

simply the passive recipient of the information per Step 1. FAQ 18 also explained three reasons

why “the government will not provide individual claims data to each hospital:” (1) providing 10

million claims of data is impractical; (2) including patient-level data is inadvisable due to privacy

concerns; and (3) giving hospitals the summary worksheet is sufficient for hospitals to determine

whether the historical claims counts and amounts are reasonable. DPP Contract FAQs at A14.

Plaintiffs, therefore, knew before they entered the contract through parallel provisions (Step 1,

FAQ 11, and FAQ 18) TMA was not providing its claim-level data. DPP Contract Notice at A7;

DPP Contract FAQs at A11, A14. Although the provision noted, the “hospital submits a request

for analysis of their claims data[,]” where “their” referred to hospitals, the provision directed

hospitals to Step 2 for how to “submit[] a request for analysis of their claims data.” DPP

Contract Notice at A7. As Step 1 directed the parties to Step 2, the Court next considers whether

the “process defined in Step 2” obligated TMA to extract, analyze, and adjust the hospitals’

radiology data. See id.

Plaintiffs state Step 2 “requested Plaintiffs to provide . . . basic [identifying] information

in an Excel spreadsheet.” Pls.’ MSJ Resp. at 33. Step 2 provided “[a]s part of the [Step 1]

request, hospital submits data with its name, address, zip code, Tax ID number, TRICARE sub

ID number, the 6-digit Medicare OSCAR provider number, and NPI number.” DPP Contract

Notice at A7. Hospitals “shall also include” a contact name and address for correspondence

related to the Step 9 “formal response.” Id. The requested information qualifies as “basic

[identifying]” data, not claims-level data—billing codes that healthcare entities submit to

insurance companies—or patient-level data—patients’ personal information, such as medical

history and demographic characteristics. See id. The government argues, “[a]t most, plaintiffs

seek to infer a promise or warranty that the data that [TMA] was using was perfect from the fact

that [TMA] did not invite hospitals to submit patient-level data as part of Step 2.” Def.’s MSJ at

39; see also Tr. at 68:16–21 (“THE COURT: . . . [T]he DPP does not warranty proper data

going into it and does not warranty that the data going into it, for the purposes of DPP analysis,

is the same as the data that the hospitals had originally submitted to the intermediary. [THE

GOVERNMENT]: That’s correct.”). The contextual evidence of Step 1, which only calls

hospitals to action, renders similar conclusions. Step 2 is an extension of Step 1, as Step 1

mentioned a “[h]ospital submits a request for analysis of their claims data (process defined in

Step 2)[.]” DPP Contract Notice at A7. Like Step 1, the plain language of Step 2 only described

information for plaintiffs—it does not obligate TMA in any way. See id. Step 2 also limited the

information plaintiffs would submit “[a]s part of the request.” Id. Notably, under Step 2,

hospitals were not invited or required to submit claims data—only basic identifying information.

See id. FAQs 1 and 2 from the TMA website together state the limited information needed from

hospitals more expressly. FAQ 1 clarified hospitals are not required to submit sub-ID numbers.

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DPP Contract FAQs at A10. FAQ 2 then built on FAQ 1 by answering the question, “Will I

need to provide further information such as claims-level data or identify the relevant claims or

patients?” Id. TMA answered: “No, you will not. TRICARE will do this. You need to submit

only the information in the Excel sheet [according to Step 2]. Do not submit patient-level data.”

Id. The instructions of Step 2 limited who could submit data and further limited submitted data

to a hospital’s “name, address, zip code, Tax ID number, TRICARE sub ID number, the 6-digit

Medicare OSCAR provider number, and NPI number.” DPP Contract Notice at A7. Step 2 does

not obligate TMA to any action—let alone to analyze data not submitted. Step 1, Step 2, FAQ 1,

and FAQ 2 accordingly specify what the hospitals needed to submit with a request and what they

did not, but the plain meaning of these provisions does not bind the government to analyze the

hospitals’ radiology data. See Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr., Inc., 97

F.3d at 1435); DPP Contract Notice at A7; DPP Contract FAQs at A10.

2. Whether Step 3 Requires TMA to Reference External Data Sources

Step 3 of the Notice included the first mention of an action by TMA:

Step 3: TMA will extract the claims for each hospital for claims for outpatient

radiology services during the relevant period (either the August 2003-April 2009,

August 2003-December 2009, or August 2003-November 2010 period). All

hospital outpatient department claims for radiology paid as billed, with OHI, or

with a professional modifier (-26) will be excluded. Radiology claims will include

codes within the CPT range of 70000-79999 and which were codes with a non-zero

rate in the Technical Component (TC) field of the CMAC rate file. Within this

group of claims, if the TC CMAC amount is less than the global CMAC and the

claim does not have a TC modifier, it will be excluded.

DP Contract Notice at A7–A8 (emphasis added). As to Step 3, the government argues “plaintiffs

posit that essentially any difference between TMA’s data and the hospital’s data constitutes a

contract breach. However, this proposition cannot be derived from Step 3, and is not in the

parties’ contract at all.” Def.’s MSJ at 42. The government asserts the following actions did not

violate its obligations under Step 3 because “[t]he issue was not with the extraction itself, but

with the contents of the underlying records, whose examination and correction was in no way

required by the contract”: excluding (1) “some miscoded line items”; (2) “dump coded records”;

and (3) “line items without TC modifiers.” Id. at 42–43 (citing DPP Contract Notice A7–A8).

Plaintiffs respond TMA’s extraction of data “from its own records . . . does not explain

why some of the data did not exist in [TMA’s] systems or how this somehow justifies failing to

perform its contractual obligations.” Pls.’ MSJ Resp. at 30. Plaintiffs also contend “[t]he

Government cannot reasonably argue that it was not required to conduct due diligence on its own

data, while at the same time refusing Plaintiffs access to the data.” Id. Plaintiffs argue TMA

should have corrected errors with the data “(e.g., the records conversion issue for 2003-2004 in

the South regarding to which the Government stipulated, and a fiscal intermediary advising of

erratic TC modifier practices in May 2011).” Id. at 30–31 (citing Def.’s MSJ at 43–44).

Plaintiffs add “if you look at Step 3, the government’s basic obligation was to extract the claims

- 17 -

from each hospital for claims for outpatient radiology services during the relevant period.

Claims from each hospital has to mean the claims that the hospital submitted.” Tr. at 70:8–14.

Building on the information hospitals supplied in Step 2, Step 3 provided “TMA will

extract the claims for each hospital for claims for outpatient radiology services during the

relevant period.” DPP Contract Notice at A7. From Merriam-Webster Dictionary’s definition of

“extract,” only two definitions are relevant: (1) “to draw forth (as by research)” e.g., “extract

data”; and (2) “to select (excerpts) and copy out or cite.” Extract, Merriam Webster Dictionary,

(11th ed. 2022); see Af–Cap, Inc. v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080, 1088 (9th

Cir. 2007) (“When determining the plain meaning of language, we may consult dictionary

definitions.”). Using either definition, the word “extract” contemplates removing or copying

something from somewhere. Although plaintiffs argued under Step 3, “somewhere” must “mean

the claims that the hospital submitted,” Tr. at 70:13–14, plaintiffs admitted TMA extracted line

items from TMA’s own database as a practical matter. Tr. at 111:23–112:4 (“[COURT]: . . . .

[Step 3] begins, ‘TMA will extract the claims.’ Where is TMA to extract the claims from?

[PLAINTIFFS]: Well, from the database that the government maintains. . . . [COURT]: From

TMA’s database? [PLAINTIFFS]: Yeah, from TMA’s database”), 113:23–24

(“[PLAINTIFFS]: . . . . [A]s a practical matter, TMA was looking to its database.”). Further, in

arguing FAQ 4 does not support the government’s position, plaintiffs admitted TMA was “just

going to look at the records that are in the database and use those as a basis for the adjustment.”

Tr. at 20:11–13. Plaintiffs were aware at numerous stages of the process—from extracting line

items, Tr. at 111:23–112:4, to determining adjustment bases, Tr. 113:23–24—TMA was utilizing

its database. “The process of interpretation . . . turns in good part on what the court regards as

normal habits in the use of language, habits that would be expected of reasonable persons in the

circumstances of the parties.” E. Allan Farnsworth, Contracts 456 (4th ed. 2004). The parties

were aware TMA extracted line items from TMA’s own database, contextualizing the

interpretation of from where “TMA will extract the claims for each hospital.” DPP Contract

Notice at A7; see, e.g., George Backer Mgt. Corp. v. Acme Quilting Co., 385 N.E.2d 1062, 1065

(N.Y. 1978) (If particularized meaning is intended, “surely no problem of draftsmanship would

have stood in the way of its being spelled out.”).

TMA extracted data from its database, so at oral argument the Court questioned “where

also in Step 3 then is TMA obligated to collect data from outside its database to make it match

something that the hospitals had submitted to the intermediaries?” to which plaintiffs responded,

“I think that’s built into what we believe is the only reasonable interpretation of what it means to

extract claims for each hospital.” Tr. at 113:8–15. The notion TMA’s duties are assumed,

however, only points back to the Court’s interpretation of “extract.” When the Court asked

whether Step 3 obligated TMA to seek data outside its database, plaintiffs initially said, “No,”

but plaintiffs later said, “‘[Y]es,’ . . . because Step 3 obligate[d] the government to adjust the

claims that the hospitals submitted.” Tr. at 112:11–19. Plaintiffs admitted for TMA to collect

data it lacked, TMA would “have [had] to go to the fiscal intermediaries[,]” Tr. at 177:15–16;

however, the contract expressly stated TMA would not go to the intermediaries. See DPP

Contract Letter at A1 (“DoD has decided to calculate the net adjustments itself, rather than

through the [intermediaries].”); supra Section IV.A. Further, FAQ 2 clarified hospitals did not

need to provide claims-level data, rather “TRICARE will do this.” DPP Contract FAQs at A10

(answering “[y]ou need to submit only the information in the Excel sheet” to the question “Will I

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need to provide further information?”). Plaintiffs attempted to contextualize the notion TMA

would adjust the claims with an action TMA explicitly rejected: using intermediaries. See DPP

Contract Letter at A1; supra Section IV.A. Plaintiffs’ arguments Step 3 obligated TMA to

extract the hospitals’ radiology data accordingly impermissibly reach beyond the plain meaning

of the text. See Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr., Inc., 97 F.3d at 1435);

DPP Contract Notice at A7; DPP Contract FAQs at A10.

After TMA “extract[ed] the claims for each hospital” meeting certain criteria, Step 3

further provided certain claims “will be excluded” from what “TMA will extract.” DPP Contract

Notice at A7–A8. For example:

All hospital outpatient department claims for radiology paid as billed, with [other

hospital insurance (‘OHI’)], or with a professional modifier (-26) [the professional

component used when a physician interprets but does not perform the test] will be

excluded. . . . Within this group of [radiology] claims, if the Technical Component

(TC) CMAC amount is less than the global CMAC and the claim does not have a

TC modifier, it will be excluded.

Id. at A7. In addition to defining “extract” as “to select (excerpts) and copy out or cite,”

Merriam Webster Dictionary also defines “exclude” as “to expel . . . especially from a place or

position previously occupied.” See Extract, Exclude, Merriam Webster Dictionary. Reading the

definitions together, TMA must extract data before it can then exclude portions of its extractions

because TMA must “select” excerpts of data from hospitals request before it is able to “expel”

certain data points. As the ordinary meaning of the Step 3 exclusions merely narrow the

universe of considered data from what “TMA will extract,” the claims data “TMA will extract”

is the largest universe of data TMA was obligated to consider. Excluding existing database data

is the plain meaning of excluding data TMA extracts in Step 3. See Jowett, Inc., 234 F.3d at

1368 (quoting McAbee Constr., Inc., 97 F.3d at 1435); DPP Contract Notice at A7–A8.

One of the excluded claims relates to “dump codes.” The government explained a dump

code is a non-CMAC-associated generic code from a fiscal intermediary resulting from the

inability of the coder to input the proper CPT code. See Tr. at 46:16–21. 8 Regarding “dump

codes,” Step 3 provided “[r]adiology claims will include codes within the CPT range of

70000-79999 and which were codes with a non-zero rate in the TC field of the CMAC rate file.”

DPP Contract Notice at A7 (emphasis added). Dump codes have a zero rate in the TC field, so

dump codes were not included in the data TMA extracted according to Step 3. Id. Plaintiffs

argue TMA erred by excluding dump codes. See Pls.’ MSJ Resp. at 21. TMA’s obligations

stem from the contract, and the contract expressly provided TMA would exclude dump codes.

See DPP Contract Notice at A7. Plaintiffs admitted under Step 3 “the DPP provided that claims

with certain CPT codes would be adjusted” and “[a] dump code falls outside that.” Tr. at 63:6–9.

Therefore, TMA did not err in excluding dump codes per Step 3. Under a plain meaning rule,

there is a two-stage process. In the first stage, the court makes a preliminary determination of

whether the language in dispute lacks the required degree of clarity before going on to the second

8

The government noted during oral argument, “there were 82 line items [out of 4,006 total] for Ingham that were

not adjusted because of the dump code issue.” Tr. at 46:9–11; see Tr. at 44:18–19 (“[THE GOVERNMENT:] . . .

[W]e adjusted 4,006 line items for Ingham.”).

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stage, that of interpretation. E. Allan Farnsworth, Contracts 464 (4th ed. 2004) (quoting Arthur

L. Corbin, The Parol Evidence Rule, 53 YALE L.J. 603, 622 (1944)). The direction of Step 3 that

dump codes fall outside of TMA’s adjustment purview does not “lack the required degree of

clarity,” so the Court does not need to proceed with interpretation. See id.

i. Whether the Word “Each” Qualifies “Claim” and “Hospital”

in Steps 1 through 6 Individually or Collectively

Plaintiffs contend the government was obligated to analyze the hospitals’ radiology data.

Pls.’ MSJ Resp. at 27. Plaintiffs emphasize the word “each” in Steps 3 through 6 supports their

hospital-data interpretation. 9 Id. After admitting at oral argument TMA extracted claims from

9

The Notice provides in full Steps 3–6:

Step 3: TMA will extract the claims for each hospital for claims for outpatient radiology services

during the relevant period (either the August 2003-April 2009, August 2003-December 2009, or

August 2003-November 2010 period). All hospital outpatient department claims for radiology paid

as billed, with OHI, or with a professional modifier (-26) will be excluded. Radiology claims will

include codes within the CPT range of 70000-79999 and which were codes with a non-zero rate in

the Technical Component (TC) field of the CMAC rate file. Within this group of claims, if the TC

CMAC amount is less than the global CMAC and the claim does not have a TC modifier, it will be

excluded.

Step 4: TMA will calculate what would have been paid under the approach that Medicare used to

pay hospital outpatient radiology claims prior to CMS’s implementation of the Medicare OPPS in

2000. Medicare used a weighted blending of two factors with 42 percent for the first factor and 58

percent for the second factor. We refer to this as the “Medicare” method. Specifically, TMA would

use the following formula to calculate the “Medicare” allowed amount for each hospital radiology

claim:

.42 (BC*CCR) + .58 (.62 global CMAC)

where: BC = billed charge for that line item

CCR= the hospital-specific outpatient cost-to-charge ratio

Global CMAC = the global CMAC for that CPT code (line item)

TMA will perform separate calculations of the “Medicare” amount for the following periods. Each

period corresponds to a change in the TRICARE CMAC amounts:

August 11, 2003-February 29, 2004

March 1, 2004-March 31, 2005

April 1, 2005-February 28, 2006

March 1, 2006-January 31, 2007

February 1, 2007-February 29, 2008

March 1, 2008-February 28, 2009

March 1, 2009-March 31, 2010

April 1, 2010-June 30, 2010

July 1, 2010-July 31, 2010

August 1, 2010-December 31, 2010

The outpatient cost-to-charge ratio (CCR) used for each period shall be the hospital-specific

outpatient CCR in effect on the first day of each period as provided on the Outpatient Provider

Specific File (OPSF) available from CMS’s OPPS Pricer file.

Step 5: To reflect the value of discounts at network hospitals, TMA will adjust the “Medicare”

amount calculated in Step 4 on each claim using the ratio of the actual allowed amount on the claim

to the TRICARE Standard allowed amount (the technical component of the CMAC). For example,

if the TRICARE Standard technical portion of the CMAC for a radiology claim was equal to $100

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its database, plaintiffs agreed the phrase “each hospital” in Step 3 is the same as “each hospital”

in Step 2:

A separate Excel spreadsheet must be completed for each hospital in the

TMA-specified format.

DPP Contract Notice at A7 (emphasis added); Tr. at 112:5–7. The word “each” immediately

precedes—and modifies—the word “hospital,” so the plain meaning of the word “each”

instructed TMA to extract data based on the individual hospitals that submitted their identifying

information per Steps 1 and 2. See DPP Contract Notice at A7 (“TMA will extract the claims for

each hospital . . . .”). The plain meaning of “each hospital” accordingly does not change the

scope of TMA’s duty to “extract [from its database] the claims for each hospital” which

submitted identifying information according to Step 2. Id.

Regarding Steps 4 through 6, the word “each” modifies “hospital radiology claim” in

Step 4, and “claim” in Steps 5 and 6. Id. at A8–A9. As Steps 4, 5, and 6 sequentially follow

Steps 1, 2, and 3, the “each hospital radiology claim” and “each claim” language in Steps 4, 5,

and 6 referred only to each individual claim extracted and not excluded under Step 3. Steps 4

through 6 described the calculations TMA was to perform, so the word “each” in this context

denoted TMA was to analyze claims on an individual basis as opposed to collectively. The DPP

specifically included “each” as the modifier as opposed to an indefinite article like “a.” “Each”

is a word of limitation as opposed to the generalizing force of “a.” See Am. Bus Ass’n v. Slater,

231 F.3d 1, 4–5 (D.C. Cir. 2000). The only interpretation that “makes sense,” therefore, is if the

plain meaning of the word “each” does not broaden TMA’s duty to extract data from its database

and then use this data for TMA’s analysis of individual claims for each hospital. Put differently,

TMA is only responsible for analyzing the data of each claim of each hospital. See Jowett, Inc.,

234 F.3d at 1368 (quoting McAbee Constr., Inc., 97 F.3d at 1435 and giving “the words of the

agreement their ordinary meaning unless the parties mutually intended and agreed to an

alternative meaning”); DPP Contract Notice at A7–A9.

and the actual allowed amount on the claim was equal to $95, the ratio is 0.95. This difference could

occur because of a hospital discount. In this example, the adjusted “Medicare” amount would be

equal to 0.95 multiplied by the “Medicare” amount prior to adjustment. If both the actual and the

TRICARE Standard amounts were equal (for example, because there were no discounts), the ratio

would be equal to 1.0 (the ratio could not exceed a value of 1.0). For purposes of this discretionary

adjustment, this process will level discounts over the period even if the hospital may not have had a

network agreement in effect at the time of any individual service claim.

Step 6: TMA will then compare the adjusted “Medicare” amount for each claim with the actual

allowed amounts on that claim. TMA will calculate the difference between the two amounts. The

positive and negative differences will be summed over the entire 2003-2009 period (or the

2003-2010 period for hospitals not subject to OPPS). If the sum of the differences is positive

(because the adjusted “Medicare” allowed amounts exceed the actual allowed amounts) then this

information will be used in determining the level of the additional payment to the hospital. If the

actual allowed amounts are equal to or exceed the “adjusted Medicare” amounts, then no additional

payment shall be made.

DPP Contract Notice at A7–A9 (emphasis added).

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3. Whether FAQ 14’s Clarification of “The Notice to Hospitals of

Potential Adjustment to Past Payment for Outpatient Radiology

Services” Applies to the Kennell Study or the DPP Calculations

The government argues FAQ 14, which clarifies the DPP “analysis was performed on a

service line basis, rather than on a hospital specific basis,” does not impose a duty on TMA to

extract and analyze the hospitals’ radiology data. Def.’s MSJ Reply at 14–15 (quoting FAQ 14).

The government asserts FAQ 14 is irrelevant to TMA’s duty as “it is describing the methodology

that was used in the Kennell studies that were conducted prior to the [DPP] to determine whether

TRICARE’s payment methodology was comparable to Medicare’s across different types of

outpatient services generally.” Id. at 14. Plaintiffs argue FAQ 14 does require the government

to extract all hospital radiology claims, emphasizing “[t]he [data] analysis was performed on a

service line basis.” Id.

The FAQ, published in 2013, mentions the data analysis of hospital outpatient services

generally, not just radiology claims, so the FAQ—by its plain meaning—refers to the Kennell

study. See DPP Contract FAQs at A12. The 2013 FAQ also refers to the data analysis in past

tense which further signals it refers to the Kennell study, which accounted for 2003–2009 data:

FAQ 14 specifies “[t]he analysis was performed on a service line basis, rather than on a hospital

specific basis,” confirming the provision must refer to the Kennell study and not the

yet-to-be-performed DPP calculations according to the contract. See id. (emphasis added). The

Kennell study does not apply to individual hospital claims, and the DPP obligated TMA to

perform—but not to the extent of extracting and analyzing radiology data not in the database.

FAQ 14’s clarification of “The Notice to Hospitals of Potential Adjustment to Past Payment for

Outpatient Radiology Services” applies to the Kennell study, which occurred before the

publication of the Notice and thus does not provide context to TMA’s contractual duty regarding

plaintiffs’ data. See J & B Steel Contractors, Inc. v. C. Iber & Sons, Inc., 642 N.E.2d 1215, 1218

(Ill. 1994) (interpreting existence of ambiguity by looking solely at what appears within the

written contract itself).

4. Whether Spearin Applies

Citing D.F.K. Enterprises, Inc., a 1999 Court of Federal Claims case in which a contractor

sued alleging the Army Corps of Engineers breached a contract to paint a water storage tank by

misrepresenting the amount of adverse weather experienced at the site, plaintiffs argue TMA

“had a contractual duty to verify its data because it implicitly warranted that its representations

about the data were accurate.” Pls.’ MSJ Resp. at 26 (citing D.F.K. Enters., Inc., 45 Fed. Cl. at

285); see infra Section IV.B (holding TMA’s data and its performance according to the DPP

methodology were both within TMA’s control). In a related 1918 case, the Supreme Court

considered a government contract to construct a dry dock at the Brooklyn Navy Yard. United

States v. Spearin, 248 U.S. 132, 133 (1918). The Court found “the insertion of the articles

prescribing the character, dimensions and location of the sewer imported a warranty that if the

specifications were complied with, the sewer would be adequate. This implied warranty is not

overcome by the general clauses requiring the contractor to examine the site . . . .” Id. at 137.

Further, in Spearin, the government specified steps for the contractor to follow, which implied

these steps would lead to a certain result. Id. at 133; see also Lakeshore Eng’g Servs., Inc. v.

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United States, 748 F.3d 1341, 1349 (Fed. Cir. 2014) (“[T]he Supreme Court in Spearin

recognized that an implied warranty arises in a particular circumstance: when a contractual

requirement binds the builder to follow design specifications stated in the contract.”). The basis

for the “Spearin Doctrine” is when contractors are bound to build according to the plans and

specifications provided by the owner, the contractor should not be responsible for damages that,

through no fault of his own, occur when the plans and specifications are defective. In response

to plaintiffs’ citation of D.F.K. Enterprises, Inc., the government characterizes D.F.K.

Enterprises, Inc. as “a Spearin warranty case” and clarifies “Spearin does not apply in a ‘case

[that] does not involve a design specification that bound [the contractor] but turned out to

produce a defective or unsafe construction.’” Def.’s MSJ Reply at 13 (first citing D.F.K. Enters.,

Inc., 45 Fed. Cl. at 285, and then citing Lakeshore, 748 F.3d at 1349). The Court agrees Spearin

implied warranties apply in design specification cases, and plaintiffs fail to cite any non-design

specification cases for their argument. In this case, moreover, the contract specified how TMA

should perform under the DPP Contract, not how the contractor—plaintiffs in this case—should

perform. For example, Step 3 of the contract states, “TMA will extract the claims for each

hospital for claims for outpatient radiology services during the relevant period.” See Def.’s MSJ

Reply at 10–11 (citing DPP Contract Notice at A7–A8). TMA created a duty for itself, if

anything, not an implied warranty.

The government argues further on the issue of implied warranties, “if the government was

promising to do something as elaborate as going and checking records . . . there would be an

explicit express obligation in the contract to do that.” Tr. at 125:6–9. The government explained

“that would be a very complicated prospect and it’s in no way contemplated in the language of

this instrument.” Tr. at 125:9–11. Plaintiffs responded “[i]f the government was going to do

anything less than its promise, which was to extract all the hospitals’ claims, it should have

provided a disclaimer of that fact and it didn’t.” Tr. at 125:21–24. Plaintiffs’ argument on this

point requires the Court first accept their argument TMA had an express obligation to analyze

the hospitals’ data, which the Court rejects. See infra Section IV.A.5. Further, the Court agrees

with the government if TMA had promised to analyze the hospitals’ data, which would have

required requesting data from intermediaries or plaintiffs themselves and would have been a

complicated process, the DPP Contract would have provided so expressly. See DPP Contract

Notice at A7 (requesting “claims” data—not “all” or “new” data). TMA thus lacked a

contractual duty to extract, analyze, and adjust the hospitals’ radiology data. See Moore v.

Shawmut Woodworking & Supply, Inc., 788 F.Supp.2d 821, 825, 829 (S.D. Ind. 2011) (finding a

breach of contract can be predicated upon a contractual duty only when the contract affirmatively

evinces an intent to charge one party with a duty).

5. Conclusion

The Court finds TMA did not have a contractual duty to “locate, identify, and adjust each

and every line item for radiology ever paid,” or put another way, “the Parties’ contracts

contained no requirement that the Government extract and adjust all of Plaintiffs’ radiology

data.” Def.’s MSJ at 34; Def.’s MSJ Reply at 6 (cleaned up); see Jowett, Inc., 234 F.3d at 1368

(quoting McAbee Constr., Inc., 97 F.3d at 1435); Trauma Serv. Grp. v. United States, 104 F.3d

1321, 1325 (Fed. Cir. 1997); San Carlos Irrigation & Drainage Dist., 877 F.2d at 959; DPP

Contract Letter at A1–A2; DPP Contract Notice at A3–A9; DPP Contract FAQs at A10–A15;

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DPP Contract Release at A17. As the government has shown TMA lacked this specific

contractual duty, the government has proven it is “entitled to a judgment as a matter of law”; the

Court accordingly grants the government’s motion for summary judgment as to plaintiffs’ breach

of contract claim regarding TMA’s lack of contractual duty to extract, analyze, and adjust the

hospitals’ radiology data. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986).

B. Whether TMA Had a Contractual Duty to Extract, Analyze, and Adjust

Radiology Data from its Database

Regarding TMA’s duty to extract, analyze, and adjust radiology data, plaintiffs argue

even if the Court found TMA was not obligated “to extract and analyze all of plaintiffs’

radiology data,” “there would still be a breach.” Tr. at 131:8–16. Plaintiffs note “[t]he

government has . . . stipulated to the fact that there were line items in their database that met the

criteria for extraction that were not adjusted. That’s still a breach.” Tr. at 131:18–21; see also

Tr. at 85:4–7 (“[PLAINTIFFS:] . . . [T]he government has stipulated that there are certain claims

that did meet the criteria for extraction that were not adjusted, even though they were in their

database.”).

As discussed supra Section IV.A.2, Step 3 provided “TMA will extract the claims” and

then exclude certain claims using specified criteria. See DPP Contract Notice at A7. The

government admits “[t]he contract provided that TMA first would extract data with certain

contractually-specified identifiers from its own records, and use the methodology specified in the

parties’ contract to generate a proposed adjustment amount.” Def.’s MSJ at 31 (citing DPP

Contract Notice at A7–A8). The government also concedes it “failed to include [several] line

items . . . that met the criteria for extraction set forth in Step 3.” Def.’s MSJ Reply at 5 (citing

DPP Contract Notice at A9; DPP Contract FAQs at A15). The government also conceded at oral

argument TMA’s exclusion of several line items “although they met the criteria for extraction”

“would not be compliant with Step 3.” See Tr. at 80:1–9. The government then stated: “[D]id

our algorithm fail in some way on Step 3 for these 13 line items? Sure.” Tr. at 81:19–21. The

government finally said “[it] agreed to extract the records in our possession.” Tr. at 97:20–21.

The government admitting it had a duty according to Step 3 is consistent with the contract

language; to assert otherwise would lead to the absurd result where TMA could have performed

calculations based on plainly incorrect data that did not match the data in TMA’s system. At oral

argument, the government admitted if TMA provided bogus data, it technically would have

breached the contract. Tr. at 97:3–10 (“THE COURT: But if [TMA] provided bogus data, that

wouldn’t be following the process as detailed in the DPP, that would be a breach. [THE

GOVERNMENT]: . . . yes.”); see also Tr. at 224:2–7 (“[PLAINTIFFS:] . . . [I]f the government

were not obligated to use accurate data in doing its adjustments, on some level it would be an

illusory promise, right, because the government could use whatever data and come up with

whatever result and it wouldn’t be a breach.”). 10 The Court accordingly finds TMA did have a

10

The algorithm’s failure does not amount to an illusory promise, a promise that is unenforceable due to

indefiniteness or lack of mutuality. 1 Corbin on Contracts § 1.17 (2022). A promise conditioned upon an event

within the promisor’s control is not illusory if the promisor also “impliedly promises to make reasonable effort to

bring the event about or to use good faith and honest judgment in determining whether or not it has in fact

occurred.” Id. In this case, TMA had a duty to extract data in its records, but the failure to utilize “perfect data” is

not illusory.

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duty under the plain language of Step 3 to extract, analyze, and adjust radiology data from its

database. See Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr., Inc., 97 F.3d at 1435);

Trauma Serv. Grp., 104 F.3d at 1325; San Carlos Irrigation & Drainage Dist., 877 F.2d at 959;

DPP Contract Letter at A1–A2; DPP Contract Notice at A3–A9; DPP Contract FAQs at

A10–A15; DPP Contract Release at A17.

C. Whether TMA Had a Contractual Duty to Consider Zip Codes Not Provided

by Hospitals

Regarding plaintiff Integris Baptist, who the government stipulates had five unadjusted

line items during the DPP because of an alternate zip code, the government states “there is no

dispute that Integris Baptist did not advise TMA that it provided radiology services in zip code

73116” under Step 2. Def.’s MSJ Reply at 4 (citing DPP Contract Notice at A7). Step 2

provided “[a]s part of the request, hospital submits data with its . . . zip code[.]” DPP Contract

Notice at A7. FAQ 8 answered “[p]lease provide the address and zip code of the physical

location of the hospital” to the question “[s]hould I provide the address of the physical location

of the hospital or a billing address?” DPP Contract FAQs at A11.

The government argues “it does not appear that plaintiffs could meet their burden of

proving [TMA’s failure to adjust five line items associated with an alternative zip code for

Integris Baptist Medical Center] constituted an error of extraction. Step 2 of the Notice required

hospitals to provide zip code information to TMA to facilitate the extraction process.” Def.’s

MSJ at 43 n.9 (citations omitted). Plaintiffs, however, contend “the DPP doesn’t make any

provision that if a hospital has multiple locations, that all of the zip codes must be separately

identified in the DPP.” Tr. at 9:18–20.

Plaintiffs admit there is no “evidence that [Integris Baptist] did” provide TMA with its

73116 zip code so this issue is not factually disputed. Tr. at 8:14–21. Plaintiffs, however, argue

Integris Baptist was not obligated to do so because the contract only provided hospitals must

submit their “zip code” not “zip codes.” Tr. at 8:19–9:2. The government counters it is “a

reasonable reading of the provision to assume that if a hospital has more than one physical

location, it’s going to advise the government to that effect.” Tr. at 10:6–9. The government

argues “under FAQ 8, the physical location zip code had to be provided and [Integris Baptist]

didn’t.” Tr. at 10:17–18.

Interpreting the zip code requirement of Step 2 requires examining its context. Step 2

provides: “As part of the request, hospital submits data with its name, address, zip code, Tax ID

number, TRICARE sub ID number, the 6-digit Medicare OSCAR provider number, and NPI

number. [(“Sentence 1”).] If multiple Tax ID or Medicare provider numbers were used during

this period, hospitals will submit these data. [(“Sentence 2”).]” DPP Contract Notice at A7

(emphasis added). The plain meaning of Sentence 1 in context requires submission of only one

zip code. Reading the two sentences together raises the negative implication canon, a tool of

contract interpretation this court has employed many times. See, e.g., United Pac. Ins. v. United

States, 497 F.2d 1402, 1405 (Ct. Cl. 1974) (applying the rule of expressio unius est exclusio

alterius to find when language specifically provided where flashings were to be installed, there

was manifested an intention the flashings are not required to be installed elsewhere); Pub. Util.

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Dist. No. 1 v. United States, 20 Cl. Ct. 696, 700 (1990) (interpreting a contract using the doctrine

of expressio unius est exclusion alterius); Nicholson v. United States, 29 Fed. Cl. 180, 196

(1993) (explaining where particular things are specified in a contract, others of the same general

character are impliedly excluded); Sam Rayburn Mun. Power Agency v. United States, No.

20-1535, 2021 WL 4888872, at *12 (Fed. Cl. Oct. 19, 2021) (Holte, J.) (finding damages were

generally available under a contract, as an issue of subject matter jurisdiction, when the contract

enumerated three exceptions to damages); see also Scalia & Garner, supra, at 107–11

(describing the negative implication canon as “[t]he expression of one thing implies the

exclusion of others”). By listing two specific identifying criteria from Sentence 1 for which

hospitals should submit multiple values, “Tax ID” and “Medicare provider numbers[,]” DPP

Contract Notice at A7, Sentence 2 of the Notice implied hospitals did not have to submit

multiple values for the non-listed identifying criteria, including zip codes. See, e.g., United

States v. Giordano, 416 U.S. 505, 514 (1974) (finding an individual government employee was

not authorized to perform an action under a statute authorizing only two types of officials). The

plain meaning of Step 2 did not, therefore, require hospitals to submit multiple zip codes, and the

Court thus finds TMA did have a duty to consider zip codes for hospital locations not provided

by the hospitals. 11 See Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr., Inc., 97 F.3d at

1435); Pub. Util. Dist. No. 1, 20 Cl. Ct. at 700; United Pac. Ins. v., 497 F.2d at 1405; DPP

Contract Notice at A7.

D. Whether TMA Breached its Contractual Duty to Extract, Analyze, and

Adjust Radiology Data from its Database and Damages

Regarding TMA’s breach, plaintiffs argue, “the Government itself concedes that it did

not follow the methodology in the DPP[.]” Pls.’ MSJ Resp. at 27. Plaintiffs also argue the errors

with the data were not trivial, “[r]ather, the Excluded Hospitals Memo and the Settlement

Agreement prove that the Government failed to follow the DPP methodology on a substantially

large scale, rather than just in a few insignificant instances.” Id. at 29. Plaintiffs further argue

the government’s failure to extract line items “for unknown reasons” supports plaintiffs’

argument “the Government does not understand its own data and failed to satisfy its contractual

obligations.” Id. at 29–30.

To prove breach of contract, plaintiffs must show the government “fail[ed] to perform a

contractual duty when it [was] due.” Trauma Serv. Grp., 104 F.3d at 1325. The Court finds

supra Section IV.B the DPP Contract obligated TMA to extract, analyze, and adjust plaintiffs’

radiology data TMA had in its system, and this is the duty plaintiffs allege TMA failed to

perform. See Pls.’ MSJ Resp. at 27. “The Government stipulates that there are nine line items

for Integris Baptist Medical Center, and four line items for Integris Bass Baptist Medical Center

that were not extracted from TMA’s databases in 2011, although they met the criteria for

extraction.” Def.’s MSJ at 30 (emphasis added) (citations omitted). The government concedes

11

The Court holds under the plain meaning of Step 2 of the Notice but notes the parties did not discuss the language

of Sentence 2, “multiple Tax ID or Medicare provider numbers[,]” or the negative implication canon at oral

argument or in their briefing. See generally Tr.; Def.’s MSJ; Pls.’ MSJ Resp.; Def.’s MSJ Reply. Additionally, the

record does not reflect whether the multiple zip codes of Integris Baptist also had multiple associated Tax ID or

Medicare provider numbers or, if so, whether Integris Baptist submitted those numbers as required by Step 2. The

Court denies the government’s motion for summary judgment as to the line items covered by the alternative zip

code, see infra Section IV.F, but notes additional discovery may be required to determine liability.

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its “algorithm fail[ed] in some way on Step 3 for these 13 line items[.]” Tr. at 81:19–21. The

government also states, “We believe that the contract express provisions provided what would

and would not be included in the adjustment set.” Tr. at 48:18–20. The government accordingly

admits TMA failed to follow the extraction criteria, at least in part.

Although the government admits it technically breached the DPP Contract regarding

extraction, it argues “where government records are in the tens of millions, I think it would be

unreasonable to expect perfection . . . on something of this scale.” Tr. at 59:6–10. As support,

the government cites to FAQ 18 which contextualizes Step 8, directing questions about the

content—not the calculation—of claims data to TMA within thirty days of request response

receipt. Tr. at 82:13–18 (“[THE GOVERNMENT]: . . . [T]he purpose of the claims counts, it’s

from FAQ 18 and I think that the final sentence of that FAQ . . . the intention is that hospitals can

review these amounts to determine whether the historical claims counts and amounts are

reasonable.”). FAQ 18 stated, “Hospitals can review [the summary worksheet] amounts to

determine whether the historical claims counts and amounts are reasonable.” DPP Contract

FAQs at A14. The government emphasizes the language “are reasonable” to argue the

government did not “promis[e] exactitude.” Tr. at 82:18–21. The government adds FAQ 18

“doesn’t say exact; it says reasonable.” Tr. at 82:18. Plaintiffs respond, “[j]ust because Question

18 says ‘reasonable’ . . . the very best hospitals could do is some sort of reasonableness check.”

Tr. at 86: 8–11. Plaintiffs also argue “the hospitals [did not] ha[ve a] way of easily figuring this

out or doing some calculation as part of the DPP.” Tr. at 62:1–5.

The government argues “historical claims counts and allowed amounts would be used to

assess reasonableness, not exactitude[,]” and thus, “even though it’s not, strictly speaking, a

complete compliance with Step 3, given the contract obligations as a whole, we don’t believe

that would be a breach either, particularly given Step 8.” Tr. at 80:13–19. The government also

argues infinitesimal variance is not “within the contemplation of the contract” under Southwest

Welding. Tr. at 83:23–25. In Southwest Welding, a contractor could not recover extra

compensation for additional work entitled by a 0.16 percent deviation from a base number of 90

degrees because it was within the variation contemplated by use of the figure “90 degrees plus or

minus.” Sw. Welding & Mfg. Co. v. United States, 373 F.2d 982, 985 (Ct. Cl. 1967). The

government asserts it did not “know that the technical noncompliance . . . with respect to this

negligible number of line items . . . is as grievous as it would appear on the face.” Tr. at

84:9–17. Plaintiffs note in the Southwest Welding case, “there were plus and minus symbols”

following the parameter at issue indicating there was an acceptable margin of error. Tr. at

85:17–20. Plaintiffs argue unlike Southwest Welding, “[t]here weren’t any plus or minus

symbols in the DPP or anything like plus or minus symbols[.]” Tr. at 85:21–22.

“When performance of a duty under a contract is due any non-performance is a breach.”

Restatement (Second) of Contracts § 235(2) (Am. L. Inst. 1981). The Restatement further

explains: “[A] duty is discharged when it is fully performed. Nothing less than full

performance, however, has this effect and any defect in performance, even an insubstantial one,

prevents discharge on this ground.” § 235, cmt. a. “[A] ‘reasonable’ breach of contract is

nonetheless a breach.” Stockton E. Water Dist. v. United States, 583 F.3d 1344, 1365 (Fed. Cir.

2009). The government admits its “performance of a duty under [the DPP] contract”—extracting

plaintiffs’ radiology data which was in TMA’s database—was due. See § 235(2). Contrary to

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the Restatement, the government argues something less than full performance discharged its

obligation under the DPP. See § 235, cmt. A; Tr. at 80:13–19. In unambiguous terms, however,

the DPP Contract provided TMA’s duty was to “extract the claims for each hospital” and then

exclude certain claims. DPP Contract Notice at A7–A8. The government admitted it failed to do

just that. See e.g., Tr. at 81:19–21. Following the Restatement’s guidance, the Court finds

“[n]othing less than full performance” can satisfy TMA’s obligation to perform under the DPP

Contract, and “a ‘reasonable’ breach of contract is nonetheless a breach.” § 235, cmt. a; Stockton

E. Water Dist., 583 F.3d at 1365. As a matter of law regarding contract interpretation and the

government’s admission, the government’s failure to extract all thirteen line items for Integris

Baptist and Integris Bass Baptist constitutes a breach of TMA’s duty according to Step 3. See

Stockton E. Water Dist., 583 F.3d at 1365; DPP Contract Notice at A7; supra Section IV.B.

1. Damages

To prevail on their breach of contract claim, plaintiffs must also prove damages. See San

Carlos Irrigation & Drainage Dist., 877 F.2d at 960 (citing Com. Int’l Co. v. United States, 338

F.2d 81, 86 (1964)). “Damages for a breach of contract are recoverable where: (1) the damages

were reasonably foreseeable by the breaching party at the time of contracting; (2) the breach is a

substantial causal factor in the damages; and (3) the damages are shown with reasonable

certainty.” Indiana Michigan Power Co. v. United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005)

(citation omitted). The government admitted if the Court finds TMA was obligated to extract

and analyze plaintiffs’ radiology data from its system, and if the Court finds the government

failed to sufficiently prove a defense, the Court “would find that [the government] owed one

[named plaintiff] hospital $486”—plaintiffs would be entitled to some damages. Tr. at 133:7–15.

The parties, however, did not agree to any specific amount of damages, and plaintiffs argued

damages would be calculated after class certification. See Tr. at 134:2–7 (“a class would be

certified . . . and determining which hospitals were entitled to damages would be something that

would be resolved at that stage.”). The Court accordingly finds the government did not carry its

burden as the moving party of establishing plaintiffs cannot prove damages, and thus the

government did not show it is “entitled to a judgment as a matter of law” in this respect.

Anderson, 477 U.S. at 247; see Tr. at 133:7–15.

E. The Government’s Defenses to Breach of Contract

In a breach of contract case, “[o]nce the facts of breach are established, the defendant has

the burden of pleading and proving any affirmative defense that legally excuses performance.”

Shell Oil Co. v. United States, 751 F.3d 1282, 1297 (Fed. Cir. 2014) (quoting Stockton E. Water

Dist., 583 F.3d at 1360). The defendant also has the burden of proving any risk-shifting defense

against a breach of contract claim by a preponderance of the evidence. See Cardiosom, L.L.C. v.

United States, 117 Fed. Cl. 526, 532 (2014) (denying the government’s motion for summary

judgment in a breach of contract case, in part, because the contract did not shift the relevant risk

to plaintiff). The Court accordingly considers first whether plaintiffs were obligated to check the

data under the DPP and second whether the DPP shifted the risk of any data errors to plaintiffs.

1. Whether Plaintiffs Had a Contractual Obligation to Check

Discretionary Adjusted Payment Data

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In relevant part, Step 8 regarding written requests to TMA provided:

While the methodology for calculating the adjustment is not subject to questions,

any questions regarding the data used in the calculations should be received by

TMA within 30 days of the date of TMA’s response as specified in the response.

Any questions should be accompanied by detailed explanation of the alleged errors

and the proposed corrections with supporting documentation.

DPP Contract Notice at A9. The government contends Step 8 “unequivocally placed the

ultimate responsibility for identifying any errors in the adjustment calculation squarely on the

plaintiffs, and not the Government.” Def.’s MSJ at 34. The government elaborates “the

hospitals shouldered the obligation under the contract to raise ‘any questions regarding the data

used in the calculations’ and provide a ‘detailed explanation of the alleged errors and the

proposed corrections with supporting documentation’ within 30 days.” Id. at 35–36. Step 8

“created a process by which the hospitals could challenge any perceived mistakes in the

calculations received, putting the onus on the hospitals to do so.” Id. at 43.

Plaintiffs respond by noting the government’s “deliberate choice to use permissive

language in Step 8,” notably “should,” shows “Step 8 in no way required Plaintiffs to confirm

that the Government’s data was accurate.” Pls.’ MSJ Resp. at 34–35 (citing DPP Contract

Notice at A9). Plaintiffs further argue “[t]he Government could have similarly stated in Step 8

that ‘the hospitals are required to verify the Government’s calculations’ or that ‘the hospitals

must verify the Government’s data. However, the Government chose not to incorporate such

language.” Id. at 34. Plaintiffs argued Step 8 “is not what the Government asserts it is. It was

not ever intended to place an obligation on hospitals to undertake some elaborate investigation

and identify all possible errors. It was intended to set a time frame when they could ask

questions.” Tr. at 243:19–25.

While the government at times argued at oral argument Step 8 obligated the hospitals to

verify the data TMA presented, Tr. at 93:11–12 (“[THE GOVERNMENT:] . . . it is a contract

obligation to bring any questions within a 30-day window”), the government admitted plaintiffs

were not obligated under the contract to check data, rather the contract merely permits plaintiffs

to verify. 12 See Tr. at 229:11–17 (“I agree that . . . Step 8 doesn’t say must—the language is not

as strong [as Lakeshore], but it’s still structurally putting the contractor on notice.”), 57:15–18

(government counsel characterizing Step 8 as plaintiffs’ “opportunity” to check radiology data),

93:8–11 (“[THE GOVERNMENT:] . . . the language in Step 8 is precatory only insofar as the

choice to undertake . . . a challenge rests with the Plaintiff”); see also Tr. at 91:21–24

(“[PLAINTIFFS:] . . . there’s nothing in the language of Step 8 that imposes an obligation on

12

As relevant to the Court’s finding of no mutual mistake of fact infra Section V, the government admitted at oral

argument Step 8 only applies to radiology data questions. See Tr. at 229:24–230:4 (“THE COURT: . . . [Y]ou

argue that Step 8 applies to radiology claims. Are you also arguing that Step 8 applies to non-radiology claims?

[THE GOVERNMENT]: No. THE COURT: Not at all? [THE GOVERNMENT]: No.”). The government

argued non-radiology risk shifting only occurs by operation of law, citing ConocoPhillips v. United States, 501 F.3d

1374 (Fed. Cir. 2007), because plaintiffs chose to enter a business settlement expressly limited to radiology claims,

necessarily foreclosing adjustment for non-radiology claims. Tr. at 230:4–6 (“[THE GOVERNMENT]: . . . [T]he

risk shifting that occurs with respect to the non-radiology claims is by operation of law, not by contract

[pro]vision.”).

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the hospitals to [investigate data]”). Plaintiffs therefore could verify the data but did not have to.

See e.g., Telzrow v. United States, 127 Fed. Cl. 115, 123–24 (2016) (holding the contract allowed

but did not require the government to collaborate with landowners on restoration project).

Further, Step 8 provided “any questions regarding the data used in the calculations should

be received by TMA within 30 days of the date of TMA’s response as specified in the response.”

DPP Contract Notice at A9 (emphasis added). The Step 8 language is permissive, allowing

plaintiffs to submit questions if they so choose. See id.; Tr. at 91:24–92:1 (“[PLAINTIFFS]: . . .

I mean, really what [Step 8] does is put a time limit on how long [hospitals] are allowed to ask

questions if they so choose.”). If plaintiffs did not challenge TMA’s data under Step 8, plaintiffs

signed the Release, and TMA then paid the hospitals. See DPP Contract Notice at A9. The

government did not claim plaintiffs breached the DPP Contract by not checking the data, as the

government might claim if plaintiffs were obligated to verify the data. As TMA was required to

perform according to the DPP Contract even if plaintiffs failed to question the radiology data,

and as the government does not now claim plaintiffs breached the contract by failing to question

the data, the Court finds the plain meaning of Step 8 provided plaintiffs the option to challenge

TMA’s data—but not the obligation. 13 Jowett, Inc., 234 F.3d at 1368 (quoting McAbee Constr.,

Inc., 97 F.3d at 1435) (holding courts “must interpret the contract in a manner that gives meaning

to all of its provisions and makes sense.”); DPP Contract Notice at A9.

2. Whether Plaintiffs Bore the Risk of Any Data Issues

The government argued even if Step 8 is only optional and does not obligate plaintiffs to

check TMA’s data, it structurally places risk on plaintiffs, making them “the insurers of this

calculation.” Tr. at 212:11–13. As the Court finds TMA did not have a duty to analyze the

hospitals’ radiology data, the Court need not analyze whether plaintiffs bore the risk of this

alleged breach of contract. See supra Section IV.A. By contrast, as the Court finds TMA did

have a duty to extract, analyze, and adjust radiology data from TMA’s database, the Court must

consider whether plaintiffs bore the risk of this alleged breach of contract. See supra Section

IV.B.

The government argues TMA was not required to disclaim data accuracy because “[t]he

entire contract structure provided plaintiffs with more than adequate notice that they, not the

Government, were to be the ultimate insurers of the proposed adjustment calculations, and that

they should act accordingly.” Def.’s MSJ Reply at 8. Considering Step 8 and FAQ 18, the

government argues this case is like Lakeshore wherein the Federal Circuit recognized a

contract’s structure may “‘reinforce[] the allocation of risk by affirmatively pointing [a] potential

contractor to the mechanism it should use . . . to account for potential . . . error[,]’ and put that

potential contractor on notice to protect its interests.” Id. at 9–10 (quoting Lakeshore, 748 F.3d

at 1347). The government also distinguishes Metcalf Construction Co., 742 F.3d at 995–96, by

13

Plaintiffs argue even if the Court finds the DPP Contract did require hospitals submit questions per Step 8, “the

Government made it impossible for Plaintiffs to do so within thirty days.” Pls.’ MSJ Resp. at 35. As the

government notes, impracticability is “‘intended for use as a defense to a breach-of-contract claim for

nonperformance, not as a theory to be used in pursuit of an affirmative remedy[.]’” Def.’s MSJ at 44 n.10 (quoting

CanPro Invs., Ltd. v. United States, 130 Fed. Cl. 320, 345 (2017))). Additionally, some hospitals submitted

questions within the thirty-day period. Id.; Tr. at 247:14–249:3. The Court finds supra plaintiffs were not obligated

to verify TMA’s data, so the Court need not consider plaintiffs’ impracticability argument.

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arguing “here, (1) there were no affirmative representations, and (2) consistent with Lakeshore,

the contract implicitly warned plaintiffs . . . were to take into account a risk or [sic] error.” Def.’s

MSJ Reply at 10. The government adds “[t]here would be no need for Step 8 . . . if TMA was

guaranteeing that the data that it extracted from its own databases, or the extraction process

itself, would be perfect.” Def.’s MSJ at 41. The government contends “hospitals were free to

check against their own records for the same services[.]” Def.’s MSJ Reply at 5 (citing DPP

Contract Notice at A9; DPP Contract FAQs at A15).

Plaintiffs respond “the DPP . . . did not allocate the risk to Plaintiffs.” Pls.’ MSJ Resp. at

37 (citing Metcalf Constr. Co., 742 F.3d at 996). Plaintiffs also note “[i]f the Federal Circuit

considered Step 8 to be a basis upon which to defeat Plaintiffs’ claim, the Federal Circuit would

have presumably done so, rather than remanding the claim.” Id. at 38–39 (citing Glaxo Grp. Ltd.

v. TorPharm, Inc., 153 F.3d 1366, 1371 (Fed. Cir. 1998) (“[A]n appellate court may affirm a

judgment of a district court on any ground the law and the record will support . . . .”)).

Regarding its argument the contract expressly shifted the risk of data errors to plaintiffs,

the government argued “although . . . Lakeshore is maybe 75 percent on all fours, it’s the closest

case.” Tr. at 227:17–19. In Lakeshore, the Federal Circuit affirmed the Court of Federal

Claims’ grant of summary judgment in favor of the government. 748 F.3d at 1343. To solicit

“bids for a contract for [future, indefinite] repair, maintenance, and construction services at Fort

Rucker, Alabama[,]” the United States Army Contracting Agency instructed prospective

contractors to submit bids using prices found in the Universal Unit Price Book (“UUPB”) and

then multiply these costs by coefficients to account for costs not considered in the UUPB. Id.

The Federal Circuit noted “[a] fundamental aspect of contracts for future performance is how

they allocate risks related to the performance.” Id. at 1350. The Federal Circuit concluded that

“the language of the contract does not promise that the prices [provided] in the UUPB were

accurate or place on the government the risk that they will turn out to be inaccurate” and instead

“the only reasonable conclusion on the evidence here is that any risk that the prices in the UUPB

were inaccurate at the time of contracting was borne by [the plaintiff].” Id. at 1347. The Federal

Circuit supported its conclusion with three reasons: (1) the contract lacked a promise the prices

would be accurate, and the firm fixed-price nature of the agreement in dispute shifted the risk to

the contractor; (2) the contract “affirmatively point[ed] the potential contractor to the mechanism

it should use in its bid to account for potential error in the 2006 UUPB prices”; and (3) the

plaintiff’s “own actions ma[d]e clear that it understood that it was responsible for checking the

2006 UUPB unit prices and setting its coefficients accordingly.” Id. The essence of the Federal

Circuit’s conclusion was rooted in its finding the plaintiff could not “rewrite the clauses to

provide it protections the government did not agree to.” Id. at 1348 (citing ConocoPhillips v.

United States, 501 F.3d 1374, 1379 (Fed. Cir. 2007)).

First, unlike Lakeshore, the contract in this case did not involve future government

procurement but rather the calculation of discretionary adjustment payments for past services

performed by plaintiffs. The DPP Contract involved an adjustment paid shortly after the contract

was executed, unlike Lakeshore involving payment for services “indefinite as to delivery and

quantity” rendered at some undetermined future date with potential interim market fluctuations

in material or labor prices. The risk borne by the contractor in Lakeshore was risk of future

market price fluctuations, outside the government’s control, whereas in this case the government

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asks the Court to find plaintiffs bore the risk of the government’s failure to perform according to

the contract. See DPP Contract Notice at A7–A9.

Second, the government admits Step 8 “is not as strong” as the risk-shifting language in

Lakeshore. Tr. at 229:1–13. In Lakeshore, the Federal Circuit noted the procurement contract

stated the plaintiff must use a coefficient to “take into account ‘all costs other than the prepriced

unit prices,’ and it provide[d] a nonexclusive list of the factors that the coefficient must include,

one of which [wa]s ‘[o]ther risks of doing business.’” 748 F.3d at 1347. The Lakeshore

solicitation also provided “the coefficients must ‘contain all costs other than the prepriced unit

prices, as no allowance [would] be made after award.’” Id. at 1343. In this case, however, the

DPP Contract obligated the government to “extract the claims[,]” “calculate what would have

been paid under the [Medicare method,]” and send a written response to hospitals detailing “the

calculated discretionary adjusted payment and the calculations from which the adjustment was

derived.” DPP Contract Notice at A7–A9. The contract then provided plaintiffs the opportunity

to check the data and calculations according to Step 8. Step 8 noted “any questions regarding the

data used in the calculations should be received by TMA within 30 days of the date of TMA’s

response[.]” Id. at A9. Given the contract obligated TMA to “extract” radiology line items from

its database, the plain meaning and purpose of Step 8 was to give hospitals a chance to

cross-reference their data with a summary of TMA’s extracted data. See Tr. at 212:16–24

(“[PLAINTIFFS:] . . . [T]he purpose of Step 8 is to limit the amount of time in which the

government will entertain questions from the plaintiffs. It says if you have any questions about

the calculations . . . you have to get those to us within 30 days, otherwise we’re not going to

listen to them.”). Though the government argues TMA “made no statements or promises that its

own work is accurate[,]” Tr. at 229:20–21, TMA did expressly promise it would extract from its

database and include or exclude radiology line items according to specific criteria. See DPP

Contract Notice at A7; Tr. at 239:11–15 (“[PLAINTIFFS:] . . . [T]he government promised that

it would extract the hospitals’ claims. The government has to perform that promise even if it

turns out that it’s difficult for the government to do so.”).

Not only is Step 8 weaker than the contractual language the Federal Circuit held shifted

risk to the contractor in Lakeshore, but also the DPP Contract did affirmatively obligate TMA to

perform in a particular manner which it admits it failed to do—e.g., “TMA will extract the

claims for each hospital for claims for outpatient radiology services during the relevant period[.]”

DPP Contract Notice at A7. In Lakeshore, the Federal Circuit held the plaintiff “has advanced

no evidence that could support a finding that the government represented that the UUPB prices

were accurate and could be relied on by [the plaintiff], with the government assuming the risk of

error in those prices.” 748 F.3d at 1348. A key distinction between this case and Lakeshore is

the government here did not do what the contract specified it must. 14 By asking the Court to

enforce the contract according to TMA’s express obligations to consider its own data, plaintiffs

14

Though the government’s argument using Lakeshore is distinguishable when it comes to plaintiffs’ TMA-data

duty claim—alleging the government had a duty to adjust line items in its database—the government’s argument

using Lakeshore is more closely analogous against plaintiffs’ “hospital-data duty” claim—alleging the government

had a duty to adjust all hospital data, including data from intermediaries or plaintiffs not in TMA’s database. Like

the contract in Lakeshore, the DPP Contract does not expressly provide for this hospital-data obligation. The Court

finds the government prevails as a matter of law on plaintiffs’ hospital-data duty claim because the government was

not obligated to analyze all hospital’s radiology data, supra Section IV.A. There is therefore no reason to analyze

further whether plaintiffs bore the risk of their hospital-data duty claim.

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in this case are accordingly not seeking to “rewrite the clauses to provide it protections the

government did not agree to[,]” but rather plaintiffs request TMA perform as it was contractually

obligated. Lakeshore, 748 F.3d at 1348 (citing ConocoPhillips, 501 F.3d at 1379). Further,

TMA’s data and its performance according to the DPP methodology were both within TMA’s

control, unlike the materials and labor pricing in Lakeshore.

Plaintiffs add, unlike Lakeshore, “there’s nothing in Step 8 that says you have to do this,

otherwise the government is off the hook and they don’t have to perform their obligations under

the agreement.” Tr. at 216:23–25. Although the government states it does not argue the Release

applies, Step 8 aside, the government’s argument would require the Court to enforce the Release

against plaintiffs’ remaining breach of contract claim. The government also mentioned the

Release as barring plaintiffs’ claim at oral argument. See Tr. at 227:2–3 (“[THE

GOVERNMENT:] . . . They know that the deadline cannot be extended. That’s in the FAQs.

They execute[d] a release.”). This argument, however, improperly contradicts the Federal

Circuit’s guidance: the Release cannot bar a suit for breach of the underlying contract. See

Ingham Reg’l Med. Ctr. v. United States, 874 F.3d 1341, 1347 (Fed. Cir. 2017) (“[T]he Release

cannot be enforced against a claim for breach of the underlying contract.”). In short, the

government cannot argue the Step 8 option allows TMA to avoid performing a proper

calculation.

In addition to express risk allocation, the government argues the DPP Contract

structurally or impliedly allocated risk of radiology data discrepancies to plaintiffs. See Def.’s

MSJ at 37. Even if risk is not expressly allocated to one party, risk may still be attributed to a

party for “conscious ignorance” when “he was not only so aware that his knowledge was limited

but undertook to perform in the face of that awareness[.]” Restatement (Second) of Contracts,

§ 154 cmt. c (Am. L. Inst. 1981). In Metcalf Construction Co., the Federal Circuit ruled a

contractor failed to establish liability in its suit alleging the Navy breached its duty of good faith

and fair dealing under a contract to design and build military housing. 742 F.3d at 997. The

contractor did not “bear the risk of significant errors in the pre-contract assertions by the

government about the subsurface site conditions” even when the contract required the contractor

to conduct an independent investigation upon award. Id. at 995–96. Conversely, to the extent

plaintiffs rely on assumptions when contracting with the government, it is “incumbent upon the

plaintiffs to investigate those issues before entering into the contract.” ConocoPhillips, 501 F.3d

at 1380. In ConocoPhillips, the plaintiffs entered multiple contracts “contain[ing] an economic

price adjustment clause that caused the contract price to be adjusted each month based on a

publication known as the Petroleum Marketing Monthly (‘PMM’).” Id. at 1376. The plaintiffs

argued reformation of the contracts was necessary because “they did not appreciate the way in

which the price changes reported by the PMM could differ from price changes reported by other

sources of market information.” Id. at 1379–80. The Federal Circuit held “[t]o the extent the

plaintiffs thought that the PMM tracked other market publications more closely than it did,” they

should have gathered more information before entering the contracts. Id. at 1380.

ConocoPhillips is distinguishable from this case as plaintiffs are not asserting they relied on their

own assumptions but rather plaintiffs relied on TMA’s express contractual duty to extract,

analyze, and adjust TMA’s data according to the DPP Contract. See ConocoPhillips, 501 F.3d at

1380; supra Section IV.B. The government also admits the Federal Circuit in ConocoPhillips

did not discuss risk-shifting in the breach of contract analysis section. Tr. at 87:7–9 (“THE

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COURT: . . . [D]oes Conoco discuss risk in the breach of contract section? [THE

GOVERNMENT]: No[.]”). In this case, as TMA expressly promised to use its data for the

adjustments, plaintiffs cannot impliedly bear the risk of the government’s “pre-contract

assertions” even though Step 8 gives plaintiffs a thirty-day option window to question the

government’s written response, akin to offering a contractor an opportunity to perform a site

visit. See Metcalf Constr. Co., 742 F.3d at 995–96.

As TMA had an express duty it admittedly failed to perform, this case is distinguishable

from Lakeshore regarding express allocation of risk and from Conoco regarding implied

allocation of risk. The Court accordingly finds the government has not met its burden of

showing it is “entitled to judgment as a matter of law” for whether plaintiffs bore the risk as to

the government’s breach of its contractual duty to extract, analyze, and adjust radiology data

from TMA’s database. Anderson, 477 U.S. at 247; see Lakeshore, 748 F.3d at 1348; Metcalf

Constr. Co., 742 F.3d at 990–91; ConocoPhillips, 501 F.3d at 1380.

F. Conclusion

As the Court finds TMA was not obligated to perform what plaintiffs argue was TMA’s

contractual duty to extract and adjust the hospitals’ data, the Court accordingly grants in part the

government’s motion for summary judgment as to plaintiffs’ breach of contract claim regarding

TMA’s contractual duty to extract and adjust the hospitals’ data. See supra Section IV.A. As

the government, however, admits TMA failed to meet what plaintiffs assert was TMA’s

contractual duty to extract, analyze, and adjust radiology claims data from TMA’s database, and

as the government has not met its burden of proving any breach of contract defenses, the Court

accordingly denies in part the government’s motion for summary judgment as to plaintiffs’

breach of contract claim regarding TMA’s contractual duty to extract, analyze, and adjust

radiology claims data from TMA’s database. See supra Sections IV.B, D. As the government

admits TMA failed to meet what plaintiffs assert was TMA’s contractual duty to extract, analyze,

and adjust radiology claims data for an alternative zip code for plaintiff Integris Baptist, the

Court accordingly denies in part the government’s motion for summary judgment as to plaintiffs’

breach of contract claim regarding TMA’s contractual duty to extract, analyze, and adjust

radiology claims data for the five line items under Integris Baptist’s alternative zip code. 15 See

supra Section IV.C.

V. Analysis of Plaintiffs’ Mutual Mistake of Fact Claim

The Restatement (Second) of Contracts Section 152, titled “When Mistake of Both

Parties Makes a Contract Voidable” (the “mutual mistake” doctrine), provides:

(1) Where a mistake of both parties at the time a contract was made as to a basic

assumption on which the contract was made has a material effect on the agreed

exchange of performances, the contract is voidable by the adversely affected

party unless he bears the risk of the mistake under the rule stated in § 154.

15

Plaintiffs did not cross-move for summary judgment, so the Court only decides the government’s motion for

summary judgment.

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(2) In determining whether the mistake has a material effect on the agreed

exchange of performances, account is taken of any relief by way of

reformation, restitution, or otherwise.

(Am. L. Inst. 1981). The classic illustration of a mutual mistake is: “A contracts to sell and B to

buy a tract of land, the value of which has depended mainly on the timber on it. Both A and B

believe that the timber is still there, but in fact it has been destroyed by fire. The contract is

voidable by B.” § 152, illus. 1. The Federal Circuit in Atlas Corp. v. United States provided the

standard for a mutual mistake of fact claim:

A party seeking to state a claim for reformation of a contract under the doctrine of

mutual mistake must allege four elements:

(1) the parties to the contract were mistaken in their belief regarding a fact;

(2) that mistaken belief constituted a basic assumption underlying the contract;

(3) the mistake had a material effect on the bargain; and

(4) the contract did not put the risk of the mistake on the party seeking reformation.

895 F.2d 745, 750 (Fed. Cir. 1990).

Plaintiffs aver the mutual mistake issue is whether specific categories, including facility

charges, were correctly paid before the DPP. See Tr. at 166:4–8. To frame the mutual mistake

issue, the Court notes plaintiffs clarified at oral argument their only allegation of mutual mistake

is whether 32 C.F.R. § 199.14(a)(5)(xi) requires TMA to reimburse plaintiffs for outpatient

service “facility charges.” Tr. at 137:3–7 (“THE COURT: . . . [T]he parties’ disagreement is

whether the agency’s mandate was to provide facility charges over the 199.14 enumerated

outpatient services, correct? [PLAINTIFFS]: Correct.”), 147:18–24 (“[PLAINTIFFS]: . . .

[T]he DPP represents that prior payments had been made in accordance with Medicare

principles. . . . The mistake was that the hospitals believed that proper facility charge payments

had already been made.”). Plaintiffs further clarified regarding radiology data and calculations

per the DPP Contract—plaintiffs’ breach of contract claim—they “do not allege (and do not need

to allege) ‘mistakes’ in the calculations, and do not seek reformation of the DPP on that basis.”

Pls. MSJ Resp. at 38. Plaintiffs do not allege a mutual mistake of fact regarding dump codes,

either. See Tr. at 63:14–20 (“[PLAINTIFFS]: Well, I think that the government was aware the

dump codes were a problem. I think the government had knowledge of that and failed to

disclose that knowledge as part of the DPP. THE COURT: So there was no mistake of fact; the

government knew about it? [PLAINTIFFS]: Correct[.]”). Notably, other than facility charges

under § 199.14(a)(5)(xi), plaintiffs do not claim a mutual mistake of fact regarding general

underpayment in relation to Medicare principles. Tr. at 138:6–9 (“THE COURT: . . . [O]ther

than the 199.14 payment of facilities charges . . . is there any other mutual mistake of fact?

[PLAINTIFFS]: No[.]”), 207:9–16 (“THE COURT: If zero dollars are due under (xi), is there

still underpayment? [PLAINTIFFS]: “I don’t believe that there would be underpayment, at least

in the way we formulated our claims for those other categories of outpatient services.”). The

Court accordingly need only analyze whether the parties were mutually mistaken as to the

interpretation of § 199.14(a)(5)(xi).

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A. Whether the Parties Were Mistaken in Their Belief Regarding a Fact

The first element of the mutual mistake standard requires “the parties to the contract [to

be] mistaken in their belief regarding a fact[.]” Atlas Corp., 895 F.2d at 750. “An erroneous

mutual belief about the contents of a written agreement is sufficient to constitute a ‘mistake’ for

this purpose: reformation is available when the parties, having reached an agreement and having

attempted to reduce it to writing, fail to express it correctly in the writing.” Nat’l Australia Bank

v. United States, 452 F.3d 1321, 1329 (Fed. Cir. 2006) (cleaned up). “Reformation is not a

proper remedy for the enforcement of terms to which the defendant never assented; it is a remedy

the purpose of which is to make a mistaken writing conform to antecedent expressions on which

the parties agreed.” Atlas Corp., 895 F.2d at 750 (quoting 3 Corbin on Contracts § 614 at 723

(1960)).

The government contends reformation of a contract based on mutual mistake is

“extraordinary relief” which “is not legally available under the circumstances of this case,

because TMA considered, and disclaimed at the time of contract formation, any intention to

provide hospitals with a markup for hospital overhead through the [DPP] in the first place.”

Def.’s MSJ at 45–46. The government argues the DPP Contract “stat[ed] unequivocally that

‘[a]ny interpretation [of] the regulation provision that facility charges were to be paid on all

hospital outpatient services in addition to the allowable charge authorized for specified

outpatient services is unsupportable.’” Id. at 53 (quoting DPP Contract Notice at A5). In other

words, the government argues the contract “cannot now be ‘reformed’ to create a contract

obligation that DoD explicitly refused to offer.” Id. The government concludes “[t]here is no

aspect of plaintiffs’ ‘mutual mistake’ that is legally viable, and, as such, the Government is

entitled to summary judgment in its favor.” Id. at 71.

Plaintiffs argue courts “frequently use the power of a court of equity to reform contracts

so that they conform to the intention of the parties.” Pls.’ MSJ Resp. at 45 (quoting Nippon

Hodo Co. v. United States, 160 F. Supp. 501, 502 (Ct. Cl. 1958)) (cleaned up). Plaintiffs assert

“the Parties made a mutual mistake by believing that the Government had reimbursed Plaintiffs

for facility charges for all categories of outpatient reimbursement services.” Id. Plaintiffs argue

“[t]he Government offered to pay hospitals the amounts it owed them, but only for outpatient

radiology services, and only as quantified by the Kennell Study.” Id. at 46 (citing DPP Contract

Letter at A1–A2; DPP Contract Notice at A3–A9). TMA, plaintiffs argue, “affirmatively and

unambiguously represented in the DPP that radiology was the only underpaid outpatient

service.” Id. (citing DPP Contract Notice at A6; DPP Contract FAQs at A12–A13). Further,

plaintiffs claim “the DPP failed to reflect anywhere that facility charges were not factored into

payments,” and “[t]hus, radiology was not the only underpaid outpatient service[.]” Id.

The 1990 Federal Circuit case Atlas Corp. concerned contracts with the government to

produce uranium and offers an analytical framework for determining proper reformation of a

contract. 895 F.2d at 750. Although the Federal Circuit found no mutual mistake in Atlas Corp.,

the court recognized reformation would be appropriate where “the parties recognize the existence

of a fact about which they could negotiate” and “they mutually form a belief concerning that

fact, but their belief is erroneous.” Id. (finding no mutual mistake and so no contract reformation

because “[t]he parties could not have formed a mutually mistaken belief concerning a fact whose

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existence they could not recognize”). In Atlas Corp., the Federal Circuit listed several cases

where courts did permit reformation of contracts. See id. at 751 (citing Sw. Welding & Mfg. Co.

v. United States, 373 F.2d 982, 990 (Ct. Cl. 1967) (the parties mistakenly believed the price of

steel was lower than it actually was); Walsh v. United States, 102 F. Supp. 589 (Ct. Cl. 1952)

(the parties erroneously believed the minimum wage rate was a certain amount, even though it

had increased earlier); Aluminum Co. of Am. v. Essex Grp., Inc., 499 F. Supp. 53 (W.D. Pa.

1980) (the parties erroneously believed the Wholesale Price Index would accurately represent

nonlabor production costs for the purpose of a contractual escalation clause)); see also

Bowen–McLaughlin–York Co. v. United States, 813 F.2d 1221 (Fed. Cir. 1987) (reformation

permitted where the parties erroneously omitted certain price items which existed and could have

been included in the contract). The Court of Claims also reformed a contract in National Presto

Industries, Inc. v. United States where plaintiff contractor entered a contract with the

government, but neither party knew at the time of negotiations the step they had cut to save costs

would end up being necessary. 338 F.2d 99 (Ct. Cl. 1964). The Federal Circuit in Atlas Corp.

discussed National Presto Industries, stating, “Although the parties did not know of the need for

the additional equipment, they clearly recognized that the equipment might be needed. . . .

Therefore, there was a mutual mistake[.]” Atlas Corp., 895 F.2d at 751 (citation omitted) (citing

Nat’l Presto Indus., 338 F.2d at 107).

At oral argument, the parties admitted they are unsure whether the Atlas Corp.

mutual-mistake-of-fact standard requires the parties share the same mistaken belief, although the

government added it has not “seen a case where the actual mistaken belief was not the same.”

Tr. at 135:23–136:21. The government stated, “[A]t a minimum, the parties have to share the

same intention.” Tr. at 136:7–8. Indeed, the first element of a mutual mistake claim requires

“the parties recognize the existence of a fact about which they could negotiate,” and “they

mutually form a belief concerning that fact, but their belief is erroneous.” Atlas Corp., 895 F.2d

at 750. The exemplary mutual mistake cases cited by the Federal Circuit in Atlas Corp. involved

parties sharing the same belief. See e.g., Sw. Welding & Mfg. Co., 373 F.2d at 991; Walsh, 102

F. Supp. at 591; Aluminum Co. of Am., 499 F. Supp. at 69–70. The parties further would have

assented to the deal had they been aware of the truth regarding the fact, and thus, reformation

was a viable option. See Atlas Corp., 895 F.2d at 751 (“Other cases in which courts have

permitted reformation of contracts similarly show that the parties held an erroneous belief

concerning a fact whose existence the parties recognized and about which they could reach

agreement.”).

The Court accordingly must determine whether the parties shared a mistaken belief.

Plaintiffs argue the regulation mandates TMA reimburse facility charges under 32 C.F.R.

§ 199(a)(5)(xi) for all outpatient services, whereas TMA expressly stated in the DPP Contract

“[a]ny interpretation [of] the regulation provision that facility charges were to be paid on all

hospital outpatient services in addition to the allowable charge authorized for specific outpatient

services is unsupportable.” DPP Contract Notice at A5. As the parties’ beliefs on the

interpretation of the regulation are diametrically opposed, the Court does not find the parties

“mutually form[ed] a belief concerning [a] fact[.]” Atlas Corp., 895 F.2d at 750–51; see Nat’l

Australia Bank, 452 F.3d at 1329. Further, as the parties entirely disagreed on the interpretation

of the regulation when they entered the DPP Contract, plaintiffs in this case cannot contend the

parties “reached an agreement[,] . . . attempted to reduce it to writing, [and] fail[ed] to express it

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correctly in the writing.” Nat’l Australia Bank, 452 F.3d at 1329 (internal quotations omitted);

see also Am. President Lines, Ltd. v. United States, 821 F.2d 1571, 1582 (Fed. Cir. 1987) (“The

purpose and function of the reformation of a contract is to make it reflect the true agreement of

the parties on which there was a meeting of the minds.”).

“Reformation is not a proper remedy for the enforcement of terms to which the defendant

never assented; it is a remedy the purpose of which is to make a mistaken writing conform to

antecedent expressions on which the parties agreed.” Atlas Corp., 895 F.2d at 750. The

government, however, never assented to making facility charge payments atop other payments

for outpatient services; the government in fact argues the opposite. Tr. at 143:21–23 (“[THE

GOVERNMENT]: . . . [Plaintiffs] contend, and we disagree, . . . there’s a facility charge

payment due on top of the CMAC.”). The government states, “TMA expressly rejected the

option of offering hospitals an overhead markup on top of the reimbursement amounts[.]” Def.’s

MSJ Reply at 43 (citing DPP Contract Notice at A5). This express rejection in the DPP states,

“[A]ll categories of hospital outpatient services paid in accordance with the specific terms of

199.14(a)(5)(i) through (x) received the correct payment under the TRICARE regulation and are

not entitled to an additional ‘facility charge’ under paragraph (xi).” DPP Contract Notice at A5.

This DPP language expresses TMA’s intention of not paying additional facility charges atop

payments for various outpatient services. Id. Further, when asked at oral argument how the DPP

Contract dealt with facility charges, plaintiffs responded, “[F]acility charge payments were not

offered as part of the DPP.” Tr. at 147:8–11, 147:20–22 (“[PLAINTIFFS]: . . . [T]he DPP

represents that no additional facility charge payment is necessary.”). The government added

“[t]here [are] no documents or government witness testimony to suggest that the government was

mistaken factually about the way that these matters are reimbursed.” Tr. at 165:16–19.

The parties disagree on the interpretation of the statute relative to facility charges such

that the Court cannot hold they had a meeting of the minds on this issue. Compare Pls.’ MSJ

Resp. at 41 (“Section 199.14(a)(5) provides that the Government must reimburse Plaintiffs for

twelve categories of outpatient hospital services, including facility charges.”), with Def.’s MSJ

Reply at 51 (quoting Pls.’ MSJ Resp. at 5, 54–55) (the government rejects plaintiffs’ claim

“TMA admitted . . . the ‘facility charge’ provision of 32 C.F.R. § 199.14(a)(5) was intended to

provide for a markup for hospital overhead on top of reimbursements otherwise paid as described

in the regulation, and is now taking a supposedly contrary ‘convenient litigating position[.]’”).

Without a meeting of the minds, the parties cannot have mutually come to a mistaken belief.

Against the government’s argument TMA “considered and disclaimed . . . any intention

to provide hospitals with a markup for hospital overhead[,]” plaintiffs argue, “the DPP’s central

purpose was to reimburse hospitals for any outpatient category where the hospitals were paid less

than they should have been paid when applying Medicare fair payment principles.” Pls.’ MSJ

Resp. at 49. Plaintiffs emphasize “the Notice states that all categories of hospital outpatient

services paid pursuant to 1991.4(a)(5)(i) [sic] through (x) ‘are not entitled to an additional

“facility charge” under paragraph (xi).’” Id. (quoting DPP Contract Notice at A5). Plaintiffs

argue this “explanation thus suggests that [the government incorrectly believed] facility charges

were already appropriately included in the payments pursuant to the regulation.” Id.

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At oral argument, the government stated the general purpose of the contract was to “bring

closure to any concerns regarding payment of hospital outpatient services under the TRICARE

regulation, prior to the implementation of OPPS.” Tr. at 145:10–14 (quoting DPP Contract

Letter at A1–A2). Plaintiffs contended “the purpose of the DPP was to provide payment to the

hospitals that was consistent with . . . the requirements of the regulation and the statute.” Tr. at

234:10–12. In response to plaintiffs’ appeal to “equity” and the “spirit and purpose” of the DPP

as grounds for reformation, the government argues “plaintiffs misapprehend the spirit and central

purpose of the [DPP,]” which “was to settle definitively outstanding disputes between the parties

that had arisen in connection with the interpretation of 32 C.F.R. § 199.14(a)(5) and a supposed

difference between levels of reimbursement for outpatient services between Medicare and

TRICARE.” Def.’s MSJ Reply at 43. To determine the parties’ intent, the Court looks to the

plain language of “the contract itself.” Greco v. Dep’t of the Army, 852 F.2d 558, 560 (Fed. Cir.

1988); see CITGO Asphalt Refin. Co. v. Frescati Shipping Co., 140 S. Ct. 1081, 1088 (2020)

(“[T]he parties’ intent ‘can be determined from the face of the agreement’ and ‘the language that

they used to memorialize [that] agreement.’”). Plaintiffs’ characterization of the general purpose

of the DPP Contract to argue TMA would have consented to paying facility charges conflicts

with the plain terms of the DPP Contract: “The intent and effect of the regulation provision for

reimbursement of facility charges was to pay all other hospital outpatient services not

specifically listed in the regulation provision with a stated allowable charge methodology based

on billed charges.” DPP Contract Notice at A5. The government was not mistaken in the DPP

regarding whether facility charges needed adjustment because they expressly excluded facility

charges from the scope of consideration. See id.

The remedy for mutual mistake of fact is to reform the contract—in this case, the DPP

Contract. The Court is, however, unable to reform the DPP Contract in a way which does not

“reflect the true agreement of the parties on which there was a meeting of the minds.” Am.

President Lines, Ltd., 821 F.2d at 1582. As the parties did not “mutually form a belief

concerning [a] fact,” and as TMA did not assent to reimbursing plaintiffs’ facility charges as

plaintiffs request, the Court finds plaintiffs’ claim fails the first element of a mutual mistake of

fact claim. 16 Atlas Corp., 895 F.2d at 750; see Nat’l Australia Bank, 452 F.3d at 1329; Am.

President Lines, Ltd., 821 F.2d at 1582. 17 As plaintiffs failed to satisfy the first element of a

mutual mistake claim, the Court accordingly grants the government’s motion for summary

judgment as to plaintiffs’ mutual mistake of fact claim. See Atlas Corp., 895 F.2d at 750 (“A

party seeking to state a claim for reformation of a contract under the doctrine of mutual mistake

must allege four elements[.]”). Although the Court finds plaintiffs failed to satisfy a necessary

16

In dicta in Northern Michigan Hospitals, Inc. v. Health Net Federal Services, LLC, a related case preceding the

present action discussed supra Section I.A, the Third Circuit provided if “the dispute at issue is not a purely legal

one, but rather requires factual determinations[,]” such as applying the TRICARE regulations to the Hospitals’

specific claims for reimbursement, “what is required by the underlying dispute . . . is an application of the

TRICARE regulations to the Hospitals’ specific claims for reimbursement.” 344 F. App’x 731, 737 (3d Cir. 2009).

After the Third Circuit affirmed the dismissal of Northern Michigan Hospitals’ claim, the parties in this case entered

the DPP Contracts instead of pursuing their “implied in fact and breach of quasi-contract/unjust enrichment” claims

in the Third Circuit case. Id. at 735. Further, during oral argument on 9 June 2022, both parties confirmed there are

no disputes of material fact on the issues of TMA’s duties under the contract and whether there was a mutual

mistake of fact. Tr. at 78:11–19.

17

As the Court finds plaintiffs’ claim fails the first element of a mutual mistake of fact claim, the Court need not

consider the parties’ arguments regarding whether TMA’s interpretation of 32 C.F.R. § 199.14(a)(5)(xi) was correct,

including evaluation of the Kisor deference factors.

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element of their mutual mistake of fact claim, the Court nonetheless analyzes the other three

elements in the alternative.

B. Whether the Mistaken Belief Constituted a Basic Assumption Underlying the

Contract

For a mutual mistake of fact claim to succeed, the mistaken belief must have “constituted

a basic assumption underlying the contract[.]” Id. This element presupposes proving a mistake

under element one of the Atlas Corp. analysis. Because the Court finds there was no mistake, no

mistake could have constituted a basic assumption underlying the contract. Plaintiffs’ claim

accordingly fails element two of the Atlas Corp. analysis. Id.; see supra Section V.A.

C. Whether the Mistake had a Material Effect on the Bargain

A party asserting a mutual mistake of fact must show the mistaken belief “had a material

effect on the bargain[.]” Atlas Corp., 895 F.2d at 750. This element is contingent on finding a

mistaken fact per element one of the Atlas Corp. analysis. Because the Court finds there was no

mistake, no mistake could have had a material effect on the bargain. Plaintiffs’ claim

accordingly fails element three of the Atlas Corp. analysis. Id.; see supra Section V.A.

D. Whether Plaintiffs Bore the Risk of Mistake

Element four of the Atlas Corp. analysis requires plaintiffs show “the contract did not put

the risk of the mistake on [them].” Atlas Corp., 895 F.2d at 750. The Court finds there was no

mistake sufficient to satisfy element one of the Atlas Corp. analysis, and thus the Court need not

address Atlas Corp. element four. See id. Assuming in the alternative plaintiffs’ claim “DoD

and Class Members had been parties to a mutual mistake because, contrary to DoD’s

representations in the contract documents, radiology was not the only outpatient service that

TRICARE underpaid” was true, and there was a mutual mistake of fact as to the underpayment

of non-radiology outpatient services, the Court analyzes whether plaintiffs bore the risk of the

mistake. Pls.’ Class Cert. at 15; see Atlas Corp., 895 F.2d at 750.

Restatement (Second) of Contracts Section 154 provides:

A party bears the risk of a mistake when

(a) the risk is allocated to him by agreement of the parties, or

(b) he is aware, at the time the contract is made, that he has only limited

knowledge with respect to the facts to which the mistake relates but treats

his limited knowledge as sufficient, or

(c) the risk is allocated to him by the court on the ground that it is reasonable

in the circumstances to do so.

In Harbor Insurance Co. v. Stokes, the DC Circuit stated “[i]n the comments to § 154(b), the

Restatement reformulates treating ‘limited knowledge as sufficient’ as ‘conscious ignorance[.]’”

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45 F.3d 499, 502 (D.C. Cir. 1995) (citing Restatement (Second) of Contracts § 154 cmt. c. (Am.

L. Inst. 1981)). The Restatement reads:

c. Conscious ignorance. Even though the mistaken party did not agree to bear the

risk, he may have been aware when he made the contract that his knowledge with

respect to the facts to which the mistake relates was limited. If he was not only so

aware that his knowledge was limited but undertook to perform in the face of that

awareness, he bears the risk of the mistake. It is sometimes said in such a situation

that, in a sense, there was not mistake but “conscious ignorance.”

§ 154 cmt. c. Commenting on the scope of “conscious ignorance,” the court stated, “The

Restatement has quite logically set ‘conscious ignorance’ in a section explicitly addressing risk

allocation.” Harbor Ins. Co., 45 F.3d at 502.

The government argues “a party bears the risk of a mistake when [it] is aware, at the time

the contract is made, that it has only limited knowledge with respect to the facts which the

mistake relates but treats that limited knowledge as sufficient.” Def.’s MSJ at 47 (citing

ConocoPhillips v. United States, 501 F.3d 1374, 1380 (Fed. Cir. 2007)). 18 The government

argues “‘[e]very time parties enter into a contract, they act with incomplete information[,]’” and

“[t]herefore, ‘[w]here [the parties] have been explicitly concerned about an issue, but decide to

press forward without further inquiry or explicit provision, it is reasonable to suppose that they

intend the contract to dispose of the risk in question, i.e., to bar any reopening at the behest of the

party who, it turns out, would have done better without the contract.” Id. at 48 (quoting Harbor

Ins. Co., 45 F.3d at 502). As an initial matter for the government’s risk-bearing argument, the

government admits Step 8 of the DPP, which in pertinent part reads, “[t]he response will provide

the calculated discretionary adjusted payment and the calculations from which the adjustment

was derived[,]” applies to “radiology only[,]” so the government argues its “position is that the

imposition of the risk of mistake occurs . . . by operation of law, as a result of [plaintiffs’]

conscious choice to proceed and go forward on the basis of limited knowledge.” DPP Contract

Notice at A9; Tr. at 211:4–23. The government argues because the contract was “consciously

considered,” the resulting contractual relationship is not a mistake, but rather “awareness

of . . . uncertainty[.]” Def.’s MSJ at 48 (quoting Loral Corp. v. United States, 434 F.2d 1328,

1331 (Ct. Cl. 1970)).

To support their contention that they did not bear the risk of errors, plaintiffs cite Metcalf

Construction Co., stating: “In Metcalf Construction Co., the Government made representations

to the plaintiff in its pre-contract requests and questions-and-answers, and the plaintiff later sued

the Government for breach of contract.” Pls.’ MSJ Resp. at 37 (quoting Metcalf Constr. Co. v.

United States, 742 F.3d 984, 996 (Fed. Cir. 2014)).

18

The plaintiffs in ConocoPhillips, discussed supra Section IV.E.2, argued their contracts should be reformed based

on mutual mistake because “when they entered into the contracts they believed that the [Petroleum Marketing

Monthly (‘PMM’)] accurately reflected market prices, and they did not appreciate the way in which the price

changes reported by the PMM could differ from price changes reported by other sources of market information.”

501 F.3d at 1379–80. The contracts were, however “very clear about the price that [would] be paid to the contractor

and how that price [would] be adjusted.” Id. at 1380. The Federal Circuit held “[t]o the extent the plaintiffs thought

that the PMM tracked other market publications more closely than it did . . . it was incumbent upon the plaintiffs to

investigate those issues before entering into the contract.” Id. (citing Restatement (Second) of Contracts § 154(b)).

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The court held that nothing in the contract “expressly or implicitly warned Metcalf

that it could not rely on, and that instead it bore the risk of error in, the government’s

affirmative representations . . . . The natural meaning of the representations was

that, while Metcalf would investigate conditions once the work began, it did not

bear the risk of significant errors in the pre-contract assertions by the

government[.]”

Id. (quoting Metcalf Constr. Co., 742 F.3d at 995–96).

The government asserts plaintiffs incorrectly view “the fact that TMA provided them

with limited information, particularly as to the [Kennell] studies, during the settlement process,

[as] effectively mak[ing] TMA their insurer[.]” Def.’s MSJ at 50. Plaintiffs had other options,

according to the government, but chose to proceed with “conscious ignorance” instead. Id. at

50–51. For example, the government contends plaintiffs could have “avail[ed] themselves of the

FAQ process to obtain additional information[,]” “attempt[ed] to negotiate contract terms that

were more protective of their interests in light of the limited information TMA had provided[,]”

“walk[ed] away from the proposed arrangement entirely,” or resolved to litigate. Id. at 51

(emphasis remo

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