Amicus Curiae Brief — Moda Health Plan, Inc., Petitioner v. United States
Supreme Court briefMar 8, 2019
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No. 18-1028
IN THE
Supreme Court of the United States
___________
MODA HEALTH PLAN, INC.,
Petitioner,
v.
UNITED STATES,
___________
Respondent.
BLUE CROSS AND BLUE SHIELD
OF NORTH CAROLINA,
v.
UNITED STATES,
___________
Petitioner,
Respondent.
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
___________
BRIEF FOR THE CHAMBER OF COMMERCE
OF THE UNITED STATES OF AMERICA AS
AMICUS CURIAE IN SUPPORT OF
PETITIONERS
___________
STEVEN P. LEHOTSKY
MICHAEL B. SCHON
U.S. CHAMBER
LITIGATION CENTER
1615 H Street, N.W.
Washington, D.C. 20062
PAUL J. ZIDLICKY*
JACQUELINE G. COOPER
C. FREDERICK BECKNER III
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, D.C. 20005
(202) 736-8000
pzidlicky@sidley.com
Counsel for Amicus Curiae Chamber of Commerce of
the United States of America
March 8, 2019
* Counsel of Record
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .................................
iii
INTEREST OF AMICUS CURIAE ......................
1
SUMMARY OF ARGUMENT ..............................
2
ARGUMENT .........................................................
4
I. REVIEW IS NECESSARY BECAUSE THE
FEDERAL CIRCUIT’S DECISION UNDERMINES PUBLIC-PRIVATE PARTNERSHIPS IN A WIDE VARIETY OF
AREAS OF CRITICAL IMPORTANCE TO
THE NATIONAL ECONOMY ......................
4
A. Congress Has Encouraged A Wide
Variety Of Efforts By Private Industry
To Implement Important Governmental
Priorities ....................................................
5
B. Critical To Any Public-Private Partnership Is A Need For Certainty And A
Shared Understanding That, Absent A
Clear And Explicit Repeal, Congress Will
Abide By Its Legal Obligations To
Private Parties ..........................................
8
II. REVIEW IS NECESSARY BECAUSE THE
DECISION BELOW CONFLICTS WITH
THIS COURT’S PRECEDENT GOVERNING THE REPEAL OF EXISTING
STATUTORY OBLIGATIONS .....................
11
A. The Decision Below Squarely Presents
Whether The Appropriations Riders At
Issue Retroactively Alter The Government’s Obligations Under Section 1342 ...
11
(i)
ii
TABLE OF CONTENTS—continued
B. The Decision Below Conflicts With This
Court’s Decisions By Concluding That
Congress Reneged On Its Statutory
Obligations To Private Parties Through
Ambiguous Appropriations Riders ...........
CONCLUSION .....................................................
Page
14
21
iii
CASES
TABLE OF AUTHORITIES
Page
Amell v. United States, 384 U.S. 158
(1966) ..........................................................
14
Bruesewitz v. Wyeth, 562 U.S. 223 (2011) ....
7
Can. Life Assurance Co. v. Converium
Ruckversicherung (Deutschland) AG, 335
F.3d 52 (2d Cir. 2003) ................................
8
Duke Power Co. v. Carolina Envtl. Study
Grp., Inc., 438 U.S. 59 (1978) ....................
7
Eastern Enters. v. Apfel, 524 U.S. 498
(1998) .................................................. 19, 20, 21
Edward J. De Bartolo Corp. v. Fla. Gulf
Coast Bldg. & Constr. Trades Council,
485 U.S. 568 (1988) ....................................
20
Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612
(2018) ..........................................................
16
Fernandez-Vargas v. Gonzales, 548 U.S. 30
(2006) ......................................................... 18, 19
Gen. Motors Corp. v. Romein, 503 U.S. 181
(1992) ..........................................................
19
Gonzales v. Oregon, 546 U.S. 243 (2006) ......
16
Landgraf v. USI Film Prods., 511 U.S. 244
(1994) ......................................................... 18, 19
Miller v. French, 530 U.S. 327 (2000) ...........
20
NLRB v. Catholic Bishop of Chi., 440 U.S.
490 (1979) ...................................................
20
NLRB v. Jones & Laughlin Steel Corp., 301
U.S. 1 (1937) ...............................................
20
Posadas v. Nat’l City Bank, 296 U.S. 497
(1936) ............................................ 14, 15, 16, 17
Puerto Rico v. Franklin Cal. Tax-Free Tr.,
136 S. Ct. 1938 (2016) ................................
16
Rodriguez v. United States, 480 U.S. 522
(1987) ..........................................................
14
iv
TABLE OF AUTHORITIES—continued
Page
Salazar v. Ramah Navajo Chapter, 567
U.S. 182 (2012) ...........................................
10
Schneider v. Feinberg, 345 F.3d 135 (2d Cir.
2003) ...........................................................
8
Tenn. Valley Auth. v. Hill, 437 U.S. 153
(1978) ......................................................... 17, 18
United States v. Langston, 118 U.S. 389
(1886) ..........................................................
17
STATUTES
42 U.S.C. §§ 300aa-1 to 300aa-34 .................
§ 2210 ............................................
7
7
RULE
Sup. Ct. R. 10(a) ............................................
14
OTHER AUTHORITIES
1A Norman J. Singer & J.D. Shambie
Singer, Statutes and Statutory Construction § 23.10 (7th ed. 2009) .................
Office of Energy Efficiency & Renewable
Energy, U.S. Dep’t of Energy, Small
Businesses, Big Opportunities: Advancing
Building Energy Efficiency through
Public-Private Collaboration (Oct. 27,
2016),
https://www.energy.gov/eere/
buildings/articles/small-businesses-bigopportunities-advancing-building-energyefficiency .....................................................
14
6
v
TABLE OF AUTHORITIES—continued
Office of Policy & Research, U.S. Dep’t of
Hous. & Urban Dev., The Evolution of
HUD’s Public-Private Partnerships: A
HUD 50th Anniversary Publication
(2015), https://www.huduser.gov/hud50th/
HUD2-048-Public-Private_Partnership_
508.pdf ........................................................
U.S. Chamber of Commerce, Modernizing
America’s Infrastructure Requires PublicPrivate Partnerships (Jan. 17, 2018),
https://www.uschamber.com/issue-brief/
modernizing-americas-infrastructurerequires-public-private-partnerships ........
U.S. Dep’t of Homeland Sec., NIPP 2013:
Partnering for Critical Infrastructure
Security and Resilience (2013), https://
www.dhs.gov/sites/default/files/publications/
national-infrastructure-protection-plan2013-508.pdf ...............................................
Page
5
6
6
INTEREST OF AMICUS CURIAE1
The Chamber of Commerce of the United States of
America (the “Chamber”) is the world’s largest
business federation. It represents 300,000 direct
members and indirectly represents the interests of
more than three million businesses and professional
organizations of every size, in every economic sector,
and from every region of the country. An important
function of the Chamber is to represent the interests
of its members in matters before Congress, the
Executive Branch, and the courts. To that end, the
Chamber regularly files amicus curiae briefs in cases
that raise issues of concern to the nation’s business
community.
This case is significant to the Chamber because
many of its members do business and partner with
the federal government in a variety of critical areas.
These dealings are often conducted pursuant to
federal statutes that include financial incentives,
risk-sharing arrangements, liability limitations and
other provisions that Congress implemented to
induce the private sector to participate in the federal
program. Such statutory commitments can only be
effective, however, if the federal government honors
its obligations to the business community and
conducts itself as a reliable business partner.
1 After timely notification pursuant to Supreme Court Rule
37.2(a), the parties consented to the filing of this brief. In
accordance with Supreme Court Rule 37.6, amicus states that
no counsel for any party authored this brief in whole or in part,
and no person or entity other than amicus, its members, or its
counsel made a monetary contribution to fund its preparation or
submission.
2
By holding that the appropriations riders at issue
repealed the government’s undisputed statutory
obligations—despite the absence of any clear
statement to that effect in the riders—the decision
below frustrates the legitimate expectations of and
creates profound uncertainty for companies that do
business and partner with the federal government. If
allowed to stand, the decision will chill the business
community from working with the federal
government in the future, and make it more difficult
and expensive for the federal government to
accomplish important policy objectives. For all of
these reasons, the Chamber has substantial interests
in the Court’s review of the decision below.
SUMMARY OF ARGUMENT
The Federal Circuit concluded that Congress had
designed a system to encourage private participation
in Affordable Care Act (“ACA”) health exchanges by
agreeing to mitigate the risks faced by private
insurers. But the court below then concluded that,
after insurers began participating in ACA health
exchanges, Congress in subsequent appropriations
bills pulled the rug out from under them by relieving
the government of any obligation to share risk with
its private partners.
I. Review is warranted because the decision
below, if left uncorrected, would have far-reaching
consequences for myriad areas in which U.S.
businesses partner with the federal government to
provide vital goods and services. In addition to the
health insurance context, public-private partnerships
serve essential roles in areas as diverse as public
housing, infrastructure development, public health,
transportation and nuclear energy. Congress often
obtains the cooperation of private industry through
3
financial incentives, risk-sharing arrangements,
technical
assistance,
and
other
provisions.
Businesses invest substantial financial and other
resources to participate in federal programs, and
their willingness to do so is based on having
assurance that the government will honor its
statutory commitments.
If the Federal Circuit’s view prevails and vague
appropriations language can be read as excusing the
government from abiding by its commitments, then
this precedent will discourage and harm those who do
business with the government. At a minimum, the
government will incur greater costs and risks in
running existing public-private partnerships and in
pursuing new partnerships.
II. Review is also warranted because the decision
below cannot be reconciled with this Court’s
precedent establishing the standards that govern
whether Congress has repealed, by implication, an
existing statutory obligation to private parties. The
Federal Circuit’s ruling is contrary to this Court’s
decisions holding that implied repeals of statutory
obligations are disfavored and must be clear and
manifest. The conflict is all the more stark because,
according to the Federal Circuit, Congress
implemented
the
implied
repeal
through
appropriations riders even though (i) such riders
presumptively do not affect Congress’ existing
statutory obligations; (ii) such a repeal violates the
presumption against retroactive legislation; and (iii)
the Federal Circuit’s construction raises substantial
constitutional doubts under the Due Process Clause
and Takings Clause.
The Petition should be granted.
4
ARGUMENT
I. REVIEW IS NECESSARY BECAUSE THE
FEDERAL CIRCUIT’S DECISION UNDERMINES PUBLIC-PRIVATE PARTNERSHIPS
IN A WIDE VARIETY OF AREAS OF
CRITICAL
IMPORTANCE
TO
THE
NATIONAL ECONOMY.
Although this case involves the ACA and the health
care industry, the Federal Circuit’s decision—if
allowed
to
stand—will
have
far-reaching
consequences for myriad areas in which U.S.
businesses partner with the federal government to
provide vital goods and services. In addition to the
health insurance context, public-private partnerships
serve essential roles in areas as diverse as public
housing, infrastructure development, public health,
transportation and nuclear energy.
In all of these fields, businesses invest substantial
financial and other resources to participate in federal
programs. Congress often induces the cooperation of
private industry through direct and indirect financial
incentives, risk-sharing and risk-mitigation measures
(such as indemnification and liability limitations),
technical assistance, and other provisions. Private
entities rely on the federal government’s statutory
commitments when deciding whether to participate.
If the government can be deemed to renege on those
commitments through ambiguous language tucked
inside appropriations riders, as the Federal Circuit
concluded it did with respect to the ACA’s risk
corridors program, then that ruling jeopardizes the
future of public-private partnerships and the benefits
that they provide to both the government and the
private sector.
5
For these reasons, the issues presented by the
petition affect numerous members of private industry
beyond those before the Court. The petition also
broadly affects the public interest because the legal
uncertainty created by the decision below will
jeopardize the ability of the federal government to
find willing partners in the business community. At
a minimum, that uncertainty will increase the
government’s costs of entering into public-private
partnerships.
A. Congress
Has
Encouraged
A
Wide
Variety Of Efforts By Private Industry
To Implement Important Governmental
Priorities.
Private sector businesses are deeply involved in
implementing federal programs of all types. The U.S.
Department of Housing and Urban Development
(“HUD”), for example, has stated that “most HUD
programs
are
structurally
public-private
partnerships” or “have some public-private aspects.”2
HUD has favored public-private partnerships because
they “enable government to share risks with the
private sector, leverage investments for far greater
effect, take advantage of efficiencies outside
government, and employ broader knowledge and
skills.” Id. at 2.
2 Office of Policy & Research, U.S. Dep’t of Hous. & Urban
Dev., The Evolution of HUD’s Public-Private Partnerships: A
HUD 50th Anniversary Publication, at 1 (2015), https://www.
huduser.gov/hud50th/HUD2-048-Public-Private_Partnership_
508.pdf (citing as examples “[t]he nation’s foremost low-income
tenant assistance subsidy,” community development block
grants, and the Federal Housing Administration’s single-family
home mortgage insurance program).
6
Infrastructure and energy development are other
areas that utilize public-private partnerships to
achieve key federal objectives. The Department of
Homeland
Security’s
National
Infrastructure
Protection Plan (“NIPP”), for example, states that
“[v]oluntary collaboration between private sector
owners and operators . . . and their government
counterparts has been and will remain the primary
mechanism for advancing collective action toward
national critical infrastructure security and
resilience.”3 The Department of Energy also has used
public-private partnerships to spur innovation and
the development of new energy sources.4
As with the ACA, federal statutes that create
public-private partnerships often include incentives
and protections for private industry to induce its
participation. Congress, for example, enacted the
National Child Vaccine Injury Act of 1986 (“Vaccine
3 U.S.
Dep’t of Homeland Sec., NIPP 2013: Partnering for
Critical Infrastructure Security and Resilience, at 10 (2013),
https://www.dhs.gov/sites/default/files/publications/nationalinfrastructure-protection-plan-2013-508.pdf.
The
Chamber
believes that the use of public-private partnerships is essential
to modernizing America’s infrastructure. See U.S. Chamber of
Commerce, Modernizing America’s Infrastructure Requires
Public-Private Partnerships (Jan. 17, 2018), available at
https://www.uschamber.com/issue-brief/modernizing-americasinfrastructure-requires-public-private-partnerships
(urging
Congress to expand existing federal loan programs, create new
loan and loan guarantee programs, make discretionary grants,
and remove barriers to public-private partnerships to modernize
the nation’s airports, ports, rail systems, dams, and waterways).
4 See Office of Energy Efficiency & Renewable Energy, U.S.
Dep’t of Energy, Small Businesses, Big Opportunities:
Advancing Building Energy Efficiency through Public-Private
Collaboration (Oct. 27, 2016), https://www.energy.gov/eere/
buildings/articles/small-businesses-big-opportunities-advancingbuilding-energy-efficiency.
7
Act”), 42 U.S.C. §§ 300aa-1 to 300aa-34, to “stabilize
the vaccine market,” which many manufacturers had
exited due to the high costs of tort liability for vaccine
injuries. Bruesewitz v. Wyeth, 562 U.S. 223, 228
(2011).
The Vaccine Act incented vaccine
manufacturers to re-enter the market by creating a
no-fault compensation scheme.
This scheme is
funded by industry contributions, but provides a
valuable “quid pro quo” to manufacturers because
they are “generally immunized from liability” for tort
claims. Id. at 229. This Court in Wyeth recognized
the importance of this “structural quid pro quo,”
when it construed the Vaccine Act as preempting
state-law design defect claims. Id. at 239. The Court
reasoned that Congress “would hardly coax
manufacturers back into the market” if it had
preserved their liability for design defects. Id. at 240.
The Atomic Energy Act similarly includes
provisions that limit liability for accidents resulting
from the operation of private nuclear power plants.
See 42 U.S.C. § 2210. Congress designed these
liability caps to “encourage[] the private sector to
become involved in the development of atomic energy
for peaceful purposes.” Duke Power Co. v. Carolina
Envtl. Study Grp., Inc., 438 U.S. 59, 63 (1978). This
Court rejected due process and equal protection
challenges to the liability limitations extended to
nuclear power plant operators, finding that the
record “fully support[ed] the need for the imposition
of a statutory limit on liability to encourage private
industry participation” in the production of nuclear
energy. Id. at 84.
The government’s partnership with industry
sometimes takes the form of direct financial support
to ensure that private companies can provide vital
services. For example, in the aftermath of the
8
September 11, 2001 terrorist attacks, Congress
enacted the Air Transportation Safety and System
Stabilization Act “to preserve the continued viability
of the United States air transportation system from
potentially ruinous tort liability in the wake of the
attacks.” Schneider v. Feinberg, 345 F.3d 135, 139
(2d Cir. 2003) (per curiam). The legislation included
“financial and tax relief to the airline industry,
including federal support for airline insurance.” Can.
Life Assurance Co. v. Converium Ruckversicherung
(Deutschland) AG, 335 F.3d 52, 55 (2d Cir. 2003). It
also capped the tort liability of air carriers and
created a victim compensation fund, which conditions
claimants’ recovery upon waiver of the right to file
court actions. Schneider, 345 F.3d at 139.
Regardless of the precise forms such programs
take,
the
federal
government’s
statutory
commitments are a necessary precondition to the
participation and cooperation of private businesses
and, therefore, a critical component of the success of
these programs.
B. Critical To Any Public-Private Partnership
Is A Need For Certainty And A Shared
Understanding That, Absent A Clear And
Explicit Repeal, Congress Will Abide By Its
Legal Obligations To Private Parties.
Businesses that partner with the federal
government make substantial investments of money,
time, and resources to comply with Congressional
mandates and regulatory requirements. Given the
need for these investments, it is crucial that
businesses have certainty that the government will
honor its statutory obligations. Absent reasonable
certainty that Congress will maintain the incentives
for participation, potential participants will be far
less willing to put significant investments at risk,
9
particularly when faced with novel market
conditions, such as those that existed when the ACA’s
health insurance exchanges were first launched.
In order for private industry confidently to rely
upon Congress’ statutory commitments, Congress
must adhere to them unless and until it implements
changes through clear and express statements that
apply prospectively.
These policy considerations
underlie the principles that this Court has adopted
disfavoring repeals by implication, retroactive
legislation, and statutory constructions that raise
serious constitutional questions. See Part II, infra.
Those principles ensure that private parties will
continue to participate in federal programs because
they understand the ground rules up front.
The Federal Circuit’s decision, in contrast,
threatens to destroy the trust necessary for publicprivate partnerships to work. By permitting implied
repeal based upon ambiguous language in
appropriations riders, the Federal Circuit has
substantially increased the risks of participation in
federal programs.
Entities considering such
participation will understand they face a significant
risk that their investment-backed expectations can be
easily undone. Indeed, the large losses incurred by
health insurers as well as the many health
cooperatives that went out of business due to the lack
of promised risk corridor payments, see Pet. App. 84,
stand as a cautionary tale to all businesses that are
considering
participation
in
public-private
partnerships.
As Judge Newman cogently stated in her dissent
from the denial of en banc review, “[t]his is a question
of the integrity of government.” Pet. App. 67. The
government cannot demand that its private sector
partners “turn square corners,” yet treat that
10
obligation as “a one-way street.” Id. (quoting Fed.
Crop Ins. Corp. v. Merrill, 332 U.S. 380, 387-88
(1947) (Jackson, J., dissenting)). Companies that
suffer losses due to broken government promises will
cease doing business with the government altogether.
At the end of the day, “[t]he government’s access to
private sector products and services is undermined if
non-payment is readily achieved after performance by
the private sector.” Id. at 68.
In a related context, this Court has similarly
recognized that if the federal government does not act
as “‘a reliable contracting partner’” that adheres to its
commitments, then “contracting would become more
cumbersome and expensive for the Government, and
willing partners more scarce.” Salazar v. Ramah
Navajo Chapter, 567 U.S. 182, 191-92 (2012) (quoting
United States v. Winstar Corp., 518 U.S. 839, 883
(1996) (plurality opinion)). In particular, “[i]f the
Government could be trusted to fulfill its promise to
pay only when more pressing fiscal needs did not
arise, would-be contractors would bargain warily—if
at all—and only at a premium large enough to
account for the risk of nonpayment.” Id.
Accordingly, if the decision below is allowed to
stand, the government will be required to expend
greater resources than necessary to partner with
private industry. The government will incur greater
costs and risks of running existing public-private
partnerships, and of pursuing new partnerships in
the future.
11
II. REVIEW IS NECESSARY BECAUSE THE
DECISION BELOW CONFLICTS WITH
THIS COURT’S PRECEDENT GOVERNING
THE REPEAL OF EXISTING STATUTORY
OBLIGATIONS.
Review is doubly warranted because the decision
below squarely presents the question whether
Congress intended the appropriations riders to
retroactively renege on statutory promises that the
government employed to induce private participation
in the ACA’s health exchanges. As to that question,
the Federal Circuit’s decision conflicts with this
Court’s precedent establishing the standards for
assessing whether Congress has repealed an existing
statutory obligation. The Federal Circuit’s decision
undermines this Court’s cases disfavoring implied
repeals, especially when they take the form of
appropriations measures, operate retroactively to
upset reasonable reliance interests, and call into
question the constitutionality of government action
under the Due Process and Takings Clauses.
A. The Decision Below Squarely Presents
Whether The Appropriations Riders At
Issue Retroactively Alter The Government’s
Obligations Under Section 1342.
None of the judges below disputed that the “plain
language of section 1342 created an obligation of the
government to pay participants in the health benefit
exchanges the full amount indicated by the statutory
formula for payments out under the risk corridors
program.” Pet. App. 20. Through this statutory
language, Congress induced private insurers to
participate in the ACA by granting them a statutory
right to payments that would reduce the risks that
insurance premiums would be inadequate to cover
their allowable costs. Through its “risk corridors
12
program,” codified in Section 1342, Congress
unequivocally provided that if a plan’s “allowable
costs for any plan year” were “more than 103 percent
but not more than 108 percent of the target amount,”
then “the Secretary shall pay the plan an amount
equal to 50 percent of the target amount in excess of
103 percent of the target amount.” Pet. App. 3
(emphasis added) (quoting section 1342(b)(1)(A)).
Further, the Secretary “shall pay” “80 percent of
allowable costs in excess of 108 percent of the target
amount.” Id. at 4 (emphasis added) (quoting Section
1342(b)(1)(B)).
Put simply, Section 1342 directed “the Secretary of
HHS to establish a program whereby participating
plans whose costs of providing coverage exceeded the
premiums received (as determined by a statutory
formula) would be paid a share of their excess costs
by the Secretary—‘payments out.’” Pet. App. 5. In
turn, “plans whose premiums exceeded their costs
(according to the same formula) would pay a share of
their profits to the Secretary—‘payments in.’” Id.5
The risk corridors program thereby “permit[ted]
issuers to lower [premiums] by not adding a risk
premium to account for perceived uncertainties in the
2014 through 2016 markets.” Id. at 5-6 (quoting
HHS Notice of Benefit and Payment Parameters for
2014, 78 Fed. Reg. 15,410, 15,413 (Mar. 11, 2013)).
5 If a plan’s “allowable costs” for any “plan year” were less
than 97 percent of the target amount, then the Plan would be
required to pay to the Secretary a portion of the difference
between the target amount and the allowable costs (50 percent
where allowable costs were between 92 and 97 percent of the
allowable amount and 80 percent “of the excess of 92 percent of
the target amount over the allowable costs”). Pet. App. 4
(quoting section 1342(b)(2)(B)).
13
The government further induced reasonable
reliance on the part of private industry through
official pronouncements by HHS. In March 2013,
HHS published parameters for payments for the first
year of the exchanges under the risk corridors
program, Pet. App. 7, and explained that “‘the risk
corridors program is not required to be budget
neutral,’ so HHS would make full payments ‘as
required under Section 1342.’” Id. (quoting 78 Fed.
Reg. at 15,473). In November 2013, after insurers
had set premiums to be used on the exchanges in
2014, “HHS announced a one-year transitional policy
that allowed insurers to continue to offer plans that
did not comply with certain of ACA’s reforms.” Id. at
8.
Although the transitional policy “dampened”
enrollment, and thereby left “insurers participating
in the exchanges to bear greater risk,” id., HHS
assured insurers that “the risk corridor program
should help ameliorate unanticipated changes in
premium revenue,” id. at 9.
HHS extended the transitional period “to last the
duration of the risk corridor program,” Pet. App. 9,
and informed insurers that it would adjust its
operation of the risk corridor program to “offset losses
that might occur under the transitional policy as a
result of increased claims costs not accounted for
when setting 2014 premiums,” id. (quoting HHS
Notice of Benefit and Payment Parameters for 2015,
79 Fed. Reg. 13,744, 13,786 (Mar. 11, 2014)).6
6 In April 2014, the division of HHS responsible for
administering the risk corridors program released guidance
providing that “if risk corridors collections are insufficient to
make risk corridors payments for a year, all risk corridors
payments for that year will be reduced pro rata to the extent of
any shortfall.” Pet. App. 10. Even so, participants were assured
that “[r]isk corridors collections received for the next year will
14
In sum, Section 1342 unambiguously required the
government to make risk corridor payments to
participating insurers pursuant to the statutory
formula without regard to whether the balance of
payments in and out under the risk corridor program
was budget neutral. Pet. App. 17-18.
B. The Decision Below Conflicts With This
Court’s Decisions By Concluding That
Congress Reneged On Its Statutory
Obligations To Private Parties Through
Ambiguous Appropriations Riders.
The Federal Circuit’s determination that Congress
repealed its statutory obligation to make risk corridor
payments is irreconcilable with this Court’s
precedent. See Sup. Ct. R. 10(a).
1. The decision below conflicts with longestablished law that (i) “repeals by implication are
not favored,” Rodriguez v. United States, 480 U.S.
522, 524 (1987) (per curiam), and (ii) a party
advocating such a repeal “bears a heavy burden of
persuasion,” Amell v. United States, 384 U.S. 158,
165 (1966).7 The decision in Posadas v. National City
Bank, 296 U.S. 497, 503 (1936), is instructive. There,
this Court considered the legality of taxes imposed by
the Philippine Government on bank branches
established by the National City Bank in the
Philippine Islands under Section 25 of the Federal
Reserve Act of 1913 (“Section 25”). Id. at 498-99.
first be used to pay off the payment reductions issuers
experienced in the previous year in a proportional manner.” Id.
7 See also 1A Norman J. Singer & J.D. Shambie Singer,
Statutes and Statutory Construction § 23.10, at 475-76 (7th ed.
2009) (the presumption against implied repeals is designed “to
give harmonious effect to all acts on a subject where reasonably
possible”).
15
Section 25 authorized the establishment of branches
“in foreign countries or dependencies of the United
States.” Id. at 500. The Court explained that
“without regard to later legislation,” the taxes
“imposed by the Philippine Government [were]
invalid” under Section 25 of the 1913 Act. Id.
Posadas, however, alleged that “subsequent
legislation ha[d] the effect of repealing and
abrogating Section 25 of the 1913 Act.” Id. at 501.
In rejecting the argument that Section 25 had been
implicitly repealed by an amendment to that same
section in the later Act, the Posadas Court relied
upon the “cardinal rule . . . that repeals by
implication are not favored,” id. at 503, and “[w]here
the powers or directions under several acts are such
as may well subsist together, an implication of repeal
cannot be allowed,” id. at 504. Accordingly, this
Court explained that repeals must be “clear and
manifest,” and the “implication” of repeal “must be a
necessary implication.”
Id. (emphasis added).
Applying those demanding standards, the Court held
that “nothing” “justifie[d] the conclusion that by the
amendment of 1916[,] Congress intended to repeal
the old section 25 of the Federal Reserve Act.” Id. at
505.
Here, the appropriations
December 16, 2014 stated:
rider
adopted
on
None of the funds made available by this Act
from the Federal Hospital Insurance Trust Fund
or the Federal Supplemental Medical Insurance
Trust Fund, or transferred from other accounts
funded by this Act to the “Centers for Medicare
and Medicaid Services—Program Management”
account, may be used for payments under section
1342(b)(1) of [the ACA] (relating to risk
corridors).
16
Pet. App. 12 (quoting Consolidated and Further
Continuing Appropriations Act, 2015, Pub. L. No.
113-235, § 227, 128 Stat. 2130, 2491 (2014) (emphasis
added)). Congress adopted “identical riders in FY
2016 and FY 2017.” Id. at 13.
By their terms, these appropriations riders restrict
the use of funds “for payments under section
1342(b)(1)” only from specific identified sources from
“this Act.” The riders do not purport to repeal
(expressly or impliedly) the obligation of the
Secretary to make the mandatory risk corridor
payments pursuant to the formula in Section 1342.
Nor do the riders alter the mandatory nature of
Congress’ obligation by making risk corridor
payments contingent on budget neutrality within the
scope of Section 1342.
Even if the appropriation riders plausibly could be
read to repeal the government’s obligation to make
risk corridor payments (as opposed merely to
restricting how funds made available by “this Act”
could be used), Congress hardly made such intent
“clear and manifest.” Indeed, had Congress intended
to strike a fundamentally different bargain than the
one set forth in Section 1342, this Court’s cases
require that it “say so” in the text of the statute.
Puerto Rico v. Franklin Cal. Tax-Free Tr., 136 S. Ct.
1938, 1953 (2016). Congress does not “alter the
fundamental details of a regulatory scheme in vague
terms or ancillary provisions.” Gonzales v. Oregon,
546 U.S. 243, 267 (2006) (quoting Whitman v. Am.
Trucking Ass’ns, 531 U.S. 457, 468 (2001)); see also
Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1627 (2018)
(same). And, the “vague” and “ancillary language” of
the appropriations riders cannot overcome the
“cardinal rule . . . that repeals by implication are not
favored,” Posadas, 296 U.S. at 503, or satisfy this
17
Court’s requirement of “clear and manifest” language
making the “implication” of repeal a “necessary” one,
id. at 504.
2. The Federal Circuit’s decision also conflicts
with this Court’s precedent confirming that
appropriations riders are a particularly inapt
mechanism for Congress to repeal substantive
statutory obligations.
Specifically, the “doctrine
disfavoring repeals by implication . . . applies with
even greater force when the claimed repeal rests
solely on an Appropriations Act.” Tenn. Valley Auth.
v. Hill, 437 U.S. 153, 190 (1978).8 In Hill, after
acknowledging that “both substantive enactments
and appropriations measures are ‘Acts of Congress,’”
this Court held that “the latter have the limited and
specific purpose of providing funds for authorized
programs,” id., and adopted a presumption that
appropriations measures do not repeal existing law
because otherwise “every appropriations measure
would be pregnant with prospects of altering
substantive legislation,” id.
Here, the lower court ignored Hill and its command
that the presumption against “repeals by implication”
applies “with even greater force when the claimed
repeal rests solely on an Appropriations Act.” Id. at
190.
Indeed, the Hill Court highlighted that
Congress’ operating rules dictate that appropriations
bills may not change existing law. Id. at 190-91
8 See also United States v. Langston, 118 U.S. 389, 394 (1886)
(holding that “a statute fixing the annual salary of a public
officer at a named sum, without limitation as to time, should not
be deemed abrogated or suspended by subsequent enactments”
when those enactments “merely appropriated a less amount for
the services of that officer for particular fiscal years, and which
contained no words that expressly or by clear implication
modified or repealed the previous law”).
18
(citing House Rule XXI(2); Rule 16.4 of the Standing
Rules of the Senate). As explained below in Judge
Newman’s dissenting opinion, “burying a repeal in a
standard appropriations bill would provide clever
legislators with an end-run around the substantive
debates that a repeal might precipitate.” Pet. App.
47.
Further, the Federal Circuit relied heavily upon an
explanatory statement by the House Appropriations
Chairman as the basis for its conclusion that
Congress intended to modify the government’s
obligations under Section 1342. Pet. App. 26 (citing
160 Cong. Rec. H9838 (daily ed. Dec. 11, 2014)).
Under Hill, however, the presumption against
implied repeals via appropriations measures applies
all the more to mere statements by Appropriations
Committees or their members. That is because
“[e]xpressions of committees dealing with requests for
appropriations cannot be equated with statutes
enacted by Congress.” Hill, 437 U.S. at 191 (rejecting
argument that “Congress as a whole was aware” of
appropriations committee’s statements “dealing with
requests for appropriations”).
3. In addition, the Federal Circuit’s decision
ignores that “deeply rooted in our jurisprudence” is
“the presumption against retroactive legislation.”
Landgraf v. USI Film Prods., 511 U.S. 244, 265
(1994). A retroactive statute is defined as one
“tak[ing] away or impair[ing] vested rights acquired
under existing laws . . . in respect to transactions or
considerations already past.” Fernandez-Vargas v.
Gonzales, 548 U.S. 30, 37 (2006) (alterations in
original). “Elementary considerations of fairness
dictate that individuals should have an opportunity
to know what the law is and to conform their conduct
accordingly; settled expectations should not be lightly
19
disrupted.” Landgraf, 511 U.S. at 265. As a result,
“a statute shall not be given retroactive effect unless
such construction is required by explicit language or
necessary implication.” Fernandez-Vargas, 548 U.S.
at 37.
Further,
“[r]etroactive
legislation
presents
problems of unfairness that are more serious than
those posed by prospective legislation, because it can
deprive citizens of legitimate expectations and upset
settled transactions.” Gen. Motors Corp. v. Romein,
503 U.S. 181, 191 (1992).
Accordingly, “[b]oth
stability of investment and confidence in the
constitutional system . . . are secured by due process
restrictions against severe retroactive legislation.” E.
Enters. v. Apfel, 524 U.S. 498, 549 (1998) (Kennedy,
J., concurring in judgment); see id. at 537 (plurality
opinion) (retroactive nature of legislation supported
plurality’s determination that it effected an
unconstitutional taking).
Here, the appropriations riders at issue operate
retroactively because Congress’ creation of the risk
corridor program induced reliance by the insurance
industry before Congress enacted the appropriations
riders. Pet. App. 57 (Newman, J., dissenting).
Accordingly, they are presumed not to repeal
Congress’ statutory obligations under the risk
corridors program “unless that construction is
required by explicit language or by necessary
implication.” Fernandez-Vargas, 548 U.S. at 37. As
discussed above, the language of the appropriations
riders does not remotely satisfy this high standard.
4. Finally, the decision below conflicts with this
Court’s cases requiring that congressional action be
interpreted, where reasonably possible, to avoid
serious constitutional questions. See Pet. 17, 23. The
“cardinal principle of statutory construction is to save
20
and not to destroy,” and therefore this Court has held
that “as between two possible interpretations of a
statute, by one of which it would be unconstitutional
and by the other valid, our plain duty is to adopt that
which will save the act.” NLRB v. Jones & Laughlin
Steel Corp., 301 U.S. 1, 30 (1937) (“Even to avoid a
serious doubt the rule is the same”). Indeed, “where
an otherwise acceptable construction of a statute
would raise serious constitutional problems, the Court
will construe the statute to avoid such problems
unless such construction is plainly contrary to the
intent of Congress.” Edward J. De Bartolo Corp. v.
Fla. Gulf Coast Bldg. & Trades Council, 485 U.S.
568, 575 (1988) (emphasis added) (citing cases);
accord NLRB v. Catholic Bishop of Chi., 440 U.S. 490,
499-501 (1979). “This approach not only reflects the
prudential concern that constitutional issues not be
needlessly confronted, but also recognizes that
Congress . . . is bound by and swears an oath to
uphold the Constitution” and thus courts will not
lightly assume that “Congress intended to infringe
constitutionally protected liberties or usurp power
constitutionally forbidden it.” Edward J. De Bartolo
Corp., 485 U.S. at 575; see also Miller v. French, 530
U.S. 327, 336 (2000) (“constitutionally doubtful
constructions should be avoided where ‘fairly
possible’”) (quoting Commc’ns Workers v. Beck, 487
U.S. 735, 762 (1988)).
Here, the Federal Circuit ignored this canon of
constitutional avoidance. It did so even though its
construction of the appropriations riders to repeal
statutory promises that induced participation by
private insurance carriers raises serious questions
under the Due Process Clause and the Takings
Clause. See, e.g., Apfel, 524 U.S. at 549 (Kennedy, J.,
concurring in judgment) (concluding that retroactive
21
imposition of liability violated the Takings Clause);
see id. at 537 (plurality opinion) (retroactive nature
of legislation supported that it violated the Takings
Clause). Construing the appropriations riders to
allow Congress to disavow the government’s
responsibility to pay private insurers $12.3 billion
under the risk corridors program conflicts with the
Court’s cases mandating that courts construe
congressional statutes to avoid serious constitutional
questions.
CONCLUSION
For these reasons, the Court should grant the
petition for a writ of certiorari.
Respectfully submitted,
STEVEN P. LEHOTSKY
MICHAEL B. SCHON
U.S. CHAMBER
LITIGATION CENTER
1615 H Street, N.W.
Washington, D.C. 20062
PAUL J. ZIDLICKY*
JACQUELINE G. COOPER
C. FREDERICK BECKNER III
SIDLEY AUSTIN LLP
1501 K Street, N.W.
Washington, D.C. 20005
(202) 736-8000
pzidlicky@sidley.com
Counsel for Amicus Curiae Chamber of Commerce of
the United States of America
March 8, 2019
*Counsel of Record
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.