[00:00:05] Speaker 06:
Okay, we've consolidated for argument the first two cases, number 19-1290 and number 19-1699, Sanford Health Plan versus United States and Community Health Choice versus United States.

[00:00:23] Speaker 06:
I think we have questions about the finality of the judgment in the

[00:00:30] Speaker 06:
community health choice and main cases.

[00:00:33] Speaker 06:
And before we start the clock on the merits, we would like to get the party's views on whether we do have a final judgment over which we have jurisdiction.

[00:00:49] Speaker 06:
So would the government please address that in the community health choice case?

[00:00:56] Speaker 06:
There's this

[00:00:58] Speaker 06:
Joint Status Report, which is the order approved by the Court of Federal Claims, which appears to have the government reserving liability and damages arguments.

[00:01:14] Speaker 06:
And in particular, the question of whether there should be a reduction because of the tax credits.

[00:01:20] Speaker 01:
So Your Honor, that was an argument that the Chief Judge rejected in the opinion.

[00:01:27] Speaker 01:
And we were just preserving it for appeal, just for clarity.

[00:01:31] Speaker 06:
It doesn't sound like that.

[00:01:34] Speaker 01:
I mean, I think this is the shared understanding of the parties, Your Honor, is that we made these arguments in our briefing to the trial court, and they were rejected.

[00:01:46] Speaker 01:
And we were just making clear that by stipulating to the quantum

[00:01:50] Speaker 01:
of cost sharing reductions that would have been owed, we were not in any way forfeiting our ability to argue on appeal that the quantum should be reduced.

[00:02:00] Speaker 06:
But when she rejected the argument, it sounded as though she rejected and said it hadn't been properly raised.

[00:02:08] Speaker 01:
No, I think that the reasoning of the opinion, as understood by all the parties, was we weren't being given another opportunity to raise it.

[00:02:17] Speaker 01:
It was anticipatorily rejected.

[00:02:19] Speaker 01:
both as a matter of liability and as a matter of damages.

[00:02:21] Speaker 01:
We do not see it open from the trial court's perspective to make that argument absence of reversal.

[00:02:29] Speaker 04:
Did you brief the issue of the premium increases set aside or set off as a matter of damages?

[00:02:38] Speaker 04:
Judge Sweeney seems to say, well, that was really only in the context of saying why there isn't a cause of action, liability.

[00:02:45] Speaker 01:
We briefed it in trial court.

[00:02:47] Speaker 01:
as a cause of action issue, but we understood the opinion not to leave room to renew before the trial court the argument in the context of damages.

[00:02:58] Speaker 06:
Yes, but was that because you didn't properly raise the issue or that the trial court was rejecting it on the merits?

[00:03:04] Speaker 01:
We took it as being rejected by the reasoning of the opinion.

[00:03:07] Speaker 06:
On the merits?

[00:03:08] Speaker 01:
On the merits.

[00:03:09] Speaker 01:
Rejected on the merits, yes.

[00:03:12] Speaker 06:
Okay, is that the understanding, is it Mr. Wolff or Mr. Roberts?

[00:03:19] Speaker 02:
I'm bill Roberts for community health choice and our understanding is it is a final judgment that if affirmed would immediately Become payable And so we do not believe there is anything further for the trial court to do unless this court were to remand And do you understand the court of federal claims to have rejected the damages argument on the merits or because it wasn't properly raised?

[00:03:47] Speaker 02:
I would say on the merits, Your Honor, there was no dispute or discussion about whether the argument had been raised.

[00:03:54] Speaker 02:
I think, and I don't want to wade into the substance of the argument today, but I believe that Judge Sweeney viewed the issue as the same, regardless of whether the government was arguing for a complete dismissal or a partial reduction.

[00:04:09] Speaker 02:
I think she viewed the issue to be essentially the same.

[00:04:13] Speaker 06:
And what about the same is true of the main case?

[00:04:18] Speaker 06:
Well, let's hear from the government first.

[00:04:20] Speaker 01:
Oh.

[00:04:23] Speaker 01:
I haven't refreshed my recollection specifically on the main case, which came in very late.

[00:04:26] Speaker 06:
It's different.

[00:04:27] Speaker 06:
There's a joint status report that says we reserve issues for appeal, and then basically it says we also reserve this damages argument.

[00:04:35] Speaker 06:
which is somewhat unclear as to whether there is an issue being reserved at the trial level or only for appeal.

[00:04:43] Speaker 01:
OK.

[00:04:43] Speaker 01:
Thank you for the clarification.

[00:04:45] Speaker 01:
The government's intent was identical, and it's actually coming back to me.

[00:04:48] Speaker 01:
The three cases that Chief Judge Sweeney decided, there was a joint oral argument and essentially identical opinions.

[00:04:57] Speaker 01:
And we understood the opinions to have exactly the same effect, which is to resolve as a merits matter

[00:05:04] Speaker 01:
both the question of liability and the question of whether the damages should take into account the increased tax credits.

[00:05:12] Speaker 04:
When the parties argued or presented the summary judgment motions and argued them and briefed them, was the assumption that the parties made that this was only going to be on liability?

[00:05:26] Speaker 01:
I didn't present the argument, and I don't want to state what might have been in counsel's head.

[00:05:31] Speaker 04:
Well, was it presented?

[00:05:34] Speaker 01:
Never mind.

[00:05:35] Speaker 04:
This I don't know.

[00:05:36] Speaker 04:
Was it presented as an argument solely going to liability?

[00:05:42] Speaker 01:
Not that I believe, but what I would say with confidence is that the government, in reading Chief Judge Sweeney's opinions, took it to foreclose, to address in anticipation,

[00:05:55] Speaker 01:
Merits of any damages argument in addition to the existence of a damages remedy Okay, is that?

[00:06:03] Speaker 03:
Council's understanding with respect to the main case also and wolf remain your honor Yeah, it's a bit of a strange posture for mains because main stipulated to the same posture that Community health choice was in and in the main portion of this case is

[00:06:21] Speaker 03:
We are actually, this was a stipulation of the parties, we are relying, we agreed not to brief it separately for Maine and we're relying on the briefing of the parties between Community Health Choice and the government.

[00:06:31] Speaker 03:
But our understanding of the posture and how it was resolved by Chief Judge Sweeney is the same as Mr. Roberts reported.

[00:06:39] Speaker 06:
Just to be clear about that, in other words that there is a final judgment, there's nothing left to be decided at the trial court and that the trial court rejected the damages argument on the merits.

[00:06:51] Speaker 03:
That is how I read Chief Judge Sweeney's opinion.

[00:06:56] Speaker 04:
And that you are not making an argument that the government's failure to make that argument with respect to damages constitutes a waiver of the damages waiver.

[00:07:05] Speaker 03:
We will not be arguing waiver.

[00:07:07] Speaker 03:
We are prepared to argue.

[00:07:08] Speaker 03:
Well, I'm speaking for Maine.

[00:07:09] Speaker 03:
OK, well, maybe we should hear.

[00:07:11] Speaker 03:
We are prepared to argue the merits of that issue.

[00:07:15] Speaker 04:
All right.

[00:07:16] Speaker 04:
Is that the same for the other parties?

[00:07:18] Speaker 02:
Yes, community is prepared to argue the merits.

[00:07:21] Speaker 04:
And you're not you're not continuing as a waiver by virtue of the issue of premium setups not being raised in the damages context.

[00:07:35] Speaker 02:
Correct.

[00:07:35] Speaker 02:
Okay.

[00:07:36] Speaker 02:
Subject to usual arguments about what evidence is of record.

[00:07:41] Speaker 05:
Yes.

[00:07:41] Speaker 05:
Can I just ask in the community case, the judgment we have is a 54B judgment.

[00:07:47] Speaker 05:
Why?

[00:07:49] Speaker 06:
I think there was a risk corridors issue.

[00:07:52] Speaker 06:
Correct.

[00:07:53] Speaker 02:
There is an additional claim of the risk corridors as part of that case.

[00:07:57] Speaker 06:
Now, just so that we touch all the bases here, in the Sanford and Montana cases, my understanding is the damages issue was not raised at the trial court.

[00:08:07] Speaker 06:
Is that correct?

[00:08:11] Speaker 06:
I think we should hear from the government first about that.

[00:08:15] Speaker 01:
Stanford and Montana was a slightly different posture in that they brought separate lawsuits, first for the last quarter of 2017, later for 2018, still pending and stayed.

[00:08:26] Speaker 01:
2018.

[00:08:26] Speaker 01:
I'm sorry, 2018 and 2019, those have been stayed.

[00:08:30] Speaker 01:
And so it wasn't raised yet.

[00:08:35] Speaker 01:
And one of the reasons.

[00:08:35] Speaker 06:
It wasn't raised with respect to 2017.

[00:08:38] Speaker 01:
Correct.

[00:08:41] Speaker 01:
would have been premature, at least in the real world, because the 2018 increased tax credits had not yet happened.

[00:08:49] Speaker 06:
So as the Sanford and Montana cases come to us, there's no damages issue in those two cases?

[00:08:58] Speaker 01:
Correct that there's not the same damages issue.

[00:09:01] Speaker 01:
And a reason that we wanted to make sure the community case was before this court was to ensure that the court had all of the issues.

[00:09:11] Speaker 03:
Yes, Montana and Sanford so Damages for 2017 are in the case and there is a final judgment on that This client is correct that 2018 not 2019 2018 are parked at At the court of federal claims pending appeal so 2018 for Sanford and Montana Was not resolved right and and it's to 2017.

[00:09:35] Speaker 06:
There's no damages issue

[00:09:37] Speaker 03:
Well if by damages issue you mean this argument that the government has raised that there should be an offset that's correct 2017 I Is but there is damages that have been adjudicated at the court of federal correct?

[00:09:50] Speaker 06:
But there's no there's no argument about the offset and as to the 2017 well, that's that's our understanding I Mean, I don't want to speak for the government, but that's our understanding Just with the government confirm that as to 2017.

[00:10:05] Speaker 06:
There's no offset argument

[00:10:07] Speaker 01:
just because of the happenstance that it was brought as a series of lawsuits, not in a big picture sense that we would certainly be arguing it down the road if it came to that.

[00:10:17] Speaker 04:
So in Sanford, you're not arguing either the set-offs either as damages or going to the cause of action?

[00:10:27] Speaker 01:
Set-off is not the word we use.

[00:10:29] Speaker 01:
Well, I understand.

[00:10:29] Speaker 01:
I'm now about to bleed into the merits.

[00:10:32] Speaker 01:
A reason that there is no cause of action is because of the relationship between

[00:10:37] Speaker 01:
cost-sharing subsidies and tax credits.

[00:10:39] Speaker 04:
OK, but was that argument made in the Sanford?

[00:10:43] Speaker 04:
Yes.

[00:10:43] Speaker 04:
And so to that extent, the argument regarding the premium increase, potential premium increases, was made with respect to 2017?

[00:10:54] Speaker 04:
Yes.

[00:10:54] Speaker 04:
OK, and in those cases?

[00:10:56] Speaker 04:
And in those cases, yes.

[00:10:57] Speaker 06:
But not as to 2017 as a basis for reducing damages?

[00:11:03] Speaker 01:
Exactly, not just with respect to those two and a half months in that lawsuit, which was filed separately.

[00:11:10] Speaker 01:
The argument wasn't raised in that context, but it would be raised in the case that's parked in the Court of Federal Claims if it came to that.

[00:11:17] Speaker 06:
And all these cases that are pending in the Court of Federal Claims, have any of them come to final judgment so they're on the way here, or are they all being stayed pending the outcome of this decision or the decisions of these cases?

[00:11:32] Speaker 01:
There are two cases in a similar posture in that 54B judgments were entered.

[00:11:39] Speaker 01:
One, I'd call it Leha.

[00:11:42] Speaker 01:
I can't remember the full name.

[00:11:43] Speaker 01:
But it's, I believe, an abeyance in this court.

[00:11:46] Speaker 01:
And the other one, which is common ground, which is the class action, we very recently moved for abeyance.

[00:11:54] Speaker 01:
And I think just yesterday, the other side opposed abeyance.

[00:11:56] Speaker 01:
that those are the cases that are before this court.

[00:11:59] Speaker 06:
A motion for abeyance in this court?

[00:12:01] Speaker 06:
In this court.

[00:12:02] Speaker 06:
In this court.

[00:12:02] Speaker 06:
So there are two other cases that have come to this court.

[00:12:06] Speaker 06:
And is the government seeking abeyance in both of those cases?

[00:12:09] Speaker 01:
Yes, Your Honor.

[00:12:11] Speaker 06:
And that it hasn't been decided yet?

[00:12:13] Speaker 01:
No, I've forgotten.

[00:12:13] Speaker 01:
I believe it may have been by agreement in the first case.

[00:12:18] Speaker 06:
But the first case is held in abeyance?

[00:12:20] Speaker 01:
I have to go back and look.

[00:12:21] Speaker 01:
But I believe so, yes.

[00:12:22] Speaker 01:
I mean, I know we're not on our briefing time.

[00:12:24] Speaker 01:
And in the one common ground, the class action, which was the very recent one, I know that the class council, I believe yesterday, just opposed abeyance, and that has not been decided yet.

[00:12:39] Speaker 01:
But just to be clear, the posture is the same.

[00:12:41] Speaker 01:
It's another 54B in which it's not materially different from these cases.

[00:12:48] Speaker 06:
All right.

[00:12:50] Speaker 06:
So Ms.

[00:12:50] Speaker 06:
Klein, why don't we start your clock?

[00:12:52] Speaker 02:
Go ahead.

[00:12:53] Speaker 02:
I just want to make sure we don't have any confusion here with regard to 2017.

[00:12:59] Speaker 02:
I wanted to be clear that our view, and the government correctly if I'm wrong, that the I'll call it the quantum question as opposed to the liability question does not apply to the 2017 amount that was stipulated to in our case.

[00:13:13] Speaker 04:
That's what I understood Ms.

[00:13:16] Speaker 04:
Klein to say.

[00:13:18] Speaker 06:
Okay.

[00:13:21] Speaker 01:
Just for Sanford and Montana, and just as of what's before the court right now in that.

[00:13:26] Speaker 01:
Yes.

[00:13:26] Speaker 01:
Okay.

[00:13:28] Speaker 02:
Make sure we're not conceding anything for down the road.

[00:13:32] Speaker 01:
No, that's not correct.

[00:13:34] Speaker 01:
As the community choice, the argument is there's no injury and as a result, no damages.

[00:13:41] Speaker 06:
No, but is there a damages calculation issue?

[00:13:46] Speaker 06:
in community as to 2017.

[00:13:49] Speaker 01:
Yes, because we are regarding this as what is alleged to be a continuing violation.

[00:13:53] Speaker 01:
You look at the entire thing.

[00:13:55] Speaker 01:
And again, I'm bleeding it to the merits.

[00:13:58] Speaker 01:
Because the increased tax credits were so substantial in 2018 and will be ongoing, they will dwarf the amounts that were not paid.

[00:14:07] Speaker 06:
But that's confusing.

[00:14:08] Speaker 06:
I understand that as a liability issue.

[00:14:10] Speaker 06:
And that is raised as a liability issue.

[00:14:13] Speaker 06:
What I think we're trying to clarify here

[00:14:15] Speaker 06:
as to Sanford and Montana, as to 2017, whether there is an argument that damages should be reduced because of the premium increases in tax credits.

[00:14:27] Speaker 01:
Not as to Sanford and Montana, but yes as to community.

[00:14:31] Speaker 01:
So this may be a disagreement, but I just want to clarify from the government's perspective.

[00:14:35] Speaker 06:
I didn't think there was a disagreement.

[00:14:37] Speaker 02:
I didn't think so until now, Your Honor.

[00:14:42] Speaker 02:
What is the disagreement?

[00:14:45] Speaker 02:
Until counsel articulated it, I hadn't understood the government's position in the community case to be that the damages amount for 2017 should also be reduced.

[00:14:55] Speaker 06:
They're not arguing that.

[00:14:57] Speaker 06:
I understood.

[00:14:57] Speaker 01:
Oh, we are arguing.

[00:15:00] Speaker 01:
Yes.

[00:15:00] Speaker 01:
In community, because the period it issued.

[00:15:03] Speaker 06:
No, no, community.

[00:15:04] Speaker 06:
But we're talking about Sanford and Montana.

[00:15:05] Speaker 01:
No, this is counsel for community.

[00:15:09] Speaker 06:
OK, so the issue as to 2017 in community?

[00:15:14] Speaker 01:
Yes, I'll put it in crude terms.

[00:15:17] Speaker 01:
Community got so much more money in 2018 than in 2017.

[00:15:21] Speaker 06:
I think we understand the argument.

[00:15:24] Speaker 06:
But as to 2017 in community, is there an issue that if the government loses on liability, that damages ought to be reduced because of the premium increases in tax credits?

[00:15:38] Speaker 05:
Yes.

[00:15:39] Speaker 06:
And you think that argument was preserved, right?

[00:15:44] Speaker 01:
Yes, because it was rejected anticipatorily by the trial court, leaving no room to make it at what might have otherwise been a damages phase.

[00:15:53] Speaker 06:
OK, and what's the community's position as to that?

[00:15:56] Speaker 02:
Anything further?

[00:16:06] Speaker 03:
Well, Your Honor, because I spoke for Montana and Sanford and you seem to be solid on that, I want to make sure that Maine, we also understand that 2017 for Maine, although the government has its liability argument, we've stipulated the damages for 2017 and there is no quantum issue for Maine, just like Montana and Sanford.

[00:16:29] Speaker 06:
What's the government's position about?

[00:16:31] Speaker 01:
We stipulated for 2018 and 2017, that's just about the number of the cost sharing subsidies that would have been paid had they been funded.

[00:16:41] Speaker 01:
That is not a waiver of the argument that number, 2017 plus 2018, should be the actual damages regardless of the large increase in tax credits for 2018.

[00:16:55] Speaker 06:
OK, so it sounds to me as though everybody's agreed except with respect

[00:17:00] Speaker 06:
2017 for community in Maine where there's a difference between the parties as to whether the Damages issue was properly preserved.

[00:17:10] Speaker 06:
Is that a fair statement?

[00:17:11] Speaker 01:
That sounds fair, yes.

[00:17:13] Speaker 06:
Other Council?

[00:17:14] Speaker 03:
Yes.

[00:17:14] Speaker 03:
Sounds right to me, Your Honor.

[00:17:16] Speaker 03:
Yes, Your Honor, I agree.

[00:17:18] Speaker 04:
Okay.

[00:17:18] Speaker 04:
Which may bring us back to the question of whether the summary judgment motions were Directed at solely at the question of liability

[00:17:30] Speaker 04:
Because if they were contemplated, if the summary judgment was contemplated to affect damages as well as liability, then there may be a waiver if you didn't raise it in those cases with respect to 2017.

[00:17:44] Speaker 01:
Well, the summary judgment only addressed liability by its terms.

[00:17:50] Speaker 01:
But the reasoning of the trial court's opinion is enough.

[00:17:53] Speaker 04:
Well, I understand the judge either may or may not have gone beyond the scope of what the parties

[00:17:58] Speaker 04:
adjudicated between themselves or believed was going to be an issue.

[00:18:05] Speaker 04:
But that doesn't mean that, I mean, what we need to understand is in order to determine down the road perhaps whether there's been a waiver with respect to damages as to 2017 is whether that was the way the summary judgment proceeding

[00:18:26] Speaker 04:
was presented to the parties at the time.

[00:18:28] Speaker 04:
Put it simply, was the government not at fault for not litigating damages with respect to 2017 because it expected only liabilities to be at issue?

[00:18:40] Speaker 01:
Yes.

[00:18:41] Speaker 01:
That's exactly.

[00:18:43] Speaker 01:
The government imagined there might be a later damages phase, but it became academic as a result of the reasoning.

[00:18:50] Speaker 04:
And then Judge Sweeney said, no, I can decide the damages issue as well.

[00:18:54] Speaker 04:
Yes.

[00:18:56] Speaker 01:
I mean, not in so many words, but yes, that's how everyone read the opinion.

[00:19:00] Speaker 05:
But there's a separate question about preservation or waiver if you look at the Joint Status Report 267 to 269 and the community case about whether you really reserved for 2017 what you did expressly reserve for 2018 about the subtraction of tax credit receipts.

[00:19:18] Speaker 01:
I would have to look back.

[00:19:20] Speaker 01:
I thought our language was quite broad.

[00:19:22] Speaker 01:
It was meant to reserve all arguments other than the number.

[00:19:26] Speaker 05:
It's under a heading addressing 2018, previous separate heading under 2017.

[00:19:31] Speaker 05:
But that maybe you could address later.

[00:19:35] Speaker 06:
What are the private parties' positions as to why there is a waiver for 2017 in the community in Maine cases?

[00:19:49] Speaker 02:
Two points, Your Honor.

[00:19:54] Speaker 02:
One is that the point that Judge Toronto just noted, the stipulation does distinguish between the two years and the agreements of the parties regarding the significance of those stipulated numbers.

[00:20:05] Speaker 02:
We do note as well that Judge Sweeney's, Chief Judge Sweeney's order at appendix page 23 does treat 27 distinctly and separately from 28.

[00:20:19] Speaker 02:
But what about the summary judgment motion?

[00:20:37] Speaker 06:
Was that limited to liability and not addressed to damages?

[00:20:41] Speaker 02:
The motion sought summary judgment of liability.

[00:20:45] Speaker 02:
It did put into the record the exact amount owed for 2017-2018 amount was subsequently discussed and agreed to by council pursuant to a separate stipulation.

[00:20:57] Speaker 06:
But did you make an argument in moving for summary judgment that there should be no reduction of the damages because of the premium increases in tax credits?

[00:21:10] Speaker 02:
We argued that that was no defense to a judgment in our favor.

[00:21:17] Speaker 02:
Well, it was no defense to liability.

[00:21:18] Speaker 02:
There was, at that moment, the government had not argued about quantum at all.

[00:21:23] Speaker 06:
So we did not respond.

[00:21:25] Speaker 06:
Yeah, OK.

[00:21:25] Speaker 06:
All right.

[00:21:27] Speaker 06:
Anything further?

[00:21:28] Speaker 06:
All right.

[00:21:29] Speaker 06:
All right.

[00:21:29] Speaker 06:
Let's start the clock, then, Ms.

[00:21:32] Speaker 06:
Klein.

[00:21:33] Speaker 01:
May it please the court, Elisa Klein, for the United States, turning, of course, to the antecedent issue of liability

[00:21:40] Speaker 01:
There are a number of legal issues, the central legal issue.

[00:21:43] Speaker 06:
Is this going to be resolved in the Moda case in the Supreme Court?

[00:21:46] Speaker 06:
If the government loses the Moda case, does the Moda case govern liability here?

[00:21:51] Speaker 01:
No, Your Honor.

[00:21:52] Speaker 01:
And I'll focus on the issues that are unique to these cases, which do turn on the hydraulic relationship between sections 1401 and 1402 of the ACA, which are the tax credit and cost sharing subsidy provisions.

[00:22:10] Speaker 01:
So just going back to the legal question is whether the Affordable Care Act can fairly be interpreted to mandate damages as compensation for cost sharing subsidies that Congress has declined to fund.

[00:22:25] Speaker 01:
And there are a number of reasons that answer is no, some of which do overlap with MODA.

[00:22:30] Speaker 01:
But in particular here, even assuming it would ever be appropriate to interpret

[00:22:36] Speaker 01:
a statutory directive to an agency to make payment without regard to the Anti-Deficiency Act and even assuming it would ever be appropriate to conclude that Congress intended implicitly a damages remedy for Congress's own funding decisions.

[00:22:50] Speaker 01:
It would not be appropriate here because of the text and structure of the ACA, which means that if Congress doesn't fund these cost sharing subsidies directly, you know, as HHS had requested through an annual appropriation early on,

[00:23:07] Speaker 01:
they just end up being paid by the government indirectly in the form of increased premium tax credits.

[00:23:15] Speaker 06:
In other words, the premium tax credit issue isn't presented in MODA, and that's a distinguishing feature for these cases.

[00:23:23] Speaker 01:
Yes, Your Honor, that's correct.

[00:23:25] Speaker 01:
And also, just to be clear, these points, though, they may be unfamiliar in the general sense, these are very familiar for anyone who's

[00:23:34] Speaker 01:
looking at the Affordable Care Act and understands the basics of health insurance pricing.

[00:23:38] Speaker 06:
How can that be a defense to liability as opposed to an argument for damages reduction?

[00:23:46] Speaker 01:
Because the question is whether to interpret substantive law, the ACA, to provide a damages remedy that Congress did not explicitly provide.

[00:23:56] Speaker 01:
That's just a statutory interpretation question.

[00:23:59] Speaker 01:
And the language the Supreme Court has used in Navajo Nation too and in forms is,

[00:24:04] Speaker 01:
whether the substantive law, so here the ACA, can fairly be interpreted as mandating compensation for damages sustained as a result of, and here it would be Congress's funding decisions that made it impossible for HHS to pay these cost sharing subsidies directly.

[00:24:22] Speaker 01:
And as with any question of statutory interpretation, you don't just look to a phrase in isolation of the statute, you consider

[00:24:31] Speaker 01:
the text and structure of the provision and related provisions.

[00:24:35] Speaker 01:
And here, I'm now going to go back a few years, as was anticipated back in 2015 when HHS first looked at the question, what would be the consequences if we were not to pay cost sharing reduction subsidies directly, in the bottom line.

[00:24:54] Speaker 01:
And this is in that ASPE issue brief.

[00:24:56] Speaker 01:
It's cited in our brief, but also

[00:24:58] Speaker 01:
quoted in the common ground amicus brief that the class submitted before this court.

[00:25:04] Speaker 01:
In effect, the federal government would pay cost sharing reductions indirectly through increased premium tax credits.

[00:25:11] Speaker 01:
And it goes on to say, at much greater total expense, the expense is greater because of, again, the text of the ACA, which makes tax credits

[00:25:23] Speaker 01:
not only linked to certain benchmark premiums, but it makes those tax credits available to a significantly larger universe of people than the people who are getting the reduced cost sharing by virtue of opportunity.

[00:25:37] Speaker 04:
But the relationship between the increased tax credits and the benefits to the insurance company depends, does it not, on the willingness of the state regulators to adjust premiums?

[00:25:48] Speaker 01:
Well, this is where I'll refer to the common ground amicus brief.

[00:25:52] Speaker 01:
This is an amicus brief on the other side by a hundred insurers.

[00:25:57] Speaker 01:
And what they say correctly is insurers have to price premiums to recoup their costs.

[00:26:05] Speaker 01:
One of their costs is if they're told

[00:26:08] Speaker 01:
lower your deductibles for a certain category of insureds.

[00:26:11] Speaker 01:
It's kind of like night follows day.

[00:26:12] Speaker 01:
They have to raise their premiums.

[00:26:14] Speaker 04:
And the insurance... Well, but they're not necessarily free to raise their premiums if state regulators don't permit them.

[00:26:19] Speaker 01:
Well, but the state regulators... And Congress enacted the ACA against the background of the state regulation.

[00:26:25] Speaker 01:
The state regulators, one of their most important responsibilities is to ensure the solvency of the insurers to make sure that... Right.

[00:26:32] Speaker 04:
But if you happen to be in North Dakota, you're

[00:26:36] Speaker 04:
Why does an insurance company that's doing business in North Dakota, where the insurance premiums were not allowed to go up, why do they benefit from the premium tax credit increases?

[00:26:51] Speaker 01:
Actually, let me address it.

[00:26:51] Speaker 01:
North Dakota and Vermont were two states that, to be clear, they've all gone up.

[00:26:55] Speaker 01:
Now, it was just because of particularities of the Vermont and North Dakota markets

[00:27:00] Speaker 01:
that they couldn't go up as quickly as in all of the rest of the states.

[00:27:03] Speaker 01:
The District of Columbia is also different, but the Medicaid program there is so generous, covers so many people, that you don't have a significant issue of cost sharing subsidies.

[00:27:14] Speaker 01:
So that was just an accident of history, because HHS, in retrospect, mistakenly paid these cost sharing amounts from the wrong funds, from the permanent appropriation for tax credits,

[00:27:29] Speaker 01:
for a number of years.

[00:27:31] Speaker 01:
And when it eventually came to appreciate that, no, that was not permissible, the announcement was made in late October 2017 and just happened to be in two states, that that was too late for them to make the adjustment.

[00:27:44] Speaker 01:
But then they did make the adjustment the following year.

[00:27:46] Speaker 01:
There's no question that when Congress, back at the dawn of time when Congress enacted the Affordable Care Act, it would have known that it didn't fund the cost sharing subsidies.

[00:27:58] Speaker 01:
and if future Congresses didn't choose to fund the cost sharing subsidies, premiums were going to go up.

[00:28:03] Speaker 01:
That's the point that the common ground amicus brief stresses correctly and so heavily, that that's just axiomatic as a matter of health insurance pricing.

[00:28:14] Speaker 01:
And then the other piece, it just flows directly from the text and structure of the ACA, which is that if benchmark premiums go up, tax credits go up dollar for dollar, and in fact,

[00:28:26] Speaker 01:
because so many more people get tax credits than these cost sharing subsidies.

[00:28:31] Speaker 01:
The result, the bottom line, is more federal spending and no damages.

[00:28:37] Speaker 01:
So it's unsurprising that Congress did not provide a damages remedy explicitly.

[00:28:42] Speaker 01:
And it would be wholly unwarranted to imply one or to infer one in the provision where Congress didn't provide.

[00:28:51] Speaker 05:
Do I remember correctly that while you cited some, I don't know, 2014, 2015 materials about this understanding of the relation between the premiums and the insurer's costs, you haven't cited anything from prior to the enactment of the ACA.

[00:29:09] Speaker 01:
There's not much legislative history on the ACA, but these points are not actually in dispute.

[00:29:15] Speaker 01:
I mean, they flow directly from the text and structure of the ACA.

[00:29:19] Speaker 01:
It's the same type

[00:29:20] Speaker 01:
of information that the Supreme Court.

[00:29:21] Speaker 05:
There's some particular dispute about the role of competition and who would pocket the increased premium taxes, right, tax credits?

[00:29:32] Speaker 01:
What can't be in dispute.

[00:29:34] Speaker 01:
And again, there actually was, in the California district court litigation that we quoted and cited in our brief, there was an evidentiary hearing.

[00:29:43] Speaker 01:
And Judge Chabrier did actually look at these issues now in the real world once

[00:29:48] Speaker 01:
In fact, cost sharing subsidies were not being directly made.

[00:29:52] Speaker 01:
What happened to the states and who?

[00:29:54] Speaker 05:
But as I understand your argument, you have an argument at this point, as I understand it, correct me if I'm wrong, is that the understanding of the likely

[00:30:08] Speaker 05:
relation between premiums and insurers cost was so widespread, so clear, that one must understand what Congress did in 1402 against the background of that.

[00:30:23] Speaker 05:
And therefore, Congress would have expected, if not a perfect solution outside a damages remedy, something so close that it didn't contemplate a need for a damages remedy.

[00:30:38] Speaker 01:
Yes.

[00:30:39] Speaker 05:
OK.

[00:30:39] Speaker 05:
And so I guess you're talking then about the Congress that enacted the ACA.

[00:30:46] Speaker 05:
Yes.

[00:30:46] Speaker 05:
From which I would, I guess, expect to see some materials, not in Congress because of the unusual process, but somewhere from that time expressing everybody's, whoever everybody is, understanding of the relation between these two things on which you rely for an interpretation of, what is it, 2010 congressional intent?

[00:31:08] Speaker 01:
Well, here's what I can give the court.

[00:31:10] Speaker 01:
Although this particular issue of cost sharing subsidies and premiums wasn't addressed with specificity, the big issue that the Congressional Budget Office did address before the ACA was enacted and its key issues in health insurance reform was what happens when premiums go up.

[00:31:28] Speaker 01:
And that was very explicitly was as a result of the structure of the ACA's tax credit provision.

[00:31:35] Speaker 01:
tax credits go up as well, absorbing the impact of premium increases.

[00:31:39] Speaker 01:
This was a big issue just because of concerns about adversely.

[00:31:42] Speaker 06:
I think people understood that, but why does that lead you to construction of the statute that there shouldn't be any damages remedy?

[00:31:51] Speaker 06:
I mean, is there any case that interprets a congressional statute that way because it wouldn't work right?

[00:32:01] Speaker 01:
I mean... Well, first, there is no case that

[00:32:05] Speaker 01:
interprets a statute to say a claimant gets a damages remedy because Congress has declined to fund a program.

[00:32:14] Speaker 01:
I know there's claims of a century, but we have said repeatedly, we can't find a single case.

[00:32:20] Speaker 06:
That seems to be a different argument.

[00:32:24] Speaker 01:
Go ahead.

[00:32:25] Speaker 01:
Obviously, this is the mode argument.

[00:32:27] Speaker 01:
But just to put in context, there's no case that has ever awarded damages as essentially

[00:32:35] Speaker 01:
compensation for Congress's own funding.

[00:32:38] Speaker 05:
It sort of depends what you want to say about Langston.

[00:32:42] Speaker 05:
So there was no judgment.

[00:32:44] Speaker 01:
But that's a big thing, which means there's no question of implying a damages cause of action, which the Supreme Court hasn't done for quite a long time just in general, and certainly didn't do in Langston.

[00:32:55] Speaker 01:
But now we're coming to this case would take it to a whole new level, which is, again, I'm going to read this

[00:33:01] Speaker 01:
line from the HHS analysis back in 2015, what happens if cost sharing reduction subsidies aren't paid directly?

[00:33:08] Speaker 01:
In effect, the federal government would pay cost sharing reductions indirectly through increased premium tax credits.

[00:33:14] Speaker 01:
So to say that in that universe, which Congress would have understood, if you don't pay the subsidies directly, they're going to come out in the increased premium tax credits, that we should also infer

[00:33:30] Speaker 01:
that Congress wanted a damages remedy that it did not choose to enact explicitly would be taking the absence of precedent for any damages remedy when what you're talking about is a, quote, injury caused by Congress's own funding decisions.

[00:33:45] Speaker 01:
And here, there's not even an injury.

[00:33:46] Speaker 06:
This argument wouldn't help you if in moda the Supreme Court decides that the statute resulted in an applied, in fact, contract, right?

[00:33:55] Speaker 01:
So I should make sure I address the contract issue because

[00:34:00] Speaker 06:
that the argument that you could imply a contract but but what before you get to that try to answer my question my question is if if Moda finds that there was an implied in fact contract the argument you just meet and making about congressional understanding of the premium and tax credit operation wouldn't affect the implied contract argument right

[00:34:25] Speaker 01:
It would, because the question is, looking at the language, all of the language of the statute, did Congress have an intent to enter into contracts?

[00:34:35] Speaker 01:
And for the same reasons we've just been discussing, that's particularly weak.

[00:34:38] Speaker 05:
Judge Dyke's question, but that seems to me to fight the premise.

[00:34:41] Speaker 05:
I think the premise of the question, as I understood it, is that, say the Supreme Court decides that in the risk orders program, there was an implied, in fact, contract.

[00:34:51] Speaker 05:
So we're no longer talking about the statutory obligation.

[00:34:55] Speaker 05:
At that point, aren't you left as to premium tax credits only, though this may be a very big deal, with damages reduction?

[00:35:05] Speaker 01:
No, because first, I want to be clear.

[00:35:08] Speaker 01:
We don't believe that the Supreme Court goes back and looks at the cases that this court recently reviewed in the American Bankers Association case, cases like Dodge and Wisconsin and Michigan.

[00:35:19] Speaker 01:
railway that the Supreme Court could possibly conclude there's an implied in fact contract in Moda, but even imagining... It may surprise you.

[00:35:31] Speaker 01:
The Petitioner's Council expressed the hope that the Supreme Court would go back and read that line of cases and we very much share that hope because we think this court was 100% correct in its recent American Bankers Association case to say that there is an incredibly strong presumption against treating

[00:35:46] Speaker 01:
a statutory benefits program as binding the government in contract in situations far more sympathetic, where you had public school teachers where the statute said, if you work 20 years and then retire, you shall be entitled to $1,500 annuity for life.

[00:36:03] Speaker 01:
And then the legislature later cut it to $500.

[00:36:06] Speaker 01:
And they said, wait, we relied.

[00:36:09] Speaker 01:
We worked 20 years, then we retired.

[00:36:11] Speaker 01:
And you cut it.

[00:36:11] Speaker 01:
That's a breach of contract.

[00:36:12] Speaker 01:
And the Supreme Court said, no contract.

[00:36:14] Speaker 01:
And similar thing, the railway case.

[00:36:16] Speaker 01:
where the law said, if you build your railway in our state, you get a 10-year tax exemption.

[00:36:22] Speaker 01:
And the railway company built the railroad.

[00:36:25] Speaker 01:
And then the legislature repealed the tax exemption.

[00:36:27] Speaker 01:
And the answer was, sorry.

[00:36:29] Speaker 01:
We don't treat statutes as contracts.

[00:36:31] Speaker 01:
So just to be clear, we trust that the Supreme Court is going to go back and read their precedents, the ones this court reviewed, and is not going to find an implied in fact contract.

[00:36:39] Speaker 01:
But hypothetically, imagining that they did, they would have to be concluding

[00:36:46] Speaker 01:
from the ACA that Congress had an intent to enter into risk corridors contracts.

[00:36:53] Speaker 01:
And though we don't know how they could say that, here you would look and think contracts, this is just the requirement to reduce cost sharing, you know, so like smaller deductibles.

[00:37:04] Speaker 01:
That's just classic insurance regulation of the sort that Congress has done for decades and has done in other ACA provisions.

[00:37:11] Speaker 01:
It's not different in kind from saying,

[00:37:14] Speaker 01:
insurers have to cover prescription drugs, which the ACA also says.

[00:37:18] Speaker 01:
All of that just means premiums are higher.

[00:37:20] Speaker 01:
So there's no contract.

[00:37:22] Speaker 01:
There's just a mandate under the commerce power.

[00:37:25] Speaker 01:
And it happens that Congress also chose to authorize a targeted form of subsidy, because this was a targeted form of regulation.

[00:37:35] Speaker 01:
But by not funding the subsidy, there's no breach of contract.

[00:37:38] Speaker 01:
It just means that the premiums would go up, which is, of course, exactly what happened.

[00:37:45] Speaker 06:
You want to turn to damages?

[00:37:48] Speaker 06:
I think I understand the argument for damages reduction if there's a breach of contract theory here.

[00:37:55] Speaker 06:
I'm less clear about the argument for damages reduction if it's a statutory claim.

[00:38:04] Speaker 06:
And the briefing hasn't exactly been expansive on these points.

[00:38:08] Speaker 01:
It's not.

[00:38:09] Speaker 01:
But again, we are hypothesizing now an implied damages remedy.

[00:38:15] Speaker 01:
If the court were going to interpret the ACA to conclude that Congress actually intended some form of damages remedy, then the question would still remain, what kind of damages remedy?

[00:38:26] Speaker 01:
Is it one that does or does not take into account the massive increase in tax credits that resulted from Congress's decision?

[00:38:34] Speaker 06:
What's happened in other areas where there have been statutory claims?

[00:38:38] Speaker 06:
Has this ever come up before, the question of damages reduction to a statutory claim?

[00:38:44] Speaker 01:
I don't know of any case, I couldn't find any case, where you had this kind of hydraulic relationship between the cost sharing subsidy on the one hand and the tax credits on the other.

[00:38:55] Speaker 01:
Sometimes there are cases that are cited on the other side about antitrust and kind of pass through to consumers, but that's not what we're talking about here.

[00:39:03] Speaker 01:
We're talking about the government actually, its own outlays, increasing by substantially more

[00:39:09] Speaker 01:
than the cost sharing payments that were not made.

[00:39:12] Speaker 05:
I don't know if this is relevant, but what about an ordinary kind of statutory damages action, Title VII or something, with damages and somebody gets fired and succeeds in winning a claim that says the firing was unlawful.

[00:39:30] Speaker 05:
If that person, right after getting fired, went and got a higher paying job, does that factor into the damages award?

[00:39:40] Speaker 01:
I don't know, and I can assume not.

[00:39:42] Speaker 01:
I think if it's an unrelated source.

[00:39:45] Speaker 01:
You assume not?

[00:39:46] Speaker 01:
Well, I'm going to assume not because I don't know.

[00:39:48] Speaker 04:
I mean, generally, you have an obligation as an employee, in my understanding.

[00:39:56] Speaker 04:
After you've been terminated, you can't simply go home and sit there and wait for your judgment.

[00:40:01] Speaker 04:
You have to go out and try to find a job if you find one.

[00:40:04] Speaker 04:
the amount of your loss is calculated by the difference between your old job and your new one.

[00:40:10] Speaker 04:
Isn't that right?

[00:40:11] Speaker 01:
Okay, again, because I haven't briefed this, I didn't want to speak out of turn, but if that's right, this is even easier because the insurers don't have to even do anything.

[00:40:20] Speaker 04:
On the other hand, there are other doctrines, like the collateral source doctrine, where you don't count money that

[00:40:28] Speaker 04:
the insurance company may have paid you for your injury, for example, in a tort case.

[00:40:32] Speaker 04:
So that would cut the other way.

[00:40:34] Speaker 01:
That's actually what I had in mind.

[00:40:36] Speaker 01:
And my point is that this is not a collateral source.

[00:40:39] Speaker 01:
These are two provisions, adjacent provisions of the ACA, that are hydraulically linked as written by Congress.

[00:40:46] Speaker 01:
And the idea that if you were implying a damages remedy, so again, the court is essentially writing the remedy and deciding its scope, that you wouldn't think about the fact that

[00:40:58] Speaker 01:
If cost sharing subsidies aren't paid directly, they get paid indirectly.

[00:41:03] Speaker 01:
If they're not paid under 1402, they get paid under 1401.

[00:41:08] Speaker 01:
It's hard to imagine why, what rational Congress would have so intended.

[00:41:19] Speaker 01:
Unless the court has further questions, I'll reserve my time for robustness.

[00:41:23] Speaker 06:
OK, thank you.

[00:41:24] Speaker 01:
Let me ask one further question.

[00:41:25] Speaker 04:
This is raised.

[00:41:27] Speaker 04:
Excuse me.

[00:41:29] Speaker 04:
by the opposing council's briefing.

[00:41:33] Speaker 04:
Is your argument with specific reference to the Anti-Deficiency Act looming there?

[00:41:42] Speaker 04:
I'll get the question out.

[00:41:44] Speaker 04:
Are you in effect saying that every statute necessarily is read to say, every statute providing for a payment from the government is necessarily read as saying,

[00:41:58] Speaker 04:
subject to appropriations, even if that language is not in the statute.

[00:42:02] Speaker 04:
That's basically your position, is it not?

[00:42:05] Speaker 01:
Yes, with an important caveat that this court flagged in the Prairie County decision.

[00:42:10] Speaker 04:
That's what I was going to ask.

[00:42:11] Speaker 01:
Well, there are some statutes, like the Medicare Part D statute and one that was flagged in Prairie County, that actually make explicit that this provision represents the obligation of the government and provides authority to make payment in advance of appropriations.

[00:42:26] Speaker 01:
So we're not saying that Congress

[00:42:28] Speaker 01:
cannot if it wants to make something an obligation in advance of appropriations.

[00:42:34] Speaker 01:
Congress can do that.

[00:42:35] Speaker 01:
But if you just have basically language like this, which just says, agency X, you shall make payment, that there's no question that the Anti-Deficiency Act prohibits the agency from making the payment unless and until it gets the appropriation.

[00:42:52] Speaker 01:
And that's true.

[00:42:53] Speaker 01:
whether or not Congress makes explicit in that substantive law that this is subject to appropriations.

[00:43:00] Speaker 04:
But the fact that the Anti-Efficiency Act may limit the ability of the officers to make the payment doesn't necessarily speak to the question of whether a judgment can be entered, which is, I take it, the distinction that's drawn in several of our cases.

[00:43:17] Speaker 04:
And in fact, there's a line in Moda to that effect.

[00:43:19] Speaker 01:
There is a line we regarded as dictated and moated to that effect.

[00:43:22] Speaker 01:
I know you do.

[00:43:23] Speaker 04:
But that is the most recent statement by this court on that question, right?

[00:43:29] Speaker 01:
We do not believe there's any holding.

[00:43:30] Speaker 01:
And obviously, the Supreme Court will address this.

[00:43:32] Speaker 01:
And one thing I just want to underscore, it was also underscored by the Deputy Solicitor General in the Supreme Court argument,

[00:43:37] Speaker 01:
that it is a mistake, particularly the ACA, to accord significance to that subject to the availability of appropriations language.

[00:43:46] Speaker 01:
If you just compare, for example, two ACA provisions, 5301 and 5303, they're essentially identical.

[00:43:55] Speaker 01:
One is a discretionary grant program for dentistry training, and the other is a discretionary grant program for general family medicine and other training.

[00:44:04] Speaker 01:
The language is largely identical.

[00:44:07] Speaker 01:
They're clearly both discretionary.

[00:44:09] Speaker 01:
The one has subject to the availability appropriations, and the other doesn't.

[00:44:13] Speaker 01:
And the point just being the one that the Chief Justice emphasized in the King decision, which is that the canon against surplusage is a feeble canon to begin with, and particularly so if you're looking at the ACA.

[00:44:25] Speaker 01:
We just think it's a mistake to record significance to that.

[00:44:30] Speaker 06:
OK.

[00:44:31] Speaker 06:
Thank you.

[00:44:31] Speaker 06:
Mr. Wolf?

[00:44:44] Speaker 03:
Good morning, and may it please the court.

[00:44:46] Speaker 03:
I'm Dan Wolfe.

[00:44:47] Speaker 03:
As we discussed earlier, I represent Sanford, Montana, and then also Maine.

[00:44:52] Speaker 03:
And Mr. Roberts at council table will stand up separately to address community health choice.

[00:44:59] Speaker 03:
The government in this case invites complexity where there is none.

[00:45:06] Speaker 03:
This is first and last a case about statutory interpretation.

[00:45:12] Speaker 03:
You are not called here to adjudicate health care economics, the policy choices of Congress.

[00:45:17] Speaker 06:
Well, it's not just about statute or interpretation, since there's the implied in fact contract theory.

[00:45:23] Speaker 03:
Well, it is.

[00:45:24] Speaker 03:
It is.

[00:45:24] Speaker 03:
But we start with the statute, because that's where our complaint and argument starts.

[00:45:28] Speaker 03:
And we can talk about the implied in fact contract.

[00:45:31] Speaker 03:
Secretary, Ms.

[00:45:32] Speaker 03:
Klein said... Well, you don't believe in the implied in fact contract theory, right?

[00:45:37] Speaker 03:
Absolutely.

[00:45:37] Speaker 03:
And it's even stronger in this case than it was in Moda.

[00:45:40] Speaker 03:
for the reasons laid out by Chief Judge Sweeney.

[00:45:44] Speaker 03:
And I'm happy to start there if you would like.

[00:45:47] Speaker 03:
Go ahead.

[00:45:50] Speaker 03:
But 1402, Ms.

[00:45:51] Speaker 03:
Klein said that one reads a statute taking in the text and the structure, et cetera.

[00:45:57] Speaker 03:
And that's true.

[00:45:58] Speaker 03:
But what you don't do is abandon the key term that governs.

[00:46:03] Speaker 03:
which in this case he shall make.

[00:46:06] Speaker 03:
And I would submit to this court, you've already decided this case.

[00:46:10] Speaker 03:
You decided this case in Moda.

[00:46:11] Speaker 03:
And Moda just tracked a long line of cases before that.

[00:46:16] Speaker 03:
Importantly here, and I'm going to go to this because Judge Bryson- Well, you said a long line.

[00:46:19] Speaker 04:
And you said that in your brief.

[00:46:20] Speaker 04:
And I looked at the long line.

[00:46:21] Speaker 04:
And as far as I could tell, the long line of cases prior to Moda is really just Green Hill, Prairie, and Langford.

[00:46:29] Speaker 04:
Are there any others that we should be looking at?

[00:46:32] Speaker 03:
So in this court, there is decades worth of money mandating statute jurisprudence.

[00:46:43] Speaker 03:
I understand that.

[00:46:44] Speaker 04:
But with respect to situations where there is a pay but no appropriation, a directive to pay but no appropriation that covers that.

[00:46:55] Speaker 04:
What other cases are there besides those?

[00:46:57] Speaker 03:
Well, the key cases, we have Langson, of course.

[00:47:00] Speaker 03:
Then we have the key claims court cases that date back to the 19th century, like Collins and Ferris, which point out that you don't need an appropriation for the court to sit in judgment of liability.

[00:47:10] Speaker 03:
And Ms.

[00:47:11] Speaker 03:
Klein, on behalf of the Department of Justice and the government, said there are no cases.

[00:47:15] Speaker 04:
You said, but liability, if there's, for example, a tort or something like that, the judgment is what.

[00:47:23] Speaker 04:
If you have a directive to pay money and there is no specific appropriation that's applicable to that directive in this case, are there any other cases with those facts other than the ones that you mentioned?

[00:47:41] Speaker 03:
Well, Slattery confronts this directly by saying, we don't consider appropriation in deciding whether there's a money-mandating statute that gives this court jurisdiction to adjudicate liability.

[00:47:49] Speaker 03:
The Supreme Court's case in Rama says the same thing and I quote, but the principle there is the same and with respect to the CSR program that was being argued in the Burwell case in the District Court of District of Columbia, where the House of Representatives challenged the prior administration's use

[00:48:07] Speaker 03:
of the appropriation that was set aside for the premium tax credits to use to pay CSR payments, the government says, and I quote, the mere absence of a more specific appropriation is not necessarily a defense to recovery from the fund, citing Salazar v. Rama.

[00:48:23] Speaker 03:
So the government, frankly, agrees with us, at least in other settings,

[00:48:28] Speaker 03:
that an appropriation is not necessary for this court, and the court of federal claims below it, to adjudicate the wholly distinct question of liability.

[00:48:38] Speaker 03:
And that's the centuries-old proposition that we're citing, because that's what's key here.

[00:48:43] Speaker 03:
Now, let's take Judge Bryson, your question about the presence or absence of limiting language, like subject to the availability of appropriations.

[00:48:52] Speaker 03:
I believe, Judge Dyke, that you were on the Greenlee County

[00:48:56] Speaker 03:
case, which looked at the Payment in Lue of Taxes Act, which was also an issue in Prairie County.

[00:49:02] Speaker 03:
And in that case, this court pointed out the significance of Congress limiting the exposure of the fisc through the use of the words subject to the availability of appropriations or words to the effect.

[00:49:18] Speaker 03:
And importantly, we don't have that here.

[00:49:22] Speaker 03:
And you can't just dismiss the absence, Congress's choice not to use those words, as meaning nothing, as assuming, Judge Bryson, when you asked Ms.

[00:49:32] Speaker 03:
Klein, that you can't take the government's position, which is, well, with or without that language, we should assume it's always there.

[00:49:39] Speaker 03:
That's not true.

[00:49:40] Speaker 03:
The ADA, the Anti-Deficiency Act,

[00:49:43] Speaker 03:
only speaks to government agents.

[00:49:47] Speaker 03:
It only limits the ability of government agents to pay when there is no appropriation, which we are not challenging HHS's, the propriety of HHS not cutting the check for the CSRs here when the Attorney General Jeff Sessions told it to stop.

[00:50:02] Speaker 05:
By the way, just on the small detour, is that why you could not succeed in an APA challenge?

[00:50:10] Speaker 03:
Well, we don't have an APA challenge.

[00:50:12] Speaker 05:
I know that.

[00:50:13] Speaker 05:
That wasn't the question.

[00:50:15] Speaker 05:
Obviously, we're talking about something that Bowen discussed a lot about the two possible ways of challenging this.

[00:50:22] Speaker 05:
If you had brought an APA action, would the Anti-Deficiency Act have precluded you from prevailing in that act against HHS because you couldn't issue an order to them to

[00:50:33] Speaker 03:
Well, I do think that if some other entity had gone to federal district court to challenge HHS cutting off, well, in fact, I believe the California v. Trump case, although that was decided at the preliminary injunction phase, that may have been an instance of that, although the court didn't ultimately get to the merits because it only ruled on a preliminary injunction.

[00:50:59] Speaker 03:
to take just a step back and take the hypothetical.

[00:51:02] Speaker 03:
Yeah, I think that under the APA, if one were to go to federal district court and argue that HHS was arbitrary and capricious for not paying CSR payments pursuant to Section 1502.

[00:51:16] Speaker 06:
No, it wouldn't be an arbitrary and capricious argument.

[00:51:18] Speaker 06:
It would be an argument that a statute obligated the payment.

[00:51:22] Speaker 03:
It's a matter of law.

[00:51:23] Speaker 03:
Well, but in an APA setting, in an APA setting,

[00:51:28] Speaker 03:
The argument of law, the response would be, well, the ADA prevents it.

[00:51:32] Speaker 03:
And the ADA does prevent it.

[00:51:35] Speaker 03:
But the ADA says nothing about our ability to come here to the Court of Federal Claims and seek judgment on liability for damages to totally different cases.

[00:51:48] Speaker 03:
And as a matter of fact, and I'm going to reference some footnotes

[00:51:54] Speaker 03:
the Bowen decision, because there's Justice Scalia's dissent, of course, which we cite.

[00:51:58] Speaker 03:
Of which there were many.

[00:51:59] Speaker 03:
But footnotes 31, 39, 42 all spell out that the majority in the dissent weren't that far apart.

[00:52:08] Speaker 03:
It was just on the specific case of Medicaid, which involves programmatically complex overlap and cooperation between the federal and state governments.

[00:52:18] Speaker 05:
One of those footnotes, maybe 42,

[00:52:23] Speaker 05:
suggests something kind of limiting about the kind of cases that he didn't have in front of it, but the kinds of cases that would be in the Court of Claims or the Court of Federal Claims about damages for retrospective harm.

[00:52:42] Speaker 05:
Is this one of those?

[00:52:44] Speaker 03:
No.

[00:52:44] Speaker 03:
Footnote 42 only addresses why, in the majority's opinion, in that case where the state was seeking equitable relief on a going forward basis.

[00:52:52] Speaker 03:
Medicaid didn't provide the answer, but it distinguished cases, statutes like the Back Pay Act, which also have the Shall Pay or Shall Make language.

[00:52:59] Speaker 05:
This is what I guess I'm remembering, that with a characterization of those Tucker Act cases as involving a kind of harm already done for which a recovery was being sought, would this case fall into that, or are you saying that's just not as limiting as it might sound?

[00:53:20] Speaker 03:
This case falls into the, and I'm not sure I'm understanding the line you're drawing, this case falls into the Greenlee County, the Aguiac, the line of cases where shall means shall.

[00:53:32] Speaker 03:
And that's an important point.

[00:53:33] Speaker 03:
Because at the end of the day, the government really doesn't confront what shall make means if it doesn't mean shall make.

[00:53:39] Speaker 03:
So we've been done.

[00:53:40] Speaker 05:
I think you've been talking till now entirely about a matter that's in front of the Supreme Court right now.

[00:53:46] Speaker 05:
What about the distinct argument that this particular statute, because of the relation between 1401 and 1402,

[00:53:54] Speaker 03:
And as Chief Judge Sweeney and the other two judges that ruled below Judge Kaplan and Judge Wheeler found, there's no support to find that the relationship between 1401 and 1402 limits the 1402 obligation.

[00:54:17] Speaker 03:
So for example, you would expect to find that if Congress really intended this.

[00:54:21] Speaker 03:
First of all, you would expect that Congress intended to do what Congress wrote.

[00:54:24] Speaker 03:
Shall make means shall make.

[00:54:26] Speaker 03:
You would expect to find, if there was this coupling to be made, some kind of reference.

[00:54:32] Speaker 03:
Shall make if state regulators don't do this about premiums.

[00:54:39] Speaker 03:
And you don't have that language.

[00:54:40] Speaker 03:
There is no limitation.

[00:54:42] Speaker 03:
And in fact, I'll point to it.

[00:54:44] Speaker 06:
Well, it would be kind of odd that they would anticipate that the funding would be cut off.

[00:54:50] Speaker 03:
Well, the whole point is that the Congress that wrote this, and the question was asked Congress in 2010, what it intended.

[00:54:57] Speaker 03:
It intended that the 1402, that the CSRs be paid.

[00:55:03] Speaker 03:
And as a reference again, and this is in Section, this is Appendix 145 of the Community Health Choice Brief, this is the Attorney General of the United States at the time, Jeff Sessions, talking about how the two programs are distinct.

[00:55:19] Speaker 03:
He says, each is authorized by a separate provision, a separate title in the US Code.

[00:55:23] Speaker 03:
They have a different focus.

[00:55:25] Speaker 03:
They each have a different eligibility formula.

[00:55:28] Speaker 03:
He goes on to say that it does not mean that CSR payments are the same as tax credits.

[00:55:32] Speaker 05:
That was in support of the legal conclusion.

[00:55:37] Speaker 05:
That was why the tax credit for 1401 shouldn't apply to 1402.

[00:55:40] Speaker 05:
Really?

[00:55:41] Speaker 05:
Can you let me finish my question before you jump in?

[00:55:44] Speaker 03:
I'm sorry, I thought you had them.

[00:55:45] Speaker 05:
Thank you.

[00:55:47] Speaker 05:
That was in support of the conclusion that the tax fund was not a source of properly authorized appropriations, right?

[00:55:55] Speaker 05:
Correct.

[00:55:56] Speaker 05:
The argument from the government is that everybody understands

[00:56:00] Speaker 05:
I think the word is hydraulic relationship between what happens to premiums and these kinds of costs.

[00:56:06] Speaker 05:
And therefore, not on the question of whether Congress intended the amounts that it says shall be paid to be paid.

[00:56:14] Speaker 05:
Of course, it expected that.

[00:56:16] Speaker 05:
But whether for the separate part of the inquiry into money mandating character or not of the statute,

[00:56:27] Speaker 05:
Congress expected, under the fairly discernible standard, that damages would be a remedy if that obligation was not carried out.

[00:56:36] Speaker 03:
And the government doesn't have a single case to support it, Your Honor.

[00:56:40] Speaker 03:
Every other case where that has been, where Tucker Act jurisdiction has been displaced, there has been a judicial remedy.

[00:56:47] Speaker 03:
So in Bowen, there was the APA.

[00:56:49] Speaker 03:
In Borms, there was the Fair Credit Protection Act.

[00:56:53] Speaker 03:
I might be messing up that name.

[00:56:55] Speaker 03:
There was a judicial remedy.

[00:56:56] Speaker 03:
Here, we're left with no remedy.

[00:56:58] Speaker 03:
And to Judge Bryson's earlier question to my friend for the government,

[00:57:03] Speaker 03:
This is to assume that Congress left the remedy up to 50 states plus other territories that have their own programs.

[00:57:12] Speaker 03:
And to infer that as an intent of Congress would be unprecedented.

[00:57:16] Speaker 03:
And the better way to think about this is as Judge Sweeney and as Judge Kaplan, Judge Wheeler looked at this, which is we take 1402 for what it is.

[00:57:25] Speaker 03:
It says you shall establish a program, you require the plans to make payments, and then you say you shall make that up to them in a dollar for dollar reimbursement.

[00:57:34] Speaker 03:
That's how 1402 should be interpreted.

[00:57:36] Speaker 03:
In this case, this court's money-mandating cases are in full support.

[00:57:41] Speaker 06:
I would like to turn there because is there really any argument on the contract theory that there should be a damages reduction if in fact the health insurers received payment through

[00:57:59] Speaker 06:
the premium increases and the credits.

[00:58:02] Speaker 03:
Your Honor, there is no damages offset, whether we're talking about a statutory claim or a contract claim.

[00:58:08] Speaker 06:
Well, talk about the contract claim first.

[00:58:09] Speaker 06:
Why isn't there an offset?

[00:58:10] Speaker 03:
Because the American rule is, in this case, and this court said it in Hughes Communications, which was a case not cited, but it's

[00:58:19] Speaker 03:
It's a recent, relatively within the last two decades, contract decision from this court, and I think Mr. Roberts will amplify this, said even in a contract setting, like the RICO setting or like the antitrust setting, we don't look to what costs got passed on.

[00:58:38] Speaker 03:
And there's an important reason for that.

[00:58:40] Speaker 03:
One is what I was starting to refer to earlier, which is attorney general session.

[00:58:43] Speaker 03:
Wait, wait.

[00:58:44] Speaker 03:
I don't understand that.

[00:58:45] Speaker 06:
Costs that are passed on, the question?

[00:58:46] Speaker 06:
Well, for example.

[00:58:48] Speaker 06:
The question here is, if, as a result of the government's breach, the insurers receive compensation through the tax credits, why doesn't the objective of making them whole for any losses have to take account of that?

[00:59:08] Speaker 03:
Because for mitigation or offset purposes, you don't look at separate transactions.

[00:59:14] Speaker 03:
For the same reason that Judge Bryson's example, or let me say, let's say that our plan's got an angel investor from, say, the Bill and Melinda Gates Foundation.

[00:59:24] Speaker 03:
I heard that CSRs aren't being paid.

[00:59:26] Speaker 03:
Dollar for dollar, here's a check.

[00:59:28] Speaker 03:
That's not an offset, because it comes from a different source.

[00:59:31] Speaker 03:
And here, we're talking about the same thing.

[00:59:32] Speaker 03:
It's not coming from a different source, it's coming from the government.

[00:59:34] Speaker 03:
The relationship between the public.

[00:59:35] Speaker 03:
Indirectly.

[00:59:36] Speaker 03:
Indirectly the premiums are a relationship between the plans right and the in the consumer But not all consumers be rate get reimbursed from Congress some have to pay it out of pocket It's only the eligible insurance that get reimbursed just because Congress as a separate policy decision Chooses to subsidize those payers that doesn't change the nature of the relationship between the money goes to the insurance companies I'm sorry the money goes to the insurance companies

[01:00:03] Speaker 03:
from the consumer, which happens to be subsidized by the consumer.

[01:00:06] Speaker 06:
Actually, the tax credits, though earned by the consumer, actually go to the insurers, right?

[01:00:12] Speaker 03:
The plans are a conduit.

[01:00:14] Speaker 03:
That is correct, Your Honor.

[01:00:15] Speaker 03:
But a premium is quintessentially a contractual relationship between the consumer and the plan.

[01:00:23] Speaker 03:
It's not, as Chief Judge Sweeney said,

[01:00:27] Speaker 03:
Payment from tax credits don't equal payment for CSR.

[01:00:31] Speaker 03:
They're two totally different things.

[01:00:33] Speaker 03:
And I commend you to Jeff Sessions' opinion on this, which is, add again, Appendix 144, 145 of the Health Choice Joint Appendix.

[01:00:43] Speaker 03:
He sets it out.

[01:00:44] Speaker 03:
We're talking about two different things.

[01:00:46] Speaker 03:
And all the cases would deem this to be a pass on defense that is not recognized.

[01:00:53] Speaker 03:
Because there isn't going to be, at the end of the day, any kind of windfall or double recovery.

[01:00:58] Speaker 03:
As the government puts in footnote 11 of the Sanford brief, at the federal level, there's something called the medical loss ratio, which limits the amount of revenue a plan can keep.

[01:01:10] Speaker 06:
That has to do with the calculation.

[01:01:12] Speaker 03:
Which is exactly why the court... Which is not before us.

[01:01:15] Speaker 06:
The basic question before us is, if the insurers are made whole through tax credits, why should they recover an additional amount pursuant to either the contract theory or the statutory theory?

[01:01:33] Speaker 03:
They are not made whole, Your Honor.

[01:01:35] Speaker 03:
They are not made whole... We don't know that.

[01:01:38] Speaker 04:
One of the problems with the way this was briefed, both in the

[01:01:42] Speaker 04:
trial court and here is that we're sort of on our own because Judge Sweeney decided the damages issue in one paragraph on a 23 and Presumably with no briefing on this specifically on the damages issue And here we are with you all have given us a total of about six pages of briefing on this issue and no elaboration of any of the details that you've both been talking about in conflicting terms as to whether

[01:02:12] Speaker 04:
there is, isn't, or sort of is, or sort of isn't a recovery by the insurance companies.

[01:02:19] Speaker 04:
But the question is, if the insurance companies get, indirectly or directly from the government, all the money that they were deprived of in the cost sharing, should they still get, in effect, a double recovery?

[01:02:35] Speaker 04:
Legally, to me, that seems to be the question

[01:02:40] Speaker 04:
You're suggesting, I think, yes, is the answer to that.

[01:02:45] Speaker 03:
I'm saying that the premise that they're getting a double recovery is incorrect.

[01:02:49] Speaker 04:
Well, but that's the issue that wasn't... The calculational issue.

[01:02:52] Speaker 04:
And that was never briefed before.

[01:02:55] Speaker 03:
was not briefed before us.

[01:02:57] Speaker 03:
It's a legal issue, I would say, Judge Dyke and Judge Bryson, for the reasons set out in the Kansas, the utility court case, the Southern Pacific case, the Hughes communications case.

[01:03:08] Speaker 03:
And I'm going to let Mr. Roberts amplify this, because he cites them in his brief.

[01:03:12] Speaker 03:
As a legal matter, the courts simply don't allow the other side to bring in, as evidence of mitigation, these sorts of costs that are passed on.

[01:03:20] Speaker 04:
The question is, what's encompassed within these sorts of costs?

[01:03:25] Speaker 06:
Thank you.

[01:03:26] Speaker 06:
Okay, thank you.

[01:03:26] Speaker 06:
Mr. Roberts.

[01:03:27] Speaker 04:
Thank you, your honor.

[01:03:35] Speaker 02:
With the court's permission, I'll jump into the discussion as it is flowing and discuss the damages question and whether premium tax credits can in some form either eliminate or reduce the appropriate damages amount in this case.

[01:03:51] Speaker 02:
Let's just take a hypothetical.

[01:03:53] Speaker 06:
Let's assume as a result of the premium increases and the tax credits for a particular year that the insurer is made whole.

[01:04:04] Speaker 06:
Why should the insurer get double recovery?

[01:04:08] Speaker 06:
What is the theory as to why that should happen?

[01:04:11] Speaker 02:
The theory is based on prevailing law going back to 1918 with Justice Holmes' case, the Southern Pacific Railroad,

[01:04:21] Speaker 02:
A person who fails to pay an amount due or overcharges, in the antitrust context usually, is not entitled to take advantage of the victims passing on some or all of that non-payment to their customers through price increases.

[01:04:39] Speaker 06:
But that's quite different.

[01:04:41] Speaker 06:
This is the government paying twice.

[01:04:44] Speaker 02:
I disagree with the court's analysis there.

[01:04:46] Speaker 02:
This is exactly

[01:04:49] Speaker 02:
Similar the only difference is the government government separately under a different program in a different part 1401 agreed to help out our customers to pay their premiums to us But it is a distinct transaction not with the government, but with the customer just as a matter of policy or logic Why should the insurers recover twice?

[01:05:13] Speaker 02:
the policy or logic is that

[01:05:15] Speaker 02:
Our government needs to hold itself accountable when it fails to follow through on an unambiguously mandatory obligation to pay CSR reimbursements under 1402.

[01:05:26] Speaker 04:
So this is a punitive or deterrent effect of a judgment?

[01:05:31] Speaker 04:
I would not say that you would end up with a double recovery, but the government learned its lesson.

[01:05:40] Speaker 02:
Well, there's more to it than that.

[01:05:42] Speaker 02:
I would not say punitive.

[01:05:43] Speaker 02:
But I do think it is an important principle of our law that the government should be held accountable under the same circumstances as a private party based upon the same kind of wrongful conduct.

[01:05:56] Speaker 02:
What we have here is a violation of a statute similar to an antitrust violation or a breach of a contract, which the Hughes case talks about.

[01:06:04] Speaker 02:
So one reason for the rule that does not allow the wrongdoer to take advantage of a passing on of costs through a price increase is that we need to hold the violator accountable.

[01:06:16] Speaker 02:
But there's more to it than that.

[01:06:19] Speaker 02:
In addition, there is the policy concern that in the law of damages, we look at the immediate direct consequences.

[01:06:28] Speaker 02:
We have a non-payment.

[01:06:30] Speaker 02:
There is a very clear and really undisputed direct injury

[01:06:34] Speaker 02:
the exact amount of money that this statute orders the government to pay pursuant to 1402.

[01:06:40] Speaker 02:
That is damage.

[01:06:43] Speaker 02:
Any damages treatise will agree.

[01:06:44] Speaker 02:
That is direct injury known.

[01:06:47] Speaker 02:
The question is whether the government is entitled to bring in an affirmative defense, in effect, and say, yes, I owe you that money, but you got it from another source.

[01:06:56] Speaker 02:
Perhaps that source ultimately was a different

[01:06:59] Speaker 02:
fund of money that comes out of the government but it is another source and therefore I don't have to pay you what the statute required me to pay you.

[01:07:08] Speaker 05:
Can I ask you this question?

[01:07:10] Speaker 05:
If you recovered the full CSR payments here say for 2018 and you've already gotten some

[01:07:19] Speaker 05:
premium increase for the same year.

[01:07:21] Speaker 05:
Would you expect state regulators say for 2021 to lower your premiums to recoup the excess you got?

[01:07:34] Speaker 02:
There are legal safeguards to prevent windfalls and excess profits for insurance companies.

[01:07:40] Speaker 02:
The exact mechanisms could vary state to state, but I think it is clear that either in the form of rebates or adjustments of other premiums,

[01:07:48] Speaker 02:
insurance companies aren't are not going to be allowed to simply pocket this money okay that may be true and that might affect the damages calculation but why does that possibility mean that if in fact you do get double recovery that that shouldn't be allowed well it addresses a concern that the government suggests there will be a giant windfall to the insurance company and

[01:08:16] Speaker 06:
I think we have to assume for purposes of deciding this that there is a possibility of a windfall and the question is whether the government is going to be able to prove the windfall.

[01:08:30] Speaker 02:
Understand that comment we disagree with it because we don't think the government has has grossly oversimplified the way this market works I mean, but I can't you that in a damages calculation proceeding before the court of federal claims But ultimately I we do agree that as a matter of law This is not a defense the government is entitled to raise either with respect to liability or damages and in order to address that head-on

[01:08:59] Speaker 02:
I agree with Your Honor's distinction between the statutory claim and a breach of contract claim.

[01:09:05] Speaker 02:
Regarding the statutory claim, we have a money-mandating statute, like the salary cases from long ago.

[01:09:13] Speaker 02:
This statute is very specific.

[01:09:15] Speaker 02:
It instructs the government who to pay and exactly how much to pay.

[01:09:20] Speaker 02:
The remedy under the Tucker Act is to address

[01:09:24] Speaker 02:
the loss of the legal right to compensation that has occurred here.

[01:09:28] Speaker 02:
And that legal right is for the amount that the statute specified.

[01:09:31] Speaker 05:
Why isn't there a separate question of liability and remedy in, I guess I'm thinking of one analogy maybe not familiar to you, in the patent world, in the eBay context, the Supreme Court said.

[01:09:45] Speaker 05:
The statute says you have a right to exclude.

[01:09:47] Speaker 05:
Separate question of remedy about whether you actually get an injunction to exclude.

[01:09:51] Speaker 05:
And I think it said something somewhat general about

[01:09:54] Speaker 05:
Right is one question, and here the right that you're asserting is a right to have make payments made.

[01:10:02] Speaker 05:
But the question is what, a separate question, what is the remedy for the violation of that right?

[01:10:08] Speaker 05:
And now we're talking about having to draw on remedial principles.

[01:10:13] Speaker 02:
Well, I would say that the law, it is true, we have not found a case that discusses specifically whether the government is entitled to raise offsets or

[01:10:24] Speaker 02:
a defense like the passing on defense in response to a violation of a money mandating statute.

[01:10:30] Speaker 02:
I don't know that there is such a case.

[01:10:32] Speaker 02:
Certainly there is not one suggesting they can.

[01:10:34] Speaker 02:
And in my judgment, the answer in that vacuum is to look at the statute and apply the statute as written and enforce it as written.

[01:10:43] Speaker 02:
That is what the three judges below have all done in response to this situation.

[01:10:48] Speaker 02:
I think that's particularly appropriate given that there truly is no textual hook or legislative history hook whatsoever, respectfully, for the government's argument here.

[01:10:58] Speaker 02:
The Publications Council mentioned from 2015 is an HHS issue brief.

[01:11:06] Speaker 02:
That's not legislative history by anyone's definition.

[01:11:10] Speaker 02:
And there is simply no committee report, no discussion, no floor discussion, anyone suggesting that there should be a linkage

[01:11:17] Speaker 02:
let alone the kind of linkage that's being advocated here between the payment of CSRs and the premium tax credits.

[01:11:27] Speaker 02:
They truly are distinct programs serving distinct purposes.

[01:11:31] Speaker 02:
The premium tax credits help the consumers afford to buy the insurance.

[01:11:36] Speaker 02:
The CSRs help them afford to use it to get health care.

[01:11:40] Speaker 02:
Those are two different things.

[01:11:42] Speaker 02:
And the statute designs them to be two separate payments out of two separate buckets.

[01:11:47] Speaker 02:
And it is simply not appropriate to offset one for the other.

[01:11:52] Speaker 02:
And there's no indication that Congress intended that to be the result here.

[01:11:59] Speaker 02:
With regard to the contract claim and the law we cite in our brief on the passing on defense, it is a proposition that does prevail throughout the law.

[01:12:10] Speaker 02:
Judge Easterbrook talks about this in the Carter v. Burger case that, as I say, passing on of

[01:12:16] Speaker 02:
Pricing increases by the victim of a wrong does not give a defense to the wrongdoer.

[01:12:22] Speaker 04:
And that's generally true.

[01:12:23] Speaker 04:
I mean, that was an antitrust case, I think.

[01:12:25] Speaker 04:
And it's generally true in tort cases as well.

[01:12:28] Speaker 04:
But there, there's a deterrent slash punishment feature.

[01:12:34] Speaker 04:
I wonder if that principle applies in this setting.

[01:12:37] Speaker 02:
Yes.

[01:12:38] Speaker 02:
We think it does.

[01:12:39] Speaker 02:
And the Hughes case, which, by the way, is at 271 F third, 1060,

[01:12:45] Speaker 02:
And specifically, 1072 is the section.

[01:12:48] Speaker 02:
This is an affirmance of the Court of Federal Claims exclusion of a government defense from a trial where the government was trying to reduce the damages to Hughes Satellite Company by the amount that Hughes recouped.

[01:13:04] Speaker 02:
I'm quoting from the case here, recouped by increasing prices to customers.

[01:13:09] Speaker 02:
In other words, by the amount Hughes, quote, passed through to its customers.

[01:13:15] Speaker 02:
The Court of Federal Claims did not allow the government to assert this defense that was affirmed by this court back in 2001.

[01:13:21] Speaker 02:
And it recognized the same principles we mentioned in our brief.

[01:13:28] Speaker 02:
As Justice Holm said.

[01:13:29] Speaker 02:
That wasn't the case either where the government was paying twice, right?

[01:13:33] Speaker 02:
Well, I'm sure the government was arguing, you're asking me to pay damages to Hughes.

[01:13:39] Speaker 02:
They got their damages recovered when they raised their prices to their customers.

[01:13:43] Speaker 02:
I'm sure that was the argument.

[01:13:44] Speaker 04:
But the government was not, in turn, paying the customers the increased price.

[01:13:50] Speaker 02:
Not to my knowledge.

[01:13:51] Speaker 04:
It makes a big difference.

[01:13:52] Speaker 04:
And the collateral source rule in tort, if the money coming to you is not from an insurance company but is from the victim, ultimately, then the collateral source rule doesn't apply.

[01:14:04] Speaker 02:
I think that that would be a matter of- Right, why not?

[01:14:08] Speaker 02:
I don't think that's necessarily true.

[01:14:09] Speaker 02:
I think there would have to be an agreement

[01:14:12] Speaker 02:
Between the wrong door that's that's not my understanding of the rule, but go ahead In this context we have a breach of contract and and the other important policy reason that that that drives the notion that we should not go to this next step of looking at the price increase to our customers in the implications is it is a remote in set of events from the actual non-payment and it

[01:14:39] Speaker 02:
opens up a can of worms regarding what is the actual overall economic impact of the government's violation here.

[01:14:47] Speaker 02:
This is a complex marketplace.

[01:14:50] Speaker 02:
There are lots of consequences to the government's non-payment of the CSRs.

[01:14:55] Speaker 02:
Some perhaps do create some additional revenue.

[01:14:58] Speaker 02:
It's possible to the insurance companies, but others drastically reduce it.

[01:15:03] Speaker 02:
In our case, we know that the

[01:15:05] Speaker 02:
The sales of CSR policies, the silver plans, have gone down a lot for community as a result of these non-payments because they've gotten more expensive.

[01:15:14] Speaker 02:
There are other unknown consequences, and the courts recognize that this is not a task that is appropriate to ask a trial court to do.

[01:15:22] Speaker 02:
to do the kind of complex reverse engineering economic analysis to try to figure out the overall economic effects of this wrong.

[01:15:32] Speaker 02:
Rather, the law looks to the direct and proximate issues and concludes, we have a clear violation.

[01:15:38] Speaker 02:
We have a clear amount due.

[01:15:40] Speaker 02:
That should end the matter.

[01:15:42] Speaker 02:
And that's what the doctrine stands for, and we think it applies here, particularly in light of the fact that we have a money-mandating statute that does not provide for any offset.

[01:15:57] Speaker 02:
I would I have a couple of minutes.

[01:15:59] Speaker 02:
I'll address the implied in fact contract if if the court will entertain that We do have unit in many below here to both Judge Sweeney and Judge Wheeler found an implied in fact contract Judge Kaplan did not address the issue, so she did not rule one way or the other We certainly do acknowledge this court's ruling in the Moda case that there was no implied in fact contract under the risk corridors program and

[01:16:27] Speaker 02:
but we think this case is distinct on that issue because Unlike there where this court found no none of the trappings quote-unquote of a contractual agreement We think those trappings very much exist here if one looks at 1402 in the very same section of this statute it creates reciprocal obligations the government must make these payments the insurance companies must provide the reductions to their insureds and

[01:16:56] Speaker 02:
They're both reciprocal obligations.

[01:16:59] Speaker 02:
The statute can be viewed as an offer.

[01:17:03] Speaker 02:
The insurance company's performance of the duty of providing these reductions can be viewed as an acceptance of that offer and a delivery of consideration to the government in exchange.

[01:17:14] Speaker 04:
Why isn't it the case, though, that, as Ms.

[01:17:16] Speaker 04:
Klein argues, that this is more in the nature of insurance regulation, where the government simply says these are the limits on what you can do?

[01:17:27] Speaker 04:
Oh, by the way, we're going to ameliorate the harshness of our regulation by giving you a funding for this, as opposed to being a contract in which parties have a mutual meeting of the minds.

[01:17:47] Speaker 02:
Well, the banking case that the government recently cited to the court is different in that

[01:17:53] Speaker 02:
There was a bit of cherry picking going on by the plaintiffs.

[01:17:57] Speaker 02:
One, they were pulling obligations out of separate provisions of that statute and trying to cobble something together.

[01:18:03] Speaker 02:
Here, it's all together right in 1402.

[01:18:06] Speaker 02:
And the connection, the reciprocity, is very direct.

[01:18:11] Speaker 02:
The government has to pay exactly the value of the reductions that insurance companies provide to the insureds.

[01:18:18] Speaker 02:
It seems much more like a reciprocal obligation

[01:18:22] Speaker 02:
than simply a regulation.

[01:18:25] Speaker 02:
And certainly, the lower courts viewed that way.

[01:18:27] Speaker 02:
And I do think it is significant as well that the government did perform under this arrangement for 45 months, 3 and 3 quarters years, before it stopped payments.

[01:18:39] Speaker 02:
And we do think that the New York Airways case, which is significant for a number of points at issue in this appeal, is also quite relevant on the implied, in fact, contract claim and so should be considered.

[01:18:52] Speaker 02:
I do want to conclude with my last 15 seconds here.

[01:18:55] Speaker 02:
Well, you actually don't have 15 seconds.

[01:18:59] Speaker 02:
I don't?

[01:18:59] Speaker 02:
Oh, I'm over.

[01:19:00] Speaker 02:
Well, we appreciate the court's indulgence.

[01:19:03] Speaker 02:
Give you the time credit.

[01:19:04] Speaker 02:
I do think it's important.

[01:19:07] Speaker 02:
There is an important broad policy here of- I think you're out of time.

[01:19:12] Speaker 02:
Thank you, Mr. Rhodes.

[01:19:13] Speaker 02:
Thank you, Your Honor.

[01:19:16] Speaker 06:
Ms.

[01:19:16] Speaker 06:
Klein?

[01:19:18] Speaker 01:
Yes, Your Honor.

[01:19:18] Speaker 01:
I'll be brief.

[01:19:20] Speaker 01:
Just quickly on reciprocal obligations.

[01:19:23] Speaker 01:
These are not reciprocal obligations.

[01:19:25] Speaker 01:
And it doesn't matter that the two instructions are in 1402.

[01:19:29] Speaker 01:
If you look back at Dodge, it was one sentence that basically said school teachers who work 20 years shall be entitled to $1,500 a year.

[01:19:37] Speaker 01:
And that packaging did not make it an implied in fact contract.

[01:19:41] Speaker 01:
Here, there's an insurance regulation, lower deductibles and co-pays for a certain category of insureds.

[01:19:49] Speaker 01:
There was no funding for that in the ACA.

[01:19:51] Speaker 01:
The consequence, Congress never chose to fund it, is that premiums went up.

[01:19:56] Speaker 01:
And here, just to refer the court again to the common ground amicus brief, page 9 in the block quote.

[01:20:04] Speaker 01:
This is, again, the amicus brief for 101 insurers on the other side.

[01:20:07] Speaker 01:
It says, if the federal government did not reimburse insurers for cost sharing reductions, insurers would increase planned premiums to cover these costs.

[01:20:16] Speaker 01:
As a result of the ACA structure, these higher premiums would translate into higher federal costs for premium tax credits.

[01:20:25] Speaker 01:
And moreover, because many more people are eligible for premium tax credits than for cost sharing reductions, the result would be a substantial increase in federal costs.

[01:20:33] Speaker 05:
That's the 2015 document.

[01:20:35] Speaker 01:
This is common ground quoting the 2015 document.

[01:20:39] Speaker 01:
So I just want to make clear that this is not just us speaking.

[01:20:41] Speaker 01:
It's not just HHS in 2015 speaking.

[01:20:44] Speaker 05:
This is the class action by 101 insurers on the other side, acknowledging that this is- Do you have any cases you can point to that, and I'm not going to be very precise here, but that rely for an inference about congressional intent on a kind of everybody knows the way this market works kind of theory?

[01:21:07] Speaker 01:
Well, I think if the court looks at the Supreme Court's decision in King,

[01:21:11] Speaker 01:
Essentially, the Supreme Court rejected King versus Burwell.

[01:21:15] Speaker 01:
The Supreme Court rejected the type of approach that the insurers are advocating.

[01:21:19] Speaker 01:
The insurers there said, look, it says exchange established by a state.

[01:21:23] Speaker 01:
Read no further.

[01:21:24] Speaker 01:
That doesn't mean exchange established by the federal government.

[01:21:27] Speaker 01:
And the Supreme Court said, no, we don't just look at that phrase.

[01:21:31] Speaker 01:
We look at it in the context of the ACA, structure, text, other provisions.

[01:21:35] Speaker 01:
And that's all we're asking here, which is don't look at this snippet

[01:21:40] Speaker 01:
in 1402D that says HHS shall make these payments.

[01:21:46] Speaker 01:
And in fact, if you do look just at that, you really should be looking at the Anti-Deficiency Act, which says HHS don't make these payments until we give you the funds.

[01:21:55] Speaker 01:
But more generally, if you were thinking about, well, what would Congress have intended if it thought these particular subsidies aren't going to be funded, it certainly wouldn't have intended to penalize

[01:22:09] Speaker 01:
future Congresses for exercising their appropriations prerogative by making the fisc pay out twice.

[01:22:15] Speaker 01:
It just doesn't make any sense.

[01:22:17] Speaker 01:
And there's no case that's like that.

[01:22:21] Speaker 01:
And just to clean up two small points, the phrase money mandating can be confusing.

[01:22:27] Speaker 01:
And as we understand the Greenlee County decision, the court has treated a much lower bar for Tucker Act jurisdiction

[01:22:35] Speaker 01:
than when saying, well, are limits on funding going to foreclose liability?

[01:22:40] Speaker 01:
And so we have argued these cases as the absence of funding foreclosed liability rather than is jurisdictional, just because that's how we understand this court's precedent.

[01:22:50] Speaker 01:
And finally, Highland Falls illustrates the point that Congress is not a wrongdoer if it chooses not to fund its own programs.

[01:22:59] Speaker 01:
That's an exercise of its appropriations prerogative, and it's not a basis for

[01:23:04] Speaker 01:
implying damages, remedy, liability, however you want to put it.

[01:23:10] Speaker 04:
What is the best case that you have for us to look at that would stand for the proposition that the insurance company, if the insurance companies are getting a benefit from the tax credits, that their damages should be reduced?

[01:23:29] Speaker 04:
The very best case, the closest analogy to that.

[01:23:33] Speaker 01:
So on

[01:23:34] Speaker 01:
The contract point?

[01:23:35] Speaker 04:
No, no, on the statute.

[01:23:38] Speaker 04:
Assuming we don't have the contract.

[01:23:40] Speaker 01:
I can only respond to their argument.

[01:23:43] Speaker 01:
They're arguing about just general pass-through principles.

[01:23:47] Speaker 01:
So the fact that a victim of a wrongdoing passes the cost along to customers doesn't excuse the wrongdoer from paying.

[01:23:57] Speaker 01:
But here, first, we think it's wrong to accept.

[01:23:59] Speaker 04:
Well, it doesn't allow the victim.

[01:24:00] Speaker 04:
It doesn't require the victim to pay.

[01:24:03] Speaker 04:
surrender part of the recovery.

[01:24:05] Speaker 01:
Right.

[01:24:05] Speaker 01:
But here, first, it's wrong to conceptualize Congress as a wrongdoer.

[01:24:09] Speaker 01:
I understand that.

[01:24:10] Speaker 01:
But further, we're talking about, again, this just all goes back to the hydraulic connection between 1401 and 1402.

[01:24:16] Speaker 01:
And we don't know of any statute like that.

[01:24:18] Speaker 04:
You have no case that's ever talked about this, anything like this hydraulic connection that you keep referring to.

[01:24:26] Speaker 01:
Not like this as a damages issue.

[01:24:28] Speaker 01:
Again, I will just go back to King, which is when you're trying to discern Congress's intent

[01:24:33] Speaker 01:
And that's a question, both if you think of it as a liability question or as contours of the damages remedy.

[01:24:39] Speaker 01:
You have to think about the related provisions and how you're doing it.

[01:24:42] Speaker 04:
That's at a very high level of abstraction.

[01:24:43] Speaker 04:
I'm looking for some help that's a little closer to the actual facts that we have here.

[01:24:49] Speaker 04:
You have, I think you're telling me that there was a case that you were able to find.

[01:24:52] Speaker 01:
We didn't find a case, but we didn't find contrary authority either.

[01:24:55] Speaker 01:
We just don't have a case, because it is unusual for an entity that's actually gotten payments from the government

[01:25:02] Speaker 01:
Compensate them for the very subsidy to then come in and say we also should get damages.

[01:25:07] Speaker 01:
We're just not familiar with that ever happening Okay, thank you.

[01:25:11] Speaker 06:
All right.

[01:25:12] Speaker 06:
Thank you.

[01:25:12] Speaker 06:
Thank all counsel the case is submitted