# I n the United States Court of Federal Claims

No. 16-744C

(Filed: November 10, 2016)

*************************************

LAND OF LINCOLN MUTUAL HEALTH INSURANCE COMPANY,

Plaintiffs,

v.

UNITED STATES,

Defendant.

************************************* ) ) ) ) ) ) ) ) ) ) ) ) ) ) Claim by qualified health insurance plan participating in a federally-run state Exchange to damages based upon statutory or regulat ory entitlement to receive “risk-corridors” payments;

Section 1342 of the Patient Protection and Affordable Care Act, 42 U.S.C. § 18062; 45 C.F.R. § 153.510; claims for damages based upon alleged breach of an express contract, an implied-in-fact contract, or an implied covenant of good

faith and fair deal ing; takings claim

Daniel P. Albers, Barnes & Thornburg LLP, Chi cago, Illinois, for plai ntiff. With him on the briefs was Scott E. Pickens, Ba rnes & Thornburg LLP, Washington, D.C.

Terrance A. Mebane and Charles E. Canter , Trial Attorneys, Commercial Litigation Branch, Civil Division, United Stat es Department of Justice, Wa shington, D.C., for defendant. With them on the briefs were Benjamin C. Mize r, Principal Deputy Assistant Attorney General, Civil Division, Ruth A. Harvey, Director, Kirk T. Manhardt, Deputy Director, Serena M. Orloff, Trial Attorney, Frances M. McLaughlin, Trial A ttorney, and L. Misha Preheim, Trial Attorney, Commercial Litigation Branch, Ci vil Division, United States Depart ment of Justice, Washington

D.C.

OPINION AND ORDER

LETTOW, Judge.

Since 2014, Land of Lincoln Mutual Health Insurance Company (“Lincoln”) has provided qualified health insura nce plans in Illinois under the Patient Protection and Affordable Care Act (“the Affordable Care Act” or “the Act”), Pub. L. No. 111-148, 124 Stat. 119 (2010). In this action, Lincoln seeks damages under Sec tion 1342 of the Act, codified at 42 U.S.C. § 18062, which establishes and governs a temporary pr ogram of “risk corrid ors” applicable to calendar years 2014, 2015, and 2016, where qualifying health plans (“QHPs”) participating on2 health insurance Exchanges pay money to or rece ive money from the Department of Health and Human Services (“HHS”), depending upon the rati o of premiums received to claimed costs. 1

Lincoln is an Illinois not-for-p rofit company with its headquar ters in Chicago that served nearly 50,000 customers on the Illinois Health In surance Marketplace in 2014, 2015, and part of 2016. Compl. ¶ 13. 2 Lincoln suffered losses in 2014 and 2015 and thus is deemed eligible to receive payment from HHS under the risk-corridors program. HH S paid Lincoln approximately 12.6% of the amount Lincoln is due for 2014, and nothing for 2015. Compl. ¶ 8. As a general matter, the payments HHS owes to qualified he alth plan issuers under the program exceed the fees received by HHS under the program, and HH S has stated that it will make payments only from fees collected, to the extent such fees ar e available, on a proportiona l basis to those owed

payment.

Lincoln filed its complaint on June 23, 2016, alleging that it ha d a statutory and regulatory entitlement to the full amount of the payments due it under the program for 2014 and 2015, totaling at least $72,859,053, and that the full entitlement was and is due on an annual basis. Compl. ¶¶ 9, 77. Additionally, Lincoln alle ges that the government’s actions breached an express or implied-in-fact contract, breached the implied covenant of good faith and fair dealing, and contravened the Takings Clause of the Fift h Amendment. Compl. ¶ 1. Shortly after the complaint was filed, Lincoln requested “expedite [d] disposition of this action” because, among other things, it otherwise lacked f unds to survive as a c ontinuing entity. Pl.’s Mot. for an Early Pretrial Conference Pursuant to Rule 16(a) at 1 (July 26, 2016), ECF No. 7. In that regard,

Lincoln advised that “the State of Illinois Di rector of Insurance has obtained an Order of Rehabilitation against Lincoln dated July 14, 2016.” Id . at 2. Absent an infusion of funds by September 30, 2016, the health insurance Lincoln was providing to citizens of Illinois would

have to be cancelled. Id . Promptly thereafter, the court held a status conference with the parties, and, because the case involves a claim of st atutory and regulatory entitlement, the court requested the government to file the administrative record of its regulations and its actions respecting Lincoln. See Hr’g Tr. 32:1-2 (Aug. 12, 2016). The court set an accelerated schedule for submission and briefing of potentially dispos itive motions and calendared an early hearing.

See Scheduling Order (Aug. 12, 2016), ECF No. 12. W ith one subsequent adjustment to the

1 The Act assigns HHS the responsibility for im plementing many aspects of the Act. HHS delegates some of those res ponsibilities to the Centers fo r Medicare & Medicaid Services (“CMS”), including the responsibilit y to establish and administer the risk-corridors program. See Delegation of Authorities, 76 Fed. Reg. 53,903, 53,904 (Aug. 30, 2011). For purposes of this opinion, both HHS and CMS will be referred to as “HHS.”

2 Lincoln is a nonprofit issuer that provided health plans thr ough the government’s Consumer Operated and Oriented Plan program, which was intended to “foster the creation of qualified nonprofit health insurance issuers.” See 42 U.S.C. § 18042(a); Pl.’s Mot. for Judgment on the Administrative Record and Mem. in Support (“Pl.’s Mot.”) at 3, ECF No. 20. Nonetheless, as an Illinois health insurance provide r, Lincoln must file it s rates, along with other information, with the State of Illinois and rece ive approval from the State before it can issue

health insurance. See 215 Ill. Comp. Stat. 5/355, 5/143 (2016).3 schedule, see Amended Scheduling Order (Oct. 18, 2016), ECF No. 36, the parties have followed this procedural path.

BACKGROUND

In 2010, Congress enacted the Patient Protectio n and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, to expand individual health insu rance coverage. The Act requires health insurance providers offering health insurance in a particular stat e to accept all individuals and qualified employers applying for coverage in that st ate, subject to certain restrictions. 42 U.S.C. § 300gg-1(a). Further, the Act prohibits insura nce providers from setting premiums based upon a particular person’s health. See King v. Burwell , __ U.S., __, __, 135 S. Ct. 2480, 2486 (2015) (citing 42 U.S.C. § 300gg); see also 45 C.F.R. §§ 147.108-116.

Additionally, the Act establishes health insurance “Exchanges,” i.e. , marketplaces within each state where individuals and qualified empl oyers can purchase health insurance. See 42 U.S.C. § 18031. The Act provides that each i ndividual state may administer its respective Exchange if it elects to do so, or, if the state el ects not to establish an Exchange, “the Secretary shall . . . establish and operate such Exchange within the [s]tate.” 42 U.S.C. § 18041(c)(1). Health insurance providers wishi ng to offer insurance coverage on an Exchange can only do so if they offer a “qualified health plan,” which is defined within the Act and the implementing regulations. See 42 U.S.C. §§ 18021, 18031(b)(1)(A); 45 C.F.R. § 155.20. The Act requires insurers participating on the Exchanges to, among other requirements, be certified as qualified health plans. See 42 U.S.C. § 18031(d)(4)(A), (e); 45 C.F.R. § 155.20.

A. The Risk-Corridors Program

Because the Act enabled health insurance coverage to be made available to many individuals who were previously underinsured or uninsured, Lincol n alleges that health insurance providers “had no previous experience or reliabl e data to meaningfully assess the risks and set the premiums for this new population of insureds .” Compl. ¶ 4. Recognizing this uncertainty, Congress established three stabilization programs, see 42 U.S.C. §§ 18061-18063, to mitigate the uncertainty and pricing risks for insurers, wh ich programs have become commonly known as “reinsurance,” “risk corridors,” and “risk adjustment,” respectively. See HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed. Reg. 15,410, 15,411 (Mar. 11, 2013), AR 1807; 3
Def.’s Mot. to Dismiss and Mot. for Judgment on the Administrative Record on Count I (“Def.’s Mot.”) at 6, ECF No. 22. The risk-corridors program established under Section 1342 of the Act, which is the stabilization program pertinent to Li ncoln’s claims, was designe d to “protect against uncertainty in rate setting for qualified health plans by limiting the extent of issuers’ financial losses and gains.” HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed. Reg. at 15,411, AR 1807. The risk-corri dors program is a three-year tem porary program that pertains to the calendar years of 2014, 2015, and 2016. 42 U.S.C. § 18062(a). It applies only to qualified

3 “AR__” refers to the administrative record certified by HHS and filed with this court in compliance with Rule 52.1(a) of the Rules of the Court of Federal Claims (“RCFC”).4 health plans offered through an Exchange. Id. ; see 45 C.F.R. § 153.510. 4 The program was “based on” a similar program enacted under Part D of Title XVIII of the Social Security Act. 42 U.S.C. § 18062(a) (referring to Pub. L. N o. 108-173, 117 Stat. 2066 (2003) (codified at 42 U.S.C. §§ 1395w-101 et seq. ) (“the Medicare Program”)).

The risk-corridors program calls upon HHS to provide a mechanism to even out the losses and gains of qualified health plan s during the three-year phase-in period. See 42 U.S.C. § 18062(b); 45 C.F.R. § 153.510. When a qualified h ealth plan issuer experiences a loss in a calendar year, such that the plan’s “allowable co sts” are more than 103 percent of the plan’s “target amount” for that year, HHS is directed to pay the issuer a portion of that loss. 42 U.S.C. § 18062(b)(1); 45 C.F.R. § 153.510(b). Correlatively, when the issuer expe riences a gain in a calendar year, such that the plan’s “allowable cost s” are less than 97 percen t of the plan’s “target amount” for that year, the issuer is directed to pay the HHS a certain amount of that gain. 42 U.S.C. § 18062(b)(2); 45 C.F.R. § 153.510(c). The “[p]ayments out” a nd “[p]ayments in” are specified by statute as follows:

(b) Payment methodology

(1) Payments out

The Secretary shall provide under the program established under subsection (a) that if –

(A) a participating plan’s allowable costs for any plan year are more than 103 percent but not more than 108 percent of the target amount, the Secretary shall pay to the plan an amount equal to 50 percent of the target amount in ex cess of 103 percent of the target amount; and

(B) a participating plan’s allowable costs for any plan year are more than 108 percent of the target amount, the Secretary shall pay to the plan an amount equal to the sum of 2.5 percent of the target amount plus 80 percent of allowable costs in excess of 108 percent of the target amount.

(2) Payments in

The Secretary shall provide under the program established under subsection (a) that if –

4 If a health insurer c hooses not to offer coverage through an Exchange, then it is not subject to the risk-c orridors program. See 45 C.F.R Part 155 (“Exchange Establishment

Standards and Other Related Standards under the A ffordable Care Act”), Subpart K (“Exchange Functions: Certification of Qua lified Health Plans”), § 155.1000(b) (“The Exchange must offer only health plans which have in e ffect a certification issued or are recognized as plans deemed certified for participation in an Exchange as a QHP, unless specifically pr ovided for otherwise.”).5 (A) a participating plan’s allowable costs for any plan year are less than 97 percent but not less than 92 percent of the target amount, the plan shall pay to the Secretary an amount equal to 50 percent of the excess of 97 percent of the target amount over the allowable costs; and

(B) a participating plan’s allowable costs for any plan year are less than 92 percent of the target am ount, the plan shall pay to the Secretary an amount equal to the sum of 2.5 percent of the target amount plus 80 percent of the exces s of 92 percent of the target

amount over the allowable costs.

42 U.S.C. § 18062(b). 5 Allowable costs include the costs incurred by the qualified health plan in providing benefits under the plan, other than admi nistrative costs. 42

5 The HHS regulations implementing the payment-out methodology set forth “substantially similar terms” to those set out in th e statute. Def.’s Mot. at 7 (citing 45 C.F.R. § 153.510(b)-(c)). As HHS explained:

For example, a [qualified health plan ] has a target amount of $10 million, and the [qualified health plan] has a llowable costs of $10.5 million, or 105 percent of the target amount. Sin ce 103 percent of the target amount would equal $10.3 million, the amount of allowable costs that exceed 103 percent of the target amount is $200,000. Therefore, HHS would pay 50 percent of that amount, or $100,000 to the [qualified health plan] issuer.

Standards Related to Reinsurance, Risk Corridors and Risk Adjustment, 76 Fed. Reg. 41,930, 41,943 (July 15, 2011), AR 11295. And further:

For example, a [qualified health plan ] has a target amount of $10 million. The [qualified health plan] has a llowable costs of $11.5 million, or 115 percent of the target amount. Sin ce 108 percent of the target amount would be $10.8 million, the amount of allowable costs that exceed 108 percent of the target amount is $700,000. Therefore, HHS pays 2.5 percent of the target amount, or $250,000, plus 80 percent of $700,000, or $560,000, for a total of $810,000.

Id

.

The regulations follow the Act in setting forth the obverse methodology when a qualified health plan issuer reports gains in a calendar y ear, but the issuer is re quired to make payments rather than receive payments. The issuer is required to pay HHS under the same formulas, but the allowable cost-to-target amount ratios are 97 and 92 percent, ra ther than 103 and 108 percent.

See 45 C.F.R. § 153.510(b), (c).6 U.S.C. § 18062(c)(1)(A). 6 The target amount consis ts of the total amount of premiums received under the plan, reduced by any administrative costs. 42 U.S.C. § 18062(c)(2). 7

The Act does not include a time limit by which payments must be made to, or received from, HHS, see 42 U.S.C. § 18062, but the implementing re gulations do include a deadline for when qualified health plan issuers must pay HHS. If a qualified health plan’s allowable costs are sufficiently below the target amount such that the issuer is required to make payments to HHS, the issuer must do so “within 30 days after notification of such charges.” 45 C.F.R. § 153.510(d). In March 2012, before HHS implemente d this regulation, HHS noted that it had considered a 30-day deadline for paying qualified health plan issuers because “issuers who are owed these amounts will want prompt payment, and payment deadlines should be the same for HHS and [qualified health plan] issuers.” Standa rds Related to Reinsurance, Risk Corridors and Risk Adjustment, 77 Fed. Reg. 17,220, 17,238 (Mar. 23, 2012), AR 969. Even so, this deadline was only considered by HHS; it was not incl uded in the proposed or final rule. Id. And, the implementing regulation did not refer to a ny time limit for HHS to make payments. See 45 C.F.R. § 153.510. Instead, HHS explained through a guidance bul letin issued on April 11, 2014, that if it failed to make sufficient payments for 2014, it would use the program’s collected fees from 2015, and then 2016 if necessar y, to satisfy amounts due. CMS, Risk Corridors and Budget Neutrality (Apr. 11, 2014), AR 108-09. HHS explained th at it would be administering the riskcorridors payments “over the three-year life of the program, rather than annually.” Exchange

and Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. 30,240, 30,260 (May 27, 2014), AR 6195.

6 Allowable costs are also reduced by “any ri sk adjustment and reinsurance payments received” by the qualified health plan issuer under Sections 1341 and 1343 of the Act. 42 U.S.C. § 18062(c)(1)(B).

7 HHS had no direct role in the premiums Lincoln charged for its health insurance coverage, either for individuals or for small groups. Hr’g Tr. 47:4-8 (Nov. 7. 2016) (“HHS has no legal say in what any QHP charges in its premiums.”) (The date will be omitted from subsequent citations to the tran script of the hearing held on Nov. 7, 2016.). Rather, by providing coverage (and participating on the federally-run Exchange for Illin ois), Lincoln agreed to offer qualifying plans ( e.g. , platinum, gold, silver, bronze) and to accept applicati ons notwithstanding pre-existing conditions. Hr’g Tr. 47:12 to 48:19; see also 42 U.S.C. § 18022(d) (levels of coverage). The premium rates for those plans were subject to regulation by the State of Illinois’ Department of Insurance. See supra , at 2 n. 2; Hr’g Tr. 47:5-8.

Federal law and regulations require plan s seeking premium increases to provide justification for the increases and to post the justification on the issuers’ website. See 42 U.S.C. § 18031(e)(2); 45 C.F.R. § 155.1020. The regulations require consideration of specified factors in determining rate increases. 45 C.F.R. § 155.1020(b); see also Hr’g Tr. 13:22 to 14:25. An Exchange can take the justification into account in deciding whether to make a plan available through the Exchange. 42 U.S.C. § 18031(e)(2).7 B. Funding of the Risk-Corridors Program

Paragraphs 1342(b)(1) and (2) of the Act provi de that HHS “shall pay” and plans “shall pay” amounts due out and due in under th e payment methodology described in Subsection 1342(b), but the Subsection is otherwise silent regarding deficits or excess funds under the riskcorridors program. See 42 U.S.C. § 18062(b); Def.’s Mot. at 8 (“Congress did not include in the [Act] either an appropriation or an authorization of funding for risk corridors.”). The Government Accountability Office (“GAO”) reached this same conclusion in 2014 in response to a congressional inquiry. See The Honorable Jeff Sessions, the Honorable Fred Upton, B-325630, 2014 WL 4825237, at *2 (Comp. Gen. Sept. 30, 2014) , AR 116 (“Section 1342, by its terms, did not enact an appropriation to make the paym ents specified in [S]ection 1342(b)(1).”) (“ GAO Op. ”). 8 Similarly, the implementing regulation states that qualified health plans will receive payments from HHS without any reference to an y source of funding or appropriations apart from the “payments in.” See 45 C.F.R. § 153.510(b).

On July 15, 2011, HHS noted in a proposed rule th at prior to enactment of the Affordable Care Act, the Congressional Budget Office (“CBO”) analyzed the estimated costs that would be attributable to passage, but “did not score the imp act of risk corridors,” under the assumption that “collections would equal payments to plans in the aggregate.” Standards Related to Reinsurance, Risk Corridors and Risk Adjustment, 76 Fed. Reg. at 41,948, AR 11300; see Letter from Douglas W. Elmendorf, Director, Congressional Budget Office, to Nancy Pelosi, Speaker, U.S. House of Representatives, Table 2 (Mar. 20, 20 10), https://www.cbo.gov/site s/default/files/111th -congress-2009-2010/costestimate/amendreconpr op.pdf (“March 2010 CBO Letter”) (providing an estimate of the spending and revenue impact for the Act’s two other stabilization programs, reinsurance and risk adjustment, but not for th e risk-corridors program ). Despite this budgetscoring circumstance and the lack of specific authorization for a ppropriations, on March 11, 2013, HHS stated in adopting a final rule that “[t]he risk corri dors program is not statutorily required to be budget neutral. Regardless of th e balance of payments and receipts, HHS will

8 GAO drew upon its prior appropriation precedents for its reasoning:

At issue here is whethe r appropriations are availa ble to the Secretary of HHS to make the payments specified in section 1342(b)(1). Agencies may incur obligations and make expenditures only as permitted by an appropriation. U.S. Const., art. 1, § 9, cl. 7; 31 U.S.C. § 1341(a)(1); B300192, Nov. 13, 2002, at 5. Appropriations may be provided through annual appropriations acts as well as through permanent legislation. See

e.g. , 63 Comp. Gen. 331 (1984). The making of an appropriation must be expressly stated in law . 31 U.S.C. § 1301(d). It is not enough for a statute to simply require an agency to make a payment . B-114808, Aug. 7, 1979. Section 1342, by its terms, did not enact an appropriation to make the payments specified in secti on 1342(b)(1). In such cases, we next determine whether there are other appr opriations available to an agency for this purpose.

GAO Op. , 2014 WL 4825237, at *2, AR 116 (emphasis added).8 remit payments as required under section 1342 . . . .” HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed. Reg. at 15,473, AR 1869. Th en, one year later, HHS issued a final rule stating that the risk-corri dors program would be implemented “in a budget neutral manner,” while also noting the possibility of “future adjustments . . . to th e extent necessary.” HHS Notice of Benefit and Payment Parameters for 2015 Final Rule, 79 Fed. Reg. 13,744, 13,787 (Mar. 11, 2014), AR 4929.

In its guidance of April 11, 2014, HHS explai ned that under the budge t-neutral criterion for administration of the program, fees collect ed by HHS through the program would be the only funds used to pay the qualified hea lth plans eligible for payment. Risk Corridors and Budget Neutrality , AR 108; see 160 Cong. Rec. H9838 (daily ed. Dec. 11, 2014) (noting that budget neutral means “the federal government will never pay out more than it collects from issuers over the three year period risk corridors are in effect”). Thus, qua lified health plans with allowable costs less than 97 percent of the target amount fo r the year would supply the funds used to pay qualified health plans with allowable costs greater than 103 percent of the target amount for the year. In its guidance of Ap ril 2014, HHS went on to state:

[I]f risk corridors collections are insufficient to make risk corridors payments for a year, all risk corridors payments for th at year will be reduced pro rata to the extent of any shortfall. Risk corridors collections received for the next year will first be used to pay off the payment reduc tions issuers experienced in the previous year in a proportional manner, up to the point where issuers are reimbursed in full for the previous year, and will then be used to fund current year payments.

Risk Corridors and Budget Neutrality , AR 108. HHS has adhered to this budget-neutral implementation in subseque nt rules and guidance. See e.g. , Exchange and Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. at 30,260, AR 6195; HHS Notice of Benefit and Payment Parameters for 2016, 80 Fed. Reg. 10,750, 10,779 (Feb. 27, 2015), AR

8153.

In establishing this payment plan, HHS rec ognized the “unlikely” possibility that HHS

would not receive sufficient collection fees to ma ke all necessary payments for the 2016 calendar year, the final year of the program. HHS Notic e of Benefit and Payment Parameters for 2016, 80 Fed. Reg. at 10,779, AR 8153. If such a situation di d occur, however, HHS stated it would “use other sources of funding for the risk corridors payments, subj ect to the availability of appropriations.” Id.

In September 2014, GAO responded to a congres sional inquiry by finding that HHS, and more specifically CMS, was permitted to dr aw from its general lump-sum 2014 programmanagement appropriation of $3.6 billion to make payments under the risk-corridors program. GAO Op. , 2014 WL 4825237, at *2-5, AR 116-20. 9 GAO nonetheless noted that for general funds to be available in 2015, the year HHS ha d stated it would begin making risk-corridors

9 The parties have reported that CMS’s program-management appropriation for 2014 was spent. Hr’g Tr. 8:8-19.9 payments, the 2015 CMS appropriation would have to “include language similar to the language” in the 2014 CMS appropriation. Id. at *5, AR 120. 10 Shortly thereafter, in December 2014, Congress enacted the Consolidated and Fu rther Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 227, 128 Stat. 2130, 2491 (2014), wh ich differed from the 2014 appropriation act by explicitly prohibiting HHS from using any of its lump-sum appropriation for payments under the risk-corridors program in the 2015 fiscal year. 11 An identical provision appeared in the Consolidated Appropriations Act, 2 016, Pub. L. No. 114-113, § 225, 129 Stat. 2242, 2624 (2015), for the 2016 fiscal year.

10 The appropriation for 2014 sp ecifically provided:

For carrying out, except as otherwise provided, titles XI, XVIII, XIX, and XXI of the Social Security Act, title s XIII and XXVII of the PHS Act, the Clinical Laboratory Improvement Amendments of 1988, and other responsibilities of the Centers for Me dicare and Medicaid Services, not to exceed $3,669,744,000, to be transferred from the Federal Hospital

Insurance Trust Fund and the Federa l Supplementary Medical Insurance Trust Fund, as authorized by section 201(g) of the Social Security Act; together with all funds collected in accordance with section 353 of the PHS Act and section 1857(e)(2) of the So cial Security Act, funds retained by the Secretary pursuant to section 302 of the Tax Relief and Health Care Act of 2006; and such sums as may be collected from authorized user fees and the sale of data, which shall be credited to this account and remain available until September 30, 2019.

Consolidated Appropriations Act, 2014, Pub. L. No. 113-76, Div. H, Title II, 128 Stat. 5, 374 (2014). GAO found that the appropriation “made funds available to CMS to carry out its responsibilities, which, with the enactment of [S]ection 1342 , include the risk corridors program.” GAO Op. , 2014 WL 4825237, at *3, AR 117.

Notably, the Consolidated Appropriations Act, 2014, allowed “such sums as may be

collected from authorized user fees and the sale of data” to “remain available until September 30, 2019.” Pub. L. No. 113-76, Div. H, Title II, 128 Stat. 374. To be subject to that limited continuing authorization, however , the user fees had to be co llected in fiscal year 2014. See Hr’g

Tr. 56:23 to 58:25.

11 The 2015 Appropriations Act specifically stated:

None of the funds made available by this Act from the Federal Hospital

Insurance Trust Fund or the Federa l Supplemental Medical Insurance Trust Fund, or transferred from othe r accounts funded by this Act to the

“Centers for Medicare and Medica id Services—Program Management” account, may be used for payments under section 1342(b)(1) of Public Law 111–148 (relating to risk corridors).

Pub. L. No. 113-235, § 227, 128 Stat. 2130, 2491 (2014).10 In these circumstances, HHS has acknowledge d its statutory obligation to make full payments to qualifying health plan issuers under Section 1342, subject to the availability of

funds. See Exchange and Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. at 30,260, AR 6195 (“HHS rec ognizes that the Affordable Ca re Act requires the Secretary to make full payments to issuers.”); HHS Noti ce of Benefit and Payment Parameters for 2016, 80 Fed. Reg. at 10,779, AR 8153 (noting that CMS w ould draw upon “risk corridors collections” and might be able to “use other sources of fundi ng for the risk corridors payments, subject to the availability of appropriations”); Def.’s Mot. App. at A47 (CMS, Risk Corridors Payments for

2015 (Sept. 9, 2016)) (same). 12

C. Lincoln is a Qualified Health Plan Issuer That Has Not Yet Received All Payments Owed to It Under the Risk-Corridors Program

In September 2013, Lincoln sought to become a qualified health plan issuer and entered into an agreement with HHS, acting through CMS. Compl. ¶¶ 35-36, Ex. 2. The agreement remained valid until December 31, 2014. Compl. Ex. 2, Section III.a. Lincoln entered into similar agreements with “materially and substant ially identical” terms for the calendar years of 2015 and 2016. Compl. ¶¶ 41, 45, Exs. 3-4. 13 Each agreement provides that the qualified health plan issuer will abide by certain standards when using “CMS Data Services Hub Web Services,” such as performing certain testing and formatting transactions appropriately. Compl. Ex. 2, Section II.b; Ex. 3, Section II.b; Ex. 4, Section II.b. Each agreemen t also states that “CMS will recoup or net payments due” to the qualified health plan issuer w ith respect to the “payment of [f]ederally-facilitated Exchange user fees.” Co mpl. Ex. 2, Section II.c; Ex. 3, Section III.b; Ex. 4, Section III.b.

Thus, Lincoln was certified as a qualified h ealth plan issuer unde r the risk-corridors program for the calendar years of 2014, 2015, and 2016. Lincoln alleges that it relied upon the protections offered by the risk-c orridors program when it agreed to become a qualified health plan issuer, and that it set premiums for its qualif ied health plans at lower rates than it otherwise

12 Like plaintiff’s motion, defe ndant’s motion is accompanie d by a sequentially paginated appendix, but one that consists of only two documents, viz ., CMS’s “Standard Companion Guide Transaction Information[:] Instructions related to the ASC X12 Benefit Enrollment and Maintenance (834) transaction, based on the 005010X220 Implementation Guide and its associated 005010X220A1 addenda for the Federally [F]acilitated Ex change (FFE)[- -] Comparison Guide Version Number: 1.5[,] Marc h 22, 2013,” Def.’s Mot. App. at A1-A46, and a memorandum from CMS dated September 9, 2016 styled “Risk Corridors Payments for 2015,”

id. at A47-A48. The index to the appendix notes that this memorandum is incorrectly dated September 9, 2015.

13 Notably, the title of the agreement changed from “Agreement Between Qualified Health Plan Issuer and [CMS]” in 2014 to “Qualified H ealth Plan Certification Agreement and Privacy and Security Agreement Between Qualified Health Plan Issuer and [CMS]” in the 2015 and 2016

agreements. See Compl. Exs. 2, 3, 4.11 would have if the program had not been in place. Compl. ¶ 28; Pl.’s Mot. at 5; cf

. HHS Notice of Benefit and Payment Parameters fo r 2014, 78 Fed. Reg. at 15,413, AR 1809 (“The risk corridors program will protect [qualified health plan] issuers . . . against inaccurate rate setting and will permit issuers to lower rates . . . .”).

Lincoln suffered losses in 2014, and as a result Lincoln was due $4,492,243.80 for 2014 under the risk-corridors program’s payment me thodology. AR 270. In October 2015, however,

HHS announced that it received $362 million in fees under the ri sk-corridors program, but owed $2.87 billion in payments. CMS, Risk Corridors Payment Proration Rate for 2014 (Oct. 1, 2015), AR 1254. Due to the budget-neutral criterion, HHS paid qualified health plan issuers 12.6% of the payments they were owed. Id. As a result, HHS paid Lincoln $566,825.32, but still owes Lincoln $3,925,418.48 in ri sk-corridors payments for 2014. AR 270; Pl.’s Mot. at 7. HHS explained that it will pay the remainder of the 2014 payments with fees collected from the 2015 risk-corridors program, and the 2016 program if necessary. AR 293.

Lincoln also claims that it is entitled to $71,833,251 from HHS under the risk-corridors program for losses Lincoln suffered in 2015. Pl .’s Mot. at 7-8 & App. 8 at A56 to A59. 14 HHS has not announced final collections and paym ents for 2015, but HHS stated in September 2015 that it anticipates “all 2015 benefit year collec tions will be used towards remaining 2014 benefit year risk corridors payments, and no funds will be available at this time for 2015 benefit year risk corridors payments.” Def.’s Mot. App. at A47. HHS has since indicated that it plans to begin making further payments for 2014 in D ecember 2016, but it has no t yet specified the

amount of fees it collected in 2015. See AR 1498; Def.’s Mot. at 13-14.

D. Lincoln’s Action in This Court

Lincoln filed this action on June 23, 2016. It a lleges that it is enti tled to damages from the government on the grounds that the governme nt violated its risk -corridors “payment obligations” under Section 1342 of the Act and th e implementing federal regulations (Count I), breached an express contract or, alternatively, an implied-in-fact contract (Counts II, III), breached the implied covenant of good faith and fair dealing (Count IV), and contravened the Fifth Amendment by taking Lincoln’s property fo r public use without ju st compensation (Count V). See generally Compl. Lincoln demands $75,758,669.48 from the government for payments Lincoln is allegedly owed to date under th e risk-corridors progr am, consisting of $3,925,418.48 for 2014 and $71,833,251 for 2015. Pl.’s Mot. at 2. 15 Lincoln additionally requests that the

14 In 2015, Lincoln’s experience deteriorated to the point that its adjusted risk-corridors ratio for individual coverage was 183.5% and th at for small-group coverage was 177.7%, Pl.’s Mot. App. 8 at A59, far removed from the target amounts.

15 Lincoln requested an amount of “at least $72,859,053” when it filed its complaint in June 2016, Compl. at 44-45, but Lincoln subsequently adjusted that figure in September 2016 to

reflect Lincoln’s final 2015 costs. See Pl.’s Mot. at 2; Pl.’s Reply in Support of Mot. for Judgment on the Administrative Record (“Pl.’s Reply”) at 6 n.4, ECF No. 37.12 court require the government to fulfill its risk-corridors payment obligations for 2015 and 2016 within 30 days of determining pa yments owed. Compl. at 45.

On September 23, 2016, Lincoln filed a moti on for judgment on the administrative record, and the government filed a motion to dism iss Lincoln’s claims and a motion for judgment on the administrative record with respect to Count I. See generally Pl.’s Mot.; Def.’s Mot. The government argues that the court should dismi ss Lincoln’s claims for lack of jurisdiction pursuant to RCFC 12(b)(1), or, al ternatively, that it is entitled to judgment on the administrative

record under Count I and that the court should di smiss Counts II, III, IV, and V for failure to state a claim pursuant to RCFC 12(b)(6). See generally Def.’s Mot. Lincoln opposed the government’s motion and filed a cross-motion fo r judgment on the admini strative record with respect to Counts II-V, see Pl.’s Resp. in Opp’n to Def.’s Mot. to Dismiss and Mot. for Judgment

on the Administrative Record and Cross-Mot. for Judgment on the Administrative Record on Counts II-V (“Pl.’s Resp. and Cross Mot.”) , ECF No. 29, which the government opposed, see Def.’s Opp’n to Pl.’s Cross-Mot. for Judgment on the Administrative Record on Counts II-V (“Def.’s Opp’n to Pl.’s Cross Mot.”), ECF No. 43. The competing motions were addressed at a hearing held on November 7, 2016.

JURISDICTION

A. The Court Has Subject Matter Jurisdiction Over Lincoln’s Claims for Money Damages, but Not Over Lincoln’s Request for Declaratory Relief

1. Claim for money damages under Section 1342 and the implementing regulations.

As plaintiff, Lincoln has the burde n of establishing jurisdiction. See Reynolds v. Army &

Air Force Exch. Serv. , 846 F.2d 746, 748 (Fed. Cir. 1988). Under the Tucker Act, this court has jurisdiction “to render judgment upon any claim against th e United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1). The Tucker Act waives sovereign immunity, which allows a plaintiff to su e the United States for money damages. United States v.

Mitchell , 463 U.S. 206, 212 (1983). It doe s not, however provide a plai ntiff with any substantive rights. United States v. Testan , 424 U.S. 392, 398 (1976). Rather, to establish jurisdiction, “a plaintiff must identify a separa te source of substantive law th at creates the right to money damages.” Fisher v. United States , 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc in relevant part) (citing Mitchell , 463 U.S. at 216; Testan , 424 U.S. at 398); Jan’s Helicopter Serv., Inc. v.

Federal Aviation Admin. , 525 F.3d 1299, 1309 (Fed. Cir. 2008) (noting that the source of substantive law must be “money-mandating” to s upport jurisdiction under the Tucker Act). This jurisdictional inquiry is sepa rate from the merits of th e case and “does not require a determination that the plaintiff has a claim on the merits.” Greenlee Cnty. , Ariz. v. United States

, 487 F.3d 871, 875 (Fed. Cir. 2007); see also Engage Learning, Inc. v. Salazar, 660 F.3d 1346, 1353 (Fed. Cir. 2011) (“We have held that juri sdiction under [the Contra ct Disputes Act, 41 U.S.C. § 7102(a), like the Tucker Ac t,] requires no more than a non-frivolous allegation of a contract with the government.”) (emphasis in original) (citations omitted); Jan’s Helicopter13 Serv. , 525 F.3d at 1309 (“There is no further jurisdic tional requirement that the court determine whether the additional allegations of the compla int state a nonfrivolous claim on the merits.”).

In short, the court will ha ve jurisdiction when a plaintiff invokes a money-mandating

source and makes a “non-frivolous assertion” that the plaintiff is entitled to relief under that

source. Jan’s Helicopter Serv. , 525 F.3d at 1307 n.8; Greenlee Cnty.

, 487 F.3d at 876-77 (citations omitted). A source is money-mandating when “it can fairly be interpreted as mandating compensation” by the government. United States v. White Mountain Apache Tribe

, 537 U.S. 465, 472 (2003) (citing Mitchell , 463 U.S. at 217). Under this standard, a source will be money-mandating when it is “reasonably amenable to the reading that it mandates a right of recovery in damages.” ARRA Energy Co. I v. United States , 97 Fed. Cl. 12, 19 (2011) (quoting White Mountain Apache Tribe , 537 U.S. at 473). In contrast , a source is not money-mandating when it provides the government with “complete discretion” regardi ng whether it will make

payments. Doe v. United States , 463 F.3d 1314, 1324 (Fed. Cir. 2006) (citations omitted); see ARRA Energy Co. I

, 97 Fed. Cl. at 19 (noting that the de termination of whether a source is money-mandating “generally turns on whether th e government has discretion to refuse to make payments under that [source]”).

While the word “may” in a statute creates a presumption of government discretion, Doe

, 463 F.3d at 1324 (citing McBryde v. United States, 299 F.3d 1357, 1362 (Fed. Cir. 2002)), the Federal Circuit has “repeatedly recognized that the use of the word ‘s hall’ generally makes a statute money-mandating.” Greenlee Cnty.

, 487 F.3d at 877 (quoting Agwiak v. United States, 347 F.3d 1375, 1380 (Fed. Cir. 2003)). For example, in Agwiak , the Federal Circuit found that a statute and its implementing regulations were mo ney-mandating because both stated that certain employees “shall be paid” by the government. 347 F.3d at 1380; see also Greenlee Cnty. , 487 F.3d at 877 (finding that the rele vant statute was “r easonably amenable” to a money-mandating interpretation because it provided th at “the Secretary of the Interior shall make a payment . . .”); Lummi Tribe of the Lummi Reservation v. United States , 99 Fed. Cl. 584, 594 (2011) (finding a statute to be money-mandating because the us e of the word “shall” bound the government “to pay a qualifying tribe the amount to which it is en titled under the [statutory] formula”). Even if the word “shall” is not present, a statute can still be money-mandating when the government is required to make payments after certa in statutory requirements are met. See Fisher , 402 F.3d at 1174-75; see also United States v. Larionoff , 431 U.S. 864, 869 (1977) (construing and applying a statute providing a reenlistment bonus for active duty soldiers); Laughlin v. United States , 124 Fed. Cl. 374, 383-85 (2015) (addressing a stat ute governing the Dental Office Multiyear Retention Bonus applicable to the military), appe al filed , No. 16-1627 (Fed. Cir.) (to be argued Dec. 8, 2016); Hale v. United States , 107 Fed. Cl. 339, 345-46 (2012) (applying statutes providing military service members with special and incentive bonuses), aff’d , 497 Fed. Appx. 43 (Fed. Cir. 2013).

Here, Section 1342 of the Act provides that when a qualified health plan’s allowable costs exceed the target amount by more than 103 pe rcent, “the Secretary shall pay to the plan” an amount set forth in Section 1342, depending on whet her the costs exceed the target amount by more than 103 or 108 percent. 42 U.S.C. § 18062(b)(1) (emphasis added). Further, the implementing regulation states that qualified he alth plan issuers “wil l receive payment from

HHS” under the criteria and formulas describe d in Section 1342. 45 C.F.R. § 153.510(b).14 Neither the statute nor the regulation use the word “may” or provide any indication that HHS has

discretion to refuse risk-corrido rs payments if funds are availa ble. Regardless of whether the program is budget neutral or whether full paym ents are required annually, which topics are

addressed infra , it is evident that HHS is obliged to make payments to qualified health plans

when certain criteria are satisfied and funds are available. HHS has acknowledged this requirement. See, e.g.

, Exchange and Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. at 30,260, AR 6195 (“HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issu ers.”). Thus, Section 1342 and the implementing regulation are money-mandating sources of law.

Nonetheless, the government argues that the court does not have jurisdiction over Lincoln’s claims because the payments that HHS owes are not “presently due.” Def.’s Mot. at 16. To support its argument, the government cites Todd v. United States , where the Federal Circuit held that this court has jurisdiction under the Tucker Act only when the money damages are “actual” and “presently due.” 38 6 F.3d 1091, 1093-94 (Fed. Cir. 2004) (quoting Testan , 424 U.S. at 398 (in turn quoting United States v. King , 395 U.S. 1, 3 (1969))). This court has found jurisdiction lacking under the “presently due” stan dard when, for example, a plaintiff brought suit against the government to r eceive a lump sum set forth in a settlement agreement between the two parties, but the agreement provided for periodic payments. See Annuity Transfers, Ltd. v.

United States , 86 Fed. Cl. 173, 179-80 (2009). Because the government was current on its periodic payments and further payments were not presently due, the plaintiff was not entitled to bring suit for the entire sum. Id. The government contends that a similar analysis applies to

Lincoln’s claims because HHS has established a three-year framework and payments under the risk-corridors programs will not be due until the end of the program in 2016, to the extent funds are available, even for losses that qualified hea lth plans incurred in 2014 and 2015. Def.’s Mot. at 16-17. The government argues that th e “fair inference” standard, discussed supra , must be analyzed in conjunction with this “presently due” requirement. See Def.’s Opp’n to Pl.’s Mot. for Judgment on the Administrativ e Record (“Def.’s Opp’n to Pl .’s Mot.”) at 11, ECF No. 30.

The government’s argument reaches too far. The court’s jurisdictional analysis differs depending on whether the plaintiff re lies on a money-mandating statute. See Bevevino v. United

States , 87 Fed. Cl. 397, 408 (2009) (noting that the Federal Circuit has “distinguished cases brought under money-mandating stat utes, and those brought under st atutes that are not moneymandating”) (citing Dysart v. United States, 369 F.3d 1303, 1315 n.9 (Fed. Cir. 2004)); Speed v.

United States , 97 Fed. Cl. 58, 66-68 (2011) (distinguishing between the jurisdictional analysis for claims arising out of a money-mandating statut e and claims arising out of a contract). The cases upon which the government relies, such as Todd and Annuity Transfers , relate to allegations based upon contracts, rath er than money-mandating statutes. See Todd , 386 F.3d at 1094; Annuity Transfers , 86 Fed. Cl. at 179-80. In rejecti ng the government’s jurisdictional challenge, the court in Bevevino explained that the governme nt’s reliance on Todd was “misplaced” because the claims in Todd were premised on contractual obligations, whereas the

claims in Bevevino were based upon a money-mandating stat ute. 87 Fed. Cl. at 407-08. Similarly, Lincoln’s claim in Count I is based upon Section 1342 of the Act and its implementing regulation, which can be fairly in terpreted as money-mandating sources of law. Thus, the court has jurisdiction over Lincoln’s clai m. In this instance, the gove rnment concedes that at least15 some money was due and more may be due shor tly, even though all of Lincoln’s claimed amounts might not be paya ble on a current basis. 16

2. Claims for money damages under an express contra ct or, alternatively, an implied-in-fact contract theory.

This court has jurisdiction “to render judgm ent upon any claim against the United States founded . . . upon any express or implied contra ct with the United States.” 28 U.S.C. § 1491(a)(1). Thus, as discussed supra , a contract can serve as the substantive source for a plaintiff’s claim to monetary relief under the Tucker Act. See Speed , 97 Fed. Cl. at 64 (citing

Ransom v. United States , 900 F.2d 242, 244 (Fed. Cir. 1990)).

Similar to the court’s jurisd ictional analysis of Lincoln’ s claim based upon Section 1342,

the merits of Lincoln’s contract claims must be separated fro m the court’s assessment of its power to rule on these claims. See Engage Learning

, 660 F.3d at 1353-54. The court has jurisdiction over express and im plied contract claims as l ong as a plaintiff makes a “nonfrivolous allegation of a cont ract with the government.” Id. (citing Lewis v. United States, 70 F.3d 597, 602, 604 (Fed. Cir. 1995); Gould, Inc. v. United States, 67 F.3d 925, 929-30 (Fed. Cir. 1995)). However, the claim must still be for “actual, presently due money damages.” Speed , 97 Fed. Cl. at 66 (citing King , 395 U.S. at 3).

Here, Lincoln seeks risk-corridors payments of $3,925,418.48 for 2014 and $71,833,251 for 2015. Pl.’s Mot. at 2. Lincoln argues that it is entitled to these pa yments under an express contract theory because prior to each year of the risk-corridors program Lincoln offered a qualified health plan, and it allegedly entered into written agreements with HHS that allegedly required HHS to make full payment for the upcoming year. See Compl. ¶¶ 166-78; Pl.’s Resp. and Cross-Mot. at 31-35, 39-43. Alternatively, Lincoln argues that the course of conduct

16 The government embellishes its contention that the court lacks jurisdiction over Count I by referring to HHS’s three-year framework fo r applying “payments in” and “payments out,” urging that no further payments for 2014 are now due, and averring that the “presently due” standard consequently has not been satisfied. As the government would have it, the decision by HHS to apply a three-year framewor k is entitled to deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837, 842-43 (1984). See Def.’s Mot. at 17- 18; Hr’g Tr. 70:6-9. This argument is mispl aced. The government’s argument addresses the

merits of whether and when Linc oln is entitled to recover mo ney under the statute, which does not correspond to the jurisdicti onal inquiry of whether the stat ute itself is money-mandating. See Greenlee Cnty. , 487 F.3d at 876 (explaining that the mone y-mandating analysis only requires the court to ask “whether the plainti ff is within the class of plaint iffs entitled to recover under the statute if the elements of a cause of action are established”) (citing Fisher , 402 F.3d at 1172-73).

The Chevron prongs apply to the merits of the case, as discussed infra

. See generally Adair v.

United States , 497 F.3d 1244 (Fed. Cir. 2007) (applying th e “reasonably amendable” standard

without reference to Chevron deference in finding jurisd iction through a money-mandating source of law, and then applying a Chevron analysis to the merits of the case); Sharp v. United

States , 80 Fed. Cl. 422, 427 (2008) (same).16 between the government and Lincoln gave rise to an implied-in-fact contract that would alsoentitle Lincoln to full annual payments from HHS. Compl. ¶¶ 180-97; Pl.’s Resp. and CrossMot. at 39 (“[T]he [g]overnment’s promise to ma ke payment can induce behavior that constitutes a mutuality of intent to contract.”).

The court concludes that Linc oln has sufficiently made non- frivolous contract claims against the government for monetary relief. Linc oln has established that it entered into written agreements with HHS certifying Lincoln as a qu alified health plan pr ovider under the riskcorridors program for all th ree years of the program. See Compl. Exs. 2-4. Further, the government engaged in conduct that indicated an intent to make at least some payments under the risk-corridors program to qualified health plans. See, e.g. , HHS Notice of Benefit and Payment Parameters for 2014, 78 Fed. Reg. at 15 ,411, AR 1807 (“The risk corridors program will protect against uncertainty in rate setting fo r qualified health plans by limiting the extent of

issuers’ financial lo sses and gains.”).

Thus, the court has jurisdiction over Lincoln’s express and implied cont ract claims to the extent that the 2014 and 2015 risk-corridors pa yments are presently due. Under Lincoln’s alleged 2014 contract with HHS, payment was due in 2015 after HHS determined the amount of payment it owed to Lincoln. HHS paid approximately 12% of that amount, see Risk Corridors Payment Proration Rate for 2014

, AR 1254, and the remaining bala nce is allegedly due. Additionally, Lincoln alleges that HHS repudiat ed its 2015 contract obligations when HHS stated that it did not anticipate making any 2015 payments during 2016. See Pl.’s Resp. and Cross-Mot. at 11-12; Def.’s Mot. App. at A47. Lincoln chose to treat that repudiation as a present breach. Pl.’s Resp. and Cross-Mot. at 11-12; see Franconia Assocs. v. United States , 536 U.S. 129, 143-44 (2002) (noting th at a plaintiff may treat the other party’s repudiation as a present breach by bringing suit); Kasarsky v. Merit Sys. Prot. Bd. , 296 F.3d 1331, 1338 (Fed. Cir. 2002) (same) (citing Franconia Associates , 536 U.S. at 143-44). Under Lincoln’s alleged anticipatory breach claim, HHS’s stated intention not to pay constitutes a present breach and the 2015 payments owed to Lincoln are due as well. 17

3. Claim for money damages under the Takings Clause of the Fifth Amendment.

The court has jurisdiction vi a the Tucker Act over claims brought under the Takings

Clause of the Fifth Amendment. See, e.g.

, Preseault v. Interstate Commerce , 494 U.S. 1, 12 (1990); Jan’s Helicopter Serv. , 525 F.3d at 1309 (citing Moden v. United States , 404 F.3d 1335,

17 This conclusion is not incons istent with the holdings of Todd and Annuity Transfers , as relied upon by the government. Linc oln is requesting monetary re lief attributable to HHS’s alleged anticipatory breach. In contrast, the plaintiff in Todd was seeking non-monetary relief,

see 386 F.3d at 1094, and the plaintiff in Annuity Transfers was not alleging an anticipatory breach, but was instead seeki ng to change the contract, see 86 Fed. Cl. at 179. This court has repeatedly exercised its jurisdiction over anticipa tory breach claims seeking monetary relief. See, e.g.

, Tamerlane, Ltd. v. United States , 81 Fed. Cl. 752 (2008); Franconia Assocs. v. United

States , 61 Fed. Cl. 718 (2004).17 1341 (Fed. Cir. 2005)). A takings claim need only be non-frivolous for this court to find jurisdiction under th e Tucker Act. Moden , 404 F.3d at 1341. Here, Lincoln has presented a nonfrivolous claim that the government took the paym ents that Lincoln is en titled to under Section 1342 and the implementing regulation. Thus, the court has jurisdiction ov er Lincoln’s takings

claim.

4. Request for declaratory relief.

Additionally, Lincoln requests th at, incidental to a monetary judgment, the court declare that the government must fulfill and fully satisfy its risk-corridors payment obligations for 2015and 2016 within 30 days of determining payments owed. Compl. at 45; Pl.’s Resp. and CrossMot. at 30-31. The court does not ha ve jurisdiction over such a request.

The Tucker Act provides the court with juri sdiction to grant equitable or declaratory

relief in three circumstances. See Annuity Transfers , 86 Fed. Cl. at 181. First, the court may “issue orders directing restor ation to office or position, pla cement in appropriate duty or retirement status, and correction of applicable re cords” as an “incident of and collateral to” a monetary judgment. 28 U.S.C. § 1491(a)(2). Second, the court has jurisdiction to hear nonmonetary disputes arising under the Contract Disputes Ac t, 28 U.S.C. § 1491(a)(1) (last sentence), and third, it has juridica l power to grant equitable relief in bid protests. 28 U.S.C. § 1491(b)(2). None of these th ree circumstances apply here. Although Lincoln is seeking declaratory relief that it contends is collateral to its request for moneta ry judgment, the relief sought is not necessarily derivative from or atte ndant to any money judgment that might issue, but rather would turn on future developments. Thus, the court does not have jurisdiction over Lincoln’s request for declaratory relief.

B. Lincoln’s Claims Are Ripe For Judicial Review

The justiciability doctrines of Article III a pply in this court, including the ripeness requirement. Square One Armoring Serv., Inc. v. United States , 123 Fed. Cl. 309, 321 (2015);

see Fisher , 402 F.3d at 1176. The government argues that Lincoln’s claims are not ripe for judicial consideration because HHS has not de termined the final payment amounts under the risk-corridors program and will not do so until the end of the three-year period the program is in effect. Def.’s Mot. at 20-22; De f.’s Opp’n to Pl.’s Mot. at 11-12.

The ripeness doctrine “prevent[s] the c ourts, through avoidance of premature adjudication, from entangling themselves in abst ract disagreements over administrative policies, and also . . . protect[s] the agen cies from judicial interference.” Abbott Labs. v. Gardner , 387 U.S. 136, 148 (1967), abrogated on other grounds by Califano v. Sanders , 430 U.S. 99 (1977). An unripe claim is dismissed without prejudice. Pernix Grp., Inc. v. United States , 121 Fed. Cl. 592, 599 (2015) (citing Shinnecock Indian Nation v. United States, 782 F.3d 1345, 1350 (Fed. Cir. 2015)). In determining whether an action is ripe, the court evaluates (1) “the fitness of the issues for judicial decision” and (2) “the hardship to the parties of withholding court

consideration.” Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc. , 527 F.3d 1278, 1294-95 (Fed. Cir. 2008) (citing Abbott Labs. , 387 U.S. at 149).18 A case will generally be fit for judicial revi ew when “further factual development would not ‘significantly advance [a court’s] ability to deal with the legal issues presented.’” Caraco

Pharm. Labs. , 527 F.3d at 1295 (citing National Park Hospitality Ass’n v. Dep’t of Interior , 538 U.S. 803, 812 (2003)). Contrastingly, a claim w ill not be fit if it is “contingent upon future events that may or may not occur.” Systems Application & Tech s., Inc. v. United States , 691 F.3d 1374, 1383 (Fed. Cir. 2012) (citing Thomas v. Union Carbide Agric. Prods. Co. , 473 U.S. 568, 580-81 (1985)). The court must also c onsider whether its involvement “would inappropriately interf ere with further administrative action.” Ohio Forestry Ass’n, Inc. v. Sierra

Club , 523 U.S. 726, 733 (1998).

Respecting hardship, the court must consider whether withholding court consideration

would have an “immediate and subs tantial impact” on the plaintiff. Caraco Pharm. Labs.

, 527 F.3d at 1295 (quoting Gardner v. Toilet Goods Ass’n , 387 U.S. 167, 171 (1967)). This element of the doctrine requires a lesser showing compared to that required of a plaintiff seeking injunctive relief, which calls upon a plai ntiff to show irreparable harm. See Systems Application

& Techs.

, 691 F.3d at 1385. Even so, the mere possibility of harm is not sufficient to establish hardship. See Confederated Tribes & Bands of The Yakama Nation v. United States , 89 Fed. Cl. 589, 616 (2009) (“[A] possible financ ial loss is not by itself a suffi cient interest to sustain a judicial challenge to gov ernmental action.”) (quoting Abbott Labs. , 387 U.S. at 153); Pernix Grp.

, 121 Fed. Cl. at 599 (“Abstract, avoidable or speculative harm is not enough to satisfy the hardship prong.”).

1. Section 1342 and the impl ementing regulation.

In evaluating fitness for review, the partie s focus on Lincoln’s cl aim for damages under Section 1342 of the Act and the implementing regul ation. Lincoln asserts that qualified health plans satisfying the conditions of Section 1342 are entitled to paym ent under the risk-corridors program, and the government accepts this assertion in substantial part. See, e.g.

, Exchange and

Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. at 30,260, AR 6195 (“HHS recognizes that the Affordab le Care Act requires the Secret ary to make full payments to issuers.”). That said, the parties differ in interpreting Section 1342 and the implementing regulations. Lincoln asserts th at both the statute and regulat ions require HHS to make full payment annually, see Pl.’s Mot. at 9-11; Pl.’s Resp. a nd Cross-Mot. at 12-23, while the government contends that payments are not due un til the end of the program, depending upon the availability of funds, see Def.’s Mot. at 23-25; Def.’s Opp’n to Pl.’s Mot. at 18-22. The dispute centers on an issue of statutory interpretation and is therefore fit fo r judicial review. See Coalition for Common Sense in Gov’t Procurement v. Sec’y of Veterans Affairs , 464 F.3d 1306, 1316 (Fed. Cir. 2006) (“[W]e find that the issues pr esented by the parties d eal largely with legal issues of statutory construction, which we have pr eviously held fit for pre-enforcement judicial review.”) (citing National Org. of Veterans’ Advocates, Inc. v. Sec’y of Veterans Affairs , 330 F.3d 1345, 1347 (Fed. Cir. 2003)). No further factual development is necessary in determining the meaning and application of Sec tion 1342 and the implementing regulation.

The possibility of the government’s making some or all of the risk-corridors payments in the future does not change this calculus. In Confederated Tribes & Bands of The Yakama

Nation , the government argued that plaintiffs’ breach of trust and fiduciary duties claims were19 not fit for judicial review because the government still had the means to obtain and provide the money requested by plaintiffs. 89 Fed. Cl. at 614- 15. The government asserted that those future

efforts would alter the facts of the case. See id. at 615. The court rejected that argument and found the claims fit for judicial review, explaini ng that the government’s as-yet indeterminate further actions might be relevant to determin ing the plaintiffs’ damages award, but had “no bearing on the accrual and fitness of plaintiffs’ claim.” Id. Regardless of future events, the facts underlying plaintiffs’ claim of breach of trust were “fixed.” Id. at 616. Similarly, the facts underlying Lincoln’s claim are fixed as well. As Lincoln would ha ve it, HHS allegedly breached its statutory and regulatory obligations by failing to make full payments annually. Subsequent HHS payments might bear on Lincoln’s ability to receive amounts due, but they will not affect Lincoln’s underlying claim.

Lincoln has also demonstrated hardship. Lincoln is allegedly due nearly $4 million for losses it suffered in 2014. AR 270; Pl.’s Mot. at 7. Further, Linc oln is allegedly due more than $70 million for losses in 2015, see Pl.’s Mot. at 7-8 & App. 8 at A 59, but HHS has stated that it does not anticipate making any 2015 payments this year. Def.’s Mot. App. at A47. Lincoln’s excess of claims paid compared to premiums received is not uncertain or speculative; as previously noted, Lincoln’s adjust ed risk-corridors ratios for c overages in 2015 were more than 175% over its target for 2015 and Lincoln suffe red substantial losses as a result. See supra , at 11

n. 14. Lincoln did not have reserves to cover th e deficit, and it was placed in liquidation proceedings as of October 1, 2016. See Def.’s Mot. to Strike Pl.’ s Cross-Mot. for Judgment on

the Administrative Record on Counts II-V at 3-4 & Attach., ECF No. 31; Pl.’s Resp. to Def.’s Mot. to Strike Pl.’s Cross-Mot. for Judgment on the Administrative Record on Counts II-V at 4- 5, ECF No. 34. 18 Coupled with Lincoln’s premium-se tting policies, HHS’s failure to make timely payments at least contributed to this insolvency and liquidation. See Inter-Tribal Council of Ariz., Inc. v. United States , 125 Fed. Cl. 493, 504 (2016) (finding that plaintiff’s breach of trust claim established hardship because government’s “years of missed payments and lack of security” was threatening the sust ainability of the trust at issu e). Thus, Lincoln’s claim under Section 1342 and the implementing regulat ions is ripe for judicial review.

2. Express and implied contract claims.

Ordinarily, a breach of contract cla im ripens when the breach occurs. See Barlow &
Haun, Inc. v. United States , 118 Fed. Cl. 597, 615-16 (2014) (citing Nager Elec. Co. v. United

States , 368 F.2d 847, 851-52 (Ct. Cl. 1966)), aff’d , 805 F.3d 1049 (Fed. Cir. 2015). If a party repudiates a contract, the claim “ripens when pe rformance becomes due or when the other party to the contract opts to treat the re pudiation as a present total breach.” Id. at 616 (citations omitted); see also Franconia Associates , 536 U.S. at 143 (noting that when a party repudiates a contract by renouncing a contractua l duty before performance is due , the repudiation “ripens into a breach . . . if the promisee elects to treat it as such”) (internal quotation marks and citations omitted).

18 See Agreed Order of Liquidation with a Finding of Insolvency, Illinois v. Land of

Lincoln Mut. Health Ins. Co. , No. 16 CH 09210 (Ill. Cir. Ct ., Cook Cnty., Chancery Div. Sept. 29, 2016), appended as the attachment to Def’s Mot. to Strike Pl.’s Cross-Mot. for Judgment on the Administrative Record on Counts II-V, ECF No. 31-1.20 Lincoln alleges that HHS had a contractual obligation to make full and annual payments under the risk-corridors program. Again, HHS made payments for the 2014 year, but did not pay in full. Further, as Lincoln would have it, HHS allegedly committed an anticipatory breach of

the 2015 contract when it announced that it woul d not be making 2015 payments this year, and Lincoln has treated HHS’s so-called repudi ation as a present and total breach. See Pl.’s Resp.

and Cross-Mot. at 11-12. Lincoln’s contract cl aims for 2014 and 2015 consequently also are ripe

for review.

3. Takings claim.

Generally, a regulatory takings claim is ripe when the “government entity charged with implementing the regulations has reached a fina l decision regarding the application of the regulations to the pr operty at issue.” Morris v. United States , 392 F.3d 1372, 1376 (Fed. Cir. 2004) (quoting Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank, 473 U.S. 172, 186 (1985)). An agency action is final when (1) it constitutes the “consummation of the agency’s decisionmaking process” such that it is not “of a merely tentative or interlocutory nature,” and (2) it is a decision where “rights or obligations have been determined” or from which “legal consequences will flow.” Barlow & Haun , 118 Fed. Cl. at 616 (citing Bennett v. Spear , 520 U.S. 154, 177-78 (1997)) (internal quotation marks omitte d). Additionally, a party must have first taken “reasonable and necessary steps” to allo w the regulatory agency to exercise its “full

discretion.” Washoe Cnty., Nev. v. United States , 319 F.3d 1320, 1324 (Fed. Cir. 2003) (quoting
Palazzolo v. Rhode Island, 533 U.S. 606, 620-21 (2001)).

Lincoln submitted timely accounts of its losses and entitlement to payment for 2014 and 2015, but it has received less than full payment fr om the government. While HHS has stated that it intends to fulfill its 2014 paymen t obligations as funds become av ailable, it did not make full payments annually. This was not a tentative de cision by HHS, but rather reflected the agency’s budget-neutral scheme and determined Lincoln’s right s as a qualified health plan issuer. HHS’s actions represent a final decision on behalf of the agency, and th e legal consequences of those actions have directly affected Lincoln. Lincoln’s takings clai m is also ripe.

STANDARDS FOR DECISION

A. Rule 12(b)(6)

Under RCFC 12(b)(6), a complaint must “cont ain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). The facts alleged must be sufficient to “raise a right to relief above the speculative leve l, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Kam-Almaz v. United States , 682 F.3d 1364, 1367-68 (Fed. Cir. 2012) (quoting Twombly , 550 U.S. at 555). In evaluating a motion to dismiss pursuant to RCFC 12(b)(6), the court dr aws all “reasonable inferences” in favor of the non-moving party. Bowers Inv. Co., LLC v. United States , 104 Fed. Cl. 246, 253 (2011) (quoting

Sommers Oil Co. v. United States

, 241 F.3d 1375, 1378 (Fed. Cir. 2001)), aff’d , 695 F.3d 1380 (Fed. Cir. 2012). However, the court is not re quired to accept legal conc lusions, even if placed21 within factual allegations. See Rack Room Shoes v. United States , 718 F.3d 1370, 1376 (Fed. Cir. 2013) (citing Iqbal , 556 U.S. at 678); Kam-Almaz , 682 F.3d at 1367-68 (citing Twombly

, 550 U.S. at 555).

B. Judgment on the Administrative Record

In a case dependent upon the administrative record, a party is permitted to move for judgment on the administrative record pursuant to RCFC 52.1(c). The court reviews decisions of a federal agency under the standards set forth in the Administrative Procedure Act (“APA”), codified in pertinent part at 5 U.S.C. § 706(2)(A). See Weeks Marine, Inc. v. United States , 575 F.3d 1352, 1358 (Fed. Cir. 2009); Meyer v. United States , 127 Fed. Cl. 372, 381 (2016). Under the APA, a court shall set aside an agency acti on if the action is “arbitr ary, capricious, an abuse of discretion, or otherwise not in acco rdance with law.” 5 U.S.C. § 706(2)(A); see Centech Grp.,

Inc. v. United States , 554 F.3d 1029, 1037 (Fed. Cir. 2009); Paralyzed Veterans of Am. v. Sec’y of Veterans Affairs , 345 F.3d 1334, 1339 (Fed. Cir. 2003). In this instance, Lincoln argues that only the “contrary to law” aspe ct of the standard applies, see Pl.’s Reply in Support of CrossMot. for Judgment on the Administrative Record on Counts II-V (“Pl.’ s Reply in Support of Cross-Mot.”) at 9, ECF No. 44, and the court will apply that criterion.

ANALYSIS

I. THE STATUTORY ENTITLEMENT COUNT

Land of Lincoln’s fundamental claim is th at HHS has misconstrued Section 1342 of the Act and that the statute when properly interprete d establishes an entitle ment to “payments out” on an annual basis and in full, even in the absenc e of an authorization fo r, or appropriation of, specific funding beyond the “payme nts in” due under the statute.

When a party challenges an agency’s interp retation of a statute administered by the agency, the court applies the two-step process established in Chevron , 467 U.S. at 842-43. See

White v. United States , 543 F.3d 1330, 1333 (Fed. Cir. 2008). Under step one, the court must determine whether “Congress has directly s poken to the precise question at issue.” Chevron , 467 U.S. at 842. “If the intent of Congr ess is clear, that is th e end of the matter; for the court, as well as the agency, must give effect to the una mbiguously expressed intent of Congress.” Id. at 842- 43. An agency must apply an unambiguous st atute according to its terms as expressed by Congress, and in that circumstance no deferen ce is accorded an agency ’s interpretation. White

, 543 F.3d at 1333 (citations omitted).

But, if Congress has not spoke n to the precise issue, the court turns to step two and applies the “ Chevron standard of deference.” Cathedral Candle Co. v. U.S. Int’l Trade Comm’n

, 400 F.3d 1352, 1361 (Fed. Cir. 2005) (“[T]he Chevron standard of deference applies if Congress either leaves a gap in the constr uction of the statute th at the administrative agency is explicitly authorized to fill, or implicitly delegates legi slative authority, as evidenced by ‘the agency’s generally conferred author ity and other statutory ci rcumstances.’”) (quoting United States v. Mead Corp. , 533 U.S. 218, 229 (2001)); see White , 543 F.3d at 1333 (noting that courts “must defer to an agency’s interpretation of a statute if the statute is ambiguous or contains a gap that22 Congress has left for the agency to fill through regulation”) (citing Federal Express Corp. v.

Holowecki , 552 U.S. 389, 395 (2008)).

In supporting its position, Lincoln relies upon a variant of the pl ain-meaning doctrine applicable to Chevron step one, while the government cont ends that Section 1342 is ambiguous because of gaps in the language and urges the co urt to defer to the agency’s interpretation under

Chevron step two.

A. Section 1342 Provides No Specific Authoriz ation for Use of Appropriated Funds and is Ambiguous as to Whether HHS Is Re quired to Make Payments Annually

Under step one of Chevron , “the precise question at i ssue” here is whether Congress intended for HHS to make full payments annua lly under Section 1342, rega rdless of the amount

of fees collected under the risk -corridors program. The court be gins with the language of the

statute. Sursely v. Peake , 551 F.3d 1351, 1355 (Fed. Cir. 2009) (citing Santa Fe Indus., Inc. v.

Green , 430 U.S. 462, 472 (1977)); see Alexander v. Sandoval , 532 U.S. 275, 288 (2001) (“We therefore begin . . . our search for Congress’s intent with the text and structure of [the statute].”). Statutory terms are interpreted “in accordance wi th [their] ordinary or natural meaning.” Sursely , 551 F.3d at 1355 (citing Microsoft Corp. v. AT & T Corp. , 550 U.S. 437, 449 (2007)) (internal quotation marks omitted). When interpreting statutory terms, the court may consider the text, structure, legislative hi story, and canons of construction. Delverde, SrL v. United

States , 202 F.3d 1360, 1363 (Fed. Cir. 2000).

Paragraph 1342(b)(1) provides th at if a qualified health plan reports allowable costs for “any plan year” that sufficiently exceed the plan’s target amount, “the Secretary shall pay to the plan” a percentage of those costs. 42 U.S.C. § 18062(b)(1). Lincoln em phasizes the “shall pay” language and the year-by-year re porting and calculus of its cost -revenue experience. Although Paragraph 1342(b)(1) contemplates that qualified health plans will be reporting costs on an annual basis via the phrase “any pl an year,” that arrangement refl ects the year-by-ye ar transitory aspect of the temporary risk-corridors program. 19 The “[p]ayments out” and “[p]ayments in “ methodology in Subsection 1342(b) governs the amounts that HHS must pay to and receive from qualified health plans, but it does not establish wh en these payments are to be made. Similarly, Subsection 1342(a) states that th e Secretary “shall establish and administer” the program “for calendar years 2014, 2015, and 2016,” but it does not specify the timing of the various payments over those three years. 20

19 Lincoln also points to seve ral other annual aspects of the program to support its argument that HHS is required to make full payments annually, see Pl.’s Resp. and Cross-Mot. at 14-15; Pl.’s Reply at 4, but thos e aspects concern HHS’s requireme nt that qualified health plans must submit data to HHS annually, see 45 C.F.R. § 153.530(d), and must be certified annually,

see 45 C.F.R. § 155.1045; Compl. Exs. 2-4. Those provisions for annual qualification for participation and for consideration of data over a calendar year do not control what is to happen with the data submitted by qualified plans and do not refer to payments to and from issuers.

20 Lincoln argues that the plural “corridors,” as opposed to “c orridor,” demonstrates that Congress intended to implement multiple risk co rridors for each calendar year, with separate23 Additionally, the only statutory source of f unding for the risk-corridors program is Paragraph 1342(b)(2), which refers to “[p]ayments in” from qualified health plans. 42 U.S.C. § 18062(b)(2); see GAO Op.

, 2014 WL 4825237, at *2, AR 116 (“Section 1342, by its terms, did not enact an appropriation to make the payments specified in [S]ection 1342(b)(1).”). No other source of funds is mentioned or specified. See supra , at 7-9 & nn. 8-10 for a discussion of GAO’s consideration of other ap propriated CMS program-management funds that might have been available during fiscal year 2014. In March 2010, while Congress was considering the bills that eventually become the Affordable Care Ac t, the CBO provided Congre ss with an estimate of how the Act would affect future government spending and revenue. See generally March 2010 CBO Letter. The CBO explicitly provided revenue and spending estimates for the Act’s two other stabilization programs, reinsurance and risk adjustment, but it omitted any budgetary estimate for the risk-corridors program. See id. , Table 2. That circumstance is significant. Congress explicitly relied upon the CBO’s findings when enacting the Affordable Care Act. See Affordable Care Act § 1563. 21 Congress also provided appropria tions or authorizations of funds

payments for each year. Pl.’s Re sp. and Cross-Mot. at 14. The implementing regulations define “risk corridors” as “any payment adjustment syst em based on the ratio of allowable costs of a plan to the plan’s target amount.” 45 C.F. R. § 153.500. Subsection 1342(b) sets forth multiple payment adjustment systems, depending on whether a qualified health plan’s allowable costs fall above or below the target amount by specified percen tages. The plural “co rridors” reflects that more than one payment adjustment system exists within the program.

21 Section 1563 of the Act is entitled “S ense of the Senate Promoting Fiscal Responsibility.” It provides:

Sec. 1563. Sense of the Senate Pr omoting Fiscal Responsibility

(a) FINDINGS. – The Senate makes the following findings:

(1) Based on Congressional Budget Office (CBO) estimates, this

Act will reduce the federal deficit between 2010 and 2019. (2) CBO projects this Act will conti nues to reduce bu dget deficits

after 2019. (3) Based on CBO estimates, this Act will extend the solvency the

Medicare HI Trust Fund. (4) This Act will increase the surplu s in the Social Security Trust Fund, which should be reserved to strengthen the finances of Social Security. (5) The initial net savings generated by the Community Living Assistance Services and Supports (CLASS) program are necessary to ensure the long-term solvency of that program.

(b) SENSE OF THE SENATE. – It is th e sense of the Senate that –24 for other programs within the Act, but it never has done so for the risk-corridors program. See,

e.g. , 42 U.S.C. §§ 18031(a)(1), 18054(i); see also National Fed’n of Indep. Bus. v. Sebelius

, __ U.S. __, __, 132 S. Ct. 2566, 2583 (2012) (“Where Congre ss uses certain language in one part of

a statute and different language in another, it is generally presumed that Congress acts intentionally.”) (citing Russello v. United States , 464 U.S. 16, 23 (1983)). 22

Lincoln additionally emphasizes that the risk-c orridors program is explicitly “based on” Part D of the Medicare Program, see 42 U.S.C. § 18062(a), which requires full payments annually and is not budget neutral. Pl.’s Mot. at 12; Pl.’s Res p. and Cross-Mot. at 15-16, 18-19. However, the Medicare Program is not helpful to Lincoln’s argument. The Medicare Program sets forth a risk-corridors pa yment program between HHS and qualified prescription drug plans.

See 42 U.S.C. § 1395w-115. While Section 1342 is “based on” the Medicare Program and the

(1) the additional surplus in the Social Security Trust Fund generated by this Act should be reserved for Social Security and not spent in this Act for other purposes; and (2) the net savings generated by the CLASS program should be reserved for the CLASS program and not spend in this Act for other purposes.

Affordable Care Act § 1563, 124 Stat. 270-71.

22 In post-enactment reports, the CBO’s observatio ns related to the risk-corridors program

have been inconsistent. See, e.g. , Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court

Decision , at Tables 2, 4 (July 2012) , https://www.cbo.gov/sites/de fault/files/112th-congress2011-2012/reports/43472-07-24-2012-C overageEstimates.pdf (providing spending and revenue

estimates for reinsurance and ri sk adjustment, but not risk co rridors); Congressional Budget Office, The Budget and Economic Outlook: 2014 to 2024 , at 59 (Feb. 2014), https://www.cbo.gov/sites/default/file s/113th-congress-2013-2014/reports/45010- outlook2014feb0.pdf (estimating the spending and re venue of the risk-corridors program and noting that “risk corridor collections . . . will not necessarily equal risk corridor payments, so that program can have net effects on the budge t deficit”); Congressional Budget Office, Insurance Coverage Provisions of the Affordab le Care Act–CBO’s January 2015 Baseline , Table B-1 (Jan. 2015), https://www.cbo.gov/sites/de fault/files/51298-2015-01-ACA.pdf (“The risk corridors program is now recorded in the budget as a discretionary program.”).

These post-enactment observations by CBO are of limited utility for statutory interpretation. For purposes of determining the congressional intent underpinning Section 1342, the CBO’s March 2010 estimate is the only pertinent report because that is what Congress relied upon in passing the Act. See United States v. Fausto , 484 U.S. 439, 455, 461 n.9 (1988) (Stevens, J., dissenting) (“If we construe a statute in a different legal environment than that in which Congress operated when it dr afted and enacted the statute, we significantly increase the risk that we will reach an erroneous interpretation.”), superseded by statute as stated in Kaplan v. Conyers , 733 F.3d 1148, 1160-61 (Fed. Cir. 2013).25 two programs share many similarities, they are not identical. The Medicare Program specifically requires that “ [f]or each plan year , the Secretary shall establish a risk corridor . . . .” 42 U.S.C. § 1395w-115(e)(3)(A) (emphasis added). In contrast , Congress chose to omit “for each plan year” in Section 1342 and instead requ ired that “[t]he Secretary sh all establish and administer a program of risk corridors.” 42 U.S.C. § 18062(a) . The only mention of “any plan year” is in reference to the qualified health plan’s reporte d costs, rather than HHS’s obligation to pay. See 42 U.S.C. § 18062(b)-(c). Additionally, unlike Section 1342, the Medicare Program explicitly provides for authorization of appropriations. See 42 U.S.C. § 1395w-115(a)(2) (“This section constitutes budget authority in a dvance of appropriations Acts a nd represents the obligation of the Secretary to provide for the payment of amounts provided under this section.”). “When Congress omits from a statute a provision found in similar statutes, the omission is typically thought deliberate.” Turtle Island Restoration Network v. Evans , 284 F.3d 1282, 1296 (Fed. Cir. 2002) (noting that Congress’s failur e to include an embargo in th e statute, when it did so in similar statutes, suggested that Congress did not intend to impose an embargo) (citing Immigration & Naturalization Serv. v. Phinpathya , 464 U.S. 183, 190 (1984)). Here, the

differences between the two stat utes suggest that Section 1342 does not require HHS to make full payments annually.

In short, Section 1342 is ambiguous in term s of the “payments in” and “payments out” arrangement for risk-corridors payments because it does not contain an express authorization for appropriations to make up any shortfall in the “p ayments in” to cover a ll of the “payments out” that may be due. 23 And, it does not explicitly require “p ayments out” to be made on an annual basis, whether in full or not. Chevron step two thus seemingly comes into play.

Lincoln nonetheless argues that Chevron deference is inappropriate because (1) HHS’s interpretation of Section 1342 is a post hoc rationalization that the government has merely advanced for purposes of litigation, and (2) defere nce is not appropriate in the context of the

Affordable Care Act. See Pl.’s Resp. and Cross-Mot. at 21-22.

HHS initially outlined its three-year, budget- neutral interpretati on of Section 1342 in 2014, several years before this suit began. See, e.g. , HHS Notice of Benefit and Payment Parameters for 2015 Final Rule, 79 Fed. Reg. at 13,787, AR 4929; Exchange and Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. at 30,260, AR 6195. HHS’s interpretation thus is not merely a “convenient litigation position.” See Parker v. Office of Pers. Mgmt. , 974 F.2d 164, 166 (Fed. Cir. 1992); see also Auer v. Robbins , 519 U.S. 452, 462 (1997) (rejecting petitioners’ argument that the agency’s in terpretation was undeserving of deference merely because it was presented through a legal br ief, and holding that there was “no reason to suspect that the interpretation [d id] not reflect the agency’s fair and considered judgment on the matter in question”). Rather, HHS’s interpretation reflects the agency’s deliberations and efforts through the rulemaking process. The fact that the agency may have taken inconsistent positions prior to 2014 does not alter the analysis. See Chevron , 467 U.S. at 863-64 (“The fact that the agency has from time to time changed its in terpretation of the term ‘source’ does not, as

23 Correlatively, the statute does not indicate the disposition of any potential excess of “payments in” over “payments out” for any given y ear, but that rather un likely scenario is perhaps only of academic interest.26 respondents argue, lead us to conclude that no deference should be accorded the agency’s interpretation of the statute . . . . [T]he fact that the agency has adopted different definitions in different contexts adds force to the argument that the definition itself is flexible . . . .”).

In resisting deference, Lincoln also relies on King v. Burwell , __ U.S. at __, 135 S. Ct. at 2488-89, where the Supreme Court did not give de ference to the Internal Revenue Service’s (“IRS”) interpretation of the Affordable Care Ac t. The Court reasoned that deference was not appropriate because that “extraordinary case[]” involved tax credits that were “central” to the Act’s statutory scheme, implicated “billions of dollars” that w ould affect health insurances prices, and related to an implic it delegation of authority from C ongress to the IRS, which did not have expertise in health insurance policy. Id. Here, in contrast, Congress delegated the responsibilities of administeri ng the risk-corridors program to HHS, which addresses health insurance policy in a variety of different contexts. Lincoln has failed to demonstrate that this setting is sufficiently “extraord inary” to obviate reference to Chevron deference.

B. HHS’s Three-Year, Budget-Neutral Interp retation of Section 1342 is Reasonable Under

the Chevron Step-Two Standard of Deference

Under step two of Chevron , the court must defer to HHS’s interpretation of Section 1342 as long as that interpreta tion is reasonable. HHS’s interpretati on was reflected in its final rule on May 27, 2014, when it stated that it intended “to administer risk corri dors in a budget neutral way over the three-year life of the program, rather than annually.” Exchange and Insurance Market Standards for 2015 and Beyond Final Rule , 79 Fed. Reg. at 30,260, AR 6195. “[A] court must defer to an agency’s reasonable interpretati on of a statute and must not substitute its own judgment for that of the agency even if the court might have pr eferred another interpretation and even if the agency’s interpretation is not the only reasonable one.” Wheatland Tube Co. v.

United States , 495 F.3d 1355, 1360-61 (Fed. Cir. 2007); see also Federal Express Corp.

, 552 U.S. at 395 (holding that when an agency inte rprets an ambiguous statute through a regulation, the court must defer to the agency’s reasonable interpretation).

Section 1342 directs HHS to establish the risk-corridors program and sets forth the amounts that HHS must receive and pay under th e payment methodology subsection, but it does not obligate HHS to make annual payments or authorize the use of a ny appropriated funds. HHS’s interpretation is consistent with the CBO ’s 2010 report, Congress’s decision explicitly to

authorize funds for other sections of the Act but not Section 1342, and Congress’s choice to omit from Section 1342 the critical appropriation language used in the Medicare Program, as

discussed supra . HHS’s three-year, budget-neutral in terpretation reasonably reflects these

circumstances.

Lincoln argues that HHS’s interpretation is unreasonable because HHS’s failure to ma ke full payments annually defeats the purpose of th e risk-corridors program, which is to provide stability and protection for qualifi ed health insurance plans. See Pl.’s Resp. and Cross-Mot. at 19-20. In this vein, HHS has repeatedly acknow ledged its obligation to pay qualified health plans that are eligible for payment under the risk-corridors program. See, e.g. , Exchange and

Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. at 30,260, AR 6195 (“HHS recognizes that the Affordab le Care Act requires the Secret ary to make full payments to issuers.”). That said, HHS’s payments in due course, not necessarily a nnually, to the extent27 funds are available from “payments in” without re sort to appropriated f unds, can still serve the program, albeit not to the extent Lincoln urges. Importantly, Lincoln’s argument based on broad purposes is not persuasive. “[P] olicy considerations cannot override our interpretation of the text and structure of [a statute], except to the extent th at they may help to show that adherence to the

text and structure would lead to a result so bizarre that Congre ss could not have intended it.” Chamberlain Grp., Inc. v. Skylink Techs., Inc. , 381 F.3d 1178, 1192 (Fed. Cir. 2004) (quoting
Central Bank, N.A. v. First Interstate Bank, N.A. , 511 U.S. 164, 188 (1994)); see also Sharp , 80 Fed. Cl. at 433 (“While the outcome of granting mo re money to married people than to similarly situated single people may seem odd, it is entire ly reasonable to assume a scenario in which various factions within Congress, each of whic h had different policy goals, were motivated to– and did–compromise in order to pass the Veterans Benefits Act of 2003.”). 24 HHS’s interpretation does not lead to such a “bizarre” result. Congre ss directed HHS to establish the risk-corridors program and make payments as necessary and appropriate, but it gave HHS

discretion in administ ering the program.

The primary implementing regulation for th e risk-corridors program, 45 C.F.R. § 153.510, sets forth substantially similar terms to Section 1342. As to “payments out,” the regulation provides:

(b) HHS payments to health insurance i ssuers. QHP issuers will receive payment from HHS in the following amounts, under the following circumstances:

(1) When a QHP’s allowable costs for any benefit year are more than 103 percent but not more th an 108 percent of the target amount, HHS will pay the QHP issuer an amount equal to 50 percent of the allowable costs in excess of 103 percent of the target amount; and

(2) When a QHP’s allowable costs for any benefit year are more than 108 percent of the target amount, HHS will pay to the QHP issuer an amount equal to the su m of 2.5 percent of the target amount plus 80 percent of allowabl e costs in excess of 108 percent of the target amount.

45 C.F.R. § 153.510(b). Correlatively to Secti on 1342, the regulation omits any reference to when payment from HHS is due or how HHS is to fund the program. There is no deadline for

24 As the Supreme Court observed in Board of Governors of Fed. Reserve Sys. v. Dimension Fin. Corp. , 474 U.S. 361, 373-74 (1986), “[a]pplic ation of ‘broad purposes’ of legislation at the expense of sp ecific provisions ignores the complexity of the problems Congress is called upon to address and th e dynamics of legislative action. ” The Court commented that “Congress may be unanimous in its intent to stamp out some vague social or economic evil; however, because its members may differ sharply on the means for effectuating that intent, the final language of the legislation ma y reflect hard-fought compromises.” Id . at 374; see also
America Online, Inc., v. United States , 64 Fed. Cl. 571, 579 (2005) (quoting and relying on

Dimension Financial in construing an ex cise tax statute).28 HHS to make payments to the qualified health plan issuers. See generally 45 C.F.R. § 153.510. The only relevant difference is that the regulation explicitly provides a deadline for qualified health plan issuers to remit overages to HHS. See 45 C.F.R. § 153.510(d). Thus, for the reasons

discussed supra , the court finds HHS’s interpretation of the ambiguous statute to be reasonable. HHS’s decision not to make full payments annually cannot be considered contrary to law. The government’s motion for judgment on the administ rative record with re spect to Count I is granted.

II. THE CONTRACT COUNTS

A. Count II: Lincoln Has Failed to Allege a Valid Express Contract Because the Agreements

Between Lincoln and HHS Do Not Establish Any Contractual Commitment Pertaining to the Risk-Corridors Program

Lincoln alleges that it entered into three one -year contracts with HHS when it agreed to be a qualified health plan issuer for 2014, 2015, and 2016 and that HHS breached those contracts by failing to make full payments annually. See Compl. ¶¶ 166-78, Exs. 2-4. The government responds that the agreements betw een Lincoln and HHS are not cont racts and are un related to the risk-corridors program. See Def.’s Mot. at 31-37; Def.’s O pp’n to Pl.’s Cross-Mot. at 12-18. For the reasons set out below, the court conclude s that Lincoln has failed to establish that an express contract exists between Lincoln a nd HHS respecting the risk-corridors program.

To establish a valid contract with the gove rnment, a plaintiff must demonstrate “(1) mutuality of intent to contract, (2) consideration, (3) lack of ambiguity in offer and acceptance, and (4) authority on the part of the government agent entering the contract.” Suess v. United

States , 535 F.3d 1348, 1359 (Fed. Cir. 2008) (citations omitted). In evaluating an alleged contract, the court begins with the language of the agreement. Coast Fed. Bank, FSB v. United

States , 323 F.3d 1035, 1038 (Fed. Cir. 2003) (citing Foley Co. v. United States , 11 F.3d 1032, 1034 (Fed. Cir. 1993)). When the terms of the ag reement are “clear and unambiguous, they must be given their plain and ordinary meaning.” Bell/Heery v. United States , 739 F.3d 1324, 1331 (Fed. Cir. 2014) (quoting McAbee Constr., Inc. v. United States , 97 F.3d 1431, 1435 (Fed. Cir. 1996)) (internal quotation marks omitted). Additi onally, the agreement is “construed as a whole and ‘in a manner that gives meaning to a ll of its provisions and makes sense.’” Id. (quoting

McAbee Constr. , 97 F.3d at 1435); see also Jowett, Inc. v. United States , 234 F.3d 1365, 1368 (Fed. Cir. 2000).

Here, Lincoln entered into one-year agreements with HHS for 2014, 2015, and 2016.

See Compl. Exs. 2-4. 25 The agreements certified Lincoln as a qualified health plan issuer, as required by the Affordable Care Act and the implementing regulations. See 42 U.S.C. § 18031(d)(4)(A), (e); 45 C.F.R. § 155.20. The substa nce of each agreement is contained in the “Acceptance of Standard Rules of Conduct,” where th e qualified health plan issuer agrees to use HHS’s internet services in accord with the conduct outlined in the agreement. See Compl. Ex. 2,

25 The three agreements are not identical, but th ey are substantially si milar and contain the same language in pertinent part.29 Section II.b; Ex. 3, Section II.b; Ex. 4 Section II.b. The conduct specifically re lates to the qualified health plan’s communicat ions through the government’s inte rnet service. The qualified health plan agrees to properly test and format transactions, submit test transactions, and abide by certain transaction standards, among other internet service-related requirements. See Compl. Ex. 2, Section II.b; Ex. 3, Section II.b; Ex. 4, Section II.b. The agreements do not explicitly refer to the risk-corridors program. See generally Compl. Exs. 2-4. Rather, they reflect Lincoln’s agreement to comply with HHS’s standards and the government’s acceptance of Lincoln into the Affordable Care Act’s Exchange program. Becaus e Illinois elected not to establish an Exchange under the provisions of 42 U.S.C. § 18031(d), HHS stepped in to provi de a federally-run Exchange in Illinois pursuant to 42 U.S.C. § 18041(c). The plain language of the agreements does not indicate any contractual commitment on behalf of HHS to ma ke risk-corridors

payments. 26

Lincoln presents several argum ents as to why the agreements represent a contractual obligation to pay qualified health plans under the risk-corridors program, including th at: (1) the agreements provide that HHS will “undertake al l reasonable efforts to implement systems and processes” to support the qualified health plan is suers, (2) the agreements state that they are “governed by the laws and common law of the United States of America, including without limitation such regulations as may be promulgate d by HHS,” and (3) the agreements state that HHS “will recoup or net payments due” to qualified health plan issuers “a gainst amounts owed” to HHS with respect to the “payment of [f]e derally-facilitated Exch ange user fees.” See Compl. Exs. 2-4; Pl.’s Resp. and Cross-Mot. at 33-34. Thes e arguments do not constitute persuasive support to Lincoln’s position for the reasons set forth below.

First, HHS’s obligation “to impl ement systems and processes,” see Compl. Ex. 2, Section II.d; Ex. 3, Section III.a; Ex. 4, Section III.a, must be read in the context of the agreements as a whole. The agreements explicitly relate to the qualified health plan ’s use of HHS’s “Data

Services Hub Web Services.” See Compl. Ex. 2, Section II.b; Ex. 3, Section II.b; Ex. 4, Section II.b. The qualified health plan agre es to abide by certain requiremen ts so that it can be certified to offer insurance through this internet service. Given this context, “systems and processes” must relate to the electronic system that HHS a nd the qualified health plan will be using, and the processes that support this electronic system. This interpretation is reinfo rced by the language of the “Companion Guide,” which is explic itly cited within the agreement. See, e.g.

, Compl. Ex. 2, Section II.b; Ex. 3, Section II.b; Ex. 4, Section II.b. The guide id entifies the various processes that are implicated by HHS’s internet service, such as the testing process and validation process.

26 The government also notes that Lincoln’s express contract claim, if accepted, would result in an “artificial policy distinction” between the qualifiedhealth plans using federallyfacilitated Exchanges and the qualified health plans using state-established Exchanges. See Def.’s Mot. at 36-37. The risk-corridors progr am applies to all qualified health plans. See generally 42 U.S.C. § 18062; 45 C.F.R. § 153.510. However, only qualified health plans under the federally-facilitated Exchanges, not the state- established Exchanges, enter into the types of agreements with HHS that are at issue here. See Def.’s Mot. at 36-37. Thus Lincoln’s express contract theory, if adopted, would create an inconsistent and unintended result where some qualified health plans have an allegedly expres s contractual basis for risk-corridors payments,

but others do not.30 See Def.’s Opp’n to Pl.’s Cross- Mot. at 13-14, App. at A1-A5. The “systems and processes” language does not give rise to any risk-corridors obligations.

Second, the general reference to “the la ws and common law of the United States, including . . . such regulations as may be prom ulgated from time to time by the Department of

Health and Human Services or a ny of its constituent agencies,” Compl. Ex 2, Section V.g; Ex. 3, Section V.g; Ex. 4, Section V.g, does not incorp orate the risk-corridors program into the agreement. For a contract to incorporate a doc ument, “the incorporating contract must use language that is express and clear , so as to leave no ambiguity about the identity of the document being referenced, nor any reasonable doubt about the fact that the refere nced document is being incorporated into the contract.” Northrop Grumman Info. Tech., Inc. v. United States , 535 F.3d 1339, 1344 (Fed. Cir. 2008) (emphasis in original). A reference to the laws of the United States, or to statutes or regulations generally, will typica lly not suffice to incorporate a specific statutory provision or regulation. See, e.g.

, St. Christopher Assocs., L.P. v. United States , 511 F.3d 1376, 1384 (Fed. Cir. 2008) (holding that a general refe rence to the agency’s regulations did not incorporate a specific regulation pr omulgated by the agency or a sp ecific section of the agency’s handbook); Smithson v. United States , 847 F.2d 791, 794-95 (Fed. Cir. 1988) (holding that a contract did not incorporate an ag ency’s regulations, despite the statement in the contract that it was “subject to the present regulations of the [agency] and to its future regulations not inconsistent with the express provisions hereof”); Dobyns v. United States , 118 Fed. Cl. 289, 315-16 (2014) (holding that an agreement’s refe rence to “all laws regarding or otherwise affecting the Employee’s employment” did not inco rporate specific agency provisions). As the Federal Circuit explained in Smithson , holding otherwise would allow a private party to “choose among a multitude of regulations as to which he could claim a contract breach” and impose entirely new obligations on the government th rough implication. 847 F.2d at 794 (internal quotation marks and citations omitted). Here, th e general reference to federal law and HHS regulations does not expressly or clearly incorporate the specifi c risk-corridors provisions upon

which Lincoln relies.

Third, HHS’s obligations regarding “[f]ede rally-facilitated Exchange user fees,” see Compl. Ex. 2, Section II.c; Ex. 3, Section III.b; Ex. 4, Section III .b, do not relate to the riskcorridors program. Neither S ection 1342 of the Act nor Secti on 153.510 of the regulations refer

to such fees. See 42 U.S.C. § 18062; 45 C.F.R. § 153.510. Rather, the term “user fees” is

included in Section 1311 of the Ac t, which permits the Exchanges “t o charge assessments or user fees to participating health insurance issuers.” 42 U.S.C. § 18031(d)(5)(A). 27 The implementing regulations, under a provision enti tled “Requirement for [f]ederall y-facilitated Exchange user fee,” explain that participati ng health insurance issuers offe ring plans through a federallyfacilitated Exchange “must remit a user fee to HHS.” 45 C.F.R. § 156.50(c)(1), (2). 28 HHS is

27 The cited Subparagraph relates to state- established Exchanges, but as noted supra , at 3, 6 n. 7, HHS provided an Exchange in Illinois when the State did not.

28 In 2014, HHS and GAO described risk-corri dors payments as “user fees.” See Letter from William B. Schultz, Gen. Counsel, HHS, to Julia C. Matta, Assistant Gen. Counsel, GAO (May 20, 2014) (“Schultz-Matta Letter”), AR 1482-84; GAO Op. , 2014 WL 4825237, at *3-5, AR 117-19. These characterizations were made, however, in the context of analyzing the 201431 obligated to adjust or reduce the user fee if the issuer satisfies certain conditions, such as making payments for a contraceptive service. See id. § 156.50(d). Thus, the agreements between HHS and Lincoln simply acknowledge that Lincoln will pay the user fee set forth in Section 156.50 of the implementing regulations. The reference to HHS’s recouping or netting payments reflects the agency’s obligations describe d in Section 156.50(d), which states when an adjustment to the user fee is applicable. The risk -corridors program is not mentioned as a basis for an adjustment. See generally 45 C.F.R. § 156.50(d).

Thus, Lincoln has failed to allege that the agreements between Lincoln and HHS created a valid express contract pertai ning to risk-corridors payments . The government’s motion to

dismiss Lincoln’s claim of breach of an express contract is granted.

B. Count III: Lincoln Has Failed to Allege a Valid Implied-in-Fact Contract Because Mutuality of Intent and Offer and Accept ance are Lacking, and Even if an Implied-inFact Contract Did Exist, the Scope of the Contract Would be Limited by the Implementing Regulations

Lincoln alleges that it formed an implied-in -fact contract with th e government and that the government implicitly agreed to make fu ll risk-corridors payments annually, which it has

failed to do. See Compl. ¶¶ 180-97; Pl.’s Resp. and Cr oss-Mot. at 35-39. The government responds that Section 1342 and the implementing regulations and the course of conduct of the parties do not establish the existence of any contract between the government and qualified health plans. See Def.’s Mot. at 37-42.

An implied-in-fact contract is based upon a m eeting of the minds, which is inferred from the conduct of the parties and the surrounding circumstances. Night Vision Corp. v. United

States , 469 F.3d 1369, 1375 (Fed. Cir. 2006) (citing Hanlin v. United States , 316 F.3d 1325, 1328 (Fed. Cir. 2003)). The requirements for a bi nding contract are the same for express and implied contracts. Trauma Serv. Grp. v. United States , 104 F.3d 1321, 1325 (Fed. Cir. 1997); see Prudential Ins. Co. of Am. v. United States , 801 F.2d 1295, 1297 (Fed. Cir. 1986) (noting that to find an implied-in-fact contract , “all of the elements of an e xpress contract must be shown by

the facts or circumstances surround ing the transaction . . . so th at it is reasonable, or even necessary, for the court to assume th at the parties intended to be bound”). 29 Plaintiff has the

appropriation act’s reference to “sums as may be collected from authorized user fees.” See Schultz-Matta Letter, AR 1482-84; GAO Op. , 2014 WL 4825237, at *2-5, AR 116-19. Here, in contrast, the agreements between Lincoln and HHS do not simply contain the term “user fees,”

but instead refer to “ [f]ederally-facilitated Exchange user fees.” See Compl. Ex. 2, Section II.c; Ex. 3, Section III.b; Ex. 4, Section III.b (emphasis added). In this setting, Section 156.50 of the implementing regulations is instructive rather than HHS’s and GAO’s past characterizations, because Section 156.50 explicitly addresses a “[f]edera lly-facilitated Excha nge user fee.” See 45 C.F.R. § 156.50(c), (d).

29 To support its implied contract claim, Lincol n argues that it relied on the government’s alleged offer to make risk-corridors payments wh en Lincoln chose to pa rticipate on the Illinois Exchange. See Pl.’s Resp. and Cross-Mot. at 36. Howe ver, detrimental reliance is not an32 burden of proving that a valid contract exists. Harbert/Lummus Agrifuels Projects v. United

States , 142 F.3d 1429, 1434 (Fed. Cir. 1998); see Hanlin , 316 F.3d at 1328 (noting that plaintiff has the burden of establishing an implied-in-fact contract); AAA Pharmacy, Inc. v. United States

, 108 Fed. Cl. 321, 328-29 (2012) (granting the govern ment’s motion to dismiss when plaintiff failed to allege the necessary elements fo r a valid contract with the government).

“[A]bsent some clear indication that the legi slature intends to bind itself contractually, the presumption is that a law is not intended to create private c ontractual or vested rights but merely declares a policy to be pursued . . . .” National R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. , 470 U.S. 451, 465-66 (1985) (citing Dodge v. Bd. of Educ. , 302 U.S. 74, 79 (1937)) (internal quotation marks omitted); see AAA Pharmacy, Inc. , 108 Fed. Cl. at 329 (“Only when statutes or regulations ha ve clearly expressed the Governme nt’s intent to enter into a contractual arrangement with program participants have courts found an implied-in-fact contract.”) (citations omitted). For example, in Hanlin , the Federal Circuit rejected plaintiff’s

claim that the relevant statute a nd regulation gave rise to an imp lied-in-fact contract. 316 F.3d at 1329-30. There, the statute provided that the agency “may direct ” payment of attorneys’ fees under certain circumstances, but the regulation st ated that such fee arrangements “will be honored” by the agency only when specific conditions were met. Id. at 1328-29. The Federal Circuit explained that “[t]he st atute and the regulation set forth the [agency’s] authority and obligation to act, rather than a promissory undertak ing . . . . The statute is a directive from the Congress to the [agency], not a promise fr om the [agency] to the [plaintiff].” Id. at 1329; see also AAA Pharmacy , 108 Fed. Cl. at 328-29 (dismissing plain tiff’s breach of contract theory based on the government’s alleged failure to abide by Medicare regulations because the regulations represented the govern ment’s independent obligations and did not indicate an intent to contract).

Here, similarly, Section 1342 and the impl ementing regulations do not provide any express or explicit intent on beha lf of the government to enter in to a contract with qualified health plan issuers. Although the provisi ons may mandate payment from HHS, albeit not annually, when a qualified health plan satisfies statutory and regulatory conditions, that alone

does not demonstrate in tent to contract. See ARRA Energy Co. I , 97 Fed. Cl. at 28 (dismissing plaintiffs’ implied-in-fact contract claim because the statute failed to indicate an unambiguous offer or intent to contract, even though the gove rnment may have had a statutory obligation to make an award to the plaintiffs); see also Hanlin , 316 F.3d at 1331 (noting that an agency “may indeed be obligated to follow a statute and regulation regardless of whether it also has a contractual duty to perform”). HHS’s obligation to make risk-c orridors payments when certain conditions are met represents the agency’s inde pendent authority and obligation as directed by

element of an implied-in-fact contract claim. Steinberg v. United States , 90 Fed. Cl. 435, 444 (2009), appeal dismissed , 451 Fed. Appx. 915 (Fed. Cir. 2010). It is an element of an impliedin-law claim, over which this cour t does not have jurisdiction. See, e.g.

, International Data Prods. Corp. v. United States , 492 F.3d 1317, 1325 (Fed. Cir. 2007); Baistar Mech. Inc., v.

United States , __Fed. Cl. __, __, 2016 WL 5404169, at *7 (2016); XP Vehicles, Inc. v. United

States , 121 Fed. Cl. 770, 782-83 (2015).33 Congress, not any promissory undertaking or offe r to qualified health plans issuers such as Lincoln. Thus there is no apparent mutuality of intent to contract.

To support its implied contract claim, Lincoln primarily relies on Radium Mines, Inc. v.

United States , where the court construed a regulation as an offer that invited acceptance by performance. 153 F. Supp. 403, 405-06 (Ct. Cl. 1957) . Lincoln contends that HHS’s obligation to make payments under the risk-corridors program constituted an offer, which Lincoln accepted by participating in the Exchange as a qualified health plan and complying with the various statutory and regulat ory requirements. See Pl.’s Resp. and Cross-Mot. at 39-41. However, in

Radium Mines , the regulation explicitly provided th at the government would contract with uranium producers that offered to sell uranium to the government, as long as certain conditions

were met. See 153 F. Supp. at 405-06. For example, one pr ovision in the regul ation stated that “the Commission will forward to the person ma king the offer a form of contract containing applicable terms and conditions ready for his acceptance.” Id. at 405. And similarly, in Grav v.

United States , 14 Cl. Ct. 390, 391-93 (1988), aff’d , 886 F.2d 1305 (Fed. Cir. 1989), the court held that a statute gave rise to an implied-in -fact contract be tween the government and private parties because it stated that “the Secretary shall offer to enter into a contract . . . .” Here, unlike the regulation in Radium Mines and the statute in Grav , Section 1342 and the implementing regulations make no explicit refere nce to an offer or contract. See AAA Pharmacy, Inc. , 108 Fed. Cl. at 329 (finding that a regula tion providing for payment from th e government did not create an implied-in-fact contract because, unlike in Radium Mines , the regulation did “not include any language manifesting either an offer or an intent to enter into contract”); ARRA Energy Co. I , 97 Fed. Cl. at 27-28 (finding that a statute did not create an implied- in-fact contract because, unlike

in Radium Mines , it did not clearly express an intent to contract).

Additionally, Lincoln relies on New York Airways, Inc. v. United States , 369 F.2d 743, 745 (Ct. Cl. 1966), where the releva nt statute provided that the “Postmaster General shall make payments out of appropriations for the transporta tion of mail by aircraft . . . as is fixed and determined by the [Civil Aeronautics] Board . . . .” The Board promulgated an order that fixed the monthly compensation for mail tr ansporters, including plaintiffs. Id. at 744. In finding an implied-in-fact contract, the court stated that the Board’s order constituted “an offer by the Government to pay the plaintiffs a stipulated co mpensation for the transportation of mail, and the actual transportation of the mail was the plaintiffs’ acceptance of that offer.” Id. at 751. The

facts of New York Airways , however, are distinguishable from Lincoln’s implied-in-fact contract

claim. In New York Airways , the plaintiffs’ were entitled to fixed monthly com pensation from the Board in exchange for transporting mail; no further action was necessary because the Board’s order invited acceptance by performance. Id. That invitation and acceptance were deemed to form a binding obligation even though the appropria tions that had been made for the mail service

had been exhausted. Id . at 746-49. In contrast, qualified he alth plans are not entitled to compensation solely by offering health insura nce on the Exchange. The only health plans eligible for payment are those that suffer sufficiently high losses and submit those losses to the

government. See 45 C.F.R. §§ 153.510(b), (g), 156.430(c). Ev en then, HHS has some discretion in determining when payments will be made because the risk-corridors program does not require full payments annually, as discussed supra

. Thus, Section 1342 and the implementing regulations do not constitute an offer or invite acceptance by performance alone. See Baker v.

United States , 50 Fed. Cl. 483, 495 (2001) (holding that a regulation did not constitute an offer34 inviting acceptance by performance because furthe r action from the agency was necessary before the private party was entitled to the bene fits provided in the regulation).

Alternatively, even assuming Lincoln could show that Section 1342 and the implementing HHS regulations cons tituted a contractual offer rela ting to risk-corridors payments that Lincoln accepted, thus giving rise to an implied-in-fact-contract, 30 Lincoln cannot establish that HHS breached a contractual obligation. See Anderson v. United States , 73 Fed. Cl. 199, 201 (2006) (“For plaintiff to recover on her breach of contract claim, she must establish the existence

of a valid contract with defendant and a breach of a duty created by that contract.”) (citing San Carlos Irrigation & Drainage Dist. v. United States , 877 F.2d 957, 959 (Fed. Cir. 1989); Cornejo-Ortega v. United States , 61 Fed. Cl. 371, 373 (2004)). If a valid implied contract obligated HHS to make risk-corridors payments, HHS’s contractual obligations would be defined by Section 1342 and the implementing regulations pe rtaining to the risk-co rridors program. As

discussed supra , neither Section 1342 of the Act nor S ection 153.510 of the re gulations dictate when HHS must make payments. Additionally, subsequent to Lincoln’s 2014 qualified health plan certification but prior to Lincoln’s 2015 certification, HHS expr essly stated that it would be implementing a three-year, budget-neutral sc heme for risk-corridors payments. See, e.g.

, Exchange and Insurance Market Standards for 2015 and Beyond Final Rule, 79 Fed. Reg. at 30,260, AR 6195. Lincoln cannot establish that HHS breached any implied contract because the three-year, budget-neutral risk-cor ridors program has not ended.

30 Assuming that Lincoln could show mutuality of intent and offer and acceptance, consideration and authority to contract would not bar Lincol n’s 2014 and 2015 contract claims,

but the latter element would bar a claim fo r 2016. As consideration for HHS’s payments, Lincoln provided health insurance on the government Exchange and complied with various regulatory requirements. See Pl.’s Resp. and Cross-Mot. at 39 -40. Additionally, HHS may have had authority to contract when it entered into the 2014 and 2015 agreements with Lincoln. One

caveat to that observation is that the Anti-Deficien cy Act prevents an agency from authorizing an expenditure that exceeds available appropriations or contracting for a monetary payment in advance of available appropriations, unless author ized by law. 31 U.S.C. § 1341(a)(1)(A), (B);

see Hercules Inc. v. United States , 516 U.S. 417, 427 (1996). An alleged contract with the government that does not comply with the Anti-Deficiency Act will be void ab initio

, see Springfield Parcel C, LLC v. United States , 124 Fed. Cl. 163, 190 (2015), due to lack of contracting authority, see, e.g. , Rick’s Mushroom Serv., Inc. v. United States , 521 F.3d 1338, 1346 (Fed. Cir. 2008). However, if the agency ha s authority when the contract is formed, the Anti-Deficiency Act is not triggered and a subseq uent government action th at restricts available funds will not negate the formation of that contract. See Wetsel-Oviatt Lumber Co. v. United

States , 38 Fed. Cl. 563, 570 (1997). Here, the 2014 a nd 2015 agreements certifying Lincoln as a qualified health plan were signed before December 2014, see Compl. Exs. 2-3, when Congress enacted the 2015 appropriations bill that restricted risk-corridors payments to fees collected under the program. Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 227, 128 Stat. at 2491. Prior to the appr opriations bill, the GAO determined that HHS had the authority to use general CMS appropr iations to make risk-c orridors payments. GAO Op. , 2014 WL 4825237, at *2-5, AR 116-20. T hus, HHS may have had sufficient appropriations to make a contract regarding risk-corridors payments prior to December 2014 without triggering the Anti-Deficien cy Act, but not thereafter.35 Thus, the government’s motion to dismiss Li ncoln’s breach of imp lied-in-fact contract claim is granted.

C. Count IV: Lincoln Failed to Allege a Brea ch of the Implied Covenant of Good Faith and Fair Dealing Because No Valid Contract Exists

Lincoln alleges that the government breached the implied covenant of good faith and fair dealing by failing to make full risk-corridors payments annually. See Compl. ¶¶ 199-209. Every contract contains an implied “duty of good faith and fair dealing in its performance and

enforcement.” Metcalf Constr. Co. v. United States , 742 F.3d 984, 990 (Fed. Cir. 2014) (quoting Restatement (Second) of Contracts § 205 (1981)). However, this implied duty only attaches to a valid contract and will not otherwise apply. See, e.g.

, HSH Nordbank AG v. United States , 121 Fed. Cl. 332, 341 (2015) (“[S]ince Plaintiff failed to establish either an express or implied contract . . . , its dependent claim for a breach of implied covenant of good faith and fair dealing also must be dismissed.”), aff’d , 644 Fed. Appx. 1004 (Fed. Cir. 2016); Westlands Water Dist. v.

United States , 109 Fed. Cl. 177, 205 (2013) (“[T]here is no contractual . . . duty to which the implied duty of good faith and fair dealing can attac h.”). Because Lincoln failed to allege a valid express or implied contract with the government, the dependent implied covenant claim does not appertain. The government’s motion to dismiss Lincoln’s breach of implied covenant of good faith and fair dealing is granted.

III. THE TAKINGS COUNT

Lincoln alleges that HHS’s failure to make full risk-corridors payments annually violated

the Fifth Amendment because it resulted in a taki ng of Lincoln’s property for public use without just compensation. See Compl. ¶¶ 211-17. The Takings Clause of the Fifth Amendment provides that private property sh all not be taken without just co mpensation. U.S. Const. amend. V, cl. 4. In evaluating a takings claim, the court must first determine whether the plaintiff has a cognizable interest in the property at issue. Karuk Tribe of Cal. v. Ammon , 209 F.3d 1366, 1374 (Fed. Cir. 2000) (citations omitted). Absent a va lid property interest, a plaintiff’s takings claim

will fail as a matter of law. Earman v. United States , 114 Fed. Cl. 81, 112 (2013), aff’d , 589 Fed. Appx. 991 (Fed. Cir. 2015). If the plaintiff doe s have a property interest, only then will the court determine whether the government’s actions constituted a taking of that interest. Adams v.

United States , 391 F.3d 1212, 1218 (Fed. Cir. 2004).

Here, Lincoln does not have a valid property interest in receiving full risk-corridors payments annually. Lincoln’s statutory entitlemen t claim does not give ri se to a takings claim because Lincoln is not entitled to full paymen ts annually, and because a statutory right to payment is not a recognized property interest. See Adams

, 391 F.3d at 1225 (holding that appellants’ right to unpaid comp ensation under the Fair Labor St andards Act did not create a property interest); Hicks v. United States , 118 Fed. Cl. 76, 85 (2014) (“Even if plaintiff’s demand represented a genuine obligati on of the government, the failure to pay such a monetary obligation w ould not amount to a taking.”) (citations omitted); Meyers v. United States , 96 Fed. Cl. 34, 62 (2010) (dismissing plaintiffs’ takings claim based on the Conservation Security Program because the program’s monetary benefi ts did not provide plaintiff with a property36 interest), appeal dismissed , 420 Fed. Appx. 967 (Fed. Cir. 2011). Additionally, although contracts are property, Lincoln’s contract claims do not establ ish a property interest because Lincoln failed to allege the elements of a valid e xpress or implied-in-fact c ontract related to riskcorridors payments. See, e.g.

, Piszel v. United States , 121 Fed. Cl. 793, 803 (2015) (“[T]his [c]ourt has long recognized that valid contracts are property.”) (emphasis added), aff’d , 833 F.3d 1366 (Fed. Cir. 2016). Thus, the government’s mo tion to dismiss Lincoln’s takings claim is granted.

CONCLUSION

For the reasons stated a bove, the government’s motion for judgment on the administrative record is GRANTED with respec t to Count I, and the government’s motion to dismiss plaintiff’s complaint pursuant to RCFC 12( b)(6) is GRANTED with respect to Counts II, III, IV, and V. Plaintiff’s motion and cross-mo tion for judgment on the administrative record are DENIED. The clerk will enter judgment in accord with this disposition.

No costs.

It is so ORDERED.

s/ Charles F. Lettow

Charles F. Lettow Judge