In the United States Court of Federal Claims

ELECTRICAL WELFARE TRUST 

FUND, et al.,

 

Plaintiffs,

 v.

THE UNITED STATES,

Defendant.

No. 19-353 C

Filed: July 30, 2021

Joseph Howard Meltzer, Kessler, Topaz, Meltzer & Check, LLP, Radnor, Pennsylvania for 

Plaintiffs. With him on the briefs are Melissa L. Troutner, Kessler, Topaz, Meltzer & Check, LLP,

Radnor, Pennsylvania; William P. Dale and Charles F. Fuller, McChesney & Dale, P.C., Bowie, 

MD. 

Eric P. Bruskin, United States Department of Justice, Civil Division, Washington, D.C. for 

Defendant. With him on the briefs are Joseph H. Hunt, Assistant Attorney General, Robert E. 

Kirschman, Jr., Director, National Courts Section, Commercial Litigation Branch, Civil Division;

and L. Misha Preheim, Assistant Director, Commercial Litigation Branch, Civil Division, 

Washington, D.C.

MEMORANDUM AND ORDER

This case arises out of the Department of Health and Human Services’ (HHS’s) 

implementation of the Patient Protection and Affordable Care Act of 2010 (ACA). Plaintiffs, selfinsured group health plans funded through employee contributions to a multiemployer benefit 

trust,1 seek to recover amounts paid under HHS regulations implementing the ACA’s Transitional 

Reinsurance Program (TRP). The TRP mandated that all “health insurance issuers, and third party 

administrators on behalf of group health plans, [were] required to make payments to an applicable 

1 Defendant’s motion addresses three Plaintiffs: (1) the Electrical Welfare Trust Fund (EWTF); 

(2) the Operating Engineers Trust Fund of Washington, D.C. (OETF); and (3) the Stone & Marble 

Masons of Metropolitan Washington, D.C. Health and Welfare Fund (Stone Masons). 
2

reinsurance entity for any plan beginning in the 3-year period beginning January 1, 2014. . . .” 42 

U.S.C. § 18061(b)(1)(A). HHS regulations implementing the TRP defined the group of entities 

that were required to contribute to the TRP as “contributing entities.” See 45 C.F.R. § 153.20(2) 

(2019) (“[Contributing entity means f]or the 2014 benefit year, a self-insured group health plan . . 

. whether or not it uses a third party administrator; and for the 2015 and 2016 benefit years, a selfinsured group health plan . . . that uses a third party administrator . . . .”). HHS deemed Plaintiffs’ 

self-insured group health plans as “contributing entities” and, consequently, required Plaintiffs to 

contribute to the TRP. Complaint (ECF No. 1) (Compl.) ¶¶ 57-58; Plaintiffs’ Response in 

Opposition to Defendant’s Motion to Dismiss or, in the alternative, Motion for Summary Judgment 

(ECF No. 7) (Pls.’ Resp.) at 9-10. Plaintiffs allege that these contribution payments constitute an 

illegal exaction because HHS’s definition of “contributing entity” exceeded its statutory authority 

and was an unreasonable interpretation of 42 U.S.C. § 18061. Compl. ¶¶ 100-111; Pls.’ Resp. at 

2-3. Plaintiffs also allege that, even if HHS’s interpretation of 42 U.S.C. § 18061 was permissible, 

Plaintiffs are still entitled to recover the fees paid pursuant into the TRP as just compensation 

under the Fifth Amendment’s Takings Clause. Compl. ¶¶ 89-99; see also Pls.’ Resp. at 12.

Pending before the Court is Defendant’s motion to dismiss Plaintiffs’ complaint for failure 

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

(RCFC or Rule) or, in the alternative, Defendant’s motion for summary judgment. See generally 

Defendant’s Motion to Dismiss or, in the alternative, Motion for Summary Judgment (Def.’sMot.) 

(ECF No. 6); see also Defendant’s Reply in Support of Its Motion to Dismiss, or in the Alternative, 

Motion for Summary Judgment (Def.’s Reply) (ECF No. 8). 2 In its motion, Defendant argues that 

2 Defendant originally moved to dismiss Plaintiffs’ illegal exaction claims for lack of jurisdiction 

but withdrew this part of the motion at oral argument. Def.’s Reply at 20 n.8; Oral Argument 

Transcript (ECF No. 21) at 5:13-19. 
3

Plaintiffs’ illegal exaction claims must be dismissed because HHS reasonably interpreted section 

18061 to require reinsurance contributions from Plaintiffs. Def.’s Mot. at 2, 34-35. Defendant 

also argues that Plaintiffs fail to state a valid Takings claim because ordinary obligations to pay 

money, such as Plaintiffs’ contributions to the TRP, do not constitute a Fifth Amendment Taking 

under controlling precedent of the United States Court of Appeals for the Federal Circuit (Federal 

Circuit). Def.’s Mot. at 2, 11-14. 

This Court has considered each of the parties’ filings and arguments. For the reasons 

explained below, Defendant’s motion to dismiss is GRANTED in part and DENIED in part. 

With respect to EWTF, this Court holds that HHS’s inclusion of self-administered accountswithin 

the definition of “contributing entity” is contrary to section 18061(b)(1)(A)’s plain language; 

therefore, Defendant’s motion is DENIED as to EWTF’s illegal exaction claim. With respect to 

OETF and Stone Masons, which use a third-party administrator, and are therefore covered under 

section 18061(b)(1)(A)’s plain language, this Court holds that those Plaintiffs’ illegal exaction 

claims are without merit. Accordingly, Defendant’s motion is GRANTED with respect to Stone 

Masons’ and OETF’s illegal exaction claims. Finally, as explained below, Defendant’s motion is

DENIED with respect to Stone Masons’, OETF’s, and EWTF’s Takings claims.
4

BACKGROUND

I. Plaintiffs’ Health Plans

Plaintiffs are group health plans3 created through collective bargaining and regulated by 

the Labor Management Relations Act of 1947 (Taft-Hartley) and the Employee Retirement Income 

Security Act of 1974 (ERISA). Compl. ¶ 3. They are not health insurance issuers.

4 Compl. ¶ 30. 

Plaintiffs’ group health plans “are funded through employee contributions to a multiemployer 

benefit trust, and benefits under the plans are provided to covered workers and their families 

pursuant to negotiated wages, hours, and terms of employment through a collective bargaining 

agreement between one or more unions and more than one employer.” Id. Participation in these 

plans is limited to employees who share “a common employer (or affiliated employers), coverage 

under one or more collective bargaining agreements, membership in a labor union, or membership 

3 “[G]roup health plan” is defined by statute as, 

an employee welfare benefit plan (as defined in [29 U.S.C. § 1002(1)]) to the extent 

that the plan provides medical care (as defined in paragraph (2)) . . . to employees 

or their dependents (as defined under the terms of the plan) directly or through 

insurance, reimbursement, or otherwise. Except for purposes of part C of title XI 

of the Social Security Act (42 U.S.C. 1320d et seq.), such term shall not include 

any qualified small employer health reimbursement arrangement (as defined in 

section 9831(d)(2) of title 26).

42 U.S.C. § 300gg-91(a)(1).

4 “[H]ealth insurance issuer” is defined by statute as,

an insurance company, insurance service, or insurance organization (including a 

health maintenance organization, as defined in paragraph (3)) which is licensed to 

engage in the business of insurance in a State and which is subject to State law 

which regulates insurance (within the meaning of section 514(b)(2) of the 

Employee Retirement Income Security Act of 1974 [29 U.S.C. 1144(b)(2)]). Such 

term does not include a group health plan.

42 U.S.C. § 300gg-91(b)(2). 
5

in one or more locals of a national or international labor union.” Compl. ¶ 28. Pursuant to 29 

U.S.C. § 1103, these plans use funds which are held in trust for the exclusive benefit of the plan 

participant and which cannot be used for any other purpose. Compl. ¶ 29.

Unlike Plaintiffs, commercial insurers write policies for group and individual health plans. 

Pls.’ Resp. at 5. Plaintiffs allege that, unlike commercial insurers, Plaintiffs’ health plans are not 

commercial in nature and are not sold on the individual market. Compl. ¶ 28. Plaintiffs also note 

that even before enactment of the Patient Protection and Affordable Care Act, Pub. L. No. 111-

148, 124 Stat. 119 (2010) (the Act or ACA), Plaintiffs’ group health plans did not exclude 

participants on the basis of pre-existing conditions. Compl. ¶¶ 28, 33; Pls.’ Resp. at 5. Thus, 

according to Plaintiffs, their group health plans did not undertake any additional risk when 

Congress abolished denials for pre-existing conditions—unlike commercial insurers. Compl. 

¶¶ 38, 50.

Plaintiffs’ group health plans are self-insured. Compl. ¶ 3. Self-insured multiemployer 

plans may be administered in one of three ways: (1) self-administered, (2) administered by a thirdparty administrator that is not a health insurance issuer, or (3) administered by a third-party 

administrator that is a health insurance issuer through an administrative services only (ASO) 

agreement. Compl. ¶ 32; Pls.’ Resp. at 5-6.

EWTF is a self-administered group health plan. Compl. ¶ 3; Pls.’ Resp. at 5. As a selfadministered plan, EWTF: (1) determines eligibility and controls enrollment for its participants, 

(2) performs claims processing and adjudication, and (3) directly pays the health care costs 

incurred by its participants and beneficiaries. Compl. ¶¶ 19-20. OETF5 and Stone Masons6 each 

5 OETF’s third-party administrator is Associated Administrators, LLC. Compl. ¶¶ 21-22.

6 Stone Masons’ third-party administrator is Carday Associates, LLC. Compl. ¶¶ 23-24.
6

are administered by a third-party administrator that is not a health insurance issuer. Compl. 

¶¶ 21-24. These third-party administrators: (1) determine eligibility and control enrollment for its 

participants, (2) perform claims processing and adjudication, and (3) directly pay the health care 

costs incurred by the OETF and Stone Masons participants and beneficiaries. Id. ¶¶ 22-24.

II. Transitional Reinsurance Program

In 2010, President Obama signed the ACA into law. See Patient Protection and Affordable 

Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by Health Care and Education 

Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 (2010) (collectively the ACA). 

Under the ACA, all individuals must maintain “minimum essential” health insurance coverage, 26 

U.S.C. § 5000A, and health insurance providers cannot discriminate against individuals with preexisting medical conditions by denying them coverage, 42 U.S.C. § 300gg-3. As a result, Congress 

anticipated that the enrollment of a disproportionate number of previously uninsured, high-risk 

individuals into the health insurance market could cause premiums to rise for all insured 

individuals. See King v. Burwell, 576 U.S. 473, 479-81 (2015). Among other provisions, the ACA 

established three programs to attempt to more evenly distribute the financial risk carried by health 

insurance issuers that cover higher-risk populations: (1) the Transitional Reinsurance Program

(TRP), (2) the risk corridors program, and (3) the risk adjustment program. 42 U.S.C. §§ 18061

(codifying the transitional reinsurance program), 18062 (codifying the risk corridors program),

18063 (codifying the risk adjustment program).

At issue here is the TRP, a temporary program intended to stabilize premiums for coverage 

in the individual health insurance market during the early years of the ACA’s implementation—

2014, 2015, and 2016. See 42 U.S.C. § 18061(c)(1)(A). To fund the program, the ACA required 
7

that “health insurance issuers, and third party administrators on behalf of group health plans” pay 

into the appropriate reinsurance pool, whether state or federal, for the three-year period. 42 U.S.C. 

§ 18061(b)(1)(A). The funds collected from the entities described in section (a)(1) were used to 

reimburse “health insurance issuers” for enrolling high-risk individuals in the individual 

marketplace. 42 U.S.C. § 18061(b)(1)(B).

Congress delegated authority to HHS to implement the TRP, requiring that HHS—in 

consultation with the National Association of Insurance Commissioners (NAIC)—create federal 

standards for the program. 42 U.S.C. § 18061(b)(1). Between July 2011 and March 2014, HHS 

published three sets of proposed and final rules defining the term “contributing entities,” found in 

42 U.S.C. § 18061(b)(1).

A. Proposed and Final Rules Titled “Patient Protection and Affordable Care Act; 

Standards Related to Reinsurance, Risk Corridors and Risk Adjustment”

On July 15, 2011, HHS, for the first time, issued a proposed rule interpreting the term 

“contributing entity” as “any health insurance issuer and, in the case of a self-insured group health 

plan, the third party administrator of the group health plan.” Def.’s Mot. App. 1 (76 Fed. Reg. 

41930 (July 15, 2011)) (ECF No. 6-1) at A237 (2011 Proposed Rule). HHS accepted public 

comments on the 2011 Proposed Rule until September 28, 2011. Id. at A2.

On March 23, 2012, HHS published a Final Rule based on its July 2011 proposal. Def.’s

Mot. App. 3 (77 Fed. Reg. 17220 (March 23, 2012)) (ECF No. 6-3) (2012 Final Rule). In the 2012 

Final Rule, HHS stated that it received several comments requesting clarification of its proposed

definition of “contributing entity.” See id. at A1964, A1978. In response, HHS explained that the 

ACA “directs a broad cross-section of issuers and self-insured plans to make reinsurance 

7 The nine (9) appendices attached to Defendant’s motion are sequentially paginated. See ECF 

Nos. 6-1 through 6-9. Throughout this Memorandum and Order, the Court uses this sequential 

numbering in its citations, preceding the page number with “A.” 
8

contributions, given the uncertainty of the size and characteristics of the population that will 

participate in the Exchanges.” Id. at A1978. While HHS claimed that the definition of 

“contributing entities” is broad, it failed to clarify the definition’s alleged breadth in the final 

regulatory text. Despite the public comments and noted confusion about the term, HHS instead 

simply mirrored the ACA’s text, stating “[c]ontributing entity means a health insurance issuer or 

a third party administrator on behalf or [sic] a self-insured group plan.” Id. at A1988.

B. Proposed and Final Rules Titled “Patient Protection and Affordable Care Act; HHS 

Notice of Benefit and Payment Parameters for 2014”

On December 7, 2012, HHS issued another proposed rule to “provide[] further detail and 

parameters related to” a host of ACA topics. Def.’s Mot. App. 4 (77 Fed. Reg. 73118 (December 

7, 2012)) (ECF No. 6-4) (2012 Proposed Rule) at A1996. In discussing the TRP contribution 

calculation and collection process in the 2012 Proposed Rule, HHS explained:

The Affordable Care Act directs that a transitional reinsurance program be 

established in each State to help stabilize premiums for coverage in the individual 

market from 2014 through 2016. The reinsurance program is designed to alleviate 

the need to build into premiums the risk of enrolling individuals with significant 

unmet medical needs. By stabilizing premiums in the individual market equitably 

throughout the United States, the reinsurance program is intended to help millions 

of Americans purchase affordable health insurance, reduce unreimbursed usage of 

hospital and other medical facilities by the uninsured, and thereby lower medical 

expenses and premiums for all people with private health insurance.

Id. at A2027. Purportedly with the goals of the TRP in mind, HHS’s stated aim in administering 

the program was “to provide reinsurance payments in an efficient, fair, and accurate manner,where 

they are needed most, to effectively stabilize premiums nationally.” Id. At the same time, HHS 

claims that it sought to minimize the administrative burden of collecting contributions and making 

reinsurance payments. See id. HHS stated that “[w]ith respect to self-insured group health plans, 

the plan is liable, although a third-party administrator or administrative-services-only contractor 

may be utilized to transfer reinsurance contributions on behalf of a self-insured group health plan, 
9

at that plan’s discretion.” Id. at A2030. HHS added that “[a]self-insured, self-administered group 

health plan without a third-party administrator or administrative-services-only contractor would 

make its reinsurance contributions directly.” Id. Further, HHS stated that “[u]nder section 

1341(b)(3)(B)(i) of the Affordable Care Act, contribution amounts for reinsurance are to reflect, 

in part, an issuer’s fully insured commercial book of business for all major medical products.” Id. 

(internal quotations omitted). Accordingly, HHS interpreted section 1341(b)(3)(B)(i) to mean that 

“an issuer will not be required to make reinsurance contributions for coverage that is noncommercial.” Id. The public comment period on this 2012 Proposed Rule closed December 31, 

2013. Id. at A1996.

On March 11, 2013, HHS published a final rule based on its 2012 Proposed Rule. 78 Fed. 

Reg. 15410 (March 11, 2013). During the preceding comment period, several commenters had

requested that HHS amend the definition of “contributing entity” to clarify the liability of thirdparty administrators. Def.’s Mot. App. 6 (78 Fed. Reg. 15410 (March 11, 2013)) (ECF No. 6-6) 

(2013 Final Rule) at A3564. In response to the comments received, HHS clarified that “a selfinsured group health plan is ultimately responsible for the reinsurance contributions, even though 

it may elect to use a TPA or ASO contractor to transfer the reinsurance contributions.” Id.

Several commenters had also requested that group health plans regulated by Taft-Hartley

and ERISA be excluded from reinsurance contributions because “many of these plans are selfinsured and self-administered, and include multiemployer plans.” Id. at A3568. HHS responded

that it “d[id] not have authority under the statute to exclude [self-insured and self-administered 

plans regulated by Taft-Hartley and ERISA] from reinsurance contributions[,]” because these 

plans’ coverage was “employment-based.” Id. at A3568. However, the 2013 Final Rule stops 

short of explicitly stating whether HHS believed self-insured or self-administered group health 
10

plans created through collective bargaining and regulated by Taft-Hartley and ERISA were 

considered “commercial.”

HHS’s 2013 Final Rule, thus clarified that all self-insured group health plans (including 

plans that are self-administered, and those regulated by Taft-Hartley and ERISA) were included 

within its definition of “contributing entity.” See id. at A3634. 

HHS’s 2013 Final Rule defining “contributing entity” reads as follows:

Contributing entity means a health insurance issuer or self-insured group health 

plan. A self-insured group health plan is responsible for the reinsurance 

contributions, though it may elect to use a third party administrator or 

administrative services only contractor for transfer of the reinsurance contributions.

Id. at A3634. 

Thus, under HHS’s amended the definition of the term “contributing entity” in the 2013 

Final Rule, all self-insured group health plans—including self-administered plans—were required 

to make reinsurance contributions. Id. 

C. Proposed and Final Rules Titled “Patient Protection and Affordable Care Act; HHS 

Notice of Benefit and Payment Parameters for 2015”

In December 2013, HHS issued another proposed rule seeking comment on, inter alia, the 

definition of “contributing entity.” Def.’s Mot. App. 7 (78 Fed. Reg. 72322 (December 2, 2013)) 

(ECF No. 6-7) (2013 Proposed Rule). HHS stated in its 2013 Proposed Rule that “continued study 

of this issue,” had led it “to believe that [section 1341] may reasonably be interpreted in one of 

two ways.” Id. at A3670. Specifically, HHS explained its belief that the ACA section 1341 (1) 

“may be interpreted to mean that self-insured, self-administered plans must make reinsurance 

contributions,” or, (2) alternatively, “may be interpreted to mean that such plans are excluded from 

the obligation to make reinsurance contributions.” Id. Accordingly, HHS yet again proposed to 

modify the definition of “contributing entity” for the 2015 and 2016 plan years, this time to exclude 
11

self-insured group health plans that do not use the services of a third-party administrator. See id. 

Consequently, HHS’s 2013 Proposed Rule amended the definition of “contributing entity” to 

exclude self-insured group health plans that do not use a third-party administer (TPA) in 

connection with claims processing, adjudication, or enrollment. Id. at A3670, A3714. However, 

HHS’s proposed definitional exclusion for self-insured, self-administered plans from the 

contributing entity definition did not apply to the 2014 benefit year. Id. As to why HHS did not 

apply this exclusion to the 2014 benefit year, HHS cited “public policy” explaining:

While, upon further consideration of the issue, we believe the statutory 

language can reasonably be read to support the proposition that self-insured group 

health plans that do not use third party administrators for the functions described 

above should not be obligated to make reinsurance contributions, we also 

recognize, as a public policy matter, that it would be disruptive to plans and issuers 

to modify the definition of “contributing entity” for the 2014 benefit year at this 

late date. Health insurance issuers have already set premiums and developed 

operational processes based on the definition of ‘contributing entity’ for the 2014 

benefit year at this late date. Health insurance issuers have already set premiums 

and developed operational processes based on the definition of ‘contributing entity’ 

that was previously finalized in the 2014 Payment Notice. To prevent lower 

reinsurance payments, the contribution rate would have to be raised for other 

contributing entities, many of whom have already set their 2014 premiums based 

on the contribution rate finalized in March 2013. Excluding self-insured, selfadministered group health plans from the set of entities that must provide 

reinsurance contributions for the 2014 benefit year, without raising the rate on other 

entities, would decrease the funds available for reinsurance payments for that 

benefit year, and thus upset settled estimates with respect to expected reinsurance 

payments that were used to establish premiums.

Therefore, we do not propose to change the definition of “contributing entity”

for the 2014 benefit year. 

Id. at A3671.

Additionally, in its 2013 Proposed Rule, HHS stated that self-insured plans administered 

by a third-party administrator would still be required to make reinsurance contributions. Id. at 

A3670. HHS explained that “[a]n insured plan and a self-insured plan administered by a 

third-party administrator are similar in that each arrangement involves an employer and an outside 
12

commercial entity—an issuer or a third-party administrator (which is often an insurance company 

or an affiliate)—for the administration of the core health insurance functions of claims processing 

and plan enrollment.” Id. Additionally, HHS noted that, 

under section 1341(b)(3)(B) of the Affordable Care Act and § 153.400(a)(1)(ii), 

reinsurance contribution amounts are to reflect a “commercial book of business.” 

Our consideration of these comments leads us to believe that a group health plan 

administered by a third party administrator would normally be viewed as part of 

the third party administrator’s “commercial book of business,” but that a selfinsured, self-administered plan would not normally be viewed as part of an entity’s 

“commercial book of business.”

Id. As a result, HHS proposed that “contributing entity” would mean: “(a) A health insurance 

issuer; or (b) a self-insured group health plan (including a group health plan that is partially selfinsured and partially insured, where the health insurance coverage does not constitute major 

medical coverage) that uses a third-party administrator in connection with claims processing or 

adjudication (including the management of appeals) or plan enrollment.” Id. at A3670. 

The definition of “contributing entity” in the 2013 Proposed Rule reads as follows: 

Contributing entity means—

(1) A health insurance issuer; or

(2) For the 2014 benefit year, a self-insured group health plan (including a group 

health plan that is partially self-insured and partially insured, where the health 

insurance coverage does not constitute major medical coverage), whether or not it 

uses a third party administrator; and for the 2015 and 2016 benefit years, a selfinsured group health plan (includinga group health plan that is partially self-insured 

and partially insured, where the health insurance coverage does not constitute major 

medical coverage) that uses a third party administrator in connection with claims 

processing or adjudication (including the management of appeals) or plan 

enrollment. A self-insured group health plan that is a contributing entity is 

responsible for the reinsurance contributions, although it may elect to use a third 

party administrator or administrative services-only contractor for transfer of the 

reinsurance contributions.

Id. at A3714. The public comment period on the 2013 Proposed Rule closed on December 

26, 2013. Id. at A3652.
13

On March 11, 2014, HHS published its third and final rule defining “contributing entity.” 

See Def.’s Mot. App. 9 (79 Fed. Reg. 13744 (March 11, 2014)) (ECF No. 6-9) (2014 Final Rule). 

This time, HHS concluded that, although ACA section 18061 “can reasonably be interpreted in 

more than one way with respect to the applicability of reinsurance contributions to self-insured, 

self-administered plans[,] . . . the better reading of section 1341 is that a self-insured, selfadministered plan should not be a contributing entity. . . .” Id. at A4702. HHS explained that 

excluding self-administered, self-funded group health plans from the definition of “contributing 

entity” was the better reading because both section 1341(b)(3)(B) of the ACA and section 

153.400(a)(1)(ii) of Title 45 of the United States Code of Federal Regulations provide that 

reinsurance contributions are to reflect a “commercial book of business,” and a self-administered 

plan would not normally be considered part of an entity’s commercial book of business. See id.

As noted, HHS also advised that, “as a matter of public policy,” the new definition of 

“contributing entity” would only apply prospectively, for 2015 and 2016. 2013 Proposed Rule at 

A3671. HHS justified its definitional distinguishment for the 2014 plan year by reasoning that 

“making the proposed exemption effective for the 2014 benefit year at this late stage would be 

disruptive to plans and issuers that have already set contribution rates and premiums and could 

upset settled estimates with respect to expected reinsurance payments and contribution 

obligations.” 2014 Final Rule at A4703.

In response to the 2013 Proposed Rule, several public commenters had argued that selfinsured plans, which did not use a health insurance issuer as TPAs, should be exempt from the 

definition of contributing entity. Id. at A4703. HHS rejected these arguments and explained its 

view that there is no statutory support for this exemption because “sections 1341(b)(1)(A) and 

(b)(3)(A) of the Affordable Care Act only refer[] to issuers and TPAs, and do[] not distinguish 
14

between issuer TPAs and non-issuer TPAs.” Id. HHS further reasoned that, in contrast to selfadministered plans, plans that are administered by a third-party administrator would normally be 

considered part of a commercial book of business. Id. at A4702. Based on the statutory language 

and the commercial nature of TPAs, HHS concluded that it did not have “the authority to 

differentiate between TPAs that are issuers or issuer affiliates and non-issuer TPAs for purposes 

of the exemption.” Id. at A4703.

HHS’s final definition of “contributing entity” in its 2014 Final Rule reads as follows:

Contributing entity means—

(1) a health insurance issuer; or 

(2) For the 2014 benefit year, a self-insured group health plan (including a group 

health plan that is partially self-insured and partially insured, where the health 

insurance coverage does not constitute major medical coverage), whether or not it 

uses a third party administrator; and for the 2015 and 2016 benefit years, a selfinsured group health plan (including a group health plan that is partially self-insured 

and partially insured, where the health insurance coverage does not constitute major 

medical coverage) that uses a third party administrator in connection with claims 

processing or adjudication (including the management of internal appeals) or plan 

enrollment for services other than for pharmacy benefits or excepted benefits within 

the meaning of section 2791(c) of the PHS Act. Notwithstanding the foregoing, a 

self-insured group health plan that uses an unrelated third party to obtain provider 

network and related claim repricing services, or uses an unrelated third party for up 

to 5 percent of claims processing or adjudication or plan enrollment, will not be 

deemed to use a third party administrator, based on either the number of 

transactions processed by the third party, or the volume of the claims processing 

and adjudication and plan enrollment services provided by the third party. A selfinsured group health plan that is a contributing entity is responsible for the 

reinsurance contributions, although it may elect to use a third party administrator 

or administrative services-only contractor for transfer of the reinsurance 

contributions.

Id. at 4763; 45 C.F.R. § 153.20 (codifying the definition of “contributing entity” as 

announced in the 2014 Final Rule).
15

III. Plaintiffs’ Contributions to the TRP

Pursuant to HHS Rules, “[e]ach contributing entity must make reinsurance contributions 

annually: at the national contribution rate for all reinsurance contribution enrollees, in a manner 

specified by HHS[.]” 45 C.F.R. § 153.400(a). According to HHS, the reinsurance contribution 

required from a “contributing entity” during a benefit year is calculated by multiplying “[t]he 

number of covered lives of reinsurance contribution enrollees during the applicable benefit year 

for all plans and coverage described in § 153.400(a)(1) of the contributing entity” by “[t]he 

contribution rate for the applicable benefit year.” 45 C.F.R. § 153.405. Defendant required 

Plaintiffs to pay the reinsurance contribution in the following manner: (1) the contributing entity 

had to submit an annual enrollment count of the number of covered lives of reinsurance 

contribution enrollees no later than November 15 of the applicable benefit year; (2) after 

submitting the annual enrollment count, HHS then notified the contributing entity of the amount 

of the reinsurance contribution allocated to reinsurance payments, administrative expenses, and 

the United States Treasury for the applicable benefit year; and (3) the contributing entity remitted

reinsurance contributions to HHS. Compl. ¶ 65 (citing 45 C.F.R. § 153.405). 8 For benefit year 

2014, Defendant required EWTF, OETF, and the Stone Masons to pay a contribution of $63 per 

covered life—an amount that encapsulated both plan participants and their dependents. Compl. ¶ 

70. For benefit years 2015 and 2016, Defendant required OETF and the Stone Masons to pay a 

contribution of $44 and $27 per covered life, respectively. Compl. ¶ 68. For benefit years 2015 

and 2016, EWTF did not make TRP contributions. 45 C.F.R. § 153.20.

8 Plaintiffs’ complaint appears to cite to the pre-2016 version of 45 C.F.R. § 153.405. Section 

153.405 was amended in 2016, but that amendment does not appear to have materially altered the 

TRP contribution process.
16

EWTF paid $865,357.50 to Defendant on January 9, 2015, reflecting its first payment for 

benefit year 2014. Compl. ¶ 70. It paid an additional $173,071.50 to Defendant on November 9, 

2015, reflecting a total sum of $1,038,429 paid for benefit year 2014. Id. OETF remitted TRP 

contribution payments to Defendant in the amount of $142,569 on January 12, 2015; $107,712 on 

January 8, 2016; and $72,873 on January 10, 2017. Compl. ¶ 71. Collectively, OETF paid 

Defendant $323,154 for benefit years 2014, 2015, and 2016. Compl. ¶ 22. The Stone Masons 

remitted TRP contribution payments to Defendant in the amount of $20,664 on January 14, 2015; 

$14,476 on January 14, 2016; and $11,637 on January 13, 2017. Compl. ¶ 72. Collectively, the 

Stone Masons paid Defendant $46,777 for benefit years 2014, 2015, and 2016. Compl. ¶ 24.

IV. Subsequent Litigation

In June 2016, EWTF filed suit in federal district court under 28 U.S.C. § 1346(a)(1), 

challenging HHS’s 2015 assessment of the ACA’s section 1341 on self-insured, self-administered 

plans. See Electrical Welfare Trust Fund v. United States, No. 16-2186, 2017 WL 3116693, *2 

(D. Md. Jul. 21, 2017). The district court dismissed the suit for lack of jurisdiction and the United 

States Court of Appeals for the Fourth Circuit affirmed. Electrical Welfare Trust Fund v. United 

States, 907 F.3d 165, 168-70 (4th Cir. 2018).

In 2017, EWTF, Stone Masons, and OETF filed suit in the United States Court of Federal 

Claims under alleging the TRP constituted “an internal-revenue tax illegally collected under 28 

U.S.C. § 1346(a)(1)” and deprived Plaintiffs of “of property without due process of law or without 

just compensation in violation of the Due Process and/or Takings clauses of the Fifth Amendment

of the United States Constitution.” Operating Engineers Trust Fund of Washington, D.C., et al. 

v. United States, No. 17-cv-1732, ECF No. 1. On March 6, 2019, the parties in that case filed a 
17

stipulation of dismissal without prejudice pursuant to Rule 41(a)(1)(A)(ii)—two days before 

Plaintiffs filed their complaint in the present action. Id. at ECF No. 29.

On May 7, 2019, Defendant moved to dismiss Plaintiffs’ complaint for lack of jurisdiction9

and for failure to state a claim, pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the United 

States Court of Federal Claims (RCFC), and alternatively moved for summary judgment. See 

generally Def.’s Mot.; Def.’s Reply. On February 27, 2020, this case was reassigned to the 

undersigned judge, and subsequently this Court held oral argument on the pending motions. See 

Order Reassigning Case (ECF No. 15). 

STANDARD OF REVIEW

To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain 

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 plaintiff also must establish “more than a sheer possibility that a defendant has 

acted unlawfully.” Ashcroft, 556 U.S. at 678. Thus, “[a] pleading that offers ‘labels and 

conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ Nor does 

a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.”’ Id. 

(quoting Twombly, 550 U.S. at 555, 557) (citations omitted).

Pursuant to Rule 56, summary judgment is appropriate only if “there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.” Rule 56(a); see 

also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-49 (1986). A “genuine” dispute is one 

that “may reasonably be resolved in favor of either party,” and a fact is “material” if it might 

significantly alter the outcome of the case under the governing law. Anderson, 477 U.S. at 248,

9 As noted, Defendant withdrew its Rule 12(b)(1) motion at oral argument. Def. Reply at 20 n.8; 

Oral Argument Transcript (ECF No. 21) at 5:13-19. 
18

250. In determining the propriety of summary judgment, a court will not make credibility 

determinations and will draw all inferences in favor of the non-moving party. See Matsushita Elec. 

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).

DISCUSSION

Pursuant to the Tucker Act, this Court’s primary jurisdictional statute, “[t]he United States 

Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the 

United States founded . . . upon the Constitution, . . . or for liquidated or unliquidated damages in 

cases not sounding in tort.” 28 U.S.C. § 1491(a). “When the government expropriates property, 

a plaintiff can obtain relief under either a Takings theory or an illegal-exaction theory . . . but not 

both.” Reid v. United States, 148 Fed. Cl. 503, 528 (2020) (citing Orient Overseas Container Line

(UK) Ltd. v. United States, 48 Fed. Cl. 284, 289 (2000); Figueroa v. United States, 57 Fed. Cl. 

488, 496 (2003), aff’d, 466 F.3d 1023 (Fed. Cir. 2006)). The Tucker Act grants this Court 

jurisdiction over an “illegal exaction” involving money “improperly paid, exacted, or taken from 

the claimant in contravention of the Constitution, a statute, or a regulation.” Eastport S.S. Corp. 

v. United States, 372 F.2d 1002, 1007 (Ct. Cl. 1967);see also Aerolineas Argentinas v. United 

States, 77 F.3d 1564, 1574 (Fed. Cir. 1996) (finding that an agency’s imposition of fees was not 

authorized because it was based on an interpretation of a regulation that was contrary to the 

authorizing statute). Conversely, “Takings claims arise because of a deprivation of property that 

is authorized by law.” Orient Overseas Container Line (UK) Ltd., 48, Fed. Cl. at 289 (citing 

Dureiko v. United States, 209 F.3d 1345, 1359 (Fed. Cir. 2000)); see also Tabb Lakes, Ltd. v. 

United States, 10 F.3d 796, 802 (Fed. Cir. 1993) (“[A] claimant must concede the validity of the 

government action which is the basis of the taking claim to bring suit under the Tucker Act[.]”). 
19

Therefore, this Court must determine whether HHS’s inclusion of Plaintiffs within the 

definition of “contributing entity” is contrary to statute before it may reach Plaintiffs’ Takings 

claims.

I. EWTF’s Illegal Exaction Claim

The central question underlying Plaintiffs’ illegal exaction claims is whether Congress 

intended for Plaintiffs to make transitional reinsurance contributions under 42 U.S.C. § 18061. To 

determine whether HHS’s regulation was contrary to statute, the Court is required to apply the 

familiar framework found in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 

467 U.S. 837 (1984). 

The first question under Chevron is “whether Congress has directly spoken to the precise 

question at issue.” Id. at 842. If, after the Court exhausts the “traditional tools of statutory 

construction,” the intent of Congress is clear, “that is the end of the matter.” Id. at 837, 842-43, 

843 n.9. If, however, the statute “is silent or ambiguous with respect to the specific issue,” id. at 

843, the Court must proceed to the second prong of Chevron, under which the Court must “defer 

to the agency’s interpretation if ‘the agency’s answer is based on a permissible construction of the 

statute.’” Cathedral Candle Co. v. U.S. Int’l Trade Commission, 400 F.3d 1352, 1362 (Fed. Cir. 

2005) (quoting Chevron, 467 U.S. at 843).

In determining whether it was permissible for HHS to include EWTF’s self-insured, selfadministered ERISA Fund within the definition of contributing entity, this Court must begin with 

the text of the statute. See Jimenez v. Quarterman, 555 U.S. 113, 118 (2009); Lamie v. U.S. 

Trustee, 540 U.S. 526, 534, (2004); Greyhound Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 330 

(1978); Strategic Hous. Fin. Corp. of Travis Cty. v. United States, 608 F.3d 1317, 1323 (Fed. Cir. 
20

2010). “If the statutory language is plain, [the Court] must enforce it according to its terms.” King

v. Burwell, 576 U.S. at 474. “[W]hen deciding whether the language is plain, [the Court] must 

read the words in their context and with a view to their place in the overall statutory scheme.” Id. 

(quotations omitted). Moreover, the court ‘“must give effect, if possible, to every clause and word 

of a statute.’” Parker Drilling Mgmt. Servs., Ltd. v. Newton, 139 S. Ct. 1881, 1890 (2019) (quoting 

Loughrin v. United States, 573 U.S. 351, 358 (2014));see also Advocate Health Care Network v. 

Stapleton, 137 S. Ct. 1652, 1659 (2017) (“each word Congress uses is there for a reason”) (citing 

A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts 174–179 (2012)). “If 

Congress has expressed its intention by clear statutory language, that intention controls and must 

be given effect.” Rosete v. Office of Pers. Mgmt., 48 F.3d 514, 517 (Fed. Cir. 1995); accord Conn. 

Nat'l Bank v. Germain, 503 U.S. 249, 253-54 (1992) (“[C]ourts must presume that a legislature 

says in a statute what it means and means in a statute what it says there.”).

Defendant argues that the term in section 18061(b)(1)(A), “third party administrators on 

behalf of group health plans,” does not directly address the contribution obligation of self-insured 

group health plans. Def.’sMot. at 21-22. Specifically, Defendant argues that “on behalf of” could 

be reasonably interpreted to mean “a self-insured group health plan is ultimately responsible for 

the reinsurance contributions, even though it may elect to use a TPA or ASO to transfer reinsurance 

contributions.” See Def.’s Mot. at 21-22 (citing A3565, A2027); see also Ohio v. United States, 

154 F. Supp. 3d 621, 625 (S.D. Ohio 2016) (finding that “Congress intended for all group health 

plans, including those operated by state or local governments, to pay into the Transitional 

Reinsurance Program.”) aff’d 849 F.3d 313, 318-322 (6th Cir. 2017) (holding that the TRP applies 

to state-provided group health insurance plans). In other words, according to Defendant, the term 

“on behalf of” could purportedly indicate that a third-party administrator was merely a “conduit” 
21

and the statutory contribution obligations ran to the group health plan regardless if the plan was 

self-administered or used a third-party administrator. Def.’s Mot at 22 (citing A3565 (“Although 

self-insured group health plans are ultimately liable for reinsurance contributions, a third-party 

administrator or administrative-services only contractor may be utilized for transfer of the 

reinsurance contributions.”)); see also Def.’s Reply at 10-20. Defendant argues that HHS’s 

interpretation of section 18061 requiring all group health plans to contribute to the program, is 

therefore permissible. Def.’sReply at 10-20. This Court finds that HHS has warped Congress’s 

plain language, likely as a means to its own ends.

The plain language of section 18061(b)(1)(A)requires “health insurance issuers, and thirdparty administrators on behalf of group health plans . . . to make [reinsurance contributions].” A 

presumption exists that each word Congress uses in a statute is there for a reason. See Advocate 

Health Care Network, 137 S. Ct. at 1659 (citing A. Scalia & B. Garner, Reading Law: The 

Interpretation of Legal Texts 174–179 (2012)). Defendant’s interpretation is in complete 

contravention of that well-established tenet of statutory interpretation and effectively reads “third 

party administrators” out of the statute. If Congress meant that all group health plans would pay 

the TRP, it could have easily omitted its third-party administrator qualifier. Indeed, when 

Congress has meant to regulate self-administered group health plans, it has done so specifically. 

For instance, 42 U.S.C. § 1395y(b)(7)(A) explicitly identified when statutory duties applied to 

both an “entity serving as an insurer or third party administrator for a group health plan” and “a 

group health plan that is self-insured and self-administered. . . .” “If Congress has expressed its 

intention by clear statutory language, that intention controls and must be given effect.” Rosete, 48 

F.3d at 517; accord Conn. Nat'l Bank, 503 U.S. at 253-54 (“[C]ourts must presume that a 

legislature says in a statute what it means and means in a statute what it says there.” (cleaned up)). 
22

It is also telling that HHS itself ultimately concluded “that the better reading of section 

1341 is that a self-funded, self-administered plan should not be a contributing entity.” 2014 Final 

Rule at A4702. Notwithstanding its express acknowledgment, HHS maintained “as a matter of 

public policy,” that the its revised definition of “contributing entity” would only apply 

prospectively, for the 2015 and 2016 plan years, because “making the proposed exemption 

effective for the 2014 benefit year at this late stage would be disruptive to plans and issuers that 

have already set contribution rates and premiums, and could upset settled estimates with respect 

to expected reinsurance payments and contribution obligations.” Id. at A4703. Although HHS

acknowledged that itsinterpretation was not a natural reading of the statute, HHS would not correct 

its previous interpretation to apply to the 2014 plan year because it had already relied on that 

erroneous interpretation and reversing course to adhere to the plain language of the statute would 

be administratively difficult. This Court is not aware of an exception that would permit an agency 

to rewrite the law for plan year 2014 based on such purported administrative difficulties. HHS did 

not have authority to ignore the plain language of the statute in the name of public policy or 

administrative efficiency. See Util. Air Regulatory Grp. v. E.P.A., 573 U.S. 302, 325 (2014) (“An 

agency has no power to ‘tailor’ legislation to bureaucratic policy goals by rewriting unambiguous 

statutory terms.”). This is especially true where, as here, HHS itself caused the “public policy” (or 

administrative difficulties) concern through its own admittedly erroneous interpretation. 

Defendant’s reliance on Ohio v. United States, a case involving TRP fees, is not persuasive. 

In Ohio, the State of Ohio challenged TRP fees as applied to include state and local entities. 154 

F. Supp. 3d at 627-28. The district court held HHS did not err in requiring Ohio to pay a TRP fee 

because states and localities were included in the definition of “group health plans.” In rejecting 

Ohio’s challenge, the court explained that “[p]ut simply, Congress intended for all group health 
23

plans, including those operated by state and local governments, to pay into the Transitional 

Reinsurance Program.” Id. at 625 (emphasis omitted). In a footnote, the district court stated 

Although § 18061(b)(1)(A) states that “third party administrators[,] on behalf of 

group health plans, are required to make payments,” HHS has interpreted this 

provision to mean that group health plans themselves are liable for the 

contributions, “although [the plans] may elect to use a third-party administrator . . . 

for transfer of the reinsurance contributions.” 45 C.F.R. § 153.20. This 

interpretation makes inherent sense given the simple fee-shifting that would occur 

were the rule otherwise.

Id. at 633 n.5.

This Court is not bound by the dicta in a district court decision. See Camreta v. Greene, 

563 U.S. 692, 709 n.7 (2011). Indeed, the argument that self-administered plans are not required 

to pay the TRP fee was not before the district court in that case. In Ohio v. United States, the 

United States District Court for the Southern District of Ohio addressed, inter alia, “whether 

Congress intended the Transitional Reinsurance Program to apply to state and local governments 

that offer qualifying group health plans . . . .” 154 F. Supp. 3d at 628. But to the extent the Ohio 

district court held that section 1341 of the ACA applies to all group health plans such a holding 

effectively reads “third party administrator on behalf of” out of the statute. As noted, HHS’s 

purported “policy concerns,” including concerns over “fee-shifting,” do not trump the plain 

meaning of the statutory text. See Util. Air Regulatory Grp., 573 U.S. at 325. Indeed, as HHS 

expressly acknowledged in its 2014 Final Rule, it would also make inherent sense for Congress to 

exclude group health plans that did not use a third-party administrator because these entities had 

little to no connection to the commercial healthcare market. 2014 Final Rule at A4702 (“[T]he 

better reading of section 1341 is that a self-funded, self-administered plan should not be a 

contributing entity.”).
24

As EWTF clearly alleged that it is a self-funded, self-administered plan that does not use a 

third-party administrator, Defendant’s motion dismiss EWTF’s illegal exaction claim must be 

denied.

II. OETF’s and Stone Masons’ Illegal Exaction Claims

OETF and Stone Masons allege that their TRP contribution respective payments for benefit 

years 2014, 2015, and 2016 constituted an illegal exaction because HHS’s definition of 

“contributing entity” exceeded its statutory authority and was an unreasonable interpretation of 42 

U.S.C. § 18061. See generally Compl ¶¶ 105-111.

In analyzing OETF’s and Stone Masons’ illegal exaction claims, the Court must again 

begin with the plain language of the statute. Plaintiffs argue that section 18061(b)(1)(A) applies 

only to health insurance issuers and commercial issuers acting as administrators andbecause OETF

and Stone Masons’ third-party administrators are not also health insurers. Pls.’ Resp. at 27-28.

This argument is unavailing. Nothing in the statute precludes HHS from calculating fees 

for group health plans administered by an ASO. The statute does not differentiate between thirdparty administrators, which are also health insurance issuers, and those third-party administrators,

which are not. Moreover, section 18061(b)(3)(A) explicitly grants authority to HHS to establish 

a specific method to calculate the reinsurance contribution fee for group health plans which use a 

third-party administrator. Section 18061(b)(3)(A) states that “contribution amount[s] for any plan

year may be based on the percentage of revenue of each issuer and the total costs of providing 

benefits to enrollees in self-insured plans . . . .” 42 U.S.C. § 18061 (emphasis added). The 

statute’s reference to “self-insured plans” in the context of section 18061(b)(3)(A)’s general 
25

instruction for calculating reinsurance contributions clearly indicates Congress’s intention to 

subject self-insured plans that use a third-party administrator to reinsurance contributions. 

Plaintiffs next contend that section 18061’s reference to “commercial book of business” 

and NAIC indicates that Congress intended TRP to apply to health insurance issuers. Pls.’ Resp. 

at 7, 30-31. While section 18061 indicates that Congress placed emphasis on health insurance 

issuers, section 18061’s reference to a “commercial book of business” orto NAIC does not prohibit 

HHS from defining “contributing entity” to include self-insured group health plans. That Congress 

mandated more detailed instructions for health insurance issuers does not nullify section 

18061(b)(1)(A)’s and 18061(b)(3)(A)’s references to group health plans that use a third-party 

administrator.

Next, Plaintiffs contend that HHS’s interpretation was unreasonable because, under 42 

U.S.C. § 18061(b)(1)(B), only commercial health insurers could receive reinsurance payments. 

Pls.’ Resp. at 1, 7-9, 18-19, 37-38. However, the plain language of section 18061 clearly permitted 

HHS to collect reinsurance contributions from self-insured group health plans while providing for 

only health insurance issuers to receive funds from the TRP. Section 18061(b)(1)(A) requires 

“health insurers issuers[] and third party administrators on behalf of group health plans” to 

contribute to the TRP. In the very next subparagraph, section 18061(b)(1)(B),mandates that only

“health insurance issuers . . . that cover high risk individuals in the individual market” are eligible 

to receive payments out of the TRP fund. The proximity of these provisions indicates that 

Congress intended to define contributing entities differently than those entities that were eligible 

to receive TRP funds. See Comm'r v. Lundy, 516 U.S. 235, 250 (1996) (“The interrelationship and 

close proximity of these provisions of the statute presents a classic case for application of the 

normal rule of statutory construction that identical words used in different parts of the same act 
26

are intended to have the same meaning.” (internal quotations and citations omitted)). It is wellestablished, as the Supreme Court has observed, “[w]here Congress includes particular language 

in one section of a statute but omits it in another section of the same Act, it is generally presumed 

that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Russello 

v. United States, 464 U.S. 16, 23 (1983) (citing United States v. Wong Kim Bo, 472 F.2d 710, 722 

(5th Cir. 1972)); see also Heino v. Shinseki, 683 F.3d 1372, 1379 (Fed. Cir. 2012) (endorsing the 

Russello principle). As the statute at issue does not prohibit HHS from including Stone Masons 

and OETF funds within the definition of “contributing entity,” this Court cannot find that HHS 

acted contrary to section 18061’s plain language when HHS defined “contributing entity” to 

include health care groups using ASO third-party administrators. 

Nor is Plaintiffs’reliance on legislative history persuasive. In its opposition to Defendant’s 

motion, Plaintiffs cite (1) the September 2009 Senate Finance Committee Mark of the America’s 

Healthy Future Act of 2009, which Plaintiffs contend contained base text of what would later 

become ACA section 1341, and (2) June 2014 testimony before the House of Representatives by 

Mandy Cohen, Acting Deputy Administrator of HHS and Director of the Center for Consumer 

Information and Insurance Oversight. Pls.’ Resp. at 33.

In September 2009, the Senate Finance Committee released the Chairman’s Mark of the 

America’s Healthy Future Act of 2009. Compl. ¶ 46 (citing Legislation, H.R. 3590: Patient 

Protection and Affordable Care Act of 2009, THE UNITED STATES SENATE COMMITTEE 

ON FINANCE, http://www.finance.senate.gov/legislation/details/hr-3590; Chairman’s Mark, 

America’s Healthy Future Act of 2009, THE UNITED STATES SENATE COMMITTEE ON 

FINANCE at 8-9, 
27

https://www.finance.senate.gov/imo/media/doc/091609%20Americas_Healthy_Future_Act.pdf 

(last visited Mar. 5, 2019). The Chairman’s Mark stated:

[a]s a condition of issuing commercial, major medical health insurance policies or 

administering benefit plans for major medical coverage in years 2013, 2014, and 

2015, all health insurance issuers would be required to contribute to a reinsurance 

program for individual policies that is [sic] administered by a non-profit reinsurance 

entity that would function as described below.

Pls.’ Resp. at 31 (emphasis omitted) (citing Compl. ¶ 46). The Chairman’s Mark also stated that 

the “requirement would be enforced at the state level” and the “National Association of Insurance 

Commissioners (NAIC) would be directed to develop a model for states to adopt.” Id (citing 

Compl. ¶¶ 36 n.10, 47. The Chairman’s Mark further provided “[t]he contribution amount must 

proportionally reflect each entity’s fully insured commercialbook of business for all major medical 

products and third-party administrators (TPA) fees (e.g., based on percentage of revenue or flat, 

per enrollee amount).” Id. (citing Compl. ¶ 47). Plaintiffs note that there is no discussion in the 

Chairman’s Mark of non-commercial employee benefits. Pls.’ Resp. at 32.

In June 2014, Mandy Cohen, Acting Deputy Administrator of HHS, testified before the 

House Committee on Oversight and Government Reform that the intent of the TRP was “to help 

provide stability in the health insurance market as the Affordable Care Act extends new benefits 

to consumers” and “encouraging issuers to participate in the Marketplace and compete on price 

and quality.” Compl. ¶ 44. 10

10 Testimony by Mandy Cohen M.D., Acting Deputy Administrator and Director Center for

Consumer Information and Insurance Oversight Centers for Medicare & Medicaid Services U.S.

Department of Health and Human Services (HHS) on The Affordable Care Act’s Premium

Stabilization Programs: Reinsurance, Risk Corridors, and Risk Adjustment before Committee on

Oversight & Government Reform United States House of Representatives (June 18, 2014),

https://docs.house.gov/meetings/GO/GO28/20140618/102420/HHRG-113-GO28-Transcript20140618.pdf.
28

“[L]egislative history is not the law.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1631 

(2018). The Constitution establishes specific procedures for the enactment of statutes. See U.S. 

Const. Art. I, § 7, cls. 2, 3. Statements made by legislators whether made on the floor or in a 

committee report are not subject to bicameralism and presentment. See INS v. Chadha, 462 U.S. 

919, 946-52 (1983). The legislature acts as a collective and the enactment of a law often represents 

a compromise between individual legislators and between individual legislators and the president. 

The Court’s reliance on statements made by individual legislators and committees “would demean 

the constitutionally prescribed method of legislating to suppose that its elaborate apparatus for 

deliberation on, amending, and approving a text is just a way to create some evidence about the 

law, while the real source of legal rules is the mental processes of legislators.” Matter of Sinclair, 

870 F.2d 1340, 1344 (7th Cir. 1989) (Easterbrook, J.). This Court accordingly looks to the plain 

language of the statute and not to legislative history when conducting its interpretation.

Even if this Court were to consider the legislative history cited by Plaintiffs, there is nothing 

in the legislative history to suggest that Congress clearly intended for section 18061 to only apply 

to those entities. Azar v. Allina Health Svcs., 139 S. Ct. 1804, 1814 (2019) (“And even those of 

us who believe that clear legislative history can ‘illuminate ambiguous text” won’t allow 

‘ambiguous legislative history to muddy clear statutory language.’” (internal citation omitted)).

The Court’s analysis must, therefore, proceed to Chevron step two, in which the Court 

should defer to HHS’s interpretation of section 18061(b) as long as it “represents a reasonable 

accommodation of conflicting policies that were committed to the agency’s care by the 

statute. . . .” Chevron, 467 U.S. at 845 (internal quotations and citation omitted).

Plaintiffs argue that HHS’s interpretation of section 18061(b) is unreasonable because 

according to Plaintiffs, Stone Masons and OETF were not part of the problem Congress sought to 
29

fix through the TRP. Specifically, Plaintiffs argue that the TRP was designed “to help stabilize 

premiums for coverage in the individual market during the first 3 years of operation of an 

Exchange . . . when the risk of adverse selection related to new rating rules and market changes 

[was] greatest.” Pls.’ Resp. at 30 (quoting 42 U.S.C. § 18061(c)(1)(A)); see also Compl. ¶¶ 6, 38. 

Plaintiffs argue that “ERISA Funds do not collect premiums, do not operate in the individual 

market, and are not sold on the ACA’s exchanges, they neither affect nor are affected by the 

problem the TRP was designed to address.” Pls.’ Resp. at 30 (citing Compl. ¶¶ 28, 33). 

Additionally, because Plaintiffs did not exclude participants with pre-existing conditions, Plaintiffs

did not undertake additional risk when Congress abolished denials for pre-existing conditions 

under the ACA. See Compl. ¶¶ 38, 50; Pls.’ Resp. at 4-6.

Defendant argues that in view of TRP’s goal of stabilizing premiums, HHS reasonably 

required both health insurance issuers and self-insured group health plans to contribute to the 

reinsurance program, because such an interpretation distributed the risk of enrolling new high-risk 

patients over the entire health insurance market. Def.’sMot. at 27, 30.

This Court agrees with Defendant that HHS reasonably interpreted section 18061(b) 

consideringthe section’s text, structure, and purpose. Plaintiffs understandably take issue with the 

fact that HHS’s implementing regulations require Plaintiffs’ group health plans to pay into a 

program from which they were not eligible to receive payment and which was purportedly enacted 

to address an issue non-attributable to Plaintiffs’ group health plans. In enacting section 18061, 

however, Congress did not limit or define “contributing entities” to those entities eligible to receive 

payment out of the fund. Nor did Congress limit HHS’s authority to define “contributing entity”

to those entities that excluded individuals with pre-existing conditions. As reflected in much of 

the ACA, many pay into the program, but that doesn’t always equate to those entities or persons 
30

eligible to receive benefits. See e.g., 42 U.S.C. § 18062(b) (instructing HHS to establish the risk 

corridors program under which health plans with lower allowable cost pay into the program and 

health plans with higher allowable cost receive payment under the program).

Congress charged HHS, not this Court, with authority to implement the TRP. See 42 

U.S.C. §§ 18041(a)(1)(C) (delegating authority to HHS to issue regulations for, inter alia, TRP), 

18061(b)(1) (requiring the Secretary of HHS to establish standards under section 18041(a)). 

Whether or not this Court agrees with Chevron, it is bound to follow it as a lower court, and HHS’s 

interpretation is entitled to deference “[i]f this choice represents a reasonable accommodation of 

conflicting policies that were committed to the agency's care by the statute . . . .” Chevron, 467 

U.S. at 845 (internal quotations and citation omitted). 

As stated in the ACA, the primary purpose of the TRP was to help stabilize premiums for 

coverage in the individual market during the first three years of operation of the ACA when the 

risk of adverse selection related to new rating rules and market changes was greatest. See 42 

U.S.C. § 18061(c)(1)(A) (stating the purpose for “applicable reinsurance entity”). HHS, through 

three separate rounds of rulemaking, carefully considered the statutory language and comments 

from interested parties to tailor a rule that would, in its view, effectuate this purpose. HHS received 

conflicting comments suggesting that exempting those plans from the contribution would decrease 

the premium stabilization effects of the program. See, e.g., Def.’sMot. App. 8 at A3738, Comment 

from BlueCross BlueShield Association to CMS (Dec. 23, 2013) (ECF No. 6-8) (“The exclusion 

of self-funded plans that do not use [third-party administrators] from the reinsurance contribution 

pool will shift costs to remaining contributors. . . . [S]hould the exemption for self-insured, selfadministered plans be finalized into law, the industry would need to pass through the shortfall 

amount to all commercial lines of business. This would discourage self-insured groups that use a 
31

[third-party administrator], as well as fully-insured groups.”); Def.’s Mot. App. 8 at A4015-27, 

Comment from National Coordinating Committee for Multiemployer Plans (NCCMP) to CMS 

(Dec. 26, 2013) (arguing that requiring self-administered group health to make temporary 

reinsurance contributions while barring their plans from realizing any benefit of risk pooling is 

unfair and contrary to the plain language of section 18061). Through the iterative rulemaking 

process, HHS concluded that TRP’s intended stabilizing effects would be best achieved by 

including within the definition of “contributing entity” the widest statutorily permissible range of 

health insurance issuers and group health plans. See 2013 Final Rule at A3628.

Even if this Court disagrees with HHS’s rational, it is not this Court’s job to make policy. 

See Chevron, 467 U.S. at 843 n.11 (“The court need not conclude that the agency construction was 

the only one it permissibly could have adopted to uphold the construction, or even the reading the 

court would have reached if the question initially had arisen in a judicial proceeding.”); Anderson 

v. Wilson, 289 U.S. 20, 27 (1933) (“We do not pause to consider whether a statute differently 

conceived and framed would yield results more consonant with fairness and reason. We take the 

statute as we find it.”).

Accordingly, Defendant’s motion to dismiss is granted with respect to OETF’s and Stone 

Masons’ illegal exaction claims.

III. Plaintiffs’ Takings Claims

Even if HHS’s definition were permissible under the ACA, this Court must determine 

whether EWTF, OETF, and Stone Masons may still recover under their Takings claims.

11 

11 The parties’ filings do not distinguish between EWTF, OETF, and Stone Masons for their 

Takings arguments; and, for purposes of this Memorandum and Order’s Takings analysis, the 

Court does not distinguish between the two. See generally Def.’s Mot. at 11-14; Pls. Resp. 12-21. 

As noted, if EWTF ultimately succeeds on its illegal exaction claim, it cannot also proceed under 
32

The Takings Clause of the Fifth Amendment provides that private property shall not “be 

taken for public use, without just compensation.” U.S. Const. amend. V. This Clause “was 

designed to bar Government from forcing some people alone to bear public burdens which, in all 

fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 

U.S. 40, 49 (1960).

The Federal Circuit has developed a two-step approach to Takings claims. See Adams v. 

United States, 391 F.3d 1212, 1218 (Fed. Cir. 2004); Boise Cascade Corp. v. United States, 296 

F.3d 1339, 1343 (Fed. Cir. 2002). First, a plaintiff must identify the property interest that was 

allegedly taken. Adams, 391 F.3d at 1218. Second, “[o]nce a property right has been established, 

the court must then determine whether a part or a whole of that interest has been appropriated by 

the government for the benefit of the public.” Members of Peanut Quota Holders Ass'n v. United

States, 421 F.3d 1323, 1330 (Fed. Cir. 2005) (citing Conti v. United States, 291 F.3d 1334, 1339

(Fed. Cir. 2002)); see also Karuk Tribe of California v. Ammon, 209 F.3d 1366, 1374 (Fed. Cir. 

2000) (“If a plaintiff possesses a compensable property right, . . . a court determines whether the 

governmental action at issue constituted a taking of that ‘stick.’” (citing M & J Coal Co. v. United 

States, 47 F.3d 1148, 1154 (Fed. Cir. 1995))). Courts cannot reach this second step without 

initially identifying a cognizable property interest. Hearts Bluff Game Ranch, Inc. v. United States, 

669 F.3d 1326, 1329 (Fed. Cir. 2012); Air Pegasus of D.C., Inc. v. United States, 424 F.3d 1206, 

1213 (Fed. Cir. 2005).

Plaintiffs argue that they have a cognizable property interest because their group healthcare 

plans consist of “a specific fund” that is “held in trust for the benefit of plan participants and their 

its Takings Claim. See Reid, 148 Fed. Cl. at 528. However, Plaintiffs (including EWTF) have not 

cross-moved for summary judgment on any of its claims. Accordingly, the Court cannot 

affirmatively rule in favor of EWTF on its illegal exaction claim at this time. Consequently, the 

Court includes EWTF in its Takings analysis in this Memorandum and Order.
33

families pursuant to federal law.” Pls.’ Resp. at 12-16 (citing 29 U.S.C. § 1103(c) (ERISA’s 

exclusive benefits provision)); Compl. ¶¶ 92-93. Plaintiff argues that the TRP constituted either a 

per se or regulatory Taking because it deprived the plan participants of those funds without 

receiving any benefit from the TRP. Compl. ¶¶ 94-95.

Defendants argue Plaintiffs fail to state a valid Takings claim because the TRP creates an 

ordinary obligation to pay money. Def.’s Mot. at 11-14; Def.’s Reply at 3. Defendant also argues 

that, even assuming that Plaintiffs have a cognizable property interest in their ERISA fund assets, 

Plaintiffs’ Takings claims fail, under either as a per se or regulatory Taking, because Plaintiffs do 

not have a reasonable expectation that ERISA funds would be shielded from legislative enactments 

requiring payment. Def.’s Mot. at 14; Def.’s Reply at 5 (citing Boyle v. Anderson, 68 F.3d 1093, 

1102 (8th Cir. 1995) (holding ERISA’s exclusive benefit provisions were “intended to prohibit . .

. wrongful diversions of trust assets” resulting from “self-dealing, imprudent investing, and 

misappropriation of funds.”).

If Plaintiffs do not have a cognizable property interest, their Takings claims must fail. 

Wyatt v. United States, 271 F.3d 1090, 1096 (Fed.Cir.2001) (“[O]nly persons with a valid property 

interest at the time of the taking are entitled to compensation.”) (citing, inter alia, Almota Farmers 

Elevator & Warehouse Co. v. United States, 409 U.S. 470, 473-74 (1973)). The Constitution itself 

neither creates nor defines the property interests that, if taken by the Government, are compensable 

under the Fifth Amendment. Phillips v. Washington Legal Foundation, 524 U.S. 156, 164 (1998) 

(quoting Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972)). Rather, “existing 

rules or understandings that stem from an independent source, such as state,” federal, or common 

law, create and define the dimensions of property interests for purposes of establishing a 
34

cognizable right and hence a potential taking. See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 

1030 (1992) (quoting Roth, 408 U.S. at 577). As the Federal Circuit has noted:

Property interests are about as diverse as the human mind can conceive. Property 

interests may be real and personal, tangible and intangible, possessory and 

nonpossessory. They can be defined in terms of sequential rights to possession 

(present interests—life estates and various types of fees—and future interests), and 

in terms of shared interests (such as those of a mortgagee, lessee, bailee, adverse 

possessor), and there are interests in special kinds of things (such as water, and 

commercial contracts). And property interests play across the entire range of legal 

ideas.

Adams v. United States, 391 F.3d at 1219 (quoting Fla. Rock Indus., Inc. v. United States, 18 F.3d 

1560, 1572 n.32 (Fed. Cir. 1994)).

The issue here is whether Plaintiffs’ ERISA funds constitute a “specific fund of money” 

protected by an “identified property interest.” Ordinarily, the “mere imposition of an obligation 

to pay money . . . does not give rise to a claim under the Takings Clause of the Fifth Amendment.”

Commonwealth Edison Co. v. United States, 271 F.3d 1327, 1340 (Fed.Cir. 2001) (en banc); Kitt 

v. United States, 277 F.3d 1330, 1336 (Fed. Cir. 2002), on reh'g in part, 288 F.3d 1355 (Fed. Cir. 

2002) (holding that a tax imposed on early withdrawals from individual retirement accounts was 

not a taking); see also United States v. Sperry Corp., 493 U.S. 52, 62 n.9 (1989) (holding that a 

federal statute that required the payment of a portion of an arbitral award from the Iran–United 

States Claim Tribunal to the United States government did not violate the Takings Clause because, 

in part, “[i]t is artificial to view deductions of a percentage of a monetary award as physical 

appropriations of property. Unlike real or personal property, money is fungible.”); U.S. Shoe Corp. 

v. United States, 296 F.3d 1378, 1383 (Fed. Cir. 2002) (holding that a statute requiring the payment 

of Harbor Maintenance Tax on exported merchandise violated the Export Clause, but was not a 

taking). However, when a specific fund of money is protected by an identifiable property interest, 

a Taking may occur. See Commonwealth Edison Co., 271 F.3d at 1339-40.
35

For instance, in Webb’s Fabulous Pharmacies v. Beckwith, Eckerd's of College Park, Inc. 

entered into an agreement to purchase substantially all the assets of Webb's Fabulous Pharmacies. 

449 U.S. 155, 156 (1980). The debts of Webb’s appeared to be greater than the purchase price,

so, Eckerd's filed a complaint of interpleader in state court to protect itself from Webb’s creditors, 

interpleading as defendants both Webb's and its creditors and tendering the purchase price to the 

court. Id. at 156-57. The state court deducted a statutorily prescribed fee for maintenance of the 

fund in the amount of $9,228.74 and an additional amount from the principal of the fund of $40,200

pursuant to court order. Id. at 157-58. The remaining principal was paid to a court-appointed 

receiver to act on behalf of Webb’s. Id. at 158. However, the clerk of court retained all the interest 

earned on the principal, approximately $100,000. Id. at 157-158. The receiver challenged the 

clerk’s retention of the interest, arguing that the company’s creditors were entitled to the interest. 

Id. 

The Supreme Court held that the state court’s appropriation of the interest earned on the 

interpleader fund, in excess of a fee for services, resulted in a taking under the Fifth Amendment. 

Id. at 160-61, 164-65. The Supreme Court explained that the deposited fund of the purchase price 

for the assets of Webb’s “plainly was private property,” which was “held only for the ultimate 

benefit of the [receivers], not for the benefit of the court and not for the benefit of the county.” Id. 

at 160-61. The Supreme Court also noted that under common law the “general rule [is] . . . that 

any interest on an interpleaded and deposited fund follows the principal and is to be allocated to 

those who are ultimately to be the owners of that principal.” Id. at 162-63 (internal citation 

omitted). The Supreme Court further held that the retention in interest “[was] not reasonably 

related to the costs of using the courts” but rather “a forced contribution to general government 

revenues” which amounted to a Taking. Id. at 163.
36

In Phillips v. Washington Legal Found., the Supreme Court examined the constitutionality 

of a Texas law mandating that interest earned on client funds deposited by attorneys into Interest 

on Lawyer Trust Accounts (IOLTA) be paid to foundations financing legal services for lowincome populations. 524 U.S. at 159-60. Texas had required that lawyers holding nominal 

amounts of client funds, which would otherwise be unable to earn interest, place such funds in a 

separate, interest-bearing bank account. Id. at 156. Again, applying the “interest follows 

principal” rule, id. at 168, the Supreme Court held that interest generated by client funds in IOLTA 

accounts remained the private property of those clients. Id. at 172. The Supreme Court also noted 

that the interest income transferred to Texas could not reasonably be viewed “as payment for 

services rendered by the State.” Id. at 171 (internal quotation and citation omitted). Thus, the 

Supreme Court held that the use of the IOLTA’s interest income by Texas amounted to a taking.

Plaintiffs argue that the present action is analogous to Webb’s and Phillips. That may be 

true, but it is difficult for the Court to discern that on the record before it. Important gaps in the 

record prevent the Court from conclusively determining whether Plaintiffs’ ERISA funds are 

similar to the funds at issue in Webb’s and Phillips. Both Webb’s and Phillips addressed funds 

covered by an identifiable property interest, i.e., the principal owner’s common law right to interest 

income. Webb’s, 449 U.S. at 155-56; Phillips, 524 U.S. at 160, 165. In both Webb’s and Phillips,

the principal funds were held by the government but belonged to the specific depositors. Webb’s, 

449 U.S. at 162-63; Phillips, 524 U.S. at 172. Under applicable common law, as the owner of the 

principal funds, the Webb’s and Phillips plaintiffs were entitled to any interest earned on those 

funds. Webb’s, 449 U.S. at 163-64; Phillips, 524 U.S. at 172. 

Here, unlike in Webb’s and Phillips, the record is unclear as to whether EWTF, OETF, and 

Stone Masons have a specific property right that the TRP operates to exact from the Funds. As 
37

the record currently stands, Plaintiffs have not identified a cognizable property interest that specific 

individuals possess in the fund. Instead, Plaintiffs rely on section 1103(c) of ERISA’s “exclusive 

benefits provision” as support for the proposition that the group health plans constitute a “specific 

fund of money.” See e.g., Compl. ¶¶ 29, 93; Pls.’ Resp. at 4, 15-17, 20. This reliance on ERISA’s 

“exclusive benefits provision,” alone, does not suffice to show a cognizable property interest.

The exclusive benefits provision requires that ERISA plan fiduciaries act solely in the 

interest of participants and beneficiaries and provide benefits exclusively to them or defray 

reasonable plan administrative costs. 29 U.S.C. § 1104(a)(1)(A); see also 60A Am. Jur. 2d 

Pensions § 371. ERISA’s exclusive benefits provision does not create any property interest as 

recognized by common law, but instead creates a statutory duty of care on the part of the trustees 

to hold “all assets of an employee benefit plan . . . in trust” for “the exclusive purposes of providing 

benefits to participants in the plan and their beneficiaries. . . .” 29 U.S.C. § 1103(a), (c)(1). 

ERISA’s “exclusive benefits provision” was “intended to prohibit . . . wrongful diversions of trust 

assets” resulting from “self-dealing, imprudent investing, and misappropriation of plan funds.” 

Boyle, 68 F.3d at 1102 (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 15 (1987)). The 

Government’s imposition of this statutory duty on fund trustees does not alone create a cognizable 

property interest in ERISA funds. See E. Enterprises v. Apfel, 524 U.S. 498, 544 (1998)(Kennedy, 

J., concurring in part) (“[T]he Government's imposition of an obligation between private parties, 

or destruction of an existing obligation, must relate to a specific property interest to implicate the 

Takings Clause.”).12 Nor was ERISA’s exclusive benefits provision designed to protect funds 

12 Eastern Enterprises v. Apfel involved a challenge to the retroactive liability provisions of the 

Coal Industry Retiree Health Benefit Act of 1992, codified at 26 U.S.C. §§ 9701–9722 (the “Coal 

Act”) which required a former mining company to pay a large sum of money for the health benefits 

of retired employees. 524 U.S. at 504. Writing for the plurality, Justice O'Connor, joined by three 

other justices (Chief Justice Rehnquist, Justice Scalia, and Justice Thomas), concluded that the 

retroactive impact of the Coal Act as applied to Eastern Enterprises resulted in an unconstitutional 
38

from costs arising from generally applicable federal healthcare regulations, like TRP, which appear 

to simply increase the cost of administration or augment the duty of the fund’s trustees. See United 

Wire, Metal & Mach. Health & Welfare Fund v. Morristown Mem’l Hosp., 995 F.2d 1179, 1196

(3d Cir. 1993) (“[W]e are unwilling to infer from ERISA’s prohibition against applying fund assets 

for the benefit of others a Congressional intent to foreclose health care cost regulation of the kind 

here challenged.”); Concrete Pipe & Prod. of California, Inc. v. Constr. Laborers Pension Tr. for 

S. California, 508 U.S. 602, 645-46 (1993) (noting that ERISA plans have long been the object of 

legislative concern and that “those who do business in the regulated field cannot object if the 

legislative scheme is buttressed by subsequent amendments to achieve the legislative end.” 

(internal quotations and citation omitted)). Indeed, section 1103(c)(1) explicitly states that trust 

assets may be used to “defray[] reasonable expenses of administering the plan.” The record 

demonstrates that TRP fees “constitute a permissible expense of the plan for purposes of Title I of 

[ERISA.]” 2013 Final Rule at A3627 n.41 (“The Department of Labor has reviewed this rule and 

taking of property because it placed a “severe, disproportionate, and extremely retroactive burden 

on Eastern.” Id. at 538. As explained by the Federal Circuit in Commonwealth Edison Co., the 

plurality found the law was unconstitutional, but five Justices of the Court determined that the law 

did not effect a Taking, because the law did not appropriate a specific property interest but rather 

merely imposed an obligation to pay money. 271 F.3d at 1339 (citing Eastern Enterprises, 524 

U.S. at 540). In his concurrence, Justice Kennedy acknowledged that the statute “impose[d] a 

staggering financial burden” (which influenced his conclusion that it violated due process). 

Eastern Enterprises, 524 U.S. at 540 (Kennedy, J., concurring). Nevertheless, Justice Kennedy 

explained, the law did not effect a Taking because it did not “operate upon or alter” a “specific and 

identified propert[y] or property right,” such as an estate in land (e.g., a lien on a particular piece 

of property), a valuable interest in an intangible (e.g., intellectual property), or even a bank account 

or accrued interest. Id. at 540–541. Instead, “[t]he law simply imposes an obligation to perform 

an act, the payment of benefits. The statute is indifferent as to how the regulated entity elects to 

comply or the property it uses to do so.” Id. at 540. Justice Breyer, writing for three other Justices, 

(Justice Stevens, Justice Souter, and Justice Ginsburg) agreed that the Takings Clause was not 

implicated. Id. at 554–555 (dissenting opinion). He stated that the Takings Clause applies only 

when the government appropriates a “specific interest in physical or intellectual property” or “a 

specific, separately identifiable fund of money.” By contrast, the Clause has no bearing when the 

government imposes “an ordinary liability to pay money. . . .” Id. at 554-55 (citations omitted).
39

advised that paying required reinsurance contributions would constitute a permissible expense of 

the plan for purposes of Title I of the Employee Retirement Income Security Act (ERISA) because 

the payment is required by the plan under the Affordable Care Act as interpreted in this rule.”

(citing Advisory Opinion 2001–01A to Mr. Carl Stoney, Jr., available at www.dol.gov/ebsa 

discussing settlor versus plan expenses)). Therefore, by the ERISA’s exclusive benefits 

provision’s own terms, TRP contribution fees would not deprive Plaintiffs of a property interest in 

their ERISA funds. 

However, Plaintiffs and the beneficiaries of their plans may have some property right in 

the employee contributions paid into the ERISA funds or may have some contractual right to these 

funds. See Nat'l Educ. Ass'n-Rhode Island ex rel. Scigulinsky v. Ret. Bd. of Rhode Island 

Employees' Ret. Sys., 172 F.3d 22, 30 (1st Cir. 1999) (stating that the Takings Clause arguably 

protects property interests in funds contributed to an ERISA pension plan); Connolly v. Pension 

Ben. Guar. Corp., 475 U.S. 211, 230-31 (1986) (O’Connor, J., concurring) (finding that ERISA’s 

broad definition of defined benefit plan “may in some circumstances raise constitutional doubts 

under the Taking Clause or Due Process Clause.”). In this respect, Plaintiffs’ ERISA plans may 

be distinguishable from Adams, 391 F.3d at 1225, upon which Defendant relies for the proposition 

that “statutory obligation to be paid money” is not a cognizable “property interest grounded in 

property law.” Def.’s Mot. at 12-13 (quoting Adams, 391 F.3d at 1212, 1224-25). In Adams, 

federal employees received overtime compensation at a rate less than one-and-one-half times their 

regular rate of pay. 391 F.3d at 1214. The Adams plaintiffs alleged, inter alia, that they had a 

cognizable property interest “in payment of underpaid overtime compensation according to FLSA 

rates . . . .” Id. at 1219. In rejecting these arguments, the Federal Circuit held that where plaintiff 

is owed money under a statute and the government does not pay the money, the government’s non-
40

payment of the statutory entitlement is not a taking under the Fifth Amendment. See id. at 1225. 

The Federal Circuit distinguished plaintiff’s alleged statutory right to unpaid overtime wages from 

an “express right[s] under [this] contract” or an “actual sum of money.” Id. at 1221-22. In doing 

so the Federal Circuit held that a contractual rights and paid sums may be cognizable property 

interests. Id. at 1220. 

Unfortunately, neither party has submitted to this Court information concerning how 

Plaintiffs’ plans are funded or the nature of the agreements governing the use of the funds. There 

is simply no pertinent information on the record before this Court. Accordingly, at this time this 

Court cannot discern whether or not Plaintiffs or their beneficiaries have a particular property 

interest in the funds that were used to pay TRP contributions. Further, other courts that have 

decided Takings claims involving ERISA or similar benefit schemes have found it prudent to 

address the Penn Centralthree factor test before categorically rejecting a plaintiff’s Takings claim. 

See Concrete Pipe & Prod. of California, Inc., 508 U.S. at604-05 (analyzing whether “withdrawal 

liability” under ERISA, 29 U.S.C. §§ 1301–1461 violated the Taking Clause under the Penn 

Centralthree factor test);Connolly v. Pension Ben. Guar. Corp., 475 U.S. 211, 225 (1986) (same);

see also Maritrans, Inc. v. United States, 40 Fed. Cl. 790, 797 (1998) (rejecting the government's 

theory that the regulated nature of the industry precludes a cognizable Fifth Amendment property 

interest in light of the Supreme Court’s decisions in Connolly and Concrete Pipe).

At this point, there is insufficient information before this Court to grant Defendant’s 

motion. To sufficiently assess Plaintiffs’ Takings claim (either on a subsequently-filed motion to 

dismiss or a motion for summary judgment) the parties must provide the Court with further 

information concerning: (1) the nature of plaintiffs’ property interest in their respective group 

health care plans, and (2) the effect, if any, the TRP had on those alleged property interests. For 
41

this reason, this Court denies without prejudice Defendant’s motion to dismiss Plaintiffs’ Taking 

claims. 13 

CONCLUSION

For the reasons stated, Defendant’s motion is GRANTED in part and DENIED in part. 

Consistent with this Memorandum and Order, Defendant’s Motion to Dismiss or, in the 

Alternative, Motion for Summary Judgment (ECF No. 6) is:

1. DENIED with respect to EWTF’s illegal exaction claim;

2. GRANTED with respect to OETF’s and Stone Masons’illegal exaction claim; and 

3. DENIED with respect to Plaintiffs’ Fifth Amendment Takings claims.

Within fourteen (14) days of this Memorandum and Order, the parties shall file a Joint 

Status Report, including a joint proposal for further proceedings.

IT IS SO ORDERED.

 s/ Eleni M. Roumel 

ELENI M. ROUMEL

Judge

Dated: July 30, 2021

Washington, D.C.

13 To the extent the parties contend that this Court should consider Defendant’s motion as one for 

summary judgment, the motion is similarly denied without prejudice as there are genuine issues 

of material fact in dispute concerning the nature of the plaintiffs’ property interest and the effect 

the TRP had on those alleged property interests.