Source: https://stormpdf.com/in-the-united-states-court-of-federal-claims-commona2894f168495931ee8bbfd686c72e31727512.html
Timestamp: 2019-04-21 13:20:48+00:00

Document:
TABLE OF CONTENTS Page TABLE OF AUTHORITIES ......................................................................................................... iii INTRODUCTION ...........................................................................................................................1 I.
STATEMENT OF THE CASE AND OF UNDISPUTED MATERIAL FACTS ...............3 A.
The ACA Established the Cost-Sharing Reduction Program to Help Make Healthcare Affordable for Those Who Most Need It ..............................................4 1.
The Government Owes the CSR Class Full Reimbursements for Their Post- September 2017 CSR Payments ...................................................................13 1.
The Federal Circuit panel deciding the case also found that certain riders Congress subsequently included in appropriations bills obviated the Government’s obligation to pay risk corridor amounts to the QHP issuers it induced to enter the ACA exchanges. Although Common Ground strongly believes the Moda majority reached the wrong conclusion, that issue will be decided in the remaining phases of the Moda appeal, and Common Ground has therefore asked that the Risk Corridors Class portion of this case remain stayed.
and legislative history, the Government cannot avoid its payment obligation by failing to appropriate funds to satisfy a money mandating obligation; failure to appropriate is not a valid defense to Common Ground’s (and the Class’s) claims for CSR payments. Common Ground respectfully requests the Court to enter judgment on its and the CSR Class’s behalf for their cost-sharing reduction claims as they are based upon a money-mandating statutory obligation to pay and there have been no spending bills that would impact this payment obligation. I.
STATEMENT OF THE ISSUE PRESENTED 1.
“periodic and timely payments” to Common Ground and the CSR Class for the final quarter of the 2017 benefit and the first two financial quarters of the 2018 benefit year? II.
STATEMENT OF THE CASE AND OF UNDISPUTED MATERIAL FACTS A.
Common Ground expects that Moda and/or Land of Lincoln (whose parallel appeal of the dismissal of its risk corridors claims was affirmed based on the Circuit’s reasoning in Moda) will take further steps to pursue their appellate rights.
language of the ACA itself, it did not have an obligation to pay QHP issuers full risk corridor amounts. The Federal Circuit held that because the statute’s language was clear and the Government’s arguments were attempts to write in limitations not present in Section 1342 or the ACA. Id. at 1320-22. B.
In addition to the risk corridors program (and the other “Three Rs,” see id. at 1314), the ACA attempted to stabilize the health insurance market and decrease the cost of health insurance by helping offset certain costs consumers must pay: insurance premiums and out-of-pocket expenses. For low-income insureds, the ACA did so by, inter alia, establishing the cost-sharing reduction (“CSR”) program. 1.
Section 1401 of the ACA provides premium tax credits for individuals with household income between 100% and 400% of the federal poverty level who purchase health insurance through ACA exchanges and meet certain other requirements. ACA § 1401 [26 U.S.C. § 36B]. Section 1402 of the ACA requires QHP issuers to reduce out-of-pocket costs for eligible insureds (those who are eligible to receive tax credits under Section 1401 and whose household income is below 250% of the poverty level) by making cost-sharing reduction (“CSR”) payments. Section 1402 then requires the Government to reimburse QHP issuers for the costs of those reductions. In relevant part, Section 1402 of the ACA provides: In the case of an eligible insured enrolled in a qualified health plan – (1) the Secretary shall notify the issuer of the plan of such eligibility; and (2) the issuer shall reduce the cost-sharing under the plan at the level and in the manner specified in subsection (c).
ACA § 1402(a) [42 U.S.C. § 18071]. “Cost-sharing” is defined to include “deductibles, coinsurance, copayments, or similar charges.” ACA § 1302(c)(3)(A)(i) [42 U.S.C. § 18022]. QHP issuers must reduce cost sharing for eligible insureds who enroll in “silver plans” through the exchanges, ACA § 1402(c)(2), and QHP issuers must offer at least one “silver” plan in order to participate in the exchanges, ACA § 1301(a)(1)(C)(ii) [42 U.S.C. § 18021]. Section 1402 of the ACA further requires the Secretaries of HHS and the Treasury to reimburse QHP issuers for these cost-sharing reductions: An issuer of a qualified health plan making reductions under this subsection shall notify the Secretary of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions. ACA § 1402(c)(3)(A) [42 U.S.C. § 18071] (emphasis added). Neither these statutory provisions nor the subsequent implementing regulations permit the government to make no payments or to make partial payments or reimbursements. Instead, they are clear that HHS shall make full payments—and, in the implementing regulations’ case, “advance” payments—for the cost-sharing reductions QHP issuers must by law provide. See generally 42 U.S.C. § 18071; 45 C.F.R. § 156.430(b), (d), & (e). Further, there are no cost-sharing reduction exceptions for QHP issuers. HHS has been consistent from the ACA’s inception through today that an issuer must make cost-sharing reduction payments if they wish to participate in the ACA exchanges. See, e.g., 45 C.F.R. § 156.410(a) (“A QHP issuer must ensure that an individual eligible for cost-sharing reductions, as demonstrated by assignment to a particular plan variation, pays only the cost sharing required of an eligible individual for the applicable covered service under the plan variation. The costsharing reduction for which an individual is eligible must be applied when the cost sharing is collected.”).
HHS Notice of Benefit and Payment Parameters for 2014, CMS (March 11, 2013), at 7, available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/payment-noticetechnical-summary-3-11-2013.pdf.
then reconcile the advance payments and the actual cost-sharing reduction amounts.”4 Finally, the Government would reimburse the QHP issuer “any amounts necessary to reflect the CSR provided or, as appropriate, the issuer [would] be charged for excess amounts paid to it.”5 3.
Manual for Reconciliation of the Cost-Sharing Reduction Component of Advance Payments for Benefit Years 2014 and 2015, CMS, March 16, 2016, at 28, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/CMS_Guidance_ on_CSR_Reconciliation-for_2014_and_2015_benefit_years.pdf; see also 45 C.F.R. 156.430(e).
for the payments. Br. for Defs. at 23, United States House of Representatives v. Burwell, 2015 WL 9316243 (D.D.C. Dec. 2, 2015) (No. 1:14-cv-01967), ECF No. 55-1.6 C.
The House of Representatives has also taken the position that portions of the ACA are “interdependent” and failing to implement some could lead to “skyrocketing premiums” or even “death spirals.” See Br. for Resp’t at 14-15, King v. Burwell, 135 S. Ct. 2480 (2015) (No. 14114), 2015 WL 349885, at *14-15 (Jan. 21, 2015) (“the individual-coverage provision could not perform its market-stabilizing function in the absence of subsidies making coverage broadly affordable” and “[t]he denial of tax credits and the resulting loss of customers would thus have disastrous consequences for the insurance markets in the affected States”); Br. for Resp’t at 26, Nat. Fed’n of Indep. Businesses v. Sebelius, 132 S. Ct. 2566 (2012) (Nos. 11-393, 11-398, 11400), 2012 WL 273133, at *26 (Jan. 27, 2012) (“without a minimum coverage provision, the guaranteed-issue and community-rating provisions would drive up costs and reduce coverage, the opposite of Congress’s goals”). The above arguments admittedly address different provisions of the ACA, but demonstrate that the Act is an interlocking statute designed to improve, not destroy, health insurance markets, and that full, annual payment regimes are critical to this functioning.
reimburse QHP issuers for cost sharing reductions pursuant to Sections 1401 and 1402.7 The Obama administration cited Section 1324 as the appropriation for these payments.8 D.
See Letter from Sylvia M. Burwell, Dir., OMB, to Senators Ted Cruz and Michael S. Lee, at Responses p. 4 (May 21, 2014), (“cost-sharing subsidy payments are being made through the advance payments program and will be paid out of the same account from which the premium tax credit portion of the advance payments for that program are paid”), available at http://www.cruz.senate.gov/files/documents/Letters/20140521_Burwell_Response.pdf.
“are legally intertwined,” and both “are made by the same payer (the Department of the Treasury), to the same recipient (the insurer), on behalf of the same person (the eligible insured), and for the same statutory purpose—‘to reduce the premiums payable by individuals eligible for such credit.’ 42 U.S.C. § 18082(a).” Id. at 2. The district court ruled in favor of the House of Representatives, finding that 31 U.S.C. § 1324 did not constitute a permanent appropriation for Section 1402 CSR reimbursements: “The Affordable Care Act unambiguously appropriates money for Section 1401 premium tax credits but not for Section 1402 reimbursements to insurers.” House v. Burwell, 185 F. Supp. 3d 165, 168 (D.D.C. 2016). Further, the district court found no other source of appropriation for Section 1402 payments: “Congress authorized reduced cost sharing but did not appropriate monies for it, in the FY 2014 budget or since.” Id. at 174-75. The District Court entered an injunction preventing any further reimbursements under Section 1402, but, recognizing the importance of CSR reimbursements, stayed the injunction pending resolution of any appeal. Id. at 189. The Obama administration appealed the ruling to the D.C. Circuit, and filed its opening brief in October 2016. However, in November 2016, Republican Donald Trump was elected President and the Republican-controlled House of Representatives filed a request that the appeal be “temporarily [held] in abeyance” to “provide the President-Elect and his future Administration time to consider whether to continue prosecuting or to otherwise resolve this appeal.” Appellee’s Mot. to Hold Briefing in Abeyance, House v. Burwell, Case No. 16-5202, Dkt. #1647228 (D.C. Cir. Nov. 21, 2016) at 1-2. The D.C. Circuit granted the request and the appeal has since been dismissed by agreement between the parties. Order, House v. Azar, Case No. 16-5202, Dkt. #1731071 (D.C. Cir. May 16, 2018).
Until October 2017, the current administration continued its predecessor’s practice of paying CSR reimbursements. However, on October 11, 2017, Attorney General Sessions submitted a letter to the Department of Treasury and HHS advising that 31 U.S.C. § 1324 could not be used to fund CSR reimbursements. (Ex. 1, Oct. 11, 2017 Ltr. from Sessions to Secretary of Treasury and Acting Secretary of HHS.) Attorney General Sessions concluded that Section 1401 premium tax credits and Section 1402 CSR reimbursements were two distinct programs, and the permanent appropriation in Section 1324 only provided funding for the Section 1401 premium tax credits. (Id. at 1-2.) The next day, on October 12, 2017, HHS announced that it would stop making CSR reimbursements: “In light of [Attorney General Session’s] opinion—and the absence of any other appropriation that could be used to fund CSR payments—CSR payments to issuers must stop, effective immediately. CSR payments are prohibited unless and until a valid appropriation exists.” (Ex. 2, Oct., 12, 2017 Mem. from E. Hargan to S. Verma re Payments to Issuers for Cost-Sharing Reductions (CSRs).) The Executive Branch submitted a Notice in the House v. Burwell appeal referencing the October 12 HHS Memorandum and noting that “[t]he upcoming October 18 [CSR reimbursement] payment thus will not occur.” Notice, House v. Burwell, Case No. 16-5202, Dkt. #1698827 (D.C. Cir. Oct. 13, 2017) at 1. As of the date of this motion, Common Ground and the other members of the CSR Class have not been reimbursed for any CSR payments they made from October 2017 through the present. III.
moving party is entitled to a judgment as a matter of law. RCFC 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine if it “may reasonably be resolved in favor of either party.” Id. at 250. The moving party bears the initial burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp., 477 U.S. at 323. The nonmoving party then bears the burden of showing that there are genuine issues of material fact for trial. Id. at 324. IV.
The Government Owes the CSR Class Full Reimbursements for Their PostSeptember 2017 CSR Payments 1.
execution the will of the Legislature.” Warner–Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1355 (Fed. Cir. 2003) (quoting Kokoszka v. Belford, 417 U.S. 642, 650 (1974)); see also King, 135 S. Ct. at 2490 (refusing to read portion of the ACA “out of context” with the broader Act, because it would render other provisions in the Act senseless or contradictory). 2.
continuing until October 2017. When the current administration ceased making CSR reimbursements, it simply cited a lack of appropriations. See generally Ex. 1. It did not argue the Government had no obligation to pay. Id. HHS has similarly admitted, in writing and through past practice, that the statute requires periodic and timely reimbursements. Once the ACA exchanges opened and QHP issuers began providing cost-sharing reduction payments, HHS employed its limited discretion to make “periodic and timely” payments by doing so every month with an annual reconciliation. 45 C.F.R. § 156.430(b)-(e).9 To this day, HHS still defines “periodic and timely” the same way for the CSR program; it simply has not made any CSR reimbursements since October 2017 because of the lack of appropriations from Congress. Compare 45 C.F.R. § 156.430(b), (d), & (e) (requiring HHS to make reimbursements to QHP issuers); with Ex. 2 (noting that the only reason HHS ceased CSR payments is because of new guidance that it had no appropriation to continue making the payments). These are not innocuous statements and actions; they are straightforward admissions that HHS reads Section 1402 exactly as the Class does here. The situation in which the parties thus find themselves is that HHS concedes it must make periodic and timely CSR reimbursements by statute, but has withheld those reimbursements because it claims it does not have adequate appropriations for the payments.
Nowhere—not in this case or any other—has the Government ever offered an interpretation of Section 1402 in which its has no obligation to reimburse QHP issuers for their CSR payments. One can only surmise as to the political motivations for failing to appropriate funds for the CSR program in the new ACA health exchanges, but such political gamesmanship has no effect on a statutory obligation to pay, particularly when citizens’ lives are at stake. HHS must comply with its own interpretation of the statute: one where it makes “periodic and timely” (i.e., monthly) CSR reimbursements. 3.
obligation to pay amounts owed); Greenlee Cnty., Ariz. v. United States, 487 F.3d 871, 877 (Fed. Cir. 2007) (Congress’s failure to appropriate funds does not “defeat a Government obligation created by statute”); District of Columbia v. United States, 67 Fed. Cl. 292, 340 (2005) (holding that government had a statutory obligation to pay the plaintiff; statute did not expressly specify that payments made pursuant to it were an “obligation” of the Government); Gibney v. United States, 114 Ct. Cl. 38, 50-51 (1949) (requiring payment of overtime wages to government workers where such overtime was mandated by statute, but Congress forbade the employing agency from using appropriated funds for that purpose). There is “a very strong presumption” that appropriation acts do not substantively change existing law. Calloway v. District of Columbia, 216 F.3d 1, 9 (D.C. Cir. 2000). Here, where Congress never even mentioned the CSR program in its appropriations bills, that presumption is dispositive. The Government thus cannot rely on any later appropriations bills to argue they somehow obviated its obligation to make CSR reimbursements. B.
Another way the Government might defend this motion is to argue that the Government has discretion to change the CSR reimbursement schedule at its whim. Such an argument, however, fails as a matter of law and fact, largely due to a doctrine—Chevron deference—the Government originally invoked in the risk corridors cases. 1.
agency, must give effect to the unambiguously expressed intent of Congress.”). This is the socalled “step one” of any Chevron analysis. HHS has admitted since the ACA’s inception that it has no discretion whether or not to make CSR reimbursements. Indeed, HHS’s payment history from 2014 until October 2017 clearly demonstrates acknowledgement that the ACA requires it to make such reimbursements. By HHS’s own admission, the only reason it ceased reimbursing QHP issuers for CSR payments is because Attorney General Sessions changed the current administration’s position with respect to its contentions about the funding sources for those payments. As a consequence, HHS then deemed itself constrained from making payments for which it did not have appropriated funds. Ex. 2. HHS did not contend it had discretion to withhold the reimbursements. Id. 2.
The one area the ACA did provide HHS discretion was with respect to the schedule for “periodic and timely” CSR reimbursements. As previously noted, the ACA did not define what that term meant, so, utilizing its limited discretion, HHS implemented a “periodic and timely” schedule in which it provided monthly reimbursements to QHP issuers with an annual reconciliation. Given that this schedule was established through the notice and comment process, it is presumed valid unless and until HHS changes its approach with a reasoned explanation. Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125-26 (2016) (“Agencies are free to change their existing policies as long as they provide a reasoned explanation for the change,” which includes “at least display[ing] awareness that it is changing position and show[ing] that there are good reasons for the new policy”) (citations and internal quotations omitted).
HHS has never purported to change its CSR reimbursement schedule; it has only informed QHP issuers that it will not make further payments until and if Congress appropriates it the proper funds. Ex. 2. Accordingly, Chevron deference applies and every month that goes by without a CSR reimbursement accrues additional owed money to the CSR Class members. See Health Republic, 129 Fed. Cl. at 776-778 (collecting law on Chevron deference and noting that HHS’s interpretation that it must make annual risk corridor payments had “controlling weight” for future lawsuits over nonpayment of those amounts). C.
Ground cannot calculate the final amount until the parties complete their briefing on this motion and the Court is prepared to enter judgment on the CSR Class’s behalf. Once the opt-in deadline passes and the Court issues its order on this motion, Class Counsel will be able to determine the full scope of the Class and its damages. Common Ground therefore requests the right to supplement this motion at that time with the full amount of damages for which it seeks summary judgment. D.
CONCLUSION For the foregoing reasons, Common Ground respectfully requests that the Court grant summary judgment in the CSR Class’s favor.
Even if the Government claimed some QHP issuers owed it some amounts as the result of their higher premiums, a set-off defense is unavailable as a matter of law. See Local Oklahoma Bank, N.A. v. U.S., 59 Fed. Cl. 713, 721 (2004), aff'd, 452 F.3d 1371 (Fed. Cir. 2006).
Report "IN THE UNITED STATES COURT OF FEDERAL CLAIMS COMMON"

References: § 1401
 § 36
 § 1402
 § 18071
 § 1302
 § 18022
 § 1402
 § 1301
 § 18021
 § 1402
 § 18071
 § 18071
 § 156
 § 156
 v. 
 v. 
 v. 
 § 18082
 § 1324
 v. 
 v. 
 v. 
 § 1324
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 156
 § 156
 v. 
 v. 
 v. 
 v. 
 v. 
 v.