Court Opinion

ID: 4368081
Source: CourtListenerOpinion
Date Created: 2019-02-14 21:01:28.604699+00
Date Added: 2024-06-11T14:22:02.279507
License: Public Domain

In the United States Court of Federal Claims
                                       No. 17-1542C

                                (Filed: February 14, 2019)

*************************************
                                    *
LOCAL INITIATIVE HEALTH             *             Patient Protection and Affordable
AUTHORITY FOR L.A. COUNTY, d/b/a *                Care Act, §§ 1401, 1402, 1412;
L.A. CARE HEALTH PLAN,              *             Rule 56 Summary Judgment; Rule
                                    *             12(b)(6) Motion to Dismiss for
                    Plaintiff,      *             Failure to State a Claim; Cost
                                    *             Sharing Reductions; Premium Tax
v.                                  *             Credits; Statutory Interpretation;
                                    *             Plain Meaning; Appropriations;
THE UNITED STATES,                  *             Implied-in-Fact Contract Created
                                    *             by Statute; Fifth Amendment
                    Defendant.      *             Takings.
                                    *
*************************************

Lawrence S. Sher, with whom was Conor M. Shaffer, Reed Smith LLP, Washington, D.C.
and Pittsburgh, Pennsylvania, for Plaintiff.

Albert S. Iarossi, Trial Attorney, with whom were Joseph H. Hunt, Assistant Attorney
General, Robert E. Kirschman, Jr., Director, and Claudia Burke, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington,
D.C., and Christopher J. Carney, Senior Litigation Counsel, Eric E. Laufgraben and
Veronica N. Onyema, Trial Attorneys, Civil Division, U.S. Department of Justice,
Washington, D.C., for Defendant.

                                 OPINION AND ORDER

WHEELER, Judge.

       The Patient Protection and Affordable Care Act (“ACA”), Pub. L. No. 111-148, 124
Stat. 119 (2010), created statewide health insurance marketplaces, or “exchanges.”
Insurers selling health plans on an exchange are referred to as qualified health plan issuers
(“QHPs”). Plaintiff Local Initiative Health Authority for L.A. County, doing business as
L.A. Care Health Plan (“L.A. Care”), is a QHP offering plans on California’s exchange.
       The ACA’s cost sharing reduction (“CSR”) program created a subsidy for certain
healthcare-related expenses for eligible exchange plan purchasers. All QHPs must provide
CSR discounts to qualified enrollees. The Government then fully reimburses QHPs for
their expenses. In late 2017, the Government stopped reimbursing QHPs after 45
consecutive months of making CSR payments. However, L.A. Care continues to provide
CSR discounts to its qualifying customers. Accordingly, issuers have been forced to bear
the cost of the Government’s subsidy alone. The Government’s non-payment prompted
L.A. Care to bring suit to collect approximately $6 million it was allegedly owed in CSR
payments for the 2017 plan year.1

       Currently before the Court is L.A. Care’s motion for partial summary judgment and
the Government’s cross-motion to dismiss. In its Rule 56 summary judgment motion, L.A.
Care seeks to hold the Government liable for statutory and regulatory violations. L.A. Care
asserts that the plain language of the ACA and its implementing regulations obligate the
Government to make full CSR payments to QHPs in advance of the issuers’ actual incurred
costs. Alternatively, L.A. Care argues that the CSR program created an implied-in-fact
contract between itself and the Government which the Government has now breached. The
Government disagrees with both theories of liability.

        Pursuant to Rule 12(b)(6), the Government has cross-moved to dismiss all of L.A.
Care’s CSR-related claims in Plaintiff’s complaint. In addition to the aforementioned
claims, Defendant requests dismissal of L.A. Care’s claim for a taking without just
compensation in violation of the Fifth Amendment to the Constitution. Defendant argues
that Plaintiff cannot state a takings claim because L.A. Care has no cognizable property
right to CSR payments.

       After careful consideration, the Court finds the Government liable under both of
L.A. Care’s theories of recovery. The Government violated the express terms of the ACA
and implementing regulations which require full, advanced CSR reimbursement payments.
In the alternative, the Court finds that the ACA, its implementing regulations, and the
circumstances surrounding their passage created an implied-in-fact contract between the
Government and L.A. Care. The Government has since breached that contract. However,
though L.A. Care’s contractual rights are recognizable property rights under the Fifth
Amendment, L.A. Care’s property has not been taken.        Plaintiff’s motion for partial
summary judgment is therefore GRANTED, and Defendant’s cross-motion to dismiss is
GRANTED in part and DENIED in part.

1
 During oral argument, counsel for L.A. Care stated its intention to amend its complaint to update the
damages amount to account for the 2018 plan year. Counsel estimated that this would increase the total
damages sought to approximately $64 million.

                                                  2
                                                Background

      A. Congress Creates the ACA and Subsidy Programs

        Enacted in 2010, the ACA introduced a series of sweeping reforms aimed to expand
the availability of health insurance nationwide. See King v. Burwell, 135 S. Ct. 2480, 2485
(2015). In pursuit of that goal, the ACA created a network of “health benefit exchanges”
(“exchanges”) to serve as “marketplaces in each state wherein individuals and small groups
[can] purchase health insurance.” Moda Health Plan, Inc. v. United States, 892 F.3d 1311,
1314 (Fed. Cir. 2018) (citing 42 U.S.C. § 18031(b)(1)). All exchange-offered plans are
categorized by “metal level” (bronze, silver, gold or platinum), which indicates the split
between the cost of the customer’s medical care that the issuer will cover and the cost that
the customer must bear. See 42 U.S.C. § 18022. For example, under a silver plan (the
second-lowest plan offered on a given exchange), a QHP pays approximately 70 percent
of the enrollee’s healthcare costs, and the enrollee is responsible for the remaining roughly
30 percent. See § 18022(d)(1)(B).2

      The ACA also established two subsidies for offsetting healthcare costs of low-
income customers. It outlines these programs in sections 1401 and 1402.

       In section 1401, Congress amended the Internal Revenue Code to provide a
“premium tax credit” for issuers to subsidize health insurance premiums for customers
earning between 100 and 400 percent of the federal poverty level (among other criteria).
See 26 U.S.C. § 36B. The tax credit is paid directly to the insurer, and the amount is
generally equal to the premium for the silver level plan available on that exchange. See id.
The ACA amended the permanent appropriation for refunds from certain enumerated tax
credits to include these premium tax credits. See 31 U.S.C. § 1324(b)(2).

        Section 1402 established the CSR program. To qualify for this subsidy, ACA
customers must be enrolled in a silver plan and have a household income below 250 percent
of the federal poverty level. See 42 U.S.C. § 18071. After the Department of Health and
Human Services (“HHS”) certifies a customer’s eligibility, QHPs must reduce some
portion of that customer’s “deductibles, coinsurance, copayments, or similar charges”
(collectively, “out-of-pocket expenses”). See § 18071(a)(2); § 18022(c)(3)(A). In turn,
the Government “shall make periodic and timely payments to the issuer equal to the value
of the reductions.” § 18071(c)(3)(A). Congress left funding for the CSR program to the
annual appropriations process.

       Section 1412 of the ACA charges the HHS Secretary and Secretary of the Treasury
with, among other things, establishing a payment procedure for both subsidies. See §
18082(a)(1). Relevant to the CSR program, the Treasury Secretary “shall make such

2
    All QHPs participating in an exchange must offer at least one silver level plan. See § 18071(c)(2).

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advance [CSR] payment [to a QHP] at such time and in such amount as the [HHS]
Secretary specifies . . . .” See § 18082(c)(3).

   B. HHS Implements the CSR Program

       The ACA tasked the Secretary of HHS with overseeing the CSR program. See ACA
§§ 1001, 1301(a)(1)(C)(iv), 1302(a)–(b), 1311(c)–(d). Accordingly, HHS promulgated
regulations implementing the program. Generally, HHS maintains that QHPs “will receive
periodic advance payments [for CSR discounts made to qualifying customers] based on the
advance payments amounts calculated in accordance” with the methodology outlined in
that subchapter. 45 C.F.R. § 156.430(b)(1). The agency has also spoken about CSR
reimbursement payments through rulemaking and guidance publications. Its position has
historically been consistent.

        In 2013, HHS published its official CSR payment policy in the Federal Register
which provided that the Government would make “monthly advance payments to issuers
to cover project cost-sharing reduction amounts and then reconcile those advance payments
at the end of the benefit year to the actual cost-sharing reduction amounts.” 78 FR 15409,
15486 (Mar. 11, 2013). This rule was grounded in HHS’ understanding that section 1402
required that “QHP issuers will be made whole for the value of all cost-sharing reductions
provided through the reconciliation process after the close of the benefit year.” Id. at
15488. Moreover, HHS added that it promulgated this rule to “fulfill[] the Secretary’s
obligation to make ‘periodic and timely payments equal to the value of the reductions’
under section 1402(c)(3) of the Affordable Care Act.” Id.

        HHS published a second rule on section 1402 in 2014 consistent with its prior
interpretation. That rule maintained that “Section 1402(c)(3) of the Affordable Care Act .
. . directs the Secretary to make periodic and timely payments to the QHP issuer equal to
the value of those reductions.” 79 FR 13743, 13805 (Mar. 11, 2014).

        In a 2015 guidance bulletin on CSR payments, HHS reiterated that the ACA
“requires [QHPs] to provide cost-sharing reductions to eligible enrollees . . . and provides
for issuers to be reimbursed for the value of those cost-sharing reductions.” Bulletin, CMS,
Timing of Reconciliation of Cost-Sharing Reductions for the 2014 Benefit Year at 1 (Feb.
14, 2015). HHS echoed this same sentiment in a 2016 manual, stating that “periodic and
timely payments equal to the value of those reductions are required to be made to issuers .
. . in advance.” Bulletin, CCIIO and CMS, Draft Manual for Reconciliation of the Cost-
Sharing Reduction Component of Advance Payments for Benefit Year 2016 at 5 (Nov. 2,
2016). Congress has neither repealed nor amended sections 1402 or 1412.

                                             4
   C. L.A. Care Offers Plans on the California ACA Exchange

       After the ACA’s passage, L.A. Care sought to participate as a QHP on the California
ACA Exchange. To qualify as a QHP, the ACA requires issuers to offer a package of
“essential health benefits” on an exchange. See 42 U.S.C. § 18021(a)(1). L.A. Care
developed the requisite plans and premiums, was certified as a QHP by California state
healthcare regulators, and began offering plans on January 1, 2014 (the day the exchanges
opened). It has participated as a QHP on the California Exchange every year since, and its
current contract extends through December 31, 2019. L.A. Care asserts (and the
Government does not challenge) that it has made CSR payments to eligible customers in
compliance with its statutory duty.

   D. History of CSR Payments

       In anticipation of the exchanges’ January 1, 2014 launch, the prior Administration
requested an appropriation to carry out section 1402’s CSR program. United States House
of Representatives v. Burwell, 185 F. Supp. 3d 165, 172-74 (D.D.C. 2016). Congress
declined. Id. at 173-74. Notwithstanding the lack of funds, the Government began making
monthly advance CSR payments to QHPs (including L.A. Care) in January 2014, drawing
the necessary money from the permanent appropriation for tax credit refunds established
in 31 U.S.C. § 1324. Id. at 174.

       The House of Representatives viewed this as a misuse of funds for a non-
appropriated purpose in violation of the Appropriations Clause, U.S. Const. art. I, § 9, cl.
7, and sued to enjoin further CSR payments. The district court agreed, holding that
Congress could not fund section 1402’s CSR program from the permanent appropriation
for section 1401’s premium tax credits. Id. at 177-79. The court enjoined further
payments, but stayed the injunction pending appeal. Id. at 189. The circuit court stayed
the appeal of that decision while the newly elected Administration reconsidered their
predecessor’s legal position on this issue. United States House of Representatives v.
Burwell, 676 F. App’x 1 (Mem.) (D.C. Cir. 2016). QHPs continued to receive monthly
advance CSR payments during these stays.

       In October 2017, the current Administration officially reversed course. In a letter
to the Treasury Secretary and Acting HHS Secretary, the Attorney General advised “that
the best interpretation of the law is that the permanent appropriation for ‘refunding internal
revenue collections,’ 31 U.S.C. § 1324, cannot be used to fund the CSR payments to issuers
authorized by 42 U.S.C. § 18071.” Letter from Jefferson B. Sessions III, U.S. Attorney
Gen., to Steven Mnuchin, Sec’y of the Treasury & Don Wright, Acting Sec’y of HHS (Oct.
11, 2017). The next day, the Acting Secretary of HHS sent a memorandum to its Centers
for Medicare and Medicaid Services (“CMS”) explaining that “CSR payments are
prohibited unless and until a valid appropriation exists.” Memorandum from Acting Sec’y
of HHS Eric Hargan to Adm’r of CMS Seema Verma, Payments to Issuers for Cost-Sharing

                                              5
Reductions (CSRs), at 1 (Oct. 12, 2017). The Government stopped making CSR payments
to QHPs in and after October 2017, ending its streak of 45 consecutive monthly advance
CSR payments. Congress has still not appropriated any money for the CSR program.

       E. The Present Dispute

       L.A. Care now asserts two separate theories of liability to recover $5,969,171.49 in
damages for these allegedly past-due CSR reimbursements.3 First, it argues that the plain
language of section 1402, section 1412, and HHS’ regulations implementing the CSR
program compel the Government to make advance monthly CSR payments to QHPs.
Plaintiff advances that Congress’ mere failure to appropriate funds for the CSR program
does not change that obligation. In response, the Government contends that the ACA’s
structure and Congress’ failure to make appropriations demonstrates Congress’ intent not
to create an enforceable obligation to make CSR payments.

       Second, L.A. Care argues that the Government entered into an implied-in-fact
contract with L.A. Care. Taken together, L.A. Care claims that the obligatory language in
sections 1402 and 1412 and their implementing regulations along with the circumstances
surrounding their passage, evidence a bargained-for exchange binding itself and the
Government to perform their respective roles under the CSR program. The Government,
L.A. Care maintains, breached that contract when it failed to make timely CSR payments.
Plaintiff adds that this contractual arrangement and subsequent breach constituted a taking
under the Fifth Amendment. The Government views the sources L.A. Care cites as simply
establishing an incentive program, and in no way indicate an intent to contract. As such,
L.A. Care therefore does not possess a cognizable property right under the Fifth
Amendment according to the Government.

                                                Procedural History

       L.A. Care filed its complaint on October 16, 2017 (amended on February 8, 2018)
seeking damages equal to those that would have been paid to Plaintiff under the ACA’s
risk corridors and CSR programs for the 2017 plan year—$25,765,038.33 in total. Upon
the Government’s request, the Court stayed Plaintiff’s claims relating to the risk corridors
program on March 5, 2018 pending the final resolutions of Land of Lincoln Mutual Health
Insurance Co. v. United States, 129 Fed. Cl. 81 (2016), aff’d, 892 F.3d 1184 (Fed. Cir.
2018) and Moda Health Plan, Inc. v. United States, 130 Fed. Cl. 426 (2017), rev’d, 892
F.3d 1311 (Fed. Cir. 2018). The plaintiff in Moda Health (along with other insurers)
petitioned the United States Supreme Court for certiorari on February 4, 2019.

      Plaintiff moved for summary judgment under Rule 56 on Counts V and VI—two of
its CSR-related claims—on September 19, 2018. On October 19, 2018, Defendant

3
    As discussed in Footnote 1, this figure may be incomplete.

                                                           6
responded and cross-moved to dismiss Plaintiff’s CSR-related claims for failure to state a
claim under Rule 12(b)(6). In addition to Counts V and VI, Defendant requested dismissal
of Count VII. That count alleges an impermissible taking under the Fifth Amendment.
Plaintiff filed its response and reply on November 13, 2018, and Defendant filed its reply
on November 27, 2018. The Court heard oral argument on January 4, 2019.

        Other judges on this Court have weighed in on certain issues presented in this case.
Most recently, Judge Kaplan issued a decision in Montana Health Co-Op v. United States,
139 Fed. Cl. 213 (2018). Montana Health, a QHP, claimed damages for statutory violations
and breach of an implied-in-fact contract arising from the Government’s failure to make
CSR payments. Judge Kaplan granted summary judgment for Montana Health, holding
that the Government violated its statutory obligation when it failed to make CSR payments.
See id. at 215. The Montana Health court chose not to address the plaintiff’s contract claim
“in light of [the court’s] favorable disposition of Montana Health’s statutory claim.” Id. at
216 n.4. The appeal of that decision is now before the U.S. Court of Appeals for the Federal
Circuit.

                                        Discussion

   A. The Court Has Subject-Matter Jurisdiction Over Both of L.A. Care’s Claims

          1. Standard of Review

        The United States, as sovereign, is immune from suit unless it consents to be sued.
United States v. Sherwood, 312 U.S. 584, 586 (1941). The Tucker Act, 28 U.S.C.
§ 1491(a)(1) (2012), waives sovereign immunity for claims predicated on the Constitution,
a federal statute or regulation, or a contract with the Government. Still, the Tucker Act
does not create a separate right to money damages. A plaintiff suing the Government for
money damages must therefore base its claims upon a separate source of law that creates
such a right. See United States v. Testan, 424 U.S. 392, 398 (1976). L.A. Care predicates
its claims on Section 1402 and 1412 of the ACA and implementing regulations, or, in the
alternative, on an implied-in-fact contract between it and the United States.

          2. The Court Has Subject-Matter Jurisdiction Over L.A. Care’s Statutory
             Claim.

       Where a plaintiff bases its claims on a statutory or regulatory provision, courts
generally find that the provision is money-mandating if it provides that the Government
“shall” pay an amount of money. Greenlee Cnty., Ariz. v. United States, 487 F.3d 871,
877 (Fed. Cir. 2007). Section 1402 states that the Government “shall make periodic and
timely [CSR] payments.” 42 U.S.C. § 18071(c)(3)(A). Similarly, section 1412 provides
that “Treasury shall make such advance [CSR] payment.” § 18082(c)(3). Clearly, the
statutes use the “shall” pay language characteristic of a money-mandating provision. They

                                             7
are therefore money-mandating, and the Court has subject-matter jurisdiction over L.A.
Care’s statutory claim as a result.

          3. The Court Has Subject-Matter Jurisdiction Over L.A. Care’s Contractual
             Claim.

        Where a plaintiff claims that the Government has breached an implied-in-fact
contract, it need only make a “non-frivolous allegation of a contract with the government.”
Mendez v. United States, 121 Fed. Cl. 370, 378 (2015) (quoting Engage Learning, Inc. v.
Salazar, 660 F.3d 1346, 1353 (Fed. Cir. 2011)) (emphasis in original). To show
jurisdiction, a plaintiff must therefore plead the elements of a contract with the
Government: “(1) mutuality of intent to contract; (2) consideration; (3) an unambiguous
offer and acceptance; and (4) actual authority on the part of the government’s
representative to bind the government.” Fisher v. United States, 128 Fed. Cl. 780, 785
(2016) (quoting Biltmore Forest Broad. FM, Inc. v. United States, 555 F.3d 1375, 1380
(Fed. Cir. 2009) (citation omitted)).

        L.A. Care alleges that sections 1402 and 1412 of the ACA and HHS’ implementing
regulations reveal the Government’s intention to contract with issuers. In this bargain,
L.A. Care agreed to offer plans on an exchange and act as a conduit for the Government’s
CSR subsidy, and, in return, the Government would reimburse issuers for their CSR-related
expenses. Under this theory, each party brings meaningful consideration to the exchange.
L.A. Care further alleges that the ACA and its implementing regulations constituted an
offer to enter into a unilateral contract. L.A. Care accepted that offer by developing and
selling plans on an exchange and providing CSR discounts to qualifying customers. Lastly,
L.A. Care asserts that the HHS Secretary had authority to contract on the Government’s
behalf. It points to the statutory language directing the Secretary to implement the ACA
as authorizing this official to enter into contracts with QHPs. Plaintiff has sufficiently
alleged the existence of an implied-in-fact contract, and, as such, the Court has subject-
matter jurisdiction to hear Plaintiff’s contract claim.

   B. L.A. Care’s Motion for Partial Summary Judgment Succeeds

          1. Standard of Review

        Summary judgment is appropriate where “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). A
fact is “material” if it might significantly alter the outcome of the case under the governing
law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party
bears the initial burden of showing that there exists no genuine dispute as to any material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment will not be
granted if the “evidence is such that a reasonable [trier of fact] could return a verdict for
the nonmoving party.” Anderson, 477 U.S. at 248. The Court’s function is not to weigh

                                              8
the evidence and determine the merits of the case presented, but to determine whether there
is a genuine issue of material fact for trial. Id. at 249; see also Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).

          2. The Government Must Make CSR Payments Per the ACA’s Terms.

                  a. Section 1402 Requires Advanced CSR Payments.

        The Court begins with the purely legal question of whether sections 1402 and 1412
of the ACA and their implementing regulations require the Government to make full
advance CSR payments to QHPs despite the absence of an appropriation to fund any such
payment. That analysis starts with the statutory text itself. See Res-Care, Inc. v. United
States, 735 F.3d 1384, 1388 (Fed. Cir. 2013) (citations omitted). When “statutory language
is plain and unambiguous, then it controls.” Id. (citing Chevron, U.S.A. v. NRDC, Inc.,
467 U.S. 837, 843 n.9 (1984)).

        Section 1402 reads: “An issuer of a qualified health plan making reductions under
this subsection shall notify the [HHS] Secretary of such reductions and the Secretary shall
make periodic and timely payments to the issuer equal to the value of the reductions.” 42
U.S.C. § 18071(c)(3)(A) (emphasis added). That provision can only mean one thing: the
Government must repay QHPs for their CSR expenses. The unambiguous “shall make”
language indicates a binding obligation to pay that the Court is powerless to construe any
differently. See, e.g., Lopez v. Davis, 531 U.S. 230, 241 (2001) (noting Congress’ “use of
the mandatory ‘shall’ . . . to impose discretionless obligations”); Lexecon, Inc. v. Milberg
Weiss Bershad Hynes & Lerach, 523 U.S. 26, 35 (1998) (Congress’ use of the word “shall”
in a statutory provision “normally creates an obligation impervious to judicial discretion.”).
QHPs must be repaid, but section 1402 specifies no timeframe for these payments apart
from that they must be “periodic and timely.” For that, the Court must turn to section 1412.

       Section 1412 permits CSR payments to be made in advance but leaves the payment
schedule to the HHS Secretary’s discretion. See § 18082(c)(3) (“The Secretary of the
Treasury shall make such advance [CSR] payment at such time and in such amount as the
[HHS] Secretary specifies . . . .”). Pursuant to that grant of authority, the Secretary
promulgated rules entitling QHPs to full CSR payments in advance of their actual incurred
costs. See 45 C.F.R. § 156.430(b)(1) (QHPs “will receive periodic advance payments”);
78 FR 15409, 15486 (Mar. 11, 2013) (the Government will make “monthly advance
payments to issuers to cover project cost-sharing reduction amounts”). Accordingly,
section 1412 and HHS’ implementing regulations act together to commit the Government
to making full advanced CSR payments to L.A. Care. HHS’ history of making 45
consecutive such payments supports the Court’s understanding of the Government’s
chosen payment schedule.

                                               9
                       b. Defendant’s Alternate Interpretations are Unavailing.

       Rather than focus on the clear statutory language, the Government encourages
examination of other indicia of Congressional intent like the relevant provisions’ structure
and design. It first points to Congress’ failure to appropriate funds for the CSR program
as evidence that Congress never intended to bind the Government to make CSR payments.

        That interpretation is flatly inconsistent with over a century of case law and, most
recently, with the Federal Circuit’s decision in Moda Health. The appeals court examined
whether section 1342 of the ACA required the Government to make risk corridor payments
despite the absence of a valid appropriation. See 892 F.3d at 1314. Section 1342 “provides
that ‘[t]he Secretary shall establish and administer’ a risk corridors program pursuant to
which ‘[t]he Secretary shall provide’ under the program that ‘the Secretary shall pay’ an
amount according to the statutory formula.” Id. at 1320 (quoting 42 U.S.C. § 18062)
(emphasis in original). The Federal Circuit determined that statutory language (which
closely tracks the language in sections 1402 and 1412) to be “unambiguously mandatory.”
Id. The lack of ambiguity led to the “conclu[sion] that the plain language of section 1342
created an obligation of the government to pay participants in the health benefit exchanges
the full amount indicated by the statutory formula.” Id. at 1323.4 Whether a valid
appropriation existed to honor that commitment was irrelevant because the initial
“obligation existed . . . independent of a sufficient appropriation to meet the obligation.”
Id. at 1322; see also United States v. Langston, 118 U.S. 389 (1886) (statute created an
enforceable obligation despite Congress’ failure to fund that obligation).

        Put differently, whether a statute creates a commitment and whether there are funds
available to honor that commitment are two independent inquiries. Moda Health, 892 F.3d
at 1321 (“[I]t has long been the law that the government may incur a debt independent of
an appropriation to satisfy that debt . . . .”).5 Congress can relieve that obligation to pay,
but only when the statute’s plain language limits the Government’s liability to an amount
appropriated by Congress. See, e.g., Prairie County, Montana v. United States, 782 F.3d
685, 689 (Fed. Cir. 2015) (relieving the Government of its obligation to pay because the
statute identified a limited source of funding to meet that obligation); Star-Glo Associates,
LP v. United States, 414 F.3d 1349, 1353 (Fed. Cir. 2005) (holding that the clause
providing that “[t]he Secretary of Agriculture shall use $58,000,000 of the funds of the
Commodity Credit Corporation to carry out this section” acted as a cap on the
Government’s obligation). That is not the case here.

4
    The Federal Circuit later found that subsequent appropriations riders canceled that obligation.
5
 As the court in Moda Health noted, an appropriation “merely imposes limitations upon the Government’s
own agents; it is a definite amount of money entrusted to them for distribution; but its insufficiency does
not pay the Government’s debts, nor cancel its obligations, nor defeat the rights of other parties.” Id. at
1321 (quoting Ferris v. United States, 27 Ct. Cl. 542, 546 (1892)).

                                                       10
        Consistent with Langston and Moda Health, section 1402 created the Government’s
obligation to make CSR payments, and this requirement exists independent of an
appropriation. Sections 1402 and 1412 do not contain a provision like the express language
that limited the Government’s obligation in Prairie County and Star-Glo. Congress’ failure
to appropriate money to fund the CSR program therefore has no impact on the existence of
this statutorily-imposed payment obligation.

       The Government also puts undue weight on the difference in funding methods for
section 1401’s and 1402’s programs. According to the Government, the choice to fund
section 1401’s tax refund through a permanent appropriation but to leave funding for the
CSR program to the annual appropriations process reveals the drafters’ intent not “to
expend funds for CSRs absent a subsequent annual appropriation.” Def.’s Cross-Mot. to
Dismiss and Resp. at 15. This difference is telling, the Government explains, because
“when Congress includes particular language in one section of a statute but omits it in
another[,] . . . [courts] presume[] that Congress intended a difference in meaning.” Digital
Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 777 (2018) (quoting Loughrin v. United States,
573 U.S. 351, 358 (2014)).

        Though the Government points to Digital Realty for support, the Supreme Court’s
analysis there instead shows the paramount importance of the text’s plain, unambiguous
words in statutory interpretation. The Digital Realty court was charged with determining
the applicable definition of the term “whistleblower” as it appeared in a statute. Id. at 778.
The court rejected interpretations of the term that went beyond the text, ultimately applying
the definition of “whistleblower” supplied by the statute without alteration. Id. at 778. The
text’s plain meaning controlled because “[t]he statute’s unambiguous whistleblower
definition, in short, precludes the [Securities and Exchange] Commission from more
expansively interpreting that term.” Id.

       The Government is correct that intent is key, and that selective statutory language
can be instructive. However, the Government’s position would have the effect of
improperly overriding the statute’s plain meaning. As was the case in Digital Realty, this
Court sees no better indication of Congress’ intent than the unambiguous words of
obligation that it chose to include in section 1402.

       The Government’s argument also ignores other more telling structural differences
which corroborate the Court’s understanding of section 1402. In at least four places
throughout the ACA, Congress made payment for a program “subject to availability of
appropriations.” 42 U.S.C. § 280k(a); 42 U.S.C. § 300hh-31(a); 42 U.S.C. § 293k-2(e); 42
U.S.C. § 1397m-1(b)(2)(A). No such conditional language exists in sections 1402 or 1412.
This discrepancy more likely indicates an intended “difference in meaning.” Congress
knew how to condition payment on the presence or absence of an appropriation; it did so
in other subsections but not in section 1402. This choice shows a decision to create a
binding obligation to make CSR payments to QHPs not predicated on the presence of an

                                             11
appropriation. There is no evidence in the text, legislative history, or otherwise to the
contrary.

       The difference in section 1401’s and 1402’s funding mechanisms is likely
insignificant. The most reasonable explanation for Congress’ decision to fund the CSR
program through the annual appropriations process and fund tax refunds through a
permanent appropriation is likely the simplest: it intended to fund its two separate programs
in two different ways.

        Lastly, the Government’s interpretation could have serious consequences beyond
this program. Determining that such clear obligatory language nevertheless did not impose
an obligation would justifiably increase contractors’ skepticism towards working with the
Government, striking a serious blow to the future of public-private ventures.

          3. Congress’ Failure to Appropriate Funds to the CSR Program Did Not
             Cancel the Government’s Statutory Obligation to Make CSR Payments.

        The Court must next consider the impact, if any, of Congress’ subsequent failure to
appropriate funds for section 1402’s and 1412’s mandatory CSR payments. Again, this is
an entirely legal inquiry. “Repeals by implication are not favored.” Langston, 118 U.S. at
393. That rule “applies with especial force” when the source of the alleged repeal is a
subsequent appropriation. United States v. Will, 449 U.S. 200, 221-22 (1980). “Whether
an appropriations bill impliedly suspends or repeals substantive law ‘depends on the
intention of [C]ongress as expressed in the statutes.’” Moda Health, 892 F.3d at 1323
(quoting Mitchell, 109 U.S. at 150). That intent “must be clearly manifest.” N.Y. Airways,
Inc. v. United States, 369 F.2d 743, 749 (Ct. Cl. 1966).

       The Federal Circuit in Moda Health grappled with this same issue. To answer this
question, the court revisited Langston, contrasting it with United States v. Mitchell, 109
U.S. 146 (1883).

       In Mitchell, the Supreme Court determined that a statute setting salaries for
interpreters was impliedly amended when “Congress appropriated funds less than the fixed
sum set by statute, with a separate sum set aside for additional compensation at the
discretion for the Secretary of the Interior.” Moda Health, 892 F.3d at 1323 (citing
Mitchell, 109 U.S. at 149). This appropriation changed the original statutory obligation
because it evidenced:

              [A] change in the policy of [C]ongress on the subject, namely
              that instead of establishing a salary for interpreters at a fixed
              amount, and cutting off all other emoluments and allowances,
              [C]ongress intended to reduce the salaries and place a fund at
              the disposal of the [S]ecretary of the [I]nterior, from which, at

                                             12
              his discretion, additional emoluments and allowances might be
              given to the interpreters.”

Mitchell, 109 U.S. at 149-50.

       Three years later, Langston limited the holding in Mitchell. The Supreme Court
distinguished the cases based on the nature of the subsequent appropriations in each. In
Langston, a statute set a foreign minister’s salary at $7,500 per year, yet Congress
appropriated only $5,000 for that official’s salary. See 118 U.S. at 393. The court
explained that Congress “merely appropriated a less amount” for the official’s salary. Id.
at 394. Unlike Mitchell, this failure to appropriate funds did not constitute “words that
expressly, or by clear implication, modified or repealed the previous law.” Id. That
appropriation did not evidence an intent to repeal the previous act and had no impact on
the original statutorily obligation. Id.

       Subsequent cases have fallen into either the Langston or Mitchell camps. That is,
failure to appropriate funds to satisfy a statutory obligation do not change that original
obligation, whereas failure to appropriate plus some additional, affirmative, and clear
indication from Congress to alter the legislation can have an overriding effect. Compare
District of Columbia v. United States, 67 Fed. Cl. 292 (2005) (determining that “an
appropriation with limited funding is not assumed to amend substantive legislation creating
a greater obligation.”) (citing N.Y. Airways, 177 F.2d at 749)), with United States v.
Dickerson, 310 U.S. 554, 555 (1940) (appropriation providing that “no part of any
appropriation” could be used to fund a program altered original statutory obligation), and
Will, 449 U.S. at 205-07 (subsequent appropriation stating that “no part of the funds
appropriated in this Act or any other Act shall be used to pay the salary” and that the
increase in pay “shall not take effect” eliminated a statutorily enacted salary raise); see also
N.Y. Airways, 369 F.2d at 748 (“It has long been established that the mere failure of
Congress to appropriate funds, without further words modifying or repealing, expressly or
by clear implication, the substantive law, does not in and of itself defeat a Government
obligation created by statute.”).

       This case fits squarely into the Langston lineage. Congress has not acted at all here;
it passed no bills or riders appropriating funds or limiting appropriations for the CSR
program. The situation at hand exemplifies a “bare failure to appropriate funds to meet a
statutory obligation” which simply has no impact on the statutory commitment. Moda
Health, 982 F.3d at 1323. There has been no indication from Congress that it intended an
about-face as to its originally intended obligation. Section 1402’s mandate to pay QHPs
for their CSR related expenses therefore remains intact.

                                              13
            4. The Government’s Arguments Regarding Plaintiff’s Lack of a Damages
               Remedy are Unpersuasive.

       The Government argues that L.A. Care’s claim must fail because Congress did not
intend to supply a remedy for QHPs to recover damages for HHS’ failure to make CSR
payments. It cites two sources for support, neither of which the Court finds compelling.

       First, the Government asserts that section 1402 does not authorize either an express
or implied cause of action for an issuer to recover damages. Def.’s Cross-Mot. to Dismiss
and Resp. at 19. This argument runs afoul of the long-standing precedent that statutes (like
the ACA) that can be fairly interpreted to be money-mandating both supply jurisdiction in
this Court and provide plaintiffs with a cause of action for damages. See, e.g., Fisher v.
United States, 402 F.3d 1167, 1173 (2005) (“[T]he determination that the source is money-
mandating shall be determinative both as to the question of the court's jurisdiction and
thereafter as to the question of whether, on the merits, plaintiff has a money-mandating
source on which to base his cause of action.”). The ACA is money-mandating, and, as
such, L.A. Care need not establish any separate damages remedy.

       Second, the Government points to state-level regulators’ ability to alter QHPs’
premiums which allows QHPs to recover costs from CSR non-payment as evidence of
Congress’ intent not to grant issuers a damages remedy. After the Government stopped
making CSR payments in late 2017, regulators in over 38 states (including California)
began permitting issuers to account for the termination of CSR payments in setting their
premium rates for the 2018 plan year. The result was increased premiums for the exchange-
offered plans which, in turn, increased the tax refunds available to the issuer. This
adjustment allowed QHPs (including L.A. Care) to recoup (at least some) CSR costs. The
Government argues that Congress could not have intended to pile on an additional damages
remedy.6

       At bottom, the Government’s argument is that section 1402 really provides that the
Government shall make CSR payments to QHPs “unless state regulators in the future
happen to raise premiums, in which case, Congress doesn’t owe you.” Oral Arg. Tr. at
24:13-14. Nowhere in the legislative history, statutory text or implementing regulations
are CSR payments subject to alteration based on the availability of offsetting funds derived
from premium increases permitted by state regulators. Premium rate adjustment is a state-
specific decision, entirely separate from the CSR program. Its possibility does not reveal
Congress’ decision not to provide a damages remedy for CSR non-payment and therefore
does not impact L.A. Care’s ability to recover. Accordingly, the Court GRANTS
Plaintiff’s motion for summary judgment on Count V.

6
 The parties do not address the degree to which L.A. Care’s damages may have been offset by its ability
to increase premiums.

                                                   14
          5. The ACA, Implementing Regulations, and Surrounding Circumstances
             Created an Implied-in-Fact Contract Which the Government Breached.

       Next, the Court must consider whether the Government entered into a contractual
relationship with L.A. Care through sections 1402 and 1412 of the ACA and HHS’
regulations implementing the CSR program. Existence of a contract is essential to L.A.
Care’s Fifth Amendment takings claim and to Defendant’s motion to dismiss that claim.
The debate here is not over the facts but whether these agreed facts give rise to a contract.
Thus, the question presented is entirely a legal dispute appropriate for summary judgment.

        The elements of an implied-in-fact contract are identical to those of an express
contract. See Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1325 (Fed. Cir. 1997).
To establish liability on a breach of contract claim, the plaintiff seeking summary judgment
must show that there is no genuine dispute as to four elements: (1) mutuality of intent to
contract, (2) consideration, (3) “lack of ambiguity in offer and acceptance,” and (4) that the
“[G]overnment representative whose conduct is relied upon [has] actual authority to bind
the [G]overnment in contract.” Lewis v. United States, 70 F.3d 597, 600 (Fed. Cir. 1995)
(citation omitted).

        The Government does not intend to bind itself in contract whenever it creates a
statutory or regulatory incentive program. See Nat’l R.R. Passenger Corp. v. Atchison
Topeka & Santa Fe Ry. Co., 470 U.S. 451, 465–66 (1985). Therefore, “absent some clear
indication that the legislature intends to bind itself contractually, the presumption is that a
law is not intended to create private contractual or vested rights but merely declares a policy
to be pursued until the legislature shall ordain otherwise.” Id. (citation omitted). Courts
should “proceed cautiously both in identifying a contract within the language of a
regulatory statute and in defining the contours of any contractual obligation.” Brooks v.
Dunlop Mfg. Inc., 702 F.3d 624, 631 (Fed. Cir. 2012).

      The Government reasons that L.A. Care’s contract claim fails because the relevant
ACA provisions and implementing regulations do not “speak in terms of contract.” Def.’s
Cross-Mot. to Dismiss and Resp. at 23. To the Government, the ACA’s language alone is
determinative of Congress’ intent. However, this inquiry does not begin and end with the
text.

       National Railroad provides the relevant framework. There, the Supreme Court
grappled with whether the Government created a contractual arrangement through statute
and subsequent agreements between it and railroad operators. See Nat’l R.R., 470 U.S. at
465. The statutory language, which was of “first importance” in making this assessment,
did not evidence “congressional intention to have the United States enter into a private
contractual arrangement” because it did not “speak in terms of contract.” Id. at 466-67.
However, the court next turned to the “circumstances surrounding the Act’s passage.” Id.
at 468. The parties’ legitimate expectations, larger national railroad regulatory context

                                              15
within which this provision fell, and unfair terms of the alleged contract all suggested that
no contract was formed. Id. at 468-69. Accordingly, National Railroad encouraged courts
not to treat one source as dispositive, but instead examine all potentially relevant signs of
Congress’ intent in determining formation of an implied-in-fact contract.

       Moda Health took a similar approach when considering if the risk corridors program
gave rise to an implied-in-fact contract. The plaintiff claimed that a “combination of [the
statutory] text, HHS’s implementing regulations, HHS’s preamble statements before the
ACA became operational, and the conduct of the parties” formed a contract. Moda Health,
892 F.3d at 1329. The court disagreed, but its analysis is telling. It did not rest with the
statutory language which it determined “contains no promissory language from which we
could find such intent [to contract].” Id. at 1329. Rather, it proceeded to consider the
“overall scheme of the risk corridors program.” Id. at 1330. The Federal Circuit therefore
appeared to engage in a similarly holistic inquiry, not limited to just the statutory language.

        Applying the precedent set in National Railroad and Moda Health, the Court must
look to all relevant circumstances to discern whether Congress intended to establish a
contractual arrangement. See also Hercules, Inc. v. United States, 516 U.S. 417, 424
(1996) (intent to contract can be inferred from the “conduct of the parties showing, in light
of the surrounding circumstances, their tacit understanding.”). Accordingly, the Court will
assess the language of sections 1402 and 1412, their implementing regulations, and the
surrounding circumstances to determine whether a bargain was struck.

                  a. There was Mutuality of Intent to Contract.

        The core of this inquiry is whether the situation exemplifies a “traditional quid pro
quo” exchange. Moda Health, 892 F.3d at 1330. Hallmarks of such an exchange include
(1) whether the provision creates a program that offers specified incentives in return for
the voluntary performance of private parties; and (2) whether the provision is promissory,
providing agency officials administering the program with no discretion in awarding
incentives to parties who perform. See Radium Mines, Inc. v. United States, 153 F. Supp.
403, 405–06 (Ct. Cl. 1957). As detailed above, Congress made an unambiguous promise
to repay issuers for their CSR expenses in sections 1402 and 1412, and HHS’ implementing
regulations. The commitment—that issuers would not be expected to shoulder the cost of
the Government’s CSR subsidy and would receive full advanced payment—was designed
to entice issuers like L.A. Care to voluntarily participate on exchanges. Once a QHP sold
its plan on an exchange and paid out-of-pocket costs to qualified plan purchasers, the
statutory “shall” used in both sections imposed a discretionless requirement on the
Government to pay issuers.

       Moda Health is also instructive in drawing a line between an “incentive program”
and a quid pro quo exchange which gives rise to a contractual relationship. Important to
its decision that the risk corridors program established an incentive program and not a

                                              16
contract was the lack of a traditional “guarantee” as the court determined existed in Radium
Mines. See Moda Health, 892 F.3d at 1330. There, the Government encouraged
stimulation of domestic uranium production by promising to pay private parties a
“guaranteed minimum price” for uranium. See Radium Mines, 153 F. Supp. at 404-05.
This program possessed the traditional “trappings of a contractual arrangement” because
“the government made a ‘guarantee,’ it invited uranium dealers to make an ‘offer,’ and it
promised to ‘offer a form of contract’ setting forth ‘terms’ of acceptance.” Moda Health,
892 F.3d at 1330. Conversely, the risk corridors program was “an incentive program
designed to encourage the provision of affordable health care to third parties without a risk
premium to account for the unreliability of data relating to participation of the exchanges—
not the traditional quid pro quo contemplated in Radium Mines.” Id. Also important was
the fact that an issuer could qualify for risk corridors payments without the encouraged
premiums in place. Id.

        Like the risk corridors program, the CSR program aims to provide affordable
healthcare to exchange customers. However, that is where the similarities between these
programs end. The risk corridors program acted to calm potential issuers’ fears regarding
entering a new and unprecedented market. The CSR program is no such safety net. Rather,
it is a means for distributing a Government subsidy. The Government chose to distribute
that subsidy by asking insurers to act as conduits for payment of certain eligible insureds’
out-of-pocket healthcare costs. Put in Radium Mines’ terms, the Government “guaranteed”
to cover QHPs’ CSR expenses if QHPs made CSR payments to eligible recipients. There
is, undoubtedly, a traditional quid pro quo exchange in that transaction. The same logic
underlying the Federal Circuit’s decision in Moda Health therefore does not apply here.
Additionally, unlike the risk corridors program, whether a QHP is entitlement to CSR
repayment depends entirely on whether it has made CSR distributions to qualifying
customers.

        The surrounding circumstances reinforce the existence of a contractual
arrangement. As in National Railroad, the legitimate expectations of the parties and
whether the would-be contractual arrangement is equitable are especially relevant. See
470 U.S. at 467-69. There, the court determined that the plaintiff could not have
legitimately believed that it was entering into a contract because (1) the statute ‘“expressly
reserved’ its rights to ‘repeal, alter or amend”’ the statute “at any time,” Id. at 467, and (2)
Congress had a history of “heavy and longstanding regulation” of the railroad industry. Id.
at 468. Moreover, under the alleged contract, Congress would have relinquished its
longstanding ability to impose rail passenger obligations on railroad operators in exchange
for virtually nothing. Id. at 468-69 (determining that the Government would not have “shed
this vitally important governmental power with so little concern for what it would receive
in exchange”). Existence of a contract was therefore implausible because “Congress would
have struck a profoundly inequitable bargain” had it agreed to the contractual terms that
the plaintiff urged existed. Id. at 469.

                                              17
        Sections 1402 and 1412 and their implementing regulations use unequivocal
promissory language leading QHPs to reasonably believe that they would be repaid under
this program. Unlike National Railroad, there is no language in those provisions which
checked L.A. Care’s expectations that it would be repaid. Indeed, there is a bevy of
evidence to the contrary. L.A. Care’s repayment expectations were reaffirmed time and
again by HHS’ directives on the CSR program. See 45 C.F.R. § 156.430(b)(1); 78 FR
15409, 15486 (Mar. 11, 2013); 79 FR 13743, 13805 (Mar. 11, 2014); Bulletin, CMS,
Timing of Reconciliation of Cost-Sharing Reductions for the 2014 Benefit Year at 1 (Feb.
14, 2015). Moreover, the Government is not getting a raw deal here. The ACA’s success
hinges on private health insurers’ voluntary participation on exchanges. Moreover, the
CSR program’s design makes issuers the sole means for distributing these out-of-pocket
healthcare costs to target recipients. L.A. Care’s assent to be an issuer therefore was not
just valuable but vital to the success of both the CSR program and ACA generally.

                  b. L.A. Care Accepted the Government’s Offer.

       Since offers are conduct which indicate assent to the proposed bargain, and the
Government intended to contract as outlined above, the ACA and its implementing
regulations established an offer to form a unilateral contract. In such an arrangement, the
offeree may only accept the offer by performing its contractual obligations. See Contract,
Black’s Law Dictionary (10th ed. 2014) (defining “unilateral contract” as “[a] contract in
which only one party makes a promise or undertakes a performance.”); see also Lucas v.
United States, 25 Cl. Ct. 298, 304 (1992) (explaining that a prize competition is a unilateral
contract because it requires participants to submit entries in return for a promise to consider
those entries and award a prize). Performance must be in the form of an actual undertaking;
simply “fill[ing] in the blanks of a Government prepared form,” such as an application,
does not constitute acceptance by performance. Cutler-Hammer, Inc. v. United States, 441
F.2d 1179, 1183 (Ct. Cl. 1971).

       The Government’s offer is clearly laid out in sections 1402 and 1412 and their
implementing regulations: it promised to reimburse L.A. Care for its CSR payments in
advance if L.A. Care offered plans on an exchange and itself made CSR distributions to
qualifying customers. Acceptance of this offer is only possible through L.A. Care
performing its half of the bargain.

       And L.A. Care did, in fact, accept this offer. It expended resources to develop plans
which comported with the ACA’s requirements, sold qualifying plans on the California
exchange, and made payments to eligible customers to reduce their out-of-pocket expenses
as the ACA required. L.A. Care’s undertakings were substantial. Its performance was
sufficient to act as an acceptance, and, as offeror, the Government’s duty to pay has
accordingly fully matured. See, e.g., Restatement (Second) of Contracts § 53 (Acceptance
by Performance); cf. Winstar Corp. v. United States, 64 F.3d 1531, 1545 (Fed. Cir. 1995)
(“When the plaintiffs satisfied the conditions imposed on them by the contracts, the

                                              18
government’s contractual obligations became effective and required it to recognize and
accept the purchase method of accounting . . . and the use of supervisory goodwill and
capital credits as capital assets for regulatory capital requirements.”), aff’d and remanded,
518 U.S. 839 (1996).

                  c. There was Consideration

       Consideration is a bargained-for performance or return promise. See Restatement
(Second) of Contracts § 71. Here, the Government offered consideration in the form of
promised advance CSR payments. In return, L.A. Care developed compliant plans, offered
those plans for sale on the California exchange, and made CSR reductions to its eligible
customers. Therefore, there was consideration.

                  d. The HHS Secretary Had Authority to Contract

       Plaintiff must prove that the contract was executed by an officer with “actual
authority to bind the Government.” Marchena v. United States, 128 Fed. Cl. 326, 333
(2016) (citing Salles v. United States, 156 F.3d 1383, 1384 (Fed. Cir. 1998)). That
authority “may be either express or implied.” Id. Express actual authority is derived from
the words of a statute or other provision. McAfee v. United States, 46 Fed. Cl. 428, 435
(2000). Authority is implied when it is “considered to be an integral part of the duties
assigned to a government employee.” H. Landau & Co. v. United States, 886 F.2d 322,
324 (Fed. Cir. 1989) (citation omitted).

       Sections 1402 and 1412 provide that the Secretary of HHS “shall establish” the CSR
program and “shall make” CSR payments. More generally, the Secretary is responsible
for administering and implementing the ACA. See ACA §§ 1001, 1301(a)(1)(C)(iv),
1302(a)–(b), 1311(c)–(d). The ACA itself creates a contractual framework that the HHS
Secretary is charged with administering and implementing. Entering into contracts
pursuant to the contractual structure of the CSR program is therefore integral to the
Secretary’s duties. Accordingly, the Secretary had implied actual authority to contract.

       The Anti-Deficiency Act (“ADA”), 31 U.S.C. § 1341(a)(1)(B) is not fatal to L.A.
Care’s claim. The Government points to language in the ADA providing that the
Government “may not . . . involve [the] government in a contract or obligation for the
payment of money before an appropriation is made unless authorized by law.” However,
when a statutory or regulatory framework also creates a contract, that limitation is no longer
applicable. N.Y. Airways, 369 F.2d at 152. When addressing this issue, the court in N.Y.
Airways reasoned that “[s]ince it has been found that the Board’s action created a ‘contract
or obligation (which) is authorized by law’, obviously the statute has no application to the
present situation.” 369 F.2d at 152. Similarly, the ACA explicitly authorizes the Secretary
of HHS to make CSR payments. And as stated above, sections 1402 and 1412 established
a contractual framework. Therefore, the Secretary is “authorized by law” under the ACA

                                             19
to make CSR payments pursuant to implied-in-fact contracts with insurers, and the implied-
in-fact contract does not fall under the Anti-Deficiency Act.

        L.A. Care’s assertion that it relied on the Government’s promise to pay does not
transform L.A. Care’s implied-in-fact contract claim into an allegation of an implied-in-
law contract that this Court is without jurisdiction to hear. See Def.’s Cross-Mot. to
Dismiss and Resp. at 27-28. An assertion of detrimental reliance does not suddenly convert
Plaintiff’s well-pled implied-in-fact contract claim into one for promissory estoppel as the
Government suggests. Steinberg v. United States, 90 Fed. Cl. 435, 444-47 (2009). Indeed,
an allegation of detrimental reliance can be instructive on whether there was a meeting of
the minds essential to the existence of an implied-in-fact contract. Son Board., Inc. v.
United States, 42 Fed. Cl. 532, 353 (1998). A jurisdictional dismissal is only proper if
Plaintiff’s complaint asserts promissory estoppel while also failing to plead the elements
of an implied-in-fact contract claim. Steinberg, 90 Fed. Cl. at 444. That is not the case
here. As already discussed, L.A. Care has satisfactorily pled the elements of an implied-
in-fact contract.

       Lastly, the Government argues that the existence of QHP Agreements—the
contracts between issuers and the Government—preclude the formation of an implied
contract since both it and the QHP Agreement are grounded in the same facts. Def.’s Cross-
Mot. to Dismiss and Resp. at 27. However, L.A. Care does not claim that the QHP
Agreements in any way evidenced an implied-in-fact contract. Moreover, these
agreements do not cover the same subject matter as Plaintiff alleges is covered by the
implied contract. Since this implied contract is not grounded in the same facts as the QHP
Agreements, Defendant’s attempt to evade liability is unsuccessful.

                 e. The Government Breached the Contract

       The Government is contractually required to make advanced CSR payments to
issuers. Moreover, by offering plans on the California exchange and paying eligible
customers’ out-of-pocket expenses, L.A. Care continues to fulfill its end of the bargain.
The Government’s failure to pay from October 2017 and beyond constitutes a breach of
this contract. Congress’ mere refusal to pay has not modified its contractual obligation in
any way. See, e.g., Salazar v. Ramah Navajo Chapter, 132 S.Ct. 2181, 2189 (2012) (“[T]he
Government is responsible to the contractor for the full amount due under the contract,
even if the agency exhausts the appropriation in service of other permissible ends.”). The
Court therefore GRANTS Plaintiff’s motion for summary judgment on Count VI.

   C. L.A. Care’s Takings Cause of Action Fails to State a Claim Upon Which Relief
      May be Granted.

     Lastly, L.A. Care alleges that when the Government discontinued making CSR
payments, it took L.A. Care’s property interest for public use without just compensation,

                                             20
in violation of the Fifth Amendment. The Government contends that L.A. Care does not
have a legally cognizable property interest in these payments, and therefore fails to state a
claim.

            1. Standard of Review

        When considering a motion to dismiss a complaint for failure to state a claim upon
which relief may be granted under Rule 12(b)(6), the Court must accept as true all factual
allegations submitted by the plaintiff. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). Accepting those allegations as true, for the plaintiff to survive dismissal, the Court
must conclude that “the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). The plaintiff’s factual
allegations must be substantial enough to raise the right to relief above the speculative
level, accepting all factual allegations in the complaint as true and indulging all reasonable
inferences in favor of the non-movant. Twombly, 550 U.S. at 545; Chapman Law Firm
Co. v. Greenleaf Constr. Co., 490 F.3d 934, 938 (Fed. Cir. 2008).

            2. Stating a Takings Claim

       The Fifth Amendment of the U.S. Constitution provides that “private property [shall
not] be taken for public use, without just compensation.” U.S. Const. amend. V. A takings
claim is evaluated under a two-part analysis. “First, the court determines whether the
claimant has identified a cognizable Fifth Amendment property interest that is asserted to
be the subject of the taking. Second, if the court concludes that a cognizable property
interest exists, it determines whether that property interest was ‘taken.’” Acceptance
Insurance Cos., Inc. v. United States, 583 F.3d 849, 854 (Fed. Cir. 2009) (citations
omitted). To prevail on the Government's motion to dismiss, L.A. Care must only plead
sufficient facts that, when accepted as true, show that it had a cognizable property interest
in continued CSR payments, and that the Government’s failure to make CSR payments
constituted a taking of that interest.7

                    a. L.A. Care Has Alleged a Property Interest in CSR Payments

       The Constitution “neither creates nor defines the scope of property interests
compensable under the Fifth Amendment.” Maritrans, Inc. v. United States, 342 F.3d
1344, 1352 (Fed. Cir. 2003) (citing Bd. of Regents of State Colls. v. Roth, 408 U.S. 564,
577 (1972)). Instead, courts look to ‘“existing rules and understandings’ and ‘background
principles’ derived from an independent source, such as state, federal, or common law” to
7
 “No statutory obligation to pay money, even where unchallenged, can create a property interest within the
meanings of the Takings Clause.” Adams v. United States, 391 F.3d 1212, 1225 (Fed. Cir. 2004). Thus,
whether Plaintiff has sufficiently alleged a takings cause of action wholly depends on the existence of a
contract between L.A. Care and the Government.

                                                   21
define the requisite property interest to establish a taking. Id. (citing Lucas v. South
Carolina Coastal Council, 505 U.S. 1003, 1030 (1992)). This broad standard for
identifying Fifth Amendment property interests has been held to include intangible rights
like contracts. See Lynch v. United States, 292 U.S. 571, 579 (1954); Cienega Gardens v.
United States, 331 F.3d 1319, 1329 (Fed. Cir. 2003) (recognizing “ample precedent for
acknowledging a property interest in contract rights under the Fifth Amendment”).

      For the reasons discussed above, L.A. Care has sufficiently alleged the existence of
an implied-in-fact contract. Since “[v]alid contracts are property,” Lynch, 292 U.S. at 579,
L.A. Care has pled facts sufficient to show that it possesses a legally cognizable Fifth
Amendment property interest.

                 b. The Government Has Not Taken L.A. Care’s Property

         Though L.A. Care possesses a vested property right, that right has not been taken;
it still can enforce this contract. This Court recently had the opportunity to address this
precise issue:

              If a plaintiff claims he is owed something to which he also
              claims a contractual right, he cannot also allege a takings claim
              because he is not alleging that the Government has “taken” his
              contract remedy. Under such circumstances, the plaintiff is
              claiming he entered into a contract with the Government that
              the Government subsequently breached, leaving the plaintiff
              with contract damages. The amount of those damages is also
              the property the plaintiff claims was taken. In other words,
              “[t]he property rights allegedly taken were the contractual
              rights themselves, not a separately existing property interest.”
              Therefore, the plaintiff's remedy lies in contract, and he cannot
              pursue a takings claim to recover his alleged contract damages.

Snyder & Associates Aquisitions LLC v. United States, 133 Fed. Cl. 120, 126 (2017)
(quoting Westfed Holdings, Inc. v United States, 52 Fed. Cl. 135, 152 (2002)) (other
citations omitted). Accordingly, L.A. Care has not stated a takings claim. The Court
GRANTS Defendant’s motion to dismiss Count VII.

                                        Conclusion

       The Government promised to make full and advanced CSR payments both in statute
and through contract for which it is now liable. L.A. Care should not be left “holding the
bag” for taking our Government at its word. For the reasons stated above, the Court
GRANTS Plaintiff’s motion for partial summary judgment on Counts V and VI, DENIES

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Defendant’s motion to dismiss Counts V and VI, and GRANTS Defendant’s motion to
dismiss Count VII of Plaintiff’s complaint.

       The Court requests that counsel for the parties submit a joint status report on or
before March 14, 2019, indicating the proposed steps and schedule for completing the
resolution of this action.

      IT IS SO ORDERED.

                                                s/Thomas C. Wheeler
                                                THOMAS C. WHEELER
                                                Judge

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