Court Opinion

ID: 9495727
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:09:13.411114+00
Date Added: 2024-06-11T17:57:10.407199
License: Public Domain

*1301MAYER, Chief Judge,
with whom Circuit Judge NEWMAN, Senior Circuit Judge PLAGER, and Circuit Judge GAJARSA join, dissenting.
This case puts me in mind of Kipling’s apparently timeless lament of the soldier once need for his service has passed:
You talk o’ better food for us, an’ schools, an’ fires, an’ all:
We’ll wait for extry rations if you treat us rational.
Don’t mess about the cook-room slops, but prove it to our face
The Widow’s Uniform is not the soldier-man’s disgrace.
For it’s Tommy this, an’ Tommy that, an’ “Chuck him out, the brute!”
But it’s “Saviour of ‘is country” when the guns begin to shoot;
An’ it’s Tommy this, an’ Tommy that, an’ anything you please;
An’ Tommy ain’t a bloomin’ fool — you bet that Tommy sees!1
Promises of lifetime medical care were made to military officers by military officials for more than 50 years. Likewise Congress knew, or certainly should be charged with knowing, how the billions of dollar’s it appropriated for military medical care were allocated and that the amounts it appropriated for military pay were diminished by the imputed value of medical care on active duty and after retirement. Congress is presumed to know the terrain against which it legislates. To suggest it was oblivious, that it did not know military officials were promising medical care in accordance with its appropriations is pure sophistry. If it were otherwise, if Congress can appropriate billions for this aspect of national defense and not know how it is accounted for, then God save the Republic.
Of course Congress knew; of course the service secretaries authorized promises in return for service; of course these military officers served until retirement in reliance; and of course there is a moral obligation to these men: it is called honoring the contract the United States-made with them and which they performed in full. Because the court countenances the government’s breach of the implied contracts and its taking of the rights vested in these retired servicemen, I dissent.
I.
More than a century ago, the Supreme Court held that the government cannot deprive a party with which it contracts “of the fruits actually reduced to possession of contracts lawfully made.” Sinking Fund Cases, 99 U.S. 700, 720, 25 L.Ed. 496 (1878); see also Bowen v. Pub. Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 55, 106 S.Ct. 2390, 91 L.Ed.2d 35 (1986). In requiring military retirees, who were promised lifetime health care, to advert to Medicare and pay for the shortfall in coverage, the government wrongfully diminished the value of their contractual “fruits,” it breached its implied-in-fact contract with them.
A contract implied-in-fact is one “founded upon a meeting of minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the *1302surrounding circumstances, their tacit understanding.” Baltimore & Ohio R.R. Co. v. United States, 261 U.S. 592, 597, 58 Ct.Cl. 709, 43 S.Ct. 425, 67 L.Ed. 816 (1923); see also Hercules, Inc. v. United States, 516 U.S. 417, 424, 116 S.Ct. 981, 134 L.Ed.2d 47 (1996). A binding implied-in-fact contract arises between a private party and the government upon proof by the person of: “(1) mutuality of intent to contract; (2) consideration; and (3) lack of ambiguity in offer and acceptance. When the United States is a party, a fourth requirement is added: The government representative whose conduct is relied upon must have actual authority to bind the government in contract.” See City of Cincinnati v. United States, 153 F.3d 1375, 1377 (Fed.Cir.1998); City of El Centro v. United States, 922 F.2d 816, 820 (Fed.Cir.1990). I address each of these requirements in turn.
A. Mutuality of Intent to Contract
In order to recruit, train, and maintain a military force, the secretaries of the military departments are delegated authority to create compensation and benefits packages for servicemen. See 5 U.S.C. § 301.2 The military has used promises of free lifetime health care to recruit and retain personnel to perform hazardous duties, often for less pay than they could have received in the civilian sector, and for less pay than it otherwise would have had to offer. The government concedes that recruiters made good faith representations to potential recruits that, upon retirement, they and their dependents would receive free lifetime health care. In fact, the record shows that the Army made these promises in its recruiting brochures as recently as the 1990s. See “Army Benefits,” Department of the Army, U.S.G.P.0.1992, 643-711 (“Health care is provided to you and your family members while you are in the Army, and for the rest of your life if you serve a minimum of 20 years of active Federal service to earn your retirement”).
Based on the Secretary of the Navy’s letter in 1945, which said that retired officers are entitled to medical care and hospitalization by naval medical facilities, it is apparent that the recruiters made these promises at the direction of the service secretaries. In determining whether the government intended to contract, we presume that the secretaries carried out their duties in good faith and in accordance with law when making these promises. See United States v. Chem. Found., Inc., 272 U.S. 1, 14-15, 47 S.Ct. 1, 71 L.Ed. 131 (1926) (Government officials are presumed to have “properly discharged their official duties.”); T & M Distrib. v. United States, 185 F.3d 1279, 1285 (Fed.Cir.1999) (“[G]ov-ernment officials are presumed to act in good faith.... ”). This presumption of regularity is the supposition that public officers perform their duties correctly, fairly, in good faith, and in accordance with law and governing regulations, Alaska Airlines, Inc. v. Johnson, 8 F.3d 791, 795 (Fed.Cir.1993), and is valid and binding unless “well-nigh irrefragable proof rebuts or overcomes it”. Id.; LaChance v. White, 174 F.3d 1378, 1381 (Fed.Cir.1999).
Because the secretaries made these offers in furtherance of their statutory duties to recruit and retain, they must *1303have intended to be contractually bound because a contrary intent would degrade their long-term ability to recruit new servicemen. See Lynch v. United States, 292 U.S. 571, 580, 54 S.Ct. 840, 78 L.Ed. 1484 (1934) (“Punctilious fulfillment of contractual obligations is essential to the maintenance of the credit of public as well as private debtors.”); 146 Cong. Rec. H7059 (daily ed. July 26, 2000) (statement of Rep. Bartlett) (“The recruitment brochures promised them and their family lifetime care in a military facility. We have broken that promise, and we are paying a heavy price for having broken that promise. Three of the services are now unable to meet their recruitment goals, and that is partly because when prospective enlistees confer with their father or their uncle or their grandfather, they frequently get the advice that T am not sure that you can believe what they are telling you, because they did not keep their promise to me.’ We are having problems with retention for exactly the same reason, because our young men and women in the military are not sure that what we have now promised them is going to be there after they retire because we have broken our promise to their elders.”). The retirees submitted affidavits stating that they served twenty or more years in military service with the expectation of lifetime health care and describing how the government provided these benefits until 1995. They intended their actions to be in performance of a binding contract between them and the government.
B. Consideration
There was consideration in the mutuality of obligation: the retirees serve in the armed forces for at least twenty years; the government provides health care to them and their dependents for the remainder of their lives. In Barker v. Kansas, 503 U.S. 594, 604, 112 S.Ct. 1619, 118 L.Ed.2d 243 (1992), the Supreme Court held that for purposes of state taxation, military retirement benefits are considered deferred compensation for past services. Similarly, lifetime health care is a deferred component of the retirees’ compensation in consideration of their continuance in military service for at least twenty years. “No one disputes that Congress may prospectively reduce the pay of members of the Armed Forces, even if that reduction deprived members of benefits they had expected to be able to earn.' Cf. Bell v. United States, 366 U.S. 393, 81 S.Ct. 1230, 6 L.Ed.2d 365 (1961); United States v. Dickerson, 310 U.S. 554, 60 S.Ct. 1034, 84 L.Ed. 1356 (1940). It is quite a different matter, however, for Congress to deprive a service member of pay due for services already performed, but still owing. In that case, the congressional action would appear in a different constitutional light. Cf. Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434 (1934); Perry v. United States, 294 U.S. 330, 55 S.Ct. 432, 79 L.Ed. 912 (1935).” United States v. Larionoff, 431 U.S. 864, 879, 97 S.Ct. 2150, 53 L.Ed.2d 48 (1977).
C. Lack of Ambiguity in Offer and Acceptance
The retirees submitted affidavits from former recruiters describing specific offers made to prospective recruits and servicemen to persuade them to enlist, reenlist or continue their military careers until retirement, in some cases indicating that the benefits should be considered as part of their compensation. See, e.g., Border Aff. (“I specifically remember one incident that has always stood out in my mind. On an [Inspector General] Inspection in January 1949, [several officers] gave the eight re*1304cruiters in Denver a talk on the benefits of permanent health care and free medicine that we would be entitled to for the rest of our lives. We were told that we had to consider this as a part of our pay.”). According to the district court, “[i]t is obvious ... recruiters made promises to potential recruits that they could obtain lifetime medical care for themselves and their dependents by joining the armed forces and fulfilling certain service obligations.” Schism v. United States, 19 F.Supp.2d 1287, 1294 (N.D.Fla.1998).
During the recent debates surrounding the 2001 Defense Authorization Act, the offers of lifetime health care made to retirees such as Schism and Reinlie were emphatically recognized. See, e.g., 146 Cong. Rec. H3322 (daily ed. May 18, 2000) (statement of Rep. Frost) (“[Rep. Shows] has introduced legislation that would fulfill a promise that has been made to every member of the armed services: Stay in 20 years and they will receive healthcare for the rest of them life.”); 146 Cong. Rec. S4621 (daily ed. June 7, 2000) (statement of Sen. Johnson) (“We all know the history: For decades, men and women who joined the military were promised lifetime health care coverage for themselves and their families. They were told, in effect, if you disrupt your family, if you work follow pay, if you endanger your life and limb, we will in turn .guarantee lifetime health benefits. Testimony from military recruiters themselves, along with copies of recruitment literature dating back to World War II, show that health care was promised to active duty personnel and their families upon the personnel’s retirement.”); 146 Cong. Rec. S10336 (daily ed. Oct. 12, 2000) (statement of Sen. Warner) (“I am pleased to announce that the conference report to accompany the National Defense Authorization Act for Fiscal Year 2001 includes a permanent health care benefit for retirees-modeled on the Senate bill. I am delighted thát we have honored the commitment of health care for life that was made to those who proudly served this nation. This is long overdue.”). There is no doubt that the government made an unambiguous offer of free lifetime health care, and that the retirees accepted that offer by their performance of career military service. See Restatement (Second) of Contracts § 45(1) (1981). It is gratifying that at least Congress recognized the contractual obligation, and worked for five years to prospectively remedy the breach.
D. Authority to Bind the Government
The court says that any promise of free lifetime health care is unenforceable for lack of express authority from Congress. It cites Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S.Ct. 1, 92 L.Ed. 10 (1947), which stands for the proposition that one, who deals with a government agent bears the burden of determining that the agent is authorized to bind the government. But this principle does not inform my view, because there is nothing in The record suggesting that the recruiters who made these promises were not authorized to do so. There is nothing in the regulations or law prior to 1956 that would have- prohibited recruiters from making these promises; indeed those regulations appear to authorize them. At the least, there is no inconsistency between them. The recruiting letter from the Secretary of the Navy is evidence that the leadership of the military departments authorized, endorsed and officially echoed those promises. The court views this as insufficient, but the government, which has all the needed evidence, resisted discovery and the district court prematurely ended it. '-Under these circumstances and view*1305ing the available evidence in the light most favorable to the retirees, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), I am persuaded that it confirms the institutional practice.
Merrill recognizes that legal authority may be delegated to agencies. 332 U.S. at 384, 68 S.Ct. 1. The statute, 5 U.S.C. § 301, delegated broad authority to the secretaries to govern their respective military departments. Before 1956, promises of lifetime health care were well within the discretion and power of the secretaries. Funding by Congress of the military’s health care system confirmed this broad delegation. Congressional delegation of authority along with the absence of any contrary statutes or regulations in force at the time the retirees entered military service, both in World War II and again in Korea, gives the promises of lifetime health care made by recruiters, under the authority of the secretaries, the force of law and creates a contract implied-in-fact binding upon the government.
In Lynch, the Supreme Court examined Congress’ ability to avoid paying out benefits promised under a contract and contrasted it with congressional power over gratuities that can “be redistributed or withdrawn at any time in the discretion of Congress.” 292 U.S. at 577, 54 S.Ct. 840. Gratuities “involve no agreement of parties; and the grant of them creates no vested right.” Id. The plaintiffs in Lynch had entered into agreements with the United States for War Risk Insurance and had paid the prescribed monthly premiums. Id. Congress delegated power to the Veterans Administration to prescribe the form of policies, and the form provided that the policies were subject to amendment and regulations then in force and thereafter adopted. Congress subsequently enacted the Economy Act which included a clause stating: “... all laws granting or pertaining to yearly renewable term insurance are hereby repealed....” Id. at 575, 54 S.Ct. 840. Nevertheless, the Supreme Court held that Congress could not curtail the benefits, which the government had contracted to pay, stating that “[n]o doubt there was in March, 1933, great need of economy.... But Congress was without power to reduce expenditures by abrogating contractual obligations of the United States.” Id. at 580, 54 S.Ct. 840.
5 U.S.C. § 301 and the military regulations are evidence of the broad authority the military secretaries had to manage their departments, including creating packages of incentives to recruit and retain personnel for hazardous military duties, and to bind the government to contracts in furtherance of them statutory function to recruit servicemen. See, e.g., 10 U.S.C. §§ 3013, 5013,' 8013 (1994) (The secretaries have “the authority necessary to conduct, all affairs of the Department[s] ..., including the following functions: (1) Recruiting....”). The government now disparages section 301 as a mere housekeeping rule, citing Chrysler Corp. v. Brown, 441 U.S. 281, 302, 310, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979), which pertained to matters starkly different from ours, but before the panel in this case it said:
In 1966, pursuant to 5 U.S.C. § SOI and 10 U.S.C. § 1086, DoD created a program of health care for all service members, including retirees, known as CHAMPUS (32 CFR Part 199). CHAMPUS is “essentially a supplemental program to the Uniformed Services direct medical care system. The Basic Program is similar to private insurance programs, and is designed to provide *1306financial assistance to CHAMPUS beneficiaries for certain prescribed medical care obtained from civilian sources” (32 ' CFR § 199.4(a)).
Respondents’ Brief at 11 (emphasis added). It strikes me as incongruous that section 301 could support creation of a comprehensive military health care program, but not support contracts for care. That is because it is not true. This shows that the secretaries interpreted the law over the years consistent with the retirees’ understanding. As the Court said in United States v. Alabama Great Southern R.R. Co., 142 U.S. 615, 621, 27 Ct.Cl. 561, 12 S.Ct. 306, 35 L.Ed. 1134 (1892):
We think the’ contemporaneous construction thus given by the executive department of the government, and continued for nine . years through six different administrations of that department — a construction which, though inconsistent with the literalism of the act, certainly consorts, with the equities of the case — should be considered as decisive in this suit. It is a settled doctrine of this court that in case of ambiguity the judicial department will lean in favor of a construction given to a statute by the department charged with the execution of such statute, and, if such construction be acted upon for a number of years, will look with disfavor upon any sudden change, whereby parties who have contracted with the government upon the faith of such construction may be prejudiced.
I see no meaningful difference’ between the situation in Larionoff, 431 U.S. 864, 97 S.Ct. 2150, 53 L.Ed.2d 48, where the statute explicitly authorized a reenlistment bonus, and the present situation, where 5 U.S.C. § 301 delegates broad authority to the secretaries to recruit servicemen. Prior to the enactment of 10 U.S.C. § 1074(b)3 in 1956, the secretaries had such authority and nothing in law or regulations precluded them from contracting to provide these benefits in exchange for twenty years of service. Though the congressional authority was delegated rather than direct, the contract between the retirees and the government is no less binding than the promise to pay a reenlistment bonus whose amount was based on a formula set well before the time at which it was to be paid in Larionoff.
II.
When the government forced the retirees to rely on insufficient Medicare, it breached the contract. Winstar Corp. v. United States, 64 F.3d 1531, 1546 (Fed.Cir.1995), held that the terms of a government contract, like any other contract, do not change with the enactment of subsequent legislation, absent a specific contractual provision providing for such a change. This was confirmed by the Supreme Court. See United States v. Winstar, 518 U.S. 839, 877, 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996). In Mobil Oil Exploration & Producing Southeast, Inc. v. United States, 530 U.S. 604, 120 S.Ct. 2423, 147 L.Ed.2d 528 (2000), the Supreme Court also held that legislation could itself be the “statement by the obligor to the obligee indicating that the obligor will commit a breach.” *1307Id. at 619, 120 S.Ct. 2423. The fact that the secretaries’ repudiation of the contract to provide lifetime health care may have “rested upon the enactment of a new statute makes no significant difference.” Id. at 620, 120 S.Ct. 2423.
In Winstar, the Federal Home Loan Bank Board, a federal agency acting under delegated congressional authority, entered into agreements with several thrifts “to accord them particular regulatory treatment in exchange for them assumption of liabilities that threatened to produce claims against the Government as insurer.” 518 U.S. at 843, 116 S.Ct. 2432. Despite the highly regulated nature of the savings and loan industry and the likelihood of changes to the regulatory structure during the pendency of the agreements, the Supreme Court applied the ordinary principles of contract construction and breach that would be applicable to contracts between private parties and held the agreements to be enforceable. Id. at 870, 116 S.Ct. 2432. Although the board could not prevent Congress from changing the rules, the agreements were valid promises to insure the thrifts against loss arising from future regulatory changes. Id. at 869-70, 116 S.Ct. 2432; New Valley Corp. v. United States, 119 F.3d 1576, 1582 (Fed.Cir.1997) (“[R]egardless of the sovereign acts doctrine, the contracts shifted responsibility to the government for changes in its launch priority and scheduling policy.”); Hughes Communications Galaxy, Inc. v. United States, 998 F.2d 953, 959 (Fed.Cir.1993) (Government “contracts routinely include provisions shifting financial responsibility to the government for events which might occur in the future. That some of these events may be triggered by sovereign government action does not render the relevant contractual provisions any less binding....”); Amino Bros. Co. v. United States, 178 Ct.Cl. 515, 372 F.2d 485, 491 (1967) (“The Government cannot make a binding contract that it will not exercise a sovereign power, but it can agree in a contract that if it does so, it will pay the other contracting party the amount by which its costs are increased by the Government’s sovereign act.”) (quoted in Winstar, 518 U.S. at 881-82, 116 S.Ct. 2432). The Supreme Court made clear that “the National Government has some capacity to make agreements binding future Congresses by creating vested rights,” and concluded that the promised regulatory treatment was within that capacity. Winstar, 518 U.S. at 876, 116 S.Ct. 2432.
Here, the secretaries had congressional authority delegated by 5 U.S.C. § 301 to make contracts to provide lifetime health care, and they did. This created a contractual right to that health care that the passage of 10 U.S.C. §§ 1074(b) and 1076(b) could not divest. The notion that the federal government could avoid a contractual obligation through subsequent legislation would conflict with the government’s “own long-run interest as a reliable contracting partner in the myriad workaday transactions of its agencies.” Winstar, 518 U.S. at 883, 116 S.Ct. 2432. The government has the power to enter into contracts which confer rights, and has the duty to honor them. Id. at 884 n. 28, 116 S.Ct. 2432. “To say that the Congress may withdraw or ignore [the government’s] pledge, is to assume that the Constitution contemplates a vain promise, a pledge having no other sanction than the pleasure and convenience of the pledgor. This Court has given no sanction to such a conception of the obligations of our Government.” Perry v. United States, 294 U.S. 330, 351, 55 S.Ct. 432, 79 L.Ed. 912 (1935). “Congress was free to reduce gra*1308tuities deemed excessive. But Congress was without power to reduce expenditures by abrogating contractual obligations of the United States. To abrogate contracts, in the attempt to lessen government expenditure, would be not the practice of economy, but an act of repudiation.” Lynch, 292 U.S. at 580, 54 S.Ct. 840.
The retirees entered active duty in the armed forces and completed at least twenty years service on the good faith belief that the government would fulfill its promises. The government cannot repudiate the contract now. “In contracts involving the government, as with all contractual relationships, rights vest and contract terms become binding when, after arms length negotiation, all parties to the contract agree to exchange real obligations for real benefits.” Winstar, 64 F.3d at 1546. Given the existence of medical facilities and the medical care for retirees already provided by the government, the retirees should not be asked now to pay for something they have long had, and were promised, as part of their deal with the military when they agreed to devote their professional lives to it.
III.
The court’s suggestion that the Anti-Deficiency Act limits the congressional authority delegated by section 301 is curious but, in any event, does not support the decision. Neither Cessna Aircraft Co. v. Dalton, 126 F.3d 1442 (Fed.Cir.1997), nor any Supreme Court ease supports the conclusion that the Anti-Deficiency Act, 31 U.S.C. § 1341 (1994), precludes the government from contracting with recruits for retirement benefits. That Act is inapplicable, first, because as shown, 5 U.S.C. § 301 delegates broad authority to service secretaries to recruit servicemen. And of course, there never has been a deficiency in funding. But even if there had it would not constitute a defense for breach of contract, Ferris v. United States, 27 Ct.Cl. 542, 546 (1892), or bar recovery of a judgment against the government, Parsons v. United States, 15 Ct.Cl. 246, 246 (1879). Insufficient appropriations at the agency level may preclude local disbursements, but they do not “pay the government’s debts, nor cancel its obligations, nor defeat the rights of other parties.” Ferris, 27 Ct.Cl. at 546. The Act is inapplicable, second, because the statutes relevant to the retirees here are those in effect in 1951 for Schism and 1953 for Reinlie. And, even if the later enacted Anti-Deficiency Act could somehow control the retirees’ right to promised lifetime health care, it cannot abrogate an existing contract without creating liability for that abrogation.
The court’s exegesis of 5 U.S.C. § 70 (now codified at 5 U.S.C. § 5536) is based on the false premise that military compensation does not include health care benefits. Military retirement benefits are considered deferred compensation for past services. See Barker v. Kansas, 503 U.S. 594, 604, 112 S.Ct. 1619, 118 L.Ed.2d 243 (1992). Section 70 covers “additional pay, extra allowance, or compensation, in any form whatever.” 5 U.S.C. § 70 (1946). As the Supreme Court has pointedly stated: “The law was passed to remedy an evil which had existed, of detailing officers with fixed pay to perform duties outside of their regular employment, and paying them for it, when the government was entitled, without this double pay, to all their services. The law prohibited, and was intended to do so, the allowance of such claims as these, made by public officers, for extra compensation, on the ground of extra services.” Stansbury v. United States, 75 U.S. (8 Wall.) 33, 37, 19 *1309L.Ed. 315 (1868). Moreover, in that case the Secretary of the Interior was prevented from paying a claim because there was neither congressional appropriation to pay it nor congressional approval to create an agency to perform the service in question. Id. at 36, 19 L.Ed. 315, 8 Wall. 33. Extra compensation is in no sense the issue here. The question is whether the health services provided these retirees should be paid out of funds already appropriated, or whether the retirees must advert to their own resources for those services, contrary to their contract with the government when they signed up.
I also part company with the court in its conclusion that there is no meaningful difference between the benefits that the Supreme Court has identified as beyond the reach of contracts, and the promises that led to implied-in-fact contracts for lifetime health care. United States v. Larionoff, 431 U.S. 864, 97 S.Ct. 2150, 53 L.Ed.2d 48, Bell v. United States, 366 U.S. 393, 81 S.Ct. 1230, 6 L.Ed.2d 365, Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434, and United States v. Teller, 107 U.S. 64, 2 S.Ct. 39, 27 L.Ed. 352 (1883), stand for the proposition that one may not rely on a purported contract he has made with the government if the contract conflicts with the express terms of a law or regulation. But this does not mean one’s contractual claim against the government must be based on a specifically worded law, rule or regulation to be valid. Where no specific statute or regulation contradicts the terms of a government contract, the validity of the contract depends on common-law rules of contract. See Winstar, 518 U.S. at 870, 116 S.Ct. 2432.
This court has recognized breach of contract claims based on servicemen’s enlistment agreements coupled with recruiter promises of assertedly non-monetary benefits, although all military activities have some monetary impact. See Chu v. United States, 773 F.2d 1226 (1985); DeCrane v. United States, 231 Ct.Cl. 951 (1982); Grulke v. United States, 228 Ct.Cl. 720 (1981). Contrary to the court, these cases support the very claim before us.
DeCrane recognized that a breach of contract claim may be based on the government’s failure to give servicemen the benefit of promises made upon enlistment. 231 Ct.Cl. at 952. That case also reasoned that unless the government officials offering promises had authority, their promises would not bind the government, but the recruiters here did have authority. Grulke recognized that enlistment inducements, analogous to the inducements of this case, couched in terms of “ ‘promise’ and ‘guarantee’ ... bolsters the bargained-for aspect that permeates the enlistment process.” 228 Ct.Cl. at 724. It further recognized that “[f]or any nonperformance by the [government], it is necessary that some remedy be afforded when special program guarantees are breached and contract concepts have been applied in framing an appropriate solution to these claims.” Id. Chu asked “whether federal officers and employees possess contractual rights which exceed their rights to continued employment.” 773 F.2d at 1229. That has nothing to do with the issue before us.
IV.
The retirees also have a valid claim for a taking of their valuable vested right to permanent health care in violation of the Fifth Amendment of the Constitution. This court rejected a similar claim in Sebastian v. United States, 185 F.3d 1368 (Fed.Cir.1999), but I believe that case was *1310wrongly decided and I would take this en banc opportunity to correct it.
Contracts are property, “whether the obligor be a private individual, a municipality, a State, or the United States. Rights against the United States arising out of a contract with it are protected by the Fifth Amendment.” Lynch, 292 U.S. at 579, 54 S.Ct. 840; see also Bowen, 477 U.S. at 52, 106 S.Ct. 2390 (the government “has the power to enter contracts that confer vested rights, and the concomitant duty to honor those rights”); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1003, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984) (citing Lynch, 292 U.S. at 579, 54 S.Ct. 840 (“Valid contracts are property within [the] meaning of the Taking Clause.”)); Thorpe v. Housing Auth. of Durham, 393 U.S. 268, 278 n. 31, 89 S.Ct. 518, 21 L.Ed.2d 474 (1969). The Fifth Amendment prohibits the federal government from depriving a person of property “without due process of law” and from taking private property “without just compensation.” U.S. Const. amend. V; Lynch, 292 U.S. at 579, 54 S.Ct. 840; cf. Eastern Enters. v. Apfel, 524 U.S. 498, 537, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998) (Congress’ enactment of the Coal Act improperly placed a severe, disproportionate, and extremely retroactive burden on Eastern and effected an unconstitutional taking) (plurality opinion).
To ascertain the retirees’ vested property rights, we look to the contracts themselves. The bargain struck between the government and the retirees was simple. The government, through its service secretaries, was to provide lifetime health care for servicemen. In return, servicemen were to provide at least twenty years of service to the military.
The effort to lessen health care expenditure has required military retirees to pay for health care. This effectively requires the retirees’ to pay the costs the government incurred as a result of promising lifetime health care, the very same costs for which the government assumed the burden. Put another way, the retirees must pay twice: once in active duty pay diminished by the value of the promised retirement health care; again when they do not get what was promised. Thus, the government retroactively abrogated the essence of the contract. Retroactivity is disfavored in the law in accordance with fundamental notions of justice. Eastern Enters., 524 U.S. at 532, 118 S.Ct. 2131; Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988). “[Moreover,] Congress [is] without power to reduce expenditures by abrogating contractual obligations of the United States. To abrogate contracts, in the attempt to lessen government expenditure would be not the practice of economy, but an act of repudiation.” Perry, 294 U.S. at 352-53, 55 S.Ct. 432 (quoting Lynch, 292 U.S. at 580, 54 S.Ct. 840). The retirees’ service fully paid the government for those benefits, and as the promisor of permanent health care, the government bore the burden of any unforeseen costs. The Fifth Amendment “was designed to bar Government from forcing some people alone to bear public burdens which ... should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960); cf. Winstar Corp., 518 U.S. at 883, 116 S.Ct. 2432 (the government may not “simply shift costs of legislation onto its contractual partners who are adversely affected by the change in the law, when the Government has assumed the risk of such change.”). The government has deprived the retirees of their vested rights and they are entitled to recover.

. Rudyard Kipling, Tommy, (1890), reprinted in The Norton Anthology of Poetry 868 (3d ed.1983). (Tommy is a diminutive of "Thomas Atkins," a nickname for British soldiers, akin to G.I. in this country.)

. In relevant part, 5 U.S.C. § 301 says, "The head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property.”

. Section 1074(b), in relevant part, provided that: Retirees of the uniformed services, "under joint regulations to be prescribed by the Secretary of Defense and the Secretary of Health, Education, and Welfare, ... may, upon request, be given medical and dental care in any facility of any uniformed service, subject to the availability of space and facilities and the capabilities of the medical and dental staff.” See also 10 U.S.C. § 1076(b) (covering dependents of retirees).