Court Opinion

ID: 9879665
Source: CourtListenerOpinion
Date Created: 2023-09-27 18:33:18.54085+00
Date Added: 2024-06-11T07:47:56.253102
License: Public Domain

BACHARACH, J., concurring in part and dissenting in part. I join the majority’s excellent opinion in Parts 11(A) and (C). But in connection with Part 11(B), I respectfully dissent. In my view, HUD enjoyed statutory authority to recoup overpayments under the block grants. Accordingly, I respectfully dissent from the majority’s conclusion in Part 11(B) that HUD lacked this authority. [[Image here]] The Native American Housing Assis-tánce and Self-Determination Act of 1996 (“NAHASDA”) authorizes a pool of funds for HUD to allocate among Native American tribes. In this ease, HUD overpaid certain tribes and sought to recoup the overpayments through administrative offset. The tribes contend that HUD lacked authority to recoup the overpayments. According to the tribes, agencies like HUD can exercise authority only upon a delegation from Congress. See La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 374, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986). The tribes acknowledge that “Congress empowered HUD to administratively recapture grant funds.” Appellees’ Resp. Br. at 19. The tribes argue, however, that this statutory power is limited to 25 U.S.C. §§ 4161 and 4165. And, as the majority explains, these provisions do not apply here. HUD argues that it obtained authority to recoup the overpayments through NA-HASDA, which implicitly incorporated the longstanding common-law principle that governmental entities can recoup erroneous payments. I agree with HUD, Through NAHASDA, Congress incorporated common-law principles that allowed HUD to recoup the overpayments by adjusting the tribes’ annual allocations. Because the majority reaches a different conclusion, I respectfully dissent with regard to Part 11(B) of the majority opinion. I. There is a longstanding common-law principle that governmental entities can recoup overpayments by offsetting amounts otherwise owed to the recipients. In justifying the administrative offsets here, HUD relies on the common-law principle that governmental entities may recoup erroneous payments. Appellants’ Opening Br. at 44 (citing United States v. Wurts, 303 U.S. 414, 415, 58 S.Ct. 637, 82 L.Ed. 932 (1938)). The Supreme Court recognized this principle in United States v. Wurts, stating that the government can recoup overpayments through “appropriate action.” 303 U.S. at 415, 58 S.Ct. 637. As the tribes point out, Wurts involved a suit by the government to recoup its funds. See id. at 415-16, 58 S.Ct. 637 (noting that the government has a “long-established right to sue for money 'wrongfully or erroneously paid from the public treasury”). Thus, the tribes would limit the Wurts principle to situations involving suit brought by the federal government. See Appellees’ Resp. Br. at 48 (arguing that the Wurts principle stands only for the proposition that the government may “bring a civil common law action in an Article III court to recover funds that were paid by ‘mistake,’ through the common law cause of ‘unjust enrichment’”). The majority agrees with the tribes’ interpretation of Wurts, concluding that the Wurts principle allows the government only “to sue to collect overpayments.” See Maj. Op. at 1192-93 (emphasis in majority opinion). The majority recognizes that in Grand Trunk Western Railway Co. v. United States, 252 U.S. 112, 117, 40 S.Ct. 309, 64 L.Ed. 484 (1920), and United States v. Munsey Trust Co., 332 U.S. 234, 236, 67 S.Ct. 1599, 91 L.Ed. 2022 (1947), the Supreme Court allowed the recoupment of overpayments even without a suit. See Maj. Op. at 1193-94. But, the majority attempts to distinguish Grand Trunk and Munsey Trust based on the fact that they involved governmental contracts with private parties, not administrative offsets, and did not involve a “unique trust responsibility.” Id. at 1193-94. I respectfully disagree. Wurts did not have occasion to address the availability of common-law authority to recoup overpay-ments in the absence of suit. Thus, Wurts cannot be read as a limitation on this authority. See Alwert v. Cox Comm’ns, Inc., 835 F.3d 1195, 1212 (10th Cir. 2016) (“An opinion is not binding precedent on an issue not addressed in the opinion.”); see also Maj. Op. at 1191 (“‘Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.’ ” (quoting Webster v. Fall, 266 U.S. 507, 511, 45 S.Ct. 148, 69 L.Ed. 411 (1925))). Indeed, Wurts relied on prior Supreme Court opinions stating that the government’s common-law authority may come from either a suit or an offset. Wurts, 303 U.S. at 415 n.3, 416 n.4, 58 S.Ct. 637 (citing Supreme Court opinions).1 And five federal appellate courts have interpreted Wurts to allow offset without the need for suit.2 Until now, no circuit court has required the government to sue when invoking the common-law authority to recoup overpayments. The majority appears to recognize that suit is unnecessary when the government exercises its common-law authority to recoup overpayments from contractors. But a governmental contract is simply one of many situations in which the common law has recognized a right of offset without the need for a suit: The right of setoff is “inherent in the United States Government,” and exists independent of any statutory grant of authority to the executive branch. The scope of this common law right is broad. Historically, it has been exercised against anyone who has a “claim” against the government, including unpaid government contractors,., persons to whom the government owes retirement benefits, and employees to whom final salary payments or lump sum, payments are due. United States v. Tafoya, 803 F.2d 140,141-42- (5th Cir. 1986) (citations omitted). Thus, four , federal appellate courts have applied Wurts to allow administrative offsets even without the need for suit or the applicability of a government contract. See Bechtel, 781 F.2d at 906-07; Collins, 661 F.2d at 708; Wilson Clinic & Hosp., Inc., 494 F.2d at 51-52; DiSilvestro, 405 F.2d at Í53, 155. . As the majority points out, these opinions do not involve a “unique [trust] relationship.” Maj. Op. at 1194. But the majority does not • explain why this difference creates a material distinction or • address the long line of authority allowing administrative offsets without the need for court action. The majority points out that the government serves as a trustee for the tribes that are overpaid. - But overpayments diminish the amounts available to other tribes, who are also beneficiaries of this trust relationship. The majority does not explain why the. government’s role as trustee would affect the widely recognized power to recoup overpayments. The majority relies on an excerpt from a treatise by Richard Cappalli, Federal Grants and Cooperative Agreements: Law, Policy, and Practice. This excerpt discusses authorization to recoup funds otherwise owed to the governmental entity making the grant. Richard B. Cappalli, Federal Grants and Cooperative Agreements: Law,. Policy, and Practice § 8:15, at 81 (1991 Cum. Supp.). But in the cited excerpt, Mr, Cappalli makes clear that even when trust relationships are involved, Congress implicitly delegates the power to administratively enforce grant programs notwithstanding the absence of an express statutory remedy: ■ Although Congress has occasionally provided in express terms for the recovery of federal payménts through deductions from subsequent payments or lawsuits, the existence of such authorizations should not be taken as evidence that Congress intended no recoveries in programs lacking them. It is equally probable that Congress was doing'no more than making explicit an administrative enforcement right otherwise implicitly held. The correct analysis is that the statutory duty of federal agencies to administer assistance is necessarily .accompanied by the power to enforce conditions of aid through reasonable means. Id. Mr. Cappalli’s treatise does not suggest that a suit is needed when a governmental trustee seeks to offset funds that are otherwise owed, and the majority does not provide any other authority or reason to require suit when a governmental trustee seeks to recoup overpayments. II. NAHASDA authorizes HUD to recoup mistakenly distributed funds. Congress implicitly delegated this common-law authority to HUD, authorizing it to recoup overpayments through offset. Indeed, in the absence of such a delegation, Congress would have left a gaping hole in NAHASDA by requiring HUD to allocate funds from a finite sum without any power to correct errors, leaving some tribes with too much and other tribes with too little. In enacting NAHASDA, Congress presumably retained the common-law authority to recoup overpayments. See United States v. Texas, 507 U.S. 529, 534, 113 S.Ct. 1631, 123 L.Ed.2d 245 (1993) (“ ‘[Statutes which invade the common law ... are to be read with a presumption favoring the retention of long-established and familiar principles, except when a statutory purpose to the contrary is evident.’ ” (quoting Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783, 72 S.Ct. 1011, 96 L.Ed. 1294 (1952) (ellipsis in original))). Thus, Congress’s silence on HUD’s ability to recoup overpayments indicates an intent to adopt the common-law principle recognized in Wurts: Congress is understood to legislate against a background of common-law adjudicatory principles. Thus, where a common-law - principle is well established, ... the courts-may take it as given that Congress has legislated with an expectation that the principle' will apply except when a statutory purpose to the contrary is evident. - Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991) (internal quotation marks & citation omitted); see Norman J. Singer & J.D. Shambie Singer, Statutes and Statutory Construction § 50:1, at 143 (7th ed. 2012) (“All legislation is interpret-éd in the light of the common law and the scheme of jurisprudence existing at the time of its enactment.”).3  If Congress had not intended to delegate this common-law power to HUD, a gap in NAHASDA would have allowed misallocations without any expressly created mechanism for correction. In my view, however, the mechanism for correction would have been implied.4  “[I]t is a fundamental principle of administrative law that the powers of an administrative agency are not limited to thosé expressly granted by the statutes, but include, also, all of the powers that may fairly be implied therefrom.” Morrow v. Clayton, 326 F.2d 36, 43-44 (10th Cir. 1963); see Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (“Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit.”). Through NA-HASDA, Congress presumably delegated to HUD the powers fairly implied by the authorization to distribute funds among eligible tribes. These powers included authority to fill the gaps implicitly or explicitly created under NAHASDA: The power of an administrative agency to administer a congressionally created and funded program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress. In the area of Indian affairs, the Executive has long been empowered to promulgate rules and policies, and the power has been given explicitly to the Secretary and his delegates at the BIA. Morton v. Ruiz, 415 U.S. 199, 231, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974). Congress not only vested HUD with broad authority to administer NAHASDA, but also specifically authorized HUD to determine how much money each tribe would obtain. 25 U.S.C. § 4111(a); see Kaw Nation v. Springer, 341 F.3d 1186, 1187 (10th Cir. 2003) (stating that block grants under NA-HASDA are controlled by HUD). If we assume that NAHASDA had not implicitly incorporated the common-law right of offset, NAHASDA’s express delegation of authority would have contained a sizeable gap. This gap would unleash a Pandora’s Box of problems if either HUD or a tribe made a mistake leading to a tribe’s underpayment or overpayment. For example, suppose that' • the Navajo Tribe accurately reports the number of eligible rent-to-own units and • this report leads to an allocation of $100,000 for a given year. Now, suppose that HUD accidentally adds a zero and sends the Navajo Tribe a check for $1,000,000 instead of $100,000. Or, suppose that the Navajo Tribe accidentally miscounts its eligible housing units, inadvertently increasing the tribe’s annual allocation from $100,000 to $1,000,000. In either event, what would happen? Left uncorrected, the Navajo Tribe would obtain a windfall of $900,000 and this windfall would leave HUD $900,000 short when allocating the remaining funds among other tribes. This would have resulted in a gap that had not been expressly addressed in NA-HASDA. Presumably, Congress would not intend to allow such a mistake to go uncorrected. This presumption suggests that Congress implicitly delegated to HUD the authority to fill this statutory gap and correct misallocations based on mistakes by HUD or a given tribe. See Fla. Med. Ctr. of Clearwater, Inc. v. Sebelius, 614 F.3d 1276, 1281 (11th Cir. 2010) (stating that “Congress implicitly delegated common law authority” to the Secretary of Health and Human Services to recoup overpayments from Medicare Part B providers); McNally v. United States, 483 U.S. 350, 373, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987) (Stevens, J., dissenting) (“The wide open spaces in statutes such as these are most appropriately interpreted as implicit delegations of authority to the courts to fill in the gaps in the common-law tradition of case-by-case adjudication.”); see also Martin H. Redish & Christopher R. Pudelski, Legislative Deception, Separation of Poivers, and the Democratic Process: Harnessing the Political Theory of United States v. Klein, 100 Nw. U. L. Rev. 437, 439 (2006) (stating that Congress sometimes delegates “common-law-making power” to “agencies empowered to administer the statute”). The majority implies that this power to fill gaps would require HUD to adopt regulations when filling statutory gaps. But the tribes have not questioned the sufficiency of HUD’s implementing regulations.5  ⅜ * ⅜ In summary, HUD has the authority to recoup the overpayments. This authority stems from the common-law principle allowing offset of overpayments. Without incorporation of this common-law principle, NAHASDA would have contained a wide gap. Even then, Congress woqld have intended for HUD to fill that gap. The majority reaches a different conclusion based on factual differences between our case and some of the opinions cited by HUD. But even if those opinions are distinguishable, many others support HUD’s reliance on the common-law principle allowing governmental entities to recoup overpayments through administrative offset. I would apply those opinions rather than stop the analysis based on factual distinctions with HUD’s cited cases. Accordingly, I respectfully dissent from Part 11(B) of the majority opinion.  . Grand Trunk W. R.R. Co. v. United States, 252 U.S. 112, 121, 40 S.Ct. 309, 64 L.Ed. 484 (1920) ("[The government] was under no obligation to establish the illegality by suit.... [The government] was at liberty to deduct the amount of the overpayment from the monies otherwise payable to the company to which the overpayment had been made.”); Wis. Cent. R.R. Co. v. United States, 164 U.S. 190, 211, 17 S.Ct. 45, 41 L.Ed. 399 (1896) ("If, in [the government’s] judgment, money had been paid without authority of law, and [the government] has money of the recipient in [its] hands, [it] is not compelled to pay such money over, and sue to recover the illegal payments, but may hold it subject to the decision of the court when the claimant sues. And in that way multiplicity of suits and circuity of action are avoided.” (citations omitted)).   . See Bechtel v. Pension Benefit Guar. Corp., 781 F.2d 906, 906-07 (D.C. Cir. 1985) (per curiam) (holding that an agency could "adjust[ ] the levels of ongoing payments” to recoup overpayments because the Wurts principle indisputably authorized the agency to recoup funds); Collins v. Donovan, 661 F.2d 705, 708 (8th Cir. 1981) (holding that- an agency .could recoup erroneous overpay-ments under Wurts and that a regulation: allowing for this recoupment "merely. codifies the government’s common law right to recover overpayments"); Mount Sinai Hosp. of Greater Miami, Inc. v. Weinberger, 517 F.2d 329, 337 & n.10 (5th Cir. 1975) ("In some circumstances when government funds are improperly paid out the government has a claim enforceable either by direct suit or by setoff ...(emphasis added) (citing Wurts)), Wilson Clinic & Hosp., Inc. v. Blue Cross of S.C., 494 F.2d 50, 51-52 (4th Cir. 1974) (noting that an agency could "withh[o]ld the amount, of alleged overpayments from later accruals” because. "[i]t is underwritten by United States v. Wurts ... that the Government may offset overpayments against current or-subsequent obligations”); DiSilvestro v. United States, 405 F.2d 150, 153, 155 (2d Cir. 1968) (noting that an- agency could "effect a-set-off” to recoup erroneous payments because Wurts permits either setoff or a separate action). -   . This argument first appeared in HUD’s reply brief, and we often decline to consider arguments newly raised in a reply brief. See Stump v. Gates, 211 F.3d 527, 533 (10th Cir. 2000). But HUD was responding to the tribes' argument that Wurts did not apply to an agency's effort to recoup overpayments. HUD’s reply brief was a perfectly appropriate place to respond to the tribes’ argument. See Beaudry v. Corr. Corp. of Am., 331 F.3d 1164, 1166 n.3 (10th Cir. 2003) (stating that-we review issues; newly - raised in a reply brief when offered in response to an argument presented in the appellee's brief); Sadeghi v. Immigration & Naturalization Serv., 40 F.3d 1139, 1143 (10th Cir. 1994) (considering an argument newly raised in a reply brief because it was responding to a contention in the appel-lee’s brief).   .. HUD did not make this argument. I discuss this scenario only to show what would have transpired if Congress had failed to delegate its common-law authority to recoup overpay-ments. See note 5, below.   . The majority states that I regard the tribes as waiving this argument. Maj. Op. at 1194— 95 n.9. I am not doing that. I am simply addressing the argument that the tribes made. The tribes argued that HUD lacked any statutory authority to recoup the overpayments. That is incorrect, for Congress delegated to HUD the common-law authority to offset funds owed to the government. I have simply pointed out that in the absence of that delegation of authority, NAHASDA would have contained a gap to be filled by HUD. The tribes have argued only that HUD lacked statutory authority, not that HÚD failed to properly implement that authority by adopting regulations. See note 4, above.