Justia U.S. Federal Circuit Court of Appeals Opinion Summaries

A three-year “risk corridors” program described in the Patient Protection and Affordable Care Act, 42 U.S.C. 18001, implemented by the Department of Health and Human Services (HHS), was intended to promote participation in insurance exchanges. Participating insurers, whose costs of providing coverage exceeded the premiums received (using a statutory formula) were to be paid a share of their excess costs while participating plans whose premiums exceeded their costs would pay in a share of their profits. The program “permit[ted] issuers to lower [premiums] by not adding a risk premium" for uncertainties in the 2014-2016 markets. The actual total "payments in"were less than requested "payments out" and Congress prohibited HHS from using its appropriations for the program. Prorated payments were issued. Moda filed suit. The Claims Court granted Moda partial summary judgment as to liability, stipulated to be $209,830,445.79. Dozens of other insurers filed actions, with mixed results. The Federal Circuit reversed. The statute created an obligation of the government to pay exchange participants the amount indicated by the statutory formula but riders in the FY 2015 and 2016 appropriations bills repealed or suspended the obligation to make payments out in an aggregate amount exceeding payments in. Congress made the policy choice to cap payments. No statement by the government evinced an intention to form a contract; the statute, its regulations, and HHS’s conduct simply created an incentive program. View "Moda Health Plan, Inc. v. United States" on Justia Law

Prime Hospitals provide inpatient services under the Medicare program, submitting payment claims to private contractors, who make initial reimbursement determinations. Prime alleged that many short-stay claims were subject to post-payment review and denied. Prime appealed through the Medicare appeal process. Prime alleged short-stay claims audits were part of a larger initiative that substantially increased claim denials and that the Center for Medicare & Medicaid Services (CMS) was overwhelmed by the number of appeals. CMS began offering partial payment (68 percent) in exchange for dismissal of appeals. Prime alleged that it executed CMS's administrative settlement agreement so that CMS was contractually required to pay their 5,079 Medicare appeals ($23,205,245). CMS ultimately refused to allow the Prime to participate because it was aware of ongoing False Claims Act cases or investigations involving the facilities. Prime alleged that the settlement agreement did not authorize that exclusion. The district court denied a motion to dismiss Prime’s suit but transferred it to the Court of Federal Claims. The Federal Circuit affirmed in part. The breach of contract claim is fundamentally a suit to enforce a contract and does not arise under the Medicare Act, so the Claims Court has exclusive jurisdiction under the Tucker Act, 28 U.S.C. 1491. That court does not have jurisdiction, however, over Prime’s alternative claims seeking declaratory, injunctive, and mandamus relief from an alleged secret and illegal policy to prevent and delay Prime from exhausting administrative remedies. View "Alvarado Hospital, LLC v. Cochran" on Justia Law

AHAC, a surety, secured importers’ importation of preserved mushrooms and crawfish tail meat from China by issuing single transaction and continuous entry bonds in 2001 and 2002. The bonds obligated the importers and AHAC to pay, up to the face amounts of the bonds, “any duty, tax or charge and compliance with law or regulations” resulting from covered activities. Customs liquidated entries secured by the bonds and assessed antidumping duties, which the importers failed to pay. Customs started charging statutory post-liquidation interest on the unpaid duties, 19 U.S.C. 1505(d). From 2003-2009, Customs issued multiple demands notifying AHAC of its intent to seek section 1505(d) interest. Customs denied AHAC’s protest. AHAC did not challenge that denial under 28 U.S.C. 1581(a). The government commenced Trade Court suits. The Federal Circuit affirmed the Trade Court’s order that AHAC pay section 1505(d) interest up to the face amounts of the bonds. Section 1505(d) interest involves “charges or exactions of whatever character” under 19 U.S.C. 1514(a)(3); the statute does not exempt charges arising after liquidation. The bonds do not distinguish between pre- and post-liquidation interest. Because AHAC failed to contest its denied protest, AHAC was precluded from asserting defenses regarding its liability under section 1505(d). View "United States v. American Home Assurance Co." on Justia Law

USF&G filed suit in the Court of Federal Claims under the Tucker Act, 28 U.S.C. 1491(a)(1), seeking reimbursement from the government for legal expenses and settlement costs it allegedly incurred in its capacity as general liability insurer for Gibbs Construction, a government contractor. USF&G alleged that, in a contract for renovation work at the New Orleans main post office, the U.S. Postal Service agreed to indemnify Gibbs and its agents against any liability incurred as a result of asbestos removal work under the contract. USF&G alleged that the Postal Service failed to indemnify Gibbs in connection with a lawsuit filed against Gibbs by a former Postal Service police officer, in which the officer claimed that he contracted mesothelioma as a result of asbestos removal during performance of the contract, and that, as Gibbs’s general liability insurer, it was required to litigate and settle the officer’s claim. The Federal Circuit affirmed dismissal. The Claims Court lacked jurisdiction under a theory of equitable subrogation. View "Fid. & Guar. Ins. Underwriters, Inc. v. United States" on Justia Law

The Court of Federal Claims ruled that MassMutual and ConnMutual were legally authorized to deduct policyholder dividends from their 1995, 1996, and 1997 tax returns in the year before the dividends were actually paid. The government agreed that both companies may deduct the policyholder dividend payments, but argued that the deduction may only be taken in the year when the dividends were actually distributed to the policyholders, because the liability to pay the dividends was contingent on other events, such as a policyholder’s decision to maintain his policy through the policy’s anniversary date. Even if the liability was fixed, the government alleged, these payments still could not have been deducted until the year they were actually paid because the dividends did not qualify as rebates or refunds, which would meet the recurring item exception to the requirement that economic performance or payment occur before a deduction may be taken (26 C.F.R. 1.461-5(b)(5)(ii)). The Federal Circuit affirmed. Because the policyholder dividends were fixed in the year the dividends were announced, they were premium adjustments, and that premium adjustments are rebates, thereby satisfying the recurring item exception. View "Mass. Mut. Life Ins. Co. v. United States" on Justia Law

Between July 30, 2003, and August 31, 2003, Sunline imported eight entries of freshwater crawfish tailmeat from Chinese producer Hubei, which were subject to a U.S. Department of Commerce antidumping duty order covering freshwater crawfish tailmeat from China. The Hubei Entries were entered following approval by Customs of eight single-entry bonds that covered the estimated antidumping duties and designated Hartford as surety. The Hubei Entries were made during the pendency of Hubei’s “new shipper review.” After Hubei’s new shipper review was rescinded, meaning Hubei did not qualify for an individual antidumping duty rate, Customs liquidated the Entries at the 223.01% country-wide rate. After Sunline failed to pay, Customs demanded payment from Hartford, which filed a complaint at the Court of International Trade, seeking to void its obligations under the bonds because Customs had been investigating Sunline for possible import law violations during the period in which the bonds were secured and did not inform Hartford of the investigation. The Trade Court dismissed. The Federal Circuit affirmed. Hartford did not allege any facts that establish a connection between the investigation and Sunline’s failure to pay its antidumping duties after liquidation. View "Hartford Fire Ins. Co. v. United States" on Justia Law

In 1997, the U.S. Department of Commerce determined, under 19 U.S.C. 1673b, that freshwater crawfish tail meat from China was being sold in the U.S. at less than fair value and directed Customs to suspend final computation of duties on such entries and to require a deposit or bond to cover estimated duties. In 2000-2001, New Phoenix made entries of the product. The exporters were subject to “new shipper” review to determine whether they were entitled to antidumping-duty rates distinct from the default rate. Each of five bonds issued by Great American to cover anticipated duties was for $1,219,458 and was signed by Davis and accepted by the government, although the power-of-attorney filed with Customs indicated a limit of $1 million on his authority. Great American later revoked his authority. In 2003, Commerce published final results, finding that the exporter was not entitled to a different rate and sought payment from New Phoenix and Great American. The amount owed is greater than the amounts of the bonds. The trial court granted the government summary judgment, without pre- and post-judgment interest, finding that the government did not timely address those issues. The Federal Circuit affirmed that the bonds were not enforceable beyond Davis’s stated authority and the denial of pre-judgment interest View "United States v. Great Am. Ins. Co" on Justia Law

Bancorp owns the 792 and 037 patents, for tracking value of life insurance policies in separate accounts, under which the policy owner pays a premium beyond that required for the death benefit and specifies types of assets in which additional funds are invested. Corporations use the policies to insure employees’ lives and fund retirement benefits on a tax-advantaged basis. The value of a separate account policy fluctuates; owners must report the value of their policies. The patents provide a computerized means for tracking book and market values and calculating stable value guarantee. Bancorp sued Sun Life for infringement. In another suit, the court invalidated the 792 patent for indefiniteness. Bancorp and Sun Life stipulated to conditional dismissal on collateral estoppel. The Federal Circuit reversed the other case. The district court vacated dismissal then granted summary judgment of invalidity under section 101 (ineligible abstract ideas) without addressing claim construction and analyzing each claim as a process claim. Applying “the machine-or-transformation test,” specified computer components are only objects on which claimed methods operate, and the central processor is a general purpose computer programmed in an unspecified manner for a process that can be completed manually. The claims “do not transform the raw data into anything other than more data and are not representations of any physically existing objects.” The Federal Circuit affirmed. View "Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Canada" on Justia Law

A contractor, renovating military housing, obtained a performance bond under the Miller Act (40 U.S.C. 3131 (b)) and abandoned the project after completing 12 percent of the work. The government had paid 40 percent of the contract price. The surety contracted for completion, but the second contractor discovered code violations and incurred penalties for late completion. Costs were reimbursed by the surety, which filed suit under the Tucker Act, 28 U.S.C. 1491. The Federal Circuit held that the Claims Court lacked jurisdiction. The court previously held that the Claims Court has jurisdiction under the Act over sureties' claims based on a theory of equitable subrogation; this case does not involve equitable subrogation because the government made payments at issue before receiving notice of the contractor's default. The waiver of sovereign immunity under the Act does not extend to impairment of suretyship claims apart from the theory of equitable subrogation. The Contract Disputes Act, 41 U.S.C. 601, applies to a surety's claim against the government arising from a takeover agreement between the government and surety for completion of a bonded contract following the principal obligor’s default; the surety failed to satisfy CDA jurisdictional prerequisites.