A $12 Billion Tab: Weekly Brief for April 27

The Supreme Court handed down three decisions this week, each one consequential in its own regard. In the only Second Amendment case of the term, six Justices found the case to be, well, no longer a case—in other words, they dismissed it as moot and didn’t opine on the Second Amendment implications (see my in-depth analysis of the decision here [forthcoming]). Next, the Court slapped Congress and the Department of Health and Human Services on the wrist—along with a $12 billion tab due private insurers. Finally, a 5:4 majority barred legislators from copyrighting annotations they write to state laws. Here’s your brief for the week of April 27.


Statistics

This Week:
Decisions: 3
Cases Argued: 0
Cert Grants: 0
GVRs: 16

O.T. 2019:
Cases Decided: 32
Cases Remaining: 39
Weeks Left in Term: 8*

This number reflects the date at which the Supreme Court’s term usually ends (the last week of June). However, it’s likely O.T. 2019’s end date will be later due to measures taken in response to COVID-19.

Monday

Orders:

Not much to recap here. The Court’s orders list on Monday was virtually devoid of any significant developments. The Court didn’t grant any new cases, and GVR’d a host of cases (mostly in light of last week’s decision in Ramos v. Louisiana).


Opinions:

After the release of orders, the Court issued decisions in three argued cases.

New York State Rifle & Pistol Ass’n v. City of New York, New York
The long-awaited, blockbuster, sole Second Amendment case of the term landed with a dull thud. In a per curiam decision, the Court dismissed the case as moot. The question presented was whether a New York City ordinance that had banned the transport of firearms into or out of the city violated the Second Amendment. But after the Court granted cert (and before it issued its decision), the city amended its ordinance and repealed the provisions at issue. Thus, the Court ruled 6:3 that the case no longer presented a live controversy (i.e., inquired about the constitutionality of a law that is no longer on the books) and dismissed the case. Justice Kavanaugh penned a short concurrence, and Justice Alito (joined by Justices Thomas and Gorsuch) dissented. For more on the Court’s decision, see my in-depth analysis elsewhere on SCOTUS Predictions [forthcoming].

Maine Community Health Options v. United States
At stake in this case is over $12 billion in unpaid federal funds.

Let that albatross hang around your neck as you consider the Court’s decision in Maine Community Health Options v. United States. While the extremely technical substance of the case may lull some to sleep, its sweeping ramifications will jolt you awake. Some context is necessary before getting into the Court’s decision:

The case concerns a specific clause (42 U.S.C. §18062) of the 2010 Affordable Care Act, commonly known as “Obamacare.” §18062 sought to mitigate the risk that private insurers face when they take on uninsured healthcare customers. Enacted in 2013, §18062 established a three-year program of “risk corridors” that managed the exchange of money between the federal government and private insurance companies. Specifically, if a private insurer at the end of the fiscal year experienced higher-than-expected costs due to bringing on uninsured customers, some of that excess cost was lifted from the private insurer’s accounts and paid for by the federal government. Conversely, if the private insurer experienced lower-than-expected costs, some of its excess savings was rerouted to the federal government. These payments to and from the federal government were to be funneled through the Department of Health and Human Services (HHS). Finally, at end of the three-year program, HHS would promulgate the official tally of the full amount due the government and the full payments due private insurers.

In December 2014, Congress enacted its appropriations law for FY 2015. The statute included a rider that directed HHS to limit the payments it gives out to under-cost insurers to the payments it brings in from over-cost insurers under the §18062 program. In other words, if HHS brings in a total of $100 million from under-cost insurers, it can only give out up to, but no more than, $100 million to over-cost insurers for that FY. However, there was a significant problem with the appropriations statute and this rider: the amount of money the government owed over-cost private insurers for FY 2014 greatly exceeded the amount of money the government collected from under-cost insurers. By “greatly exceeded,” I mean enormously exceeded, in the form of $2.5 billion. Limited by the appropriations rider, HHS was able to pay private insurers only 12.6% of what it owed in FY 2014.

Analogous riders followed in Congress’ appropriations bills for FYs 2016 and 2017. HHS used its collections in 2015–2016 to pay down what it still owed from FY 2014; none of it was devoted to payments owed for the 2015 and 2016 FYs. At the end of the three-year period, HHS announced the official tally of what it owed private insurers for the entire program: over $12 billion. As of this writing, Congress has not since appropriated any funds to HHS for the “risk corridor” program, and HHS has not paid private insurers any of the more than $12 billion dollars it still owes them.

Scores of private insurers sued the federal government, and a collection of these suits have been consolidated under this case. But in decisions below, the federal appeals courts (bizarrely) ruled for the government. They acknowledged that §18062, when it was enacted, placed an obligation on the government to pay private insurers whatever it owed. But the appeals courts reasoned that Congress’ appropriations laws in the years since have “repealed or suspended” that obligation. That was effectively the question presented before the Supreme Court: did the subsequent appropriations laws repeal or suspend §18062’s obligation?

Justice Sotomayor, writing for an 8:1 majority, answers “no,” leaving Congress and HHS with the $12 billion tab. Sotomayor first affirms that §18062 did indeed place an obligation on the federal government to pony up and then explains the scope of that obligation. First, §18062 thrice uses the term “shall” to describe the actions of HHS. It says HHS “shall establish and administer” the risk-corridors program for three years, “shall provide” for payments to and from insurers based on §18062’s formula, and “shall pay” insurers who run a deficit because of participation in the program. Next, neighboring provisions underscore the difference between what HHS must do and what it may do, Sotomayor says. In some provisions, Congress stated that HHS “shall take” certain actions (like those just mentioned); in others, Congress said HHS “may take” certain actions at the Director’s discretion. Finally, Sotomayor notes that nothing in the text of §18062 requires the risk-corridor program to be “budget neutral.” Perhaps this is Congress’ blunder, or a gaffe on behalf of the CBO or OMB. Regardless, the statute does not say that HHS’ “payments to unprofitable plans pivoted on profitable plans’ payments to the Secretary, or that a partial payment would satisfy the Government’s whole obligation,” Sotomayor writes. Thus, the risk-corridors program clearly placed an obligation on HHS to pay private insurers who ran a deficit after partaking in the program, and to pay them the full amount owed.

Sotomayor then turns to the question whether that obligation was ever lifted. This entire question turns on the idea that by limiting the amount of money HHS could use to reimburse private insurers, Congress implicitly removed the statutory obligation. That argument, Sotomayor says, does not hold much weight.

First, the Court has long been highly skeptical of “repeals [of statutory, fiscal obligations] by implication” and has found them to be a “rarity.” In other words, when the Court looks at two different Acts of Congress, it assumes both are in effect “unless Congress’ intention to repeal [one] is clear and manifest, or the two laws are irreconcilable,” Sotomayor writes (internal citation and quotation marks omitted). She adds that in the appropriations context, that assumption is “especially strong.” Here, the subsequent appropriations statutes do not clear this high bar. True, they directed HHS to pay a certain amount of money less “than that required to satisfy the Government’s obligation,” but they did so without “expressly or by clear implication modif[ying]” the amount required to fulfill the obligation under §18062. Now, this sentiment might have been different had HHS amended its reimbursement promises after the first appropriations bill. But it didn’t. After the 2014 rider, HHS “reiterated that ‘the Affordable Care Act requires the Secretary to make full payments to issuers,’ . . . and that ‘HHS w[ould] record risk corridors payments due as an obligation of the United States Government for which full payment is required,'” Sotomayor notes (citing HHS documents).

Next, although the Court has found two exceptions to this presumption against implied repeal, neither applies here. One exception deals with statutes that (without actually using the word “repeal” or something similar) “completely revok[e] or suspend[] the underlying obligation before the Government began incurring it.” Clearly that’s not the case here. The appropriations riders came long after HHS incurred and began acting on its statutory obligation. Plus, none of the riders contained any language along the lines of, “the risk-corridors program under §18062 is ‘hereby suspended,'” or “HHS’ obligation under §18062 is canceled.”

The other exception deals with statutes that “irreconcilabl[y]” amend the formulas used to disburse statutory appropriations. Again, not the case here. Sotomayor points out that the appropriations riders never even “reference[d] [§18062’s] payment formula at all, let alone irreconcilabl[y] change[d] it.”

For these reasons, Sotomayor holds that (1) §18062 places an obligation on the federal government to reimburse deficit-running private insurers in the program the full amount owed; (2) subsequent Congressional appropriations riders never removed that obligation; and (3) those private insurers affected may sue the federal government to collect their unpaid reimbursements in a damages action. Chief Justice Roberts and Justices Thomas, Ginsburg, Breyer, Kagan, Gorsuch, and Kavanaugh join in her opinion.

Justice Alito is the lone dissenter in a comparatively short opinion (8 pages to Sotomayor’s 31). The reason for his brevity is that, while he explicitly disagrees with the third part of the majority’s holding (that private insurers can sue the federal government for unpaid reimbursements), Alito is coy about whether he disagrees with the first two parts of the holding. In his words, he assumes arguendo that the Court is correct in holding that [§18062] of the Affordable Care Act created an obligation that was not rescinded by subsequent appropriations riders,” and he adds that he “do[es] not dispute the thrust of the analysis in [those] [p]arts . . . of the opinion of the Court.” But he takes issue with the private right of action the Court identifies (or, in his words, “infers” from the text of the statute). The majority “provid[es] a massive bailout for insurance companies that took a calculated risk and lost” after “cho[osing] to participate in an Affordable Care Act program that they thought would be profitable,” he writes. To Alito, this is at odds with two decisions decided earlier this term (Hernández v. Mesa and Comcast Corp. v. Nat’l Ass’n of African American-Owned Media), which denied private rights of action to parties aiming to sue the federal government.

Georgia v. Public.Resource.Org, Inc.
The final decision of the week comes from Chief Justice Roberts, his second majority opinion of the term. At issue is the question whether state legislators can copyright the annotations they write to a state’s official code (its body of statutes). Roberts answers “no” for a 5:4 majority. Interestingly, the votes are divided based on age; the majority’s Roberts, Sotomayor, Kagan, Gorsuch, and Kavanaugh are the younger five on the Court, and the dissenting Justices (Thomas, Ginsburg, Breyer, and Alito) are the four older Justices.

In Georgia’s state code, most provisions are accompanied by annotations. Georgia state legislators write these annotations, which often contain information that includes when the provision was enacted or amended, as well as the names of state court cases that have construed or dealt with the provision. But these annotations are ineligible for copyright protection, Roberts holds. Principally, Roberts looks to the “government edicts doctrine,” which presents a bright-line rule based on the author of the work at issue. “Under the government edicts doctrine,” Roberts explains, “judges—and, we now confirm, legislators—may not be considered the ‘authors’ of the works they produce in the course of their official duties as judges and legislators.”

The doctrine finds its roots in nineteenth-century soil. A trio of cases (Wheaton v. Peters (1843), Banks v. Manchester (1888), and Callaghan v. Myers (1888)) established a rule that judges cannot be the “authors” of their works “in the discharge of their official duties” because they are “vested with the authority to make and interpret the law.” In other words, Roberts says, “no one can own the law.” “Every citizen is presumed to know the law, and it needs no argument to show . . . that all should have free access to its content” (internal citation and quotation marks omitted). Therefore, Roberts explains, “[i]f judges, acting as judges, cannot be ‘authors’ because of their authority to make and interpret the law, it follows that legislators, acting as legislators, cannot be either.” And, importantly, the work of legislators includes everything from “their floor statements,” to “committee reports,” to “proposed bills,” and—crucially here—”annotations.” “These materials are part of the whole work done by legislators,” Roberts maintains, and “so they must be free for publication to all” (internal quotation marks omitted).

The main dissent comes from Justice Thomas (joined by Justice Alito in full and Justice Breyer in part). In short, Thomas sees a distinction between works that carry the force of law and works that do not. To start, Thomas reads the early three cases as establishing two principles: first, judicial opinions cannot be copyrighted; but second, notes to a decision “prepared by an official court reporter and published together with the reported opinions” may not suffer the same fate. In other words, the part of a decision that carries the force of law—the judicial opinions themselves—are subject to the government edicts doctrine. But the part of a decision that does not carry the force of law—the notes prepared by the court reporter—are not so subject. (To see what Thomas is getting at, go look at the very first page of the Court’s decision here in Public.Resource.Org. You’ll notice the decision begins with a “Syllabus,” a brief walkthrough of the majority opinion and the voting lineup. But look at the “NOTE” at the top of the Syllabus. It says, “The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.” In other words, the Syllabus is merely an explanation and does not carry the force of law, as the Court held in United States v. Detroit Timber & Lumber Co. (1906)).

Shifting gears to the legislative branch, the distinction Thomas sees is between the “statutes and regulations” passed by the legislature, which carry the force of law, and “accompanying notes” or annotations, which do not. Applying his understanding of the 1800s cases here, Thomas would hold that laws passed by the legislature fall under the government edicts doctrine, but annotations do not.

Finally, Justice Ginsburg (joined by Justice Breyer) authored a short, separate dissent. To her, the entire inquiry should focus on whether judges and legislators author the works in question in their official, “law-shaping” capacities. If the answer is “yes,” then the works fall under the government edicts doctrine and are uncopyrightable. If the answer is “no,” then they’re free game. Applying this standard, Ginsburg doesn’t think legislators write the annotations to the Georgia state code in their official capacities (and thus they should be copyrightable). She offers three reasons. First, “the annotations are not created contemporaneously with the statutes to which they pertain.” Rather, they “comment on statutes already enacted.” Second, they “summarize writings in which others express their views on a given statute,” rather than “stating the legislature’s perception of what a law conveys.” And third, they are “given for the purpose of convenient reference by the public”; “they aim to inform the citizenry at large,” not “those seated in legislative chambers.”

Tuesday–Thursday

The Court held no proceedings Tuesday through Thursday.

Friday

The Court conducted its weekly, private (tele-)conference on Friday. The Justices reviewed the petitions on their docket and debated whether to grant review for any of them. Out of an abundance of caution, only Chief Justice Roberts was actually present in the Supreme Court building; the other eight Justices took part in the conference over the phone. We can expect news from this conference in the Court’s next orders list on Monday. Some high profile cases the Justices are considering include:

  • Box v. Planned Parenthood of Indiana & Kentucky, Inc. This case challenges an Indiana state abortion law that requires women who seek an abortion to, among other things, undergo a fetal ultrasound eighteen hours before the abortion is performed. The question presented is whether such an ultrasound requirement violates a woman’s Fourteenth Amendment rights.
  • Arlene’s FlowersInc. v. Washington. This case is a mirror-image to that of Masterpiece CakeshopLtd. v. Colorado, on whose merits the Court punted in 2018. The questions before the Court are (1) whether a state violates a floral designer’s Free Exercise and Free Speech rights by forcing her to create custom floral arrangements celebrating same-sex weddings or by acting based on hostility toward her religious beliefs; and (2) whether the Free Exercise Clause’s prohibition on religious hostility applies to the executive branch.
  • United States v. California. This case involves the Trump administration’s challenge to California’s statewide “sanctuary” law. The law prohibits state law-enforcement officers from providing information about immigrants (both legal and illegal) to federal immigration officials. The question before the Court is whether federal immigration law preempts California’s sanctuary law—and others like it in cities and states around the country—under the Supremacy Clause of the Constitution.
  • Worman v. Healey. This case concerns a Massachusetts state law that bans, inter alia, semiautomatic “assault weapon[s]” and magazines capable of accepting 10+ rounds of ammunition. The question presented is whether that law violates the Second Amendment to the Constitution.
  • Malpasso v. Pallozzi. This is a constitutional law case asking whether a state law that categorically prohibits residents from carrying handguns outside the home for self-defense violates the Second Amendment.
  • McKesson v. Doe. This is a First Amendment case stemming from a Louisiana protest in which some protesters resorted to violence. The question presented is whether the First Amendment permits a state to sue the leader of a protest for criminal negligence, even where the leader does not necessarily instigate the violence.
  • Reisman v. Associated Faculties of the University of Maine. This case mixes labor unions with the Free Speech Clause of the First Amendment. The question presented is whether it violates the First Amendment to designate a labor union to represent and speak on behalf of public-sector employees who object to its advocacy.
  • Territory of Guam v. Davis. This case concerns a unique Fifteenth Amendment challenge to a political referendum Guam undertook under the 2000 Plebiscite Law. The federal territory allowed only “native inhabitants of Guam” to vote on the island’s future political status with the United States. The question presented is whether the Fifteenth Amendment permits Guam to invite only “native inhabitants of Guam” to participate in a potential political-status plebiscite that would yield only a nonbinding, symbolic expression of self-determination preferences.
  • Collins v. Mnuchin. This case concerns a constitutional challenge to the structure of the Federal Housing Finance Agency (FHFA), a mirror-image case to that of Seila Law v. CFPB, the challenge to the structure of the Consumer Financial Protection Bureau. The questions presented in Collins are (1) whether the structure of the FHFA violates the separation of powers, and if so (2) whether the actions of the FHFA must be annulled and the statute creating its structure struck down.
The Week Ahead

Next week begins the Court’s venture into terra incognita—oral arguments over the phone. On Monday, the Court will release orders at 9:30am EDT. At 11:00am, it will hear arguments in U.S. Patent & Trademark Office v. Booking.com (trademark law), the Court’s guinea pig for remote arguments. On Tuesday at 11:00am, the Court will hear U.S. Agency for Int’l Development v. Alliance for Open Society, Inc. (Free Speech Clause). The Court hears two cases on Wednesday. On the docket at 11:00am is Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania (Free Exercise Clause), and at noon is Barr v. American Ass’n of Political Consultants, Inc. (Free Speech Clause). On Thursday, there is a possibility of opinions at 10:00am. And on Friday, the Court will hold its next private conference.


Photo Credits: WSLM Radio

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