United States Court of Appeals for the Federal Circuit
05-1501
BOARD OF TRUSTEES OF BAY MEDICAL CENTER,
BAPTIST HOSPITAL, INC., and
THE HEALTHCARE AUTHORITY OF THE CITY OF HUNTSVILLE,
Plaintiffs-Appellees,
v.
HUMANA MILITARY HEALTHCARE SERVICES, INC.,
Defendant-Appellant,
and
OFFICE OF CIVILIAN HEALTH AND MEDICAL PROGRAM
OF THE UNIFORMED SERVICES, TRICARE MANAGEMENT ACTIVITY,
DEPARTMENT OF DEFENSE, and DONALD H. RUMSFELD, Secretary of Defense,
Defendants-Appellees.
J. Nixon Daniel, III, Beggs & Lane LLP, of Pensacola, Florida, argued for
plaintiffs-appellees. With him on the brief was Russell F. Van Sickle. Of counsel was
Terrie L. Didier.
Peter L. Wellington, Steptoe & Johnson LLP, of Washington, DC, argued for
defendant-appellant. With him on the brief was Andrew D. Irwin. Of counsel on the
brief was Charles M. Trippe, Moseley, Prichard, Parrish, Knight & Jones, of
Jacksonville, Florida.
Kyle E. Chadwick, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for defendants-
appellees. With him on the brief were Peter D. Keisler, Assistant Attorney General,
David M. Cohen, Director, and Mark A. Melnick, Assistant Director.
Appealed from: United States District Court for the Northern District of Florida
Judge M. Casey Rodgers
United States Court of Appeals for the Federal Circuit
05-1501
BOARD OF TRUSTEES OF BAY MEDICAL CENTER,
BAPTIST HOSPITAL, INC., and
THE HEALTHCARE AUTHORITY OF THE CITY OF HUNTSVILLE,
Plaintiffs-Appellees,
v.
HUMANA MILITARY HEALTHCARE SERVICES, INC.,
Defendant-Appellant,
and
OFFICE OF CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED
SERVICES, TRICARE MANAGEMENT ACTIVITY, DEPARTMENT OF DEFENSE,
and DONALD H. RUMSFELD, Secretary of Defense,
Defendants-Appellees.
_____________________
DECIDED: May 4, 2006
_____________________
Before LOURIE, Circuit Judge, CLEVENGER, Senior Circuit Judge, and BRYSON,
Circuit Judge.
LOURIE, Circuit Judge.
Humana Military Healthcare Services, Inc. (“Humana”) appeals from the final
decision of the United States District Court for the Northern District of Florida denying its
motion to dismiss or transfer its complaint to the United States Court of Federal Claims,
and denying its motion for reconsideration. Bd. of Trs. of Bay Med. Ctr. v. Humana, No.
5:03-CV-144, 2004 WL 3314946 (N.D. Fla. Mar. 16, 2004) (“Transfer Decision”); Bd. of
Trs. of Bay Med. Ctr. v. Humana, No. 5:03-CV-144, (N.D. Fla. July 1, 2005)
(“Reconsideration Decision”). Because the contract claims brought by the Board of
Trustees of Bay Medical Center, Baptist Hospital, Inc., and the Healthcare Authority of
the City of Huntsville (collectively the “Hospitals”) are not claims for money damages
against CHAMPUS, TMA, DOD and Donald Rumsfeld (collectively the “government”),
and the district court did not abuse its discretion in denying Humana’s motion for
reconsideration, we affirm.
BACKGROUND
This appeal relates to administrator-provider contracts for medical services under
the Department of Defense (“DOD”) Civilian Health and Medical Program of the
Uniformed Services (“CHAMPUS”), which was established in 1967. Transfer Decision,
slip op. at 2. Before the establishment of TRICARE, the DOD used claims processors,
called fiscal intermediaries, to process claims under the CHAMPUS program. Id., slip
op. at 4. Under the fiscal intermediary (“FI”) contracts, fiscal intermediaries were not
legally responsible for claims that arose regarding the discharge of duties required
under those contracts. Id. The FI contracts thus included the following indemnification
clause: “In civil law suits which seek the disbursement of funds, the United States is the
real party in interest since the funds disbursed are United States Treasury funds
appropriated by Congress to the Department of Defense.”
In 1995, the DOD established TRICARE, a managed healthcare program that
involved the competitive selection of contracts to financially underwrite the delivery of
healthcare services under CHAMPUS. Id., slip op. at 2. The program was administered
through the TRICARE Management Activity (“TMA”), which was previously the Office of
CHAMPUS. Id., slip op. at 4. Under the TRICARE system, the DOD began using
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managed care support (“MCS”) providers whose contracts did not contain the indemnity
provisions found in the FI contracts. Id.
On January 23, 1996, Humana and the DOD entered into an MCS contract (the
“Prime Contract”) whereby Humana agreed to provide managed care support services
for all CHAMPUS beneficiaries residing in a particular southeastern geographical area
(“Regions 3 and 4”). Id., slip op. at 3. Humana then subcontracted with the Hospitals
(“network provider contracts”) to provide the healthcare services required under the
Prime Contract for CHAMPUS beneficiaries residing within Regions 3 and 4. Id., slip
op. at 6.
Prior to October 1, 1999, Humana paid the Hospitals the agreed-upon amounts
set forth in the network provider contracts. Id., slip op. at 6-7. However, beginning
October 1, 1999, Humana, without prior notice, ceased paying the Hospitals the normal
amount for reimbursement of outpatient non-surgical services, reducing the payments to
the Hospitals by applying CHAMPUS Maximum Allowable Charge (“CMAC”) rates to
those services. Id., slip op. at 7.
On June 3, 2003, the Hospitals filed suit in the United States District Court for the
Northern District of Florida seeking damages for breach of the contract by Humana and
a declaratory judgment against the government. Specifically, in count I of the complaint,
the Hospitals asserted that Humana’s application of the CMAC rates to cap the
reimbursement of out-patient non-surgical services breached the previously agreed-
upon reimbursement methodology for those services in the network provider contracts.1
1
There are two components to an outpatient non-surgical service bill, a technical
component and a professional component. The parties agree that the services at issue
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In addition, the Hospitals noted that, on March 10, 2000, approximately five
months after Humana began reducing payments to the Hospitals, the TMA had issued a
policy statement relating to the reimbursement of outpatient hospital services (“Policy
Statement”), which approved of the application of the CMAC rates to institutional
providers. In count II of the complaint, the Hospitals accordingly asserted that the
Policy Statement was void because “it was in direct conflict with the reimbursement plan
for those services promulgated as 34 C.F.R. § 199.14” and “it was actually an attempt to
issue a substantive rule that [should have been] promulgated as a regulation.”
Complaint, at ¶ 28. The Hospitals also asserted that, “[r]egardless of the validity of the
policy, its existence did not change or otherwise affect the contracts entered into
between Humana and [the Hospitals].” Id., at ¶ 29.
On August 25, 2003, the government filed a Rule 12(b)(1) motion to dismiss the
declaratory judgment claim. On the same day, Humana filed a Rule 12(b)(1) motion to
dismiss the contract claims or alternatively to transfer the case to the Court of Federal
Claims, asserting that the real party in interest on the Hospitals’ claims was the
government. On March 16, 2004, the district court granted the government’s motion to
dismiss based on the Hospitals’ lack of standing to sue the government on the contract
claims and denied Humana’s motion to transfer or dismiss because the district court
determined that it had subject matter jurisdiction over the breach of contract claims.
in this case involve only Humana’s reimbursement of the technical component of the bill
for radiology and laboratory fees, i.e., the fees charged by institutional providers for use
of radiological and laboratory equipment. The Hospitals’ contract claims do not involve
the professional charges of those physicians who were involved with the delivery of the
Hospitals’ radiological or laboratorial services. Transfer Decision, slip op. at 7.
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The Hospitals did not appeal or seek reconsideration of the ruling granting the
government’s motion.
On March 30, 2004, Humana filed a motion for reconsideration in the district
court. Humana did not identify this motion as a Rule 59(e) Motion to Alter or Amend
Judgment under the Federal Rules of Civil Procedure. Before the district court ruled on
the merits of the motion for reconsideration, Humana filed a notice of appeal from the
jurisdiction decision on April 15, 2004. The district court denied the motion for
reconsideration as moot on April 19, 2004, because the court determined that the April
15 notice of appeal divested the court of jurisdiction.
On April 22, 2004, Humana filed a second notice of appeal incorporating both the
denial of the motion to dismiss or transfer and the denial of the motion for
reconsideration. Humana requested that we remand the case to the district court for
review of the merits of the motion for reconsideration, or, in the alternative, that we
transfer the case to the Court of Federal Claims. On January 8, 2005, we found that the
district court erred in determining that the motion for reconsideration was moot and
remanded for a determination of the motion on the merits. Bd. of Trs. of Bay Med. Ctr.
v. Humana, 123 Fed. Appx. 995, 997 (Fed. Cir. 2005). We did not review the denial of
the motion to dismiss or transfer to the Court of Federal Claims. Id. at 997-98.
After our remand, the district court denied Humana’s motion for reconsideration.
Bd. of Trs. of Bay Med. Ctr. v. Humana, No. 5:03-CV-144 (N.D. Fla. July 1, 2005). The
court reasoned that “Humana [had] failed to present ‘evidence of an intervening change
in controlling law, the availability of new evidence, or the need to correct clear error or
manifest injustice.’” Id., slip op. at 7 (quoting Summit Med. Ctr. of Alabama, Inc. v.
05-1501 5
Riley, 284 F. Supp. 2d 1350, 1355 (M.D. Ala. 2003)). Humana timely appealed on July
29, 2005, and we have jurisdiction to hear this appeal pursuant to 28 U.S.C. §
1292(d)(4)(A).
DISCUSSION
This court reviews legal questions without deference. Consolidated Edison Co.
of New York v. United States, 247 F.3d 1378, 1382 (Fed. Cir. 2001). Questions
concerning jurisdiction and transfer to the Court of Federal Claims are also reviewed de
novo. United States v. County of Cook, 170 F.3d 1084, 1087 (Fed. Cir. 1999). A denial
of a motion for reconsideration by a district court is reviewed under the standard of
review used by the governing regional circuit. Minton v. NASD, Inc., 336 F.3d 1373,
1378-79 (Fed. Cir. 2003). The Eleventh Circuit, the regional circuit that governs the
Northern District of Florida and is relevant here, reviews the denial of a motion for
reconsideration for an abuse of discretion. Cliff v. Payco Gen. Am. Credits, Inc., 363
F.3d 1113, 1121 (11th Cir. 2004).
On appeal, Humana argues that the government is the “real party in interest” on
the Hospitals’ claims because the true nature of the Hospitals’ breach of contract claims
is for money damages against the government under the CHAMPUS/TRICARE statutes
and regulations. Humana points out that the Hospitals’ complaint set forth a direct
noncontractual claim against the government in their complaint – challenging the Policy
Statement mandating that CMACs must be applied to institutional providers – and that
the Tucker Act provides a waiver of sovereign immunity allowing the Hospitals to assert
that claim in the Court of Federal Claims.
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The Hospitals respond that the case was properly before the district court
because their claim against Humana was based on private agreements between the
Hospitals and Humana, and the government was not a party to those contracts. The
Hospitals argue that they are not seeking, and cannot seek, money from the
government because the money given to Humana each month from the government
becomes Humana’s money when it receives it. The Hospitals also contend that the
network provider contracts do not support any inference that the government is
responsible for Humana’s breach of its contract with the Hospitals. The government
essentially repeats the Hospitals’ arguments, asserting that the Hospitals’ contract
claims against Humana are not claims seeking federal funds. According to the
government, while Humana may, if found liable in this lawsuit, request reimbursement
from the government under the TRICARE contract, Humana cannot insist that the
Hospitals recast their claims and seek damages from the government.
We agree with the Hospitals and the government that the district court did not err
in denying Humana’s motion to dismiss or transfer the case to the Court of Federal
Claims. In the Tucker Act, Congress waived the federal government’s sovereign
immunity but limited the jurisdiction of the Court of Federal Claims to hear claims
“against the United States founded either upon the Constitution, or any Act of Congress
or any regulation of an executive department, or upon any express or implied contract
with the United States or for liquidated or unliquidated damages in cases not sounding
in tort.” 28 U.S.C. § 1491(a)(1); United States v. Mitchell, 463 U.S. 206, 212 (1983).
However, “[t]he Tucker Act itself does not create a substantive cause of action; in order
to come within the jurisdictional reach and the waiver of the Tucker Act, a plaintiff must
05-1501 7
identify a separate source of substantive law that creates the right to money damages.”
Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc) (citing Mitchell,
463 U.S. at 216) (other citations omitted). This appeal turns on whether the Hospitals’
breach of contract claim is a claim for money damages against the government so as to
invoke the jurisdiction of the Court of Federal Claims. We agree with the district court
and conclude that the proper defendant for the Hospitals’ contract claims is Humana,
not the government, and therefore that the Court of Federal Claims lacks jurisdiction
over those claims.
We begin with the complaint. The complaint sets forth two claims: a breach of
contract claim against Humana and a declaratory judgment claim against the
government asserting that the TMA’s March 10, 2000 Policy was invalid. Only the first
claim, which is for money damages, is at issue in this appeal. The express language of
count I, which is directed against Humana, states that “[t]his is an action for breach of
contract against Humana.” Complaint, at ¶ 41. The Prayer for Relief section of the
complaint also makes clear that the Hospitals are seeking money damages from
Humana for the alleged breach of contract. Id., at Prayer for Relief ¶ E. In addition, the
Hospitals alleged that the breach of the network provider contracts by Humana occurred
independently of the validity of the Policy Statement: “[r]egardless of the validity of the
policy, its existence did not change or otherwise affect the contracts entered into
between Humana and [the Hospitals].” Id., at ¶ 29. The unambiguous language of the
complaint thus establishes that the Hospitals’ contract claims are directed against
Humana, not the government.
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Further, there is no basis for Humana’s allegations that “behind the facial
allegations of [the] complaint” lie claims against the government for money damages.
The network provider contracts are private agreements between the Hospitals and
Humana. The government was not a party to those contracts, and the Hospitals have
no direct relationship with the government. Moreover, Humana’s reliance upon certain
TRICARE policies as defenses against liability does not convert the Hospitals’ contract
claims against Humana into claims against the government.
In addition, that Humana may seek reimbursement from the government after a
finding of liability in this case does not mean the government is the “real party in
interest” on the Hospitals’ contract claims. While the FI contracts included an
indemnification clause stating that the United States would be considered the “real party
interest” in disputes concerning FI contracts, the Prime Contract here does not contain
such a provision. Thus, the proper defendant to the Hospitals’ contract claims is
Humana, not the government. In so holding, we do not address any interpretation of the
provisions of the Prime Contract or assess the government’s potential liability to
Humana under the Prime Contract because those issues are not properly before us.
Humana contends that the government is the real party in interest on the
Hospitals’ contract claims, relying on Texas Peanut Farmers v. United States, 409 F.3d
1370 (Fed. Cir. 2005) and Consolidated Edison Co. of New York, 247 F.3d at 1378.
Those cases do not provide the necessary support for its argument.
In Texas Peanut Farmers, we held that the proper defendant in a suit by peanut
farmers for breach of their Multiple Peril Crop Insurance (“MPCI”) policies was the
Federal Crop Insurance Corporation (“FCIC”), the reinsurer of those policies, even
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though the peanut farmers had named the United States as the defendant. 409 F.3d at
1371-72. We reasoned that the “MCPI itself plainly states that [the peanut farmers] are
the contracting parties and the FCIC is the reinsurer.” Id. at 1373. Here, unlike the
insurance contract in Texas Peanut Farmers, the network provider contracts do not
“plainly state” that the government is a reinsurer or otherwise liable for money damages
resulting from Humana’s breach of those contracts. Thus, the government was not the
proper defendant on the Hospitals’ breach of contract claims.
Our holding in Consolidated Edison Co. is also inapplicable to the question
presented here of whether the government is the proper defendant in the first instance.
In Consolidated Edison Co., the plaintiffs challenged the constitutionality of the Energy
Policy Act of 1992 (“EPACT”), which required domestic nuclear facilities to pay thirty-
two percent of the costs of decontaminating and decommissioning the government’s
uranium processing facilities. 247 F.3d at 1380-81. Before EPACT, the plaintiffs had
contracted with the government for uranium enrichment services under a series of fixed-
price agreements. Id. After making initial payments under EPACT, the plaintiffs
brought two actions: an action against the government in the Court of Federal Claims
seeking refunds of those payments, and an action in the district court for a declaratory
judgment that EPACT was unconstitutional and for injunctive relief from future EPACT
assessments. Id. at 1381.
We held that the plaintiffs’ second action against the government in district court
should be transferred to the Court of Federal Claims. Id. at 1386. We observed that the
“[plaintiffs’] case for retrospective monetary relief before the Court of Federal Claims
overlaps with its claims for prospective monetary relief before the district court,” and that
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relief from the plaintiffs’ “retrospective obligations will also relieve [them] from the same
obligations prospectively.” Id. at 1385. Here, unlike in Consolidated Edison Co., the
Hospitals are not in privity of contract with the government and have not sought
monetary relief from the government. Therefore, the district court did not err in denying
Humana’s motion to dismiss or transfer the case to the Court of Federal Claims.
Our holding is consistent with the Sixth Circuit’s decision in Baptist Physician
Hospital Organization v. Humana Military Healthcare Services, Inc., 368 F.3d 894 (6th
Cir. 2004). In Baptist Physician Hospital, the Sixth Circuit held that Humana was
potentially liable to medical providers under similar breach of contract claims, citing with
approval the district court’s rejection in this case of “Humana’s argument that any
liability for its breach of a provider contract is directly chargeable to the Treasury.” Id. at
901. In that case, Humana did not move to transfer the case to the Court of Federal
Claims, conceding that the providers’ breach of contract claims were properly before the
district court. We note, however, that because the agreements in Baptist Physician
Hospital were different from the network provider contracts at issue here, that case is
not controlling as to the district court’s jurisdiction over the Hospitals’ breach of contract
claims against Humana.
Finally, we agree with the Hospitals and the government that the district court did
not abuse its discretion in denying Humana’s motion for reconsideration. The key issue
there is whether there was an intervening change or development in controlling law that
would compel dismissal or transfer of the Hospitals’ breach of contract claims to the
Court of Federal Claims. See Zinn v. GMAC Mortg., No. Civ. A. 1:05-CV-01747, 2006
WL 898179 (N.D. Ga. April 5, 2006) (“Motions for reconsideration are to be filed only
05-1501 11
when ‘absolutely necessary’ where there is: (1) newly discovered evidence; (2) an
intervening development or change in controlling law; or (3) a need to correct a clear
error of law or fact.”); Summit Med. Ctr. of Alabama, Inc., 284 F. Supp. 2d at 1355
(“[C]ourts have recognized three grounds justifying reconsideration: 1) an intervening
change in controlling law; 2) the availability of new evidence; and 3) the need to correct
clear error or manifest injustice.”).
In support of its May 5, 2005 motion for reconsideration, Humana pointed to
“recent developments” in the case law, citing Britell v. United States, 372 F.3d 1370
(Fed. Cir. 2004) and Doe v. United States, 372 F.3d 1308 (Fed. Cir. 2004) for the
proposition that claims for CHAMPUS/TRICARE benefits generally belong in the Court
of Federal Claims. Reconsideration Decision, slip op. at 4 n.6. Those decisions are
inapposite because neither case involved a factual situation, as here, in which the
plaintiffs’ claims against the government arose only under a private contract.
The plaintiff in Britell was a military dependent who was denied CHAMPUS
reimbursement for the cost of an abortion. 372 F.3d at 1373. We held that we had
jurisdiction to review her claim because Britell was a CHAMPUS beneficiary. Id. The
plaintiff in Doe was also a military dependent who decided to terminate her pregnancy
by abortion. Doe, 372 F.3d at 1310. However, instead of seeking money damages, she
sought an injunction requiring TRICARE to authorize payment for her abortion. Id. at
1317. We held that we lacked jurisdiction to review her claim because she was not
requesting reimbursement, but rather, equitable relief. Id.
Here, unlike the plaintiffs in Britell and Doe, the Hospitals are not
CHAMPUS/TRICARE beneficiaries who are entitled to seek reimbursement directly
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from the government. Rather, the Hospitals must seek payment from Humana pursuant
to the private network provider contracts. The cases cited by Humana are not evidence
of an intervening change in controlling law. Further, we discern no abuse of discretion
in the district court’s holding that “Humana has not established that evidence which it
recently submitted compels the conclusion that [the district court does not have] subject
matter jurisdiction . . . as to [c]ount I” and that “Humana has not shown that its motion
must be granted to correct clear error or manifest injustice.” Reconsideration Decision,
slip op. at 4, 5. The district court therefore was within its discretion in denying
Humana’s motion for reconsideration.
CONCLUSION
Because the Hospitals’ contract claims are not claims for money damages
against the government, the district court did not err in denying Humana’s motion to
dismiss or transfer the case to the Court of Federal Claims. The district court also did
not abuse its discretion in denying Humana’s motion for reconsideration. The decision
of that court is therefore
AFFIRMED.
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