Supreme Court to Address Under What Circumstances A Later Congress May Revoke Governmental Obligations To Pay -
At the end of its most recent term, the U.S. Supreme Court granted certiorari in Moda Health Plan, Inc. v. United States, and two similar cases asserting virtually identical claims. These disputes present issues of critical importance regarding public-private enterprise and private entities’ options to seek money damages if the federal government reneges on a promise to pay.
Moda and its companion cases present the question of under what circumstances, if any, a later Congress may obviate a statutory obligation to pay through the use of appropriations bills (as opposed to an explicit Act revoking the previously-enacted obligation to pay). In Moda, this question arose in connection with certain payment obligations included in the Patient Protection and Affordable Care Act (“ACA”). However, the decision has potentially broader implications because an essential tool for the government to achieve policy goals is influencing private action through financial incentives, such as tax credits or subsidies for behavior the government wants to encourage. If the government can renege on its promises through less-than-obvious, after-the-fact means (such as an appropriations bill), and private parties are unable to compel the payment of those owed amounts in court, then that arguably decreases the private sector’s confidence in the government as a reliable business partner, and, along with it, the government’s power to drive conduct using financial incentives.
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