Capitol-framed-by-dollar-sign

The short answer to this question is maybe yes, maybe no.

The U.S. Court of Federal Claims recently held that the answer was no for the Electrical Welfare Trust Fund of Washington, D.C. and the Stone & Marble Masons of Metropolitan Washington, D.C. Health and Welfare Fund.

These two plaintiffs are group health care funds created through collective bargaining under the Labor Management Relations Act and the Employee Retirement Security Act (ERISA). Both plans were subject to the Transitional Reinsurance Program created under the Affordable Care Act (Obama Care), intended to distribute the financial risk carried by health insurance issuers covering higher-risk populations. Under the Affordable Care Act, group health plans had to pay funds into a reinsurance pool for three years. The funds from this program were used to reimburse health insurance carriers for enrolling high-risk individuals.

Both plaintiffs contributed significant funds as required by this program. The Electrical Welfare Trust Fund contributed $323,154 and the Stone Masons contributed $46,777 for 2014, 2015, and 2016.

Believing that they were wrongfully required to contribute money to this reinsurance pool, the plaintiffs sued the United States in the Court of Federal Claims alleging an illegal exaction and an unconstitutional taking of their property rights.

The trial court granted the Government’s motion to dismiss the illegal exaction claim. As to the taking claims, the court applied the taking analysis provided by the Federal Circuit, determining first whether the plaintiff possesses a cognizable property interest before determining whether that property interest had been taken.

Here, plaintiffs’ taking claim foundered on the first step. Plaintiffs alleged that the Government required them to “relinquish funds” held in their self-insured health and welfare trust accounts to pay the mandatory Transitional Reinsurance Program fee. Plaintiffs argued that the forced payment of these fees constituted a per se taking.

The court disagreed, stating “a property interest in money alone is generally not cognizable” under the Fifth Amendment. The court explained that because money is fungible, whereas real or personal property is not, an obligation to pay money is not considered a constitutionally protected property interest.

The court noted, however, that “one’s interest in a specific fund of money—e.g., the interest or principal of an identified account—is cognizable” as a protected property interest under the Fifth Amendment. In Webb’s Fabulous Pharmacies, Inc. v. Beckwith, for instance, the Supreme Court held that where the court appropriated the interest earned on principal held in an interpleaded account, that interest was protected, and the appropriation constituted a taking.

But here, since neither of the challenged statutes requiring payment of these fees specified the source of the required payments, the court considered the amounts paid as “abstract sum[s] of money” that were not recognized as compensable property interests.

Read Judge Roumel’s full decision here.