The Federal Circuit’s recent decision in Electrical Welfare Trust Fund v. United States confirms a consistent message from the Circuit: the Just Compensation Clause is great in theory but not so much in practice. This principle was recently reaffirmed in a decision by the Federal Circuit Court of Appeals holding that government requirements to make monetary payments from funds held in trust, here required contributions under the Transitional Reinsurance Program of the Affordable Care Act, are viewed merely as financial obligations, not appropriations of private property compensable under the Fifth Amendment.
The decision, which upheld a ruling from the US. Court of Federal Claims, involved self-insured health and welfare funds that challenged mandatory contributions to the Transitional Reinsurance Program (TRP) under the Affordable Care Act. The Electrical Welfare Trust Fund argued that the government effectively seized assets held in trust for employee benefits. However, the Federal Circuit disagreed, holding that the contributions were simply an obligation to pay money, not a government appropriation of property.
The Transitional Reinsurance Program
Congress created the TRP to stabilize costs of health insurance premiums during the rollout of the Affordable Care Act between 2014-2016. To fund the program, Congress required certain insurers and self-insured plans to make annual payments to the U.S. Department of Health and Human Services.
The plaintiffs—multiemployer health and welfare funds—paid those contributions but later sued in the Court of Federal Claims, claiming a Fifth Amendment taking. They argued that under ERISA and the Taft-Hartley Act, their assets were held in trust exclusively for participant benefits. Forcing payment from those funds amounted to a government appropriation of trust property.
The Government argued that the Act merely imposed a monetary obligation and did not seize any specific asset or account. The CFC agreed with the Government and granted summary judgment for the United States.
The Ruling of the Federal Circuit
The Federal Circuit unanimously affirmed. Writing for the court, Judge Kara Stoll explained that the Fifth Amendment protects property rights—and does not prevent Congress from imposing general obligations to pay money on private entities.
Citing cases such as Commonwealth Edison Co. v. United States and United States v. Sperry Corp., the Federal Circuit emphasized that monetary assessments, even if significant, are not necessarily takings, explaining that “[m]oney is fungible.” The court emphasized that “the mere imposition of an obligation to pay money does not give rise to a claim under the Takings Clause.”
The court contrasted this situation with rare cases—such as Webb’s Fabulous Pharmacies and Phillips v. Washington Legal Foundation—where the government physically appropriated interest or income from identifiable, segregated funds. The court explained that those cases involved specific property interests; this one did not.
Because the Act required entities to make payments—without dictating which accounts or assets must be used—the court concluded that the TRP obligation targeted no specific property interest. Although the plaintiffs had a separate legal duty to hold their assets in specific trust accounts, this duty did not change the analysis regarding TRP requirements: a payment drawn from a trust account is still a general obligation to pay, not a taking.
The ruling also clarified a narrow point: the CFC had been wrong to suggest that a taking occurs only when a fund is appropriated “in toto.”
Implications for Regulated Entities
This decision has broad implications for entities that manage restricted or fiduciary funds, such as benefit trusts, pension plans, or other regulated accounts.
- Monetary obligations are not takings.
The Federal Circuit’s holding suggests that the Just Compensation Clause does not apply to statutes or regulations that require payment of money, no matter how burdensome they are. - Trust funds are not exempt.
Even when assets are legally held in trust for limited purposes, required payments do not necessarily create a compensable taking. Trustees must meet statutory obligations, even when they conflict with fiduciary restrictions. - Alternative claims may be stronger.
When challenging federal assessments or contributions, plaintiffs may find greater traction under illegal exaction, due process, or Administrative Procedure Act theories. These claims can contest the lawfulness of a payment without relying on the narrow and often unsuccessful takings framework. - The property–liability distinction persists.
The Federal Circuit’s ruling draws (or at least purports to draw) a bright line between the governmental taking of identifiable property and its power to impose financial liabilities. This ruling focuses on the protection of governmental fiscal operations while limiting the ability of those whose funds are effectively depleted by federal mandates to recover just compensation.
Pursuing a Taking Claim
Electrical Welfare Trust Fund sets a high bar for recovery of compensation involving the taking of money by characterizing what seems to be a government seizure of funds as a mere financial obligation.
That distinction leaves entities managing fiduciary assets in a difficult position. When compelled to divert trust funds to satisfy statutory contributions, trustees risk undermining their obligations to beneficiaries, with no Fifth Amendment remedy for the loss.
This case suggests that a successful taking claim must identify a specific, segregated property interest, such as an earmarked fund the government directly controls or appropriates. Absent that, challenges to monetary obligations might be better framed under alternative theories that target the legality or scope of the governmental demand rather than its constitutional character.
Conclusion
While this ruling closes one door for compensation, it provides clarity for entities navigating federal payment mandates. Understanding this boundary—and adjusting the framing of claims accordingly —remains essential for trustees, plan administrators, and other organizations seeking to protect their assets in dealings with the federal government.
Read full decision here.
