This week, the Ninth Circuit considers whether COVID-testing providers have a private right of action for reimbursement and considers a landlord’s standing to challenge a COVID-related eviction moratorium.
SALOOJAS, INC. v. AETNA HEALTH OF CALIFORNIA, INC.
The Court holds that the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) does not provide a private right of action to enforce violations of the Act’s provider-reimbursement requirement.
The panel: Judges Wardlaw, Nguyen, and Koh, with Judge Nguyen writing for the Court.
Key highlight: “Congress’s use of mandatory language alone is not enough to create an implied private right of action. Rather, a statute must use rights-creating language that places an unmistakable focus on the individuals protected instead of the person regulated.” (Quotation marks omitted.)
Background: Section 3202 of the CARES Act states that insurers who provide coverage of COVID diagnostic products “shall reimburse the provider of the diagnostic testing” at either a negotiated rate or “in an amount that equals the cash price for such service as listed by the provider on a public internet website.” Saloojas, a provider of COVID diagnostic testing, alleges that insurer Aetna paid less than Saloojas’s posted cash price for COVID tests that Saloojas provided to Aetna’s insureds. Saloojas sued Aetna under § 3202, seeking reimbursement of the difference between its cash price and what Aetna had paid. The district court dismissed Saloojas’s claims, ruling that the CARES Act does not contain any private right of action for providers to bring claims against insurers for violations of § 3202.
Result: The Ninth Circuit affirmed, holding that the CARES Act does not imply a right of action for violations of § 3202. Saloojas conceded that the Act contains no express right of action. And as the Court explained, private rights of action to enforce federal law must be created by Congress. Four factors traditionally determine whether Congress intended to imply such a right: (1) whether the plaintiff is one of the class for whose benefit the statute was enacted; (2) whether there is any indication of legislative intent to create or deny a remedy; (3) whether implying a remedy is consistent with the underlying purposes of the statute; and (4) whether the cause of action is one traditionally relegated to state law.
Saloojas argued that the Act’s mandatory language requiring reimbursement to providers evinced Congress’s intent to benefit members of an identifiable class. The Court disagreed, explaining that the use of “mandatory language alone is not enough to create an implied private right of action”: a statute must go further by using “rights-creating language” that places “an unmistakable focus” on the individuals protected instead of the person regulated. Section 3202’s directive that insurers “shall reimburse the provider” did not satisfy that requirement. Rather, the provision focused on the regulated party by imposing obligations on insurers, making the providers the mere “object” of the obligation.
The Court also relied on the Act’s enforcement provisions, which allow the Secretary of Health and Human Services to penalize any provider that fails to post its cash price. “That Congress chose to include an enforcement mechanism” that is “limited to actions by the Secretary against a provider of testing services,” the Court concluded, “cuts strongly against a finding of intent to create a private remedy for those providers.”
ITEN v. COUNTY OF LOS ANGELES
The Court holds that a landlord subject to a COVID-related eviction moratorium has Article III standing to challenge it.
The panel: Judges Bybee, Forrest, and Gordon (D. Nev.), with Judge Bybee writing for the Court and Judge Gordon filing a partial concurrence.
Key highlight: “Standing concerns who can bring a challenge to a particular law; it is an inquiry into whether and how the law in question affects the party who has brought the suit. The injury-in-fact inquiry seeks to assure that the plaintiff is not an intermeddler, generally unhappy with the law, but without any particular stake in the outcome. Whether the party can ultimately prevail in the suit is an entirely different question.”
Background: At the outbreak of the COVID pandemic, Los Angeles County imposed a moratorium that precluded landlords from evicting tenants for nonpayment of rent if the tenant could show that nonpayment was “due to Financial Impacts Related to COVID-19.” For commercial tenants with fewer than 10 employees, landlords were required to accept the tenant’s self-certification of inability to pay due to COVID-related impacts.
Plaintiff Howard Iten was the owner of a commercial property that had been leased to an auto-repair franchisee with fewer than 10 employees. Citing COVID, the tenant stopped paying rent. Iten responded by suing the County, claiming the moratorium violated his rights under the Contracts Clause. The district court dismissed the suit for lack of standing, holding that because the tenant had not provided Iten with monthly notices of its inability to pay rent, the County’s moratorium did not actually preclude Iten from evicting the tenant.
Result: The Ninth Circuit reversed and remanded. The Court began by noting that the parties’ various arguments as to whether the tenant actually qualified for the protections of the challenged moratorium given its notices to Iten went to the merits of Iten’s claim—not his Article III standing to bring it. Deciding Iten’s standing instead required looking at whether the moratorium affected his rights secured by the Contract Clause. Detailing the history of the Contracts Clause, the Court observed that “mortgage moratoria were, from the beginning, at the heart of the Contracts Clause,” and that “[a] law affecting or changing the terms the parties previously agreed to is the quintessential example of what the Contracts Clause was designed to prohibit.” And because the moratorium undoubtedly “imposed additional rights, remedies, conditions, or procedures that impair the obligations to which he and his Tenant had contracted,” Iten had standing to challenge it. Whether Iten could, in fact, evict the tenant notwithstanding the moratorium went to the merits of his Contract Clause claim—namely, to the question whether the moratorium “substantially” impaired his contractual rights. The Court remanded to the district court, noting that it “express[ed] no view on the merits of Iten’s claim.”
Judge Gordon concurred in part. He wrote that he did not agree that “Iten and every other landlord in the county had standing to challenge the Moratorium the instant it went into effect”—a landlord whose tenant never stopped paying rent, for example, would not have suffered a non-hypothetical injury. But because Iten might have been able to amend his complaint in a way that would establish some actual injury flowing from the moratorium, Judge Gordon concurred in the remand.