Federal Circuit Court of Appeals has jurisdiction over action for breach of agreement to pay claim under Military Claims Act

Law Reporter, May 1999

Massie v. United States, 166 F.3d 1184 (Fed. Cir. 1999).

The Federal Circuit Court of Appeals held it had jurisdiction over an action for breach of an agreement to pay a claim under the Military Claims Act (MCA), 10 U.S.C. (sec)2731 et seq.

Here, Massie suffered injuries during her birth at a naval hospital. Her parents filed a medical negligence claim with the Department of the Navy. About three years later, the federal government entered into an agreement with the Massies to pay the claim as full satisfaction of any interests relating to the birth injuries. The government purchased an annuity pursuant to the agreement but when the insurer significantly reduced the payments, Massie's mother sued the United States in the Court of Claims, alleging breach of the agreement. Defendant moved to dismiss, arguing the court lacked jurisdiction. The court denied the motion but granted defendant summary judgment on other grounds.

Reversing, the Federal Circuit Court noted that the Tucker Act, 28 U.S.C. (sec)1491, grants the Court of Federal Claims jurisdiction over actions involving contracts with the United States and that an agreement to pay an MCA claim presumptively satisfies the Tucker Act. But, the court noted, a contract falls outside the purview of the Tucker Act if Congress has placed jurisdiction over it elsewhere. The court conceded that under the MCA, the secretary of defense's decision to pay the claim is discretionary. As a result, courts do not have jurisdiction over the decisions about allowing, and the extent to which to allow, a claim. However, the MCA does not address a breach of an agreement to pay an MCA claim, leaving the court jurisdiction in that area.

The court noted that it generally lacks jurisdiction over breach of settlement agreements when they arise from disputes that would have been litigated in another forum. However, an agreement to pay an MCA claim is more like a procurement contract than a settlement agreement because ( 1 ) the secretary, like a contracting officer, has authority to enter into contracts, (2) the decision to pay an MCA claim, like the decision to award a contract, is discretionary, (3) there is no judicial recourse if the secretary refuses to pay an MCA claim, and (4) an MCA claimant cannot relinquish the right to litigate the claim, unlike in a settlement agreement. Finding that the agreement here was an express contract, the court held that it had properly assumed jurisdiction in the case.

Plaintiff's Counsel: R Gordon Pate, Birmingham, Ala.

[Documents in this case are available through the Court Documents section in the back section of this issue, courtesy of Mr. Pate.]