Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance

Judge, ruling against feds, won't freeze health insurer's ACA suit

Your article was successfully shared with the contacts you provided.

A judge on the U.S. Court of Federal Claims this week declined a request from the U.S. Justice Department to pause a health insurer’s suit that seeks more than $208 million in payments from the Affordable Care Act risk corridors program.

The government urged the court to freeze Moda Health Plan Inc.’s case to allow a federal appeals court to rule in a suit that presents similar issues. In that case, Land of Lincoln Mutual Health Insurance Co. is fighting in the U.S. Court of Appeals for the Federal Circuit to revive its claim that the program owes the nonprofit carrier $75 million.

Related: Federal Claims Court rejects insurer’s ACA risk corridors suit

Moda Health is based in Portland, Oregon. Land of Lincoln was based in Chicago.

The Land of Lincoln and Moda Health cases are among several in which the plaintiffs contend that the government is on the hook for hundreds of millions of dollars in ACA risk corridors program payments.

The ACA risk corridors program was supposed to help minimize the financial risk insurers faced when participating in the ACA health insurance exchanges. Program managers were supposed to use cash from thriving exchange plan issuers to help struggling issuers. Managers collected only enough cash from thriving issuers to pay about 13 percent of the program obligations for 2014, and managers have said they expect to use any cash they collect from the program for 2015 to meet the 2014 obligations.

Judge Thomas Wheeler of the Federal Claims Court ruled for Moda Health on Monday and refused to temporarily stay proceedings. The government, Wheeler said, failed to prove a “pressing need” to temporarily stop the action. Wheeler acknowledged Land of Lincoln’s pending appeal, but he said the Federal Circuit will benefit from having more than one ruling in the lower court.

“[O]ne of the main functions of an appellate court is to consider the various viewpoints of the lower courts,” Wheeler wrote in his ruling. “It logically follows that lower courts must be free to consider similar facts and reach independent conclusions — otherwise, there would be no need for an appellate court to harmonize the law within a circuit.”

In Land of Lincoln’s case, Charles Lettow, a Federal Claims judge, dismissed the nonprofit’s case this month. Lettow concluded that the health care exchange’s issuer-agreements, which describe how the ACA risk-corridor payments work, are not, in fact, binding contracts.

Moda Health, represented by Covington & Burling, sued the U.S. government in June. The complaint said the insurer, which provided coverage in the Pacific Northwest, is owed more than $208 million for the 2014 and 2015 coverage years. A Moda Health executive this month said in a declaration that the government’s alleged payment breach caused the insurer to withdraw from health markets in California, Washington state and Alaska.

“Moda would not have needed to take these steps if it had been timely paid the entirety of the 2014 and 2015 risk corridor payments,” James Francesconi, vice president of public policy for Moda Health. “Until the government fulfills its risk corridor obligations, Moda cannot expand its operations or otherwise conduct business as in the past and as planned.”

Other Federal Claims judges are overseeing related suits from carriers that are asking for risk corridor program payments.

Judge Margaret Sweeney will hear argument on Dec. 8 in Health Republic Insurance v. United States. Quinn Emanuel Urquhart & Sullivan represents Health Republic, which was based in Lake Oswego, Oregon.

Reed Smith represents First Priority Life Insurance Co. in its lawsuit over risk-corridor payments. No argument date is set. First Priority is a unit of Pittsburgh-based Highmark Inc. The firm also represents Durham, North Carolina-based Blue Cross & Blue Shield of North Carolina in its suit in the Federal Claims court.


ACA World: Where’s the litigation?

ACA creeps into state and local courts: 5 early cases

Are you following us on Facebook?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.