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Life Health > Health Insurance

Federal court keeps carrier's ACA claim alive

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A federal judge at the U.S. Court of Federal Claims does not think she can give immediate help to a Lake Oswego, Oregon-based-based health insurer that’s seeking more than $21 million in payments from a troubled Affordable Care Act program. But she does think she can rule on whether the program owes the insurer money.

Related: Oregon CO-OP sues for $5 billion in risk corridors cash

Judge Margaret Sweeney on Tuesday approved some parts of a complaint filed by Health Republic Insurance Company and rejected others. Health Republic was based in Lake Oswego, Oregon. The company began shutting itself down, in part because of concerns about the ACA program payment delays, in October 2015.

Health Republic in February 2016 accused the United States of America of causing severe financial problems for it and other insurers by failing to make $22 million in program payments owed to it, and about $5 billion owed to other insurers, for 2014 and 2015.

Section 1342 of the Affordable Care Act directed the U.S. Department of Health and Human Services to provide a risk corridors program for the insurers selling coverage through the ACA public exchange system in 2014, 2015 and 2016. The program was supposed to shield issuers from some of the effects of new ACA programs and rules by using cash from thriving exchange plan issuers to help struggling issuers during the year the program was in effect.

HHS risk corridors program managers have collected only enough cash from exchange plan issuers that did well in 2014 and 2015 to pay about 16 percent of the amounts owed to struggling issuers for 2014. The program has not paid any of the amounts owed to struggling issuers for 2015.

Sweeney concluded in her ruling that her court lacks subject matter jurisdiction over Health Republic’s request for damages from the federal government’s failure to make risk corridors program payments, or for declaratory or injunctive relief.

“The court possesses subject matter jurisdiction to entertain plaintiff’s claim that HHS, by failing to make full risk corridor payments for 2014 and 2015, violated section 1342 of the Affordable Care Act and the regulation implementing section 1342′s payment requirements,” Sweeney said in her ruling.

Sweeney also concluded that Health Republic’s claim for unpaid risk corridors payments for 2014 and 2015 is ripe for adjudication.

Representatives for Health Republic and HHS were not immediately available for comment.

Stephen Swedlow, an attorney in the Chicago office of Quinn Emanuel Urquhart & Sullivan, leads the team representing Health Republic of Oregon.

Charles Canter, a lawyer in the U.S. Justice Department, is leading the defense for the United States of America.

Pittsburgh-based Highmark Inc., Chicago-based Land of Lincoln Mutual Health Insurance Company and other carriers have filed similar suits. In November, Judge Charles Lettow rejected Land of Lincoln Mutual’s suit. Lettow ruled that HHS has no contractual obligation to make risk corridors program payments.

Co-op problems

Representatives from the New York-based Freelancers Union said in 2013 that they had helped groups in Oregon, New Jersey and New York start health plans using cash from the ACA Consumer Operated and Oriented Plan program. Freelancers Union said in 2013 that it had no ongoing connection with the CO-OPs, because of CO-OP rules, and that the three CO-OPs were separate companies.

ACA drafters created the CO-OP system in an effort to create a new type of nonprofit, member-owned health insurer that would increase the level of competition in the private health insurance market.

Like Health Republic of Oregon, Newark, New Jersey-based Health Republic Insurance of New Jersey and New York-based Health Republic Insurance of New York have shut down.

New York state began liquidating Health Republic of New York in April.

New Jersey regulators put Health Republic of New Jersey in rehabilitation in October.


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