Lawrence Sher (Photo: Reed Smith)

One of the biggest health insurers in the country, Blue Cross and Blue Shield of North Carolina, has filed a brief telling the U.S. Court of Appeals for the Federal Circuit why it thinks the government should make billions of dollars in Affordable Care Act risk corridors program payments to health insurers.

North Carolina Blue argues in the brief that the government created an “implied in fact contract” with health insurers for the program; that top U.S. Department of Health and Human Services (HHS) officials made statements binding the federal government to make program payments; and that Congress has left the laws requiring the government to make the program payments intact, and simply added narrow funding source restrictions to an appropriations bill.

“If Congress can eliminate an ‘unequivocal obligation’ of the government by slipping a spending limitation into an appropriations bill, and then later asserting in litigation that the limitation substantively revised an earlier-enacted statute, nobody dealing with the government — in any industry — could confidently rely upon even an explicit statutory promise,” the company says. “That would, in turn, send ripple effects throughout the national economy.”

(Related: Judge Rejects North Carolina Blue’s $130M ACA Program Claim)

A judge told North Carolina Blue in April that ACA risk corridors program managers have no obligation to make program payments on an annual basis, and that its dispute with the program is not yet ready for action.

Judges in some other, similar cases have sided with the insurers. Molina Healthcare Inc. recently won an award for $52 million in risk corridors program payments.

Lawrence Sher, a partner at Reed Smith, is the lead attorney for both Molina and for North Carolina Blue.

ACA Risk Corridors Program

The ACA created a new system of public health insurance exchange programs, or web-based health insurance supermarkets.

The ACA risk corridors program was supposed to use cash from ACA exchange plan issuers that did well in 2014, 2015 and 2016 to help exchange plan issuers that did poorly during those years.

Republican ACA opponents put riders requiring program managers to use payments from the participating insurers, not other HHS funding, to run the program in spending bills for federal fiscal years 2015, 2016 and 2017.

Program managers have collected only enough cash to pay about 15% of the amounts owed for 2014, and none of the amounts owed for 2016. Many insurers have sued in the U.S. Court of Federal Claims for program payments.

Supporters of the risk corridors program funding restrictions have argued that the restrictions are necessary because the risk corridors program is a bailout program for health insurers.

North Carolina Blue says the risk corridors program funding restriction riders have no effect on the government’s obligation to make program payments, and only a limited effect on the ability of HHS to make the payments.

“The riders only precluded HHS from using certain funding sources for those payments,” North Carolina Blue says in the brief. “They do not prohibit HHS from drawing on funds provided from other possible appropriation sources.”

— Read Health Insurers v. USA: 3 things Agents Have to Know on ThinkAdvisor.


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