A judge's gavel over money (Credit: Shutterstock)

A federal judge in Washington, D.C., has awarded $1.6 billion in damages to health insurers affected by the United States of America’s refusal to make Affordable Care Act (ACA) cost-sharing reduction subsidy payments for 2017 and 2018.

Chief Judge Margaret Sweeney, a judge at the U.S. Court of Federal Claims, approved an insurer damages list last week, in connection with the case Common Ground Healthcare Cooperative et al. v. United States of America.

(Related: Health Care CEOs Hope ‘Idiocy’ Will Blow Over)

Sweeney noted in the order approving the damages list that the court concluded in February that the U.S. government’s refusal to make ACA cost-sharing reduction subsidy payments violated federal law.

Sweeney was appointed to the court by former President George W. Bush. She was designated chief judge by President Donald Trump in 2018.

One factor that could help increase the odds that the ruling will stick is that some of the biggest recipients of back cost-sharing reduction subsidy payments could be carriers in states heavily represented by Republicans in Congress.

About 100 carriers are on the list.

The carrier in line to seek the biggest award is Blue Shield of California, with a $159 million damages award approval.

Blue Cross and Blue Shield of South Carolina ranks second, with a $132 million award approval, and SelectHealth, a Utah carrier, ranks third, with a $107 million award approval.

Affiliates of Oscar, a carrier co-founded by Joshua Kushner, could get $70 million.

Kushner is the brother of Jared Kushner, a White House senior advisor.

HMO Louisiana Inc. is another carrier that could get a large payment. Sweeney has approved a $43 million damages award for HMO Louisiana.

ACA Subsidy Program Basics

The drafters of the ACA created the ACA public exchange program, or web-based health insurance supermarket, to help consumers use federal subsidies to buy commercial health coverage.

The ACA cost-sharing reduction subsidy program helps ACA public exchange users with household income under 250% of the federal poverty pay their health insurance deductibles, co-payments and coinsurance amounts.

Republicans in Congress had argued that the administration of former President Barack Obama lacked a valid congressional authorization to make the payments.

The Trump administration continued to make the payments at first, but it cut off the stream of payments in October 2017, arguing that it still had no congressional authorization to make the payments.

Common Ground Healthcare’s Reaction

Common Ground Healthcare, the nonprofit Wisconsin-based carrier that has served as the lead plaintiff in the cost-sharing reduction subsidy lawsuit, said in a statement that, even after the Trump administration stopped the subsidy program payments, carriers were still required by law to reduce the low-income enrollees’ cost-sharing bills.

That conflict “meant the loss of millions of dollars for insurers in 2017 who had set their prices for the plan year months earlier,” Common Ground said in the statement. “Some insurers left the market in 2018 when they faced financial losses while others were forced to increase health insurance premiums.”

— Read ACA Cost-Sharing Reduction Deal Helps States’ Suit Proceed, on ThinkAdvisor.

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