The U.S. Court of Federal Claims has issued judgments of $3.7 billion for health insurers involved in two class actions over the federal government’s failure to pay funds owed under a now-expired Affordable Care Act program. Feds
The judgments issued late Thursday come after the U.S. Supreme Court ruled in April that insurers were owed more than $12 billion in ACA risk-corridor payments. After that ruling, the lower courts worked on resolving the dozens of pending lawsuits, including the two class actions.
Now, more than four years since the first risk-corridor lawsuits were filed, lower court judgments and agreements between the insurers and the U.S. Department of Justice have accounted for $9.6 billion of the $12.2 billion in unpaid risk-corridor funds, according to Katie Keith, a Georgetown University law professor who tracks ACA litigation.
Once an insurer obtains a judgment, the HHS can ask the U.S. Treasury Department for payment from the Judgment Fund, she said. It is unclear how long that process will take.
The ACA risk-corridor program was created to keep insurance premiums stable by protecting insurers from significant financial losses during the first three years of the public insurance exchanges. The government would collect payments from insurers that did well and distribute payments to those with high losses.
But the government did not pay the full amount, arguing that Congress erased its obligation by passing appropriations riders that effectively made the program budget neutral. It also argued that funds were not appropriated for the risk-corridor program beyond what it collected from profitable health plans. The Supreme Court disagreed and found that the federal government was obligated to pay up.
The government subsequently asked for a delay in some cases, prompting speculation that it might try to recoup some of the risk corridor payments owed. But in large part, the cases have been resolved quickly without much dispute over the amounts.
On Thursday, the Court of Federal Claims ordered the U.S. government to fork over about $1.9 billion in unpaid risk corridor funds for 2014 and 2015, largely settling a class action led by Health Republic Insurance. It also ordered the government to pay $1.8 billion in unpaid funds for 2016 to resolve the class action led by Common Ground Health Cooperative. In each class action, a handful of insurers’ payments are still in dispute.
Earlier this month, the court also entered judgments in the lawsuits of four other insurers that were the subject of the Supreme Court litigation— Blue Cross and Blue Shield of North Carolina, Land of Lincoln, Maine Community Health Options, and Moda Health Plan. Beyond those, dozens of other lawsuits have been resolved, though some are still pending. New cases are also being filed.
Legal and insurance experts have said the payments are unlikely to benefit health plan members in the form of lower premiums or rebates under the ACA medical loss ratio rule, which requires insurers to spend a specific portion of premium revenue on medical care and quality improvement.
Moreover, some of the insurers, including most of the health insurance cooperatives created under the ACA, that sued to recover the payments have shuttered. In at least two cases, litigation funding firms and other investors bought insurers’ recoveries from the lawsuits.
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