A federal appellate court on Tuesday dealt another blow to insurers attempting to claw back billions of dollars in unpaid risk-corridor payments they say they are owed under the Affordable Care Act.
The U.S. Court of Appeals for the Federal Circuit refused a rehearing petition from Oregon's Moda Health Plan and Illinois' Land of Lincoln Mutual Health Insurance Co. The court ruled in June that the federal government doesn't have to pay $12.3 billion in risk-corridor payments since Congress slapped a budget-neutrality requirement on the program.
Moda Health originally won its suit in 2017, as it sought $214 million from HHS, but that was overturned by the appellate court. If the plans decide to pursue additional recourse they would have to take their case to the U.S. Supreme Court.
The cases' outcome will ripple far beyond Moda Health and Land of Lincoln. All together, insurers have filed dozens of lawsuits over the risk-corridor program, which was established to mitigate their losses in the individual market during the first three years of the Affordable Care Act.
Two of the Federal Circuit's 11 judges disagreed with the court's order. Judge Pauline Newman in her dissent argued that the stakes go beyond individual promises to the health insurance industry.
"The government's access to private sector products and services is undermined if non-payment is readily achieved after performance by the private sector," Newman wrote.
The second dissenter, Judge Evan Wallach, added that the government's reliability as a business partner across all sectors is in question following the court's order.
"The government induced health insurance providers to enter the risky health exchanges through ... the risk-corridors program," he wrote.
In the court's previous 2-1 ruling, in which Newman also dissented, the panel rejected the idea that the government had breached an implied contract when it didn't make payments based on the original ACA formula.