Another insurer loses its risk corridor lawsuit

justice scales and gavel
The court's ruling on a complaint filed by Maine Community Health Options is the third time the government has prevailed in a risk corridor case. ( Getty/BrianAJackson)

The federal government has notched another win in its legal battle with insurers over risk corridor payments.

A federal court ruled (PDF) in a summary judgment this week that Maine Community Health Options had no claim for risk payments beyond those it had already received. Congress included provisions in previous appropriations bills that blocked risk corridor payments for funds collected in 2015 and 2016, which kept it from making additional payments to insurers.

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In its decision, the court "tellingly suggested" that the result might have been different if Congress had simply not appropriated funds for a statutory obligation instead of expressly blocking the payments through an appropriations rider, health policy expert Timothy Jost notes in a post on the Health Affairs Blog.

Thus, the ruling could have implications if insurers sue the government in the event the Trump administration follows through on its threats to end cost-sharing reduction payments, he wrote.

RELATED: Trump administration to make CSR payments this month, yet signs persist that it's undermining ACA

The court's ruling in the Maine insurer's case is the third time the government has prevailed in a risk corridor case. A suit brought by Land of Lincoln Mutual Health Insurance Company was dismissed on its merits, and another judge ruled that Blue Cross Blue Shield of North Carolina's claims were premature. However, a judge ruled in favor of Oregon-based Moda Health's claim that the government owes it $214 million in risk corridor payments. 

Both the Land of Lincoln and Moda Health rulings are being appealed, and a panel of judges is considering the cases together. Ultimately, experts suggest, it may be up to the Supreme Court to intervene in the dispute.

The risk corridor program, which collects funds from more successful individual-market insurers and pays funds to less successful ones, has faced shortfalls as many insurers underestimated their enrollees’ claims costs. The payment shortfalls proved disastrous for many consumer operated and oriented plans, spawning a series of lawsuits from those nonprofits and other insurers. 

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