Insurers petition court to rehear risk-corridor case involving $12B in ACA payments

Legal and regulatory issues
Moda Health and Land of Lincoln asked the Federal Court of Appeals to rehear their case over risk-corridor payments. (iStock/seb_ra)

Moda Health and Land of Lincoln have asked a federal appeals court to rehear the insurers’ case involving billions in risk-corridor payments under the Affordable Care Act after a three-judge panel said the government wasn’t obligated to make the payments.

Last month, a panel of judges at the U.S. Federal Court of Appeals ruled 2-1 that the Department of Health and Human Services isn’t required to pay insurers $12 billion through the program, arguing that Congress included appropriations riders to ensure the risk-corridor program remained budget neutral.

In separate court filings, Moda and Land of Lincoln petitioned the court to rehear the case before the entire bench of 18 judges. The insurers argued that the court’s decision “directly conflicts with precedent” of the Federal Court of Appeals and the Supreme Court and “sows confusion” over how an appropriations law can override an existing statute.

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RELATED: Federal appeals court says HHS doesn’t have to make ACA risk corridor payments

“The panel majority has given the Government an undeserved windfall on the backs of health insurers who, in good faith, relied on the Government’s assurances that it would share in the risk they were undertaking,” attorneys for Moda Health wrote in their appeal (PDF).

The Federal Court of Appeals says it "grants few petitions for rehearing each year " because appeals "fail to articulate sufficient grounds upon which to grant them."

Both insurers argued the court needs to address “precedent-setting questions” around the government’s obligation to pay statutory funding despite a temporary cap on appropriations, and whether such a cap could be considered retroactive.

“Risk-Corridors payments has already gutted a central feature of the ACA, reducing the availability of insurance and increasing its costs,” Land of Lincoln wrote in its petition (PDF). “The majority’s decision will trigger further insolvencies and increase the cost of insurance for tens of millions of consumers.”

The risk-corridor program was built into the ACA as a way to protect insurers from extreme losses or gains on the ACA marketplace. Attorneys with Land of Lincoln argued that by the time the government added the appropriations riders, the insurer had already completed its 2014 plan year and had already issued policies for 2015.

Dozens of insurers have sued the government in an effort to recoup the payments, with some insurers owed upward of $600 million. Other may soon join the appeal spearheaded by Moda and Land of Lincoln. In a letter (PDF) to the court, Blue Cross and Blue Shield of North Carolina said it plans to file a petition in conjunction with the insurers.