Insurers prepare to appeal risk corridor case to the Supreme Court

View of the Supreme Court building
At least two plans will petition the Supreme Court to hear their risk corridor case. (sframephoto/iStock/Getty Images Plus/Getty Images)

A federal appeals court has denied a bid from several insurers to rehear a lawsuit seeking to recoup risk corridor payments, setting the stage for a potential battle at the Supreme Court.

Over the summer, the United States Court of Appeals for the Federal Circuit ruled that the Department of Health and Human Services (HHS) was not required to make risk corridor payments to insurers. That overturned a 2017 decision by the U.S. Court of Federal Claims that said HHS failed to fulfill its promise to make the payments designed to protect insurers from extreme gains or losses on the Affordable Care Act exchanges.

Moda Health Plans, Land of Lincoln, Maine Community Health Options and Blue Cross Blue Shield of North Carolina petitioned the federal circuit court to rehear the case in front of the entire panel of judges.

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On Tuesday, 9 of the 11 judges rejected (PDF) that request. Moda Health Plans, one of the insurers leading the litigation against HHS, plans to appeal the decision to the Supreme Court.

“Obviously we are disappointed by today’s decision,” Robert Gootee, President & CEO, Moda, Inc. said in a statement to FierceHealthcare. “We continue to believe, as the trial court did, that the government’s obligation to us is clearly stated in the law. We will seek review by the Supreme Court.”

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

Stephen McBrady, an attorney with Crowell & Moring who represents Maine Community Health Options, said the insurer also intends to appeal.

“Maine Community Health Options is a non-profit health plan that went into the exchanges and performed exactly as the Affordable Care Act required, providing healthcare coverage to thousands of previously uninsured and underinsured Maine citizens,” he said in an emailed statement. “The health plan filed its risk corridors law suit in order to enforce the government’s obligation to perform as the government was required under the ACA.  Today’s ruling is disappointing, but Maine Community Health Options intends to appeal to the Supreme Court.”

Following the Federal Circuit Court’s June decision, University of Michigan law professor Nicholas Bagley wrote in the Incidental Economist that the case is “not an implausible candidate for review… but the Court might be gun-shy about wading into another case about the ACA.”

Notably, two judges on the federal circuit—Pauline Newman and Evan Wallach—dissented, calling the case a “question of the integrity of government” with a financial impact on insurers across the country.

“Our system of public-private partnership depends on trust in the government as a fair partner,” Newman wrote. “And when conflicting interests arise, assurance of fair dealing is a judicial responsibility.”

As of last year, the government’s unpaid risk corridor tab had swelled to $12.3 billion. That brought dozens of lawsuits from insurers like Moda, Humana and Molina Healthcare, which claimed they were owed hundreds of millions in payments.