SCOTUS sides with insurers in battle over risk corridor payments

The Supreme Court sided with insurers in a years-long battle over billions in payments promised under the Affordable Care Act.

The nation's highest court ruled (PDF) 8-1 on Monday that the ACA's risk corridor program created an obligation for the federal government to pay health plans promised funds.

The insurers suing for damages sought $12 billion in unpaid funds from the program.

The ACA established the risk corridors to encourage health plans to participate in the exchanges. If an insurer earned massive profits through the individual market, the government would claim some of those funds and pay it out to insurers that are performing poorly.

The government did collect those funds, but did not pay out money to struggling insurers. The risk corridor program closed in 2016 after three years.

RELATED: AHIP, state AGs urge appeals court to rehear risk-corridor payment case

The justices argued that the government was compelled to make the payments.

"The plain terms of the risk corridors provision created an obligation neither contingent on nor limited by the availability of appropriations or other funds," the court argued.

Justice Samuel Alito was the lone dissent in the case.

The justices also disputed the government's argument that Congress implied a repeal of the risk corridors through appropriations riders. The justices said that any riders did not actually change the payment methodology or suggest the payments were not required.

The court also argued that the health plans had standing to sue under the Tucker Act.

"Petitioners clear each hurdle: The risk corridors statute is fairly interpreted as mandating compensation for damages, and neither exception to the Tucker Act applies," the court said.

In his dissent, Alito blasts the opinion as a bailout for health plans.

America's Health Insurance Plans CEO Matt Eyles praised the ruling in a statement.

"The federal government made a clear commitment in the interest of building stable markets and making coverage more affordable for individuals and small employers," Eyles said. "Health insurance providers kept their commitments while incurring substantial losses."

"Today’s decision, as the Supreme Court observes, reflects ‘a principle as old as the Nation itself: The Government should honor its obligations,’" he added. "We appreciate that today’s Supreme Court 8-1 decision ensures that the federal government honors the obligations it made for services the private sector already delivered."