Court rules that the government owes Molina $52M in risk corridor payments

Gavel
In addition to Friday's ruling in favor of Molina Healthcare, a judge ruled in February that the government owes Moda Health $214 million in payments from the risk corridor program. (Brian Turner/CC BY 2.0)

Molina Healthcare, which recently reported a staggering quarterly loss, received some welcome good news when a judge ruled that the U.S. government owes it $52 million in risk corridor payments.

The partial summary judgment (PDF), issued Friday by the U.S. Court of Federal Claims, is the second win for an insurer in a risk corridor case. The court ruled in February that the government owes Moda Health $214 million in payments from the program. 

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The courts sided with the government, however, in a case brought by Maine Community Health Options and one brought by Land of Lincoln Mutual Health Insurance Company. In another case, brought by Blue Cross Blue Shield of North Carolina, the court ruled that the insurer’s claims were premature. Cases brought by other insurers are still winding their way through the court system.

At issue in each of the cases is whether the government broke its statutory obligations laid out in the Affordable Care Act to make payments to health plans that experienced high claims costs. Individual market health plans have not received their due payments because not enough plans paid into the risk corridor program—and crucially, Republicans added a rider to past appropriations bills that prevents the program from using taxpayer money to make up the shortfall.

RELATED: More bad news for insurers in latest risk corridor data

In the Maine Community Health Options case, the court dismissed the insurer’s claims based on the fact that these appropriations riders capped payments to insurers, making the program “budget neutral.” 

But in Molina’s case, the judge saw it differently, arguing that “Congress did not clearly or adequately express an intent to make the program ‘budget neutral’ in the appropriations riders,” especially since the ACA was unequivocal in stating that paying insurers was a mandatory obligation.

In summary, the government is “liable for its breach of a statutory and contractual obligation to make full annual payments to insurers who participated in the risk corridor program,” the ruling states.

The decision in Molina's favor comes on the heels of much less positive news for the insurer, as it reported last week that it lost $230 million in the second quarter and will exit the ACA exchanges in at least two states as it undergoes a restructuring process. Citing financial losses tied to its individual market business, the company fired its CEO and CFO in May.

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