Judge dismisses Blue Cross Blue Shield of North Carolina's risk corridor lawsuit

A judge has dismissed Blue Cross Blue Shield of North Carolina's lawsuit over the federal risk corridor program. Image: Getty/AlexStar

The bevy of risk corridor lawsuits brought by health insurers continue to wend their way through the courts, with a federal judge this week dismissing one such suit on the grounds that the insurer’s claim is premature.

In the suit, Blue Cross Blue Shield of North Carolina claimed the federal government owed it roughly $140 million in risk corridor payments for 2014. It did not receive those payments because overall risk corridor collections came up extremely short of what insurers were due that year.

The risk corridor program works by requiring profitable insurers to pay into the program, while insurers with higher medical claims receive funds. The program is not able to pay out more than it collects because of a provision enacted as part of an omnibus spending bill that requires it to be budget-neutral. Given how much the government still owed insurers for 2014, all of its 2015 collections went toward that balance.

Though the BCBSNC case is one of about two dozen similar suits brought by insurers over the risk corridor program, this appears to be the first that a judge dismissed because the claim was premature, healthcare policy expert Tim Jost wrote in a Health Affairs Blog post.

Although BCBSNC claimed that the government should have paid its 2014 risk corridor claims by December 2015, U.S. Court of Federal Claims Judge Lydia Griggsby noted that the ACA did not establish an annual deadline for payments.

Thus, she wrote in her opinion (PDF) that the government has no obligation to pay BCBSNC’s risk corridor claims “until at a minimum, the agency completes its calculations for payments due for the final year of the risk corridors program.” That deadline likely will not occur until December 2017 or January 2018, she noted.

Judges in other risk corridor cases, though, have disagreed with the government’s argument that it is too early to rule on what it owes insurers before the risk corridor program concludes, Jost noted. One case, brought by Land of Lincoln Mutual Health Insurance Company, was dismissed on its merits, while a judge ruled in the insurer’s favor in a case brought by Moda Health.

In the latter case, Judge Thomas Wheeler wrote that the government “made a promise in the risk corridors program that it has yet to fulfill,” adding that “today, the court directs the government to fulfill that promise." He ruled that the government owes the Oregon-based insurer $214 million.