Plaintiff Health Republic Insurance Company claims that Defendant United States has not fully paid the risk corridors payments for 2014 and 2015 to which it and other insurers such as your organization are entitled under the Affordable Care Act. Section 1342 of the Affordable Care Act established a risk corridors program that applied to insurers who offered QHPs on the Affordable Care Act's insurance exchanges in any of the 2014, 2015, or 2016 plan years. The risk corridors program provided that QHP issuers would receive compensation from the United States if their losses exceeded a certain defined amount due to higher-than-expected utilization and medical costs for the issuer's insureds. At the same time, the risk corridors program provided that QHP issuers would pay the government a percentage of any unexpectedly high profits they made over similarly-defined amounts. During 2014, QHPs collectively incurred almost $2.9 billion in compensable losses under the risk corridors program. Similarly, QHPs also incurred substantial compensable losses in 2015, totaling about $5.8 billion.
In appropriations acts for 2015 and 2016, Congress prohibited the Centers for Medicare & Medicaid Services ("CMS") and the United States Department of Health & Human Services ("HHS") from making risk corridor payments from funds appropriated under those acts. HHS and CMS adopted a "budget neutral" approach to the program in which only risk corridor collections from QHP issuers would be used to make risk corridor payments out to other QHP issuers. HHS also stated that distributions under the risk corridor program would be reduced pro rata to the extent of any shortfall. As a result of this budget neutral approach (which Plaintiff contends in this lawsuit violates the Affordable Care Act), QHP issuers received only 12.6% of the amounts owed to them under the risk corridors program for the 2014 plan year, representing a $2.5 billion shortfall. Collections from the 2015 plan year were even less, and HHS used collections from that year to pay QHP issuers an additional 1.6% of their owed amounts for the 2014 plan year, meaning that QHP issuers received no risk corridor compensation for the 2015 plan year. Today, the collective shortfall for the 2014 and 2015 plan years stands at approximately $8.3 billion.
In February 2016, Plaintiff Health Republic Insurance Company filed a class action lawsuit in the United States Court of Federal Claims alleging that, through this "budget neutral" approach to the risk corridors program, the Government violated Section 1342 of the Affordable Care Act and its implementing regulations. Plaintiff claims that the Class is entitled to relief under the Tucker Act, a federal statute that provides the United States Court of Federal Claims with jurisdiction to award money judgments against the federal government where a statute is money-mandating and requires payment. The case was assigned to Judge Margaret M. Sweeney. On January 3, 2017, the Court entered an order granting class certification and appointing Quinn Emanuel Urquhart & Sullivan, LLP as lead counsel for the Class.
On January 10, 2017, the Court denied the United States' motion to dismiss Plaintiff’s claim for payment under the Affordable Care Act. Specifically, the Court found that it had subject matter jurisdiction over Plaintiff's claim that HHS, by failing to make full risk corridors payments for 2014 and 2015, violated section 1342 of the Affordable Care Act. The Court further found that this claim was ripe for adjudication, and so did not need to wait for some future event before the Class could pursue risk corridor payments from the Government. The Court granted the United States’ motion to dismiss with respect to limited additional relief Plaintiff requested, but this was to relief other than the unpaid risk corridor amounts, including special or consequential damages (on top of the amounts currently owed by statute), declaratory and injunctive relief, and pre-judgment and post-judgment interest.
More detailed information about this lawsuit is contained in the Class Action Complaint filed in this lawsuit. The Class Action Complaint and the Court's decision on the Government's motion to dismiss are available at the Important Documents page.