A litigation funding firm has placed a bet suggesting that it thinks insurers and states may have a reasonably good chance to collect the payments originally promised by the Affordable Care Act risk corridors program.
Juris Capital L.L.C. has agreed to pay $10.5 million to the estate of HealthyCT Inc., a failed health insurer, in exchange for the right to collect up to about $31 million from an amounts the insurer's liquidators end up getting from the risk corridors program.
The Chicago-based firm previously agreed, in late 2016, to pay $1,055,000 to acquire corridors program recoveries from the liquidators of Land of Lincoln Mutual Health Insurance Company. Under the Land of Lincoln Mutual recovery formula, Juris Capital could collect up to $3.3 million from any Land of Lincoln Mutual risk corridors lawsuit recoveries.
The Connecticut insurance regulators liquidating HealthyCT are suing for at least $35 million in payments from the risk corridors program on behalf of HealthyCT. The Illinois regulators liquidating Land of Lincoln Mutual are suing for about $76 million. The ratio of the amounts Juris Capital is paying for recovery rights to the maximum amount Juris Capital could get implies that the firm thinks the HealthyCT and Land of Lincoln Mutual liquidators have at least a 25% chance of getting the risk corridors program recoveries sought.
CO-OPs
HealthyCT and Land of Lincoln Mutual were health nonprofit, member-owned carriers started with loans from the Affordable Care Act Consumer Operated and Oriented Program. The CO-OP system was supposed to improve competition in the individual and small-group major medical markets, by creating new carriers that would put enrollees' interests first.
The 23 CO-OPs formed ended up suffering from the effects of early Affordable Care Act enrollment system glitches, tight federal restrictions on their marketing and financing efforts and their own operational problems.
The CO-OPs also suffered from problems with two Affordable Care Act programs that were supposed to protect insurers against Affordable Care Act-related risk. One of the programs, the risk-adjustment program, was supposed to use cash from individual and small-group health coverage issuers with low-risk enrollees to help the issuers with high-risk enrollees. For issuers, knowing whether they will have to pay huge sums of cash into the program, or get cash out, has been difficult.
The other program, the risk corridors program, was supposed to help Affordable Care Act exchange plans cope with exchange system startup problems, by using cash from thriving issuers to help struggling issuers. That program, which was supposed to last from 2014 through 2016, has collected only enough cash to pay 15% of the obligations for 2014. The program has not paid anything for the 2015 and 2016 obligations.
Many issuers have sued the federal government, arguing that the United States of America promised issuers the money and has to fund the program. The U.S. government has argued that the issuers simply had documents describing how the program was supposed to work, not a contract, and that the government has no obligation to make the payments.
One federal judge rejected the issuers' arguments in April, but two other federal judges have sided with the issuers. A judge told the U.S. government's lawyers in February that the government's arguments are unworthy of the U.S. government.
Agent and Broker Commissions
