DOJ Blasts Insurers' Call for $12B in ACA Risk Corridors Payments

Moda Health's Position

"Like numerous other insurers, petitioners responded exactly as Congress intended, participating in the exchanges and charging lower premiums than they would have absent the government's commitment to share some of the risk," lawyers for Oregon-based Moda Health Plan Inc. said in a petition filed in February with the Supreme Court.

Moda is represented by Kirkland & Ellis, including partner Paul Clement, who was identified as counsel of record. Moda's lawyers argued that "the net effect was a bait-and-switch of staggering dimensions in which the government has paid insurers $12 billion less than what was promised."

Moda's attorneys argued that the Federal Circuit decision, left untouched, "provides a roadmap for the government to promise boldly, renege obscurely, and avoid both financial and political accountability for depriving private parties of billions in reliance interests."

Clement added, "That the decision emanates from the court with exclusive jurisdiction over financial claims against the government only underscores the need for this court's review. There is no prospect of further percolation; there is only the certainty of further damage."

The Blues' Position

Lawyers from the law firm O'Melveny & Myers filed an amicus brief on behalf of Blue Cross Blue Shield Association, which advocates for the interests of 36 locally operated companies that provide insurance for about 106 million people.

"Blue Plans were disproportionately injured by the government's bait-and-switch. Of the $12.3 billion in risk corridors obligations that the government has failed to pay, 40% — or nearly $5 billion — is owed to Blue Plans," O'Melveny partner K. Lee Blalack II wrote in the friend-of-the-court brief.

DOJ Position Details

Moda's and Blue Cross' "repeated invocations of a multibillion-dollar 'bait-and-switch' ring hollow," DOJ said Wednesday. "The [Affordable Care Act] itself provided no funding for risk-corridors payments, leaving that determination to the judgment of future Congresses."

HHS "had no authority to make payments, or to commit the government to making such payments, beyond the sums (if any) Congress ultimately appropriated," DOJ argued.

DOJ said it would've been unreasonable to expect any insurer to participate in the ACA exchanges based on the assumption that certain costs would be reimbursed, given that the ACA itself did not provide funding for those subsidies and that "future Congresses might elect never to provide full or any funding."

"It is more probable that insurers like petitioners elected to sell plans on the exchanges as a result of the powerful business incentives they had to do so," DOJ said.

Resources

Links to the ACA risk corridors program litigation briefs, including the new DOJ brief, are available here.

— Read Judge, Ruling Against Feds, Won't Freeze Health Insurer's ACA Suit, on ThinkAdvisor.

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