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Feds Must Pay $1.6 Billion to Insurers for Obamacare Losses

Oct. 22, 2019, 6:16 PM

A class of health insurers is entitled to nearly $1.6 billion from the U.S. under an Obamacare program designed to make insurance affordable for low-income people, the U.S. Court of Federal Claims said Oct. 22.

Chief Judge Margaret M. Sweeney entered judgment for the class led by Common Ground Healthcare Cooperative, which operates in Wisconsin. Sweeney determined in February that the government’s failure to reimburse insurers for reducing members’ cost-sharing obligations violated the Affordable Care Act.

Sweeney left the case open so the insurers could identify the amount each was owed. The government and the class said in an Oct. 18 joint status report that the total amount due for unpaid claims in 2017 and 2018 is nearly $1.6 billion. They asked the court to enter judgment without prejudice to the government’s right to appeal the February decision.

The court found no just reason for delaying the entry of judgment.

Insurers participating in Obamacare health insurance marketplaces, also called exchanges, agreed to reduce some of their members’ costs, such as deductibles and copays, in exchange for the government’s promise to reimburse them for the discounts.

But Congress never appropriated the money to pay the insurers. In 2017, the Trump administration declared it would no longer do so.

The ACA, however, says the U.S. “shall make” cost-sharing payments, Sweeney said. Congress’s failure to include a funding mechanism doesn’t reflect an intent to foreclose the government’s liability, she said. The “government can create a liability without providing for the means to pay for it,” she said.

The government already has appealed several cases brought by other insurers to the U.S. Court of Appeals for the Federal Circuit.

Quinn Emanuel Urquhart & Sullivan LLP represents Common Ground and the class. The U.S. Department of Justice represents the government.

The case is Common Ground Healthcare Coop. v. United States, Fed. Cl., No. 17-877C, 10/22/19.

To contact the reporter on this story: Mary Anne Pazanowski in Washington at mpazanowski@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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