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Justices Seem Doubtful of Government’s Obamacare Pay Denial

Dec. 10, 2019, 5:29 PM

The U.S. Supreme Court Dec. 10 seemed open to arguments that the government must pay health insurers over $12 billion in unpaid Obamacare risk corridor funds program.

Chief Justice John G. Roberts Jr. and Justices Stephen G. Breyer, Sonia Sotomayor, Elena Kagan, and Brett M. Kavanaugh all asked U.S. Deputy Solicitor General Edwin S. Kneedler why the government shouldn’t have to live up to statutory language saying it “shall pay” insurers who lost money by offering health care coverage on Affordable Care Act exchanges at affordable premiums.

If a person tells another, I’ll pay you X if you do Y, and the person performs the requested act, why wouldn’t the promisor have to pay? Breyer repeatedly asked. How is the government different? he said.

Because Congress never appropriated the money to fund the risk corridor program, Kneedler responded. If there’s no appropriation, there can be no payment. Moreover, Congress specifically limited the funds from which insurers could be paid in subsequent appropriations, he said.

Where is the line? Breyer asked. Is there no situation in which the government has to abide by a money-mandating promise if there is no appropriations language in a statute? Roberts asked.

Kavanaugh noted that there are lots of laws that use similar payment language, but include the phrase, “subject to appropriations.” Kneedler said the specific language isn’t required; it can be inferred.

But adding that language puts everyone on notice that the payments are conditioned on appropriations, Kagan said. Here, the insurers performed, then were told they wouldn’t be paid, she said.

Caution Light

Paul D. Clement, arguing for the insurers, didn’t get a free pass. Roberts wanted to know why the insurers relied on the government’s alleged promise to pay when there was no appropriations language in the law. The lack of a specific appropriation “was a clear yellow light,” he said.

“Not so clear,” Clement said. The 2010 statute contained a money-mandating promise, he said, It wasn’t until the end of 2014 that insurers learned they wouldn’t be paid in full, he said. By that time, they had already performed their obligations, he said.

This type of retroactive denial is “pernicious,” he said.

Clement also repeated an argument made by Kagan that the section of the risk corridor provision that requires insurers who made money to pay a portion of their profits to the government used identical language and obligated the insurers to pay in. Text matters here, he said.

Government Obligation?

The justices are being asked to decide if the risk corridor section statutorily obligated the government to reimburse insurers for losses they suffered when they failed to set premiums high enough to cover the costs of care for people who were previously denied insurance or charged higher rates.

If it decides the statute imposed that obligation on the government, then the court must decide if Congress repealed it by implication by refusing to appropriate money to make the payments and ordering the Health and Human Services Department to only use money paid in by profitable insurers to satisfy the claims.

Clement, of Kirkland & Ellis LLP, Washington, said the obligation was clear: the law says the government “shall pay.” The government’s action subsequent refusal to pay was a massive “bait-and-switch,” he said.

But an agency can only pay out the funds appropriated to it by Congress, and Congress didn’t appropriate funds for the risk corridor payments, Kneedler said.

The HHS to date has paid insurers only a fraction of the money they say they’re owed.

The case is Maine Cmty. Health Options v. United States, U.S., No. 18-1023, oral arguments 12/10/19.

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

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com