A judge on the U.S. Court of Federal Claims this week declined a request from the U.S. Justice Department to pause a health insurer’s suit that seeks more than $208 million in payments from a fund created by the Affordable Care Act.

The government urged the court to freeze Moda Health Plan Inc.’s case to allow a federal appeals court to rule in a suit that presents similar issues.

In that case, Land of Lincoln Mutual Health Insurance Co. is fighting in the U.S. Court of Appeals for the Federal Circuit to revive its claim that the fund, the ACA risk-corridors program, owes the nonprofit $75 million.

The Land of Lincoln and Moda Health cases are among several that contend the government is on the hook for hundreds of millions of dollars to insurers through the ACA risk-corridors program.

The program was supposed to help minimize the financial risk of participation in the new ACA health care exchanges. The health care law calls for risk-corridors program managers to make payments to struggling insurers with funds received from profitable exchange plan issuers.

Judge Thomas Wheeler of the Federal Claims Court ruled for Moda Health on Monday and refused to temporarily stay proceedings. The government, Wheeler said, failed to prove a “pressing need” to temporarily stop the action. Wheeler acknowledged Land of Lincoln’s pending appeal but said the Federal Circuit will benefit from having more than one ruling in the lower court.

“[O]ne of the main functions of an appellate court is to consider the various viewpoints of the lower courts,” Wheeler wrote in his ruling. “It logically follows that lower courts must be free to consider similar facts and reach independent conclusions—otherwise, there would be no need for an appellate court to harmonize the law within a circuit.”

In Land of Lincoln’s case, Charles Lettow, a Federal Claims judge, dismissed the nonprofit’s case this month. Lettow concluded that the health care exchange’s issuer-agreements, which describe how the ACA risk-corridor payments work, are not, in fact, binding contracts.

Moda Health, represented by Covington & Burling, sued the U.S. government in June. The complaint said the insurer, which provided coverage in the Pacific Northwest, is owed more than $208 million for the 2014 and 2015 coverage years. A Moda Health executive this month said in a declaration that the government’s alleged payment breach caused the insurer to withdraw from health markets in California, Washington state and Alaska.

“Moda would not have needed to take these steps if it had been timely paid the entirety of the 2014 and 2015 risk corridor payments,” James Francesconi, vice president of public policy for Moda Health. “Until the government fulfills its risk corridor obligations, Moda cannot expand its operations or otherwise conduct business as in the past and as planned.”

Other Federal Claims judges are overseeing related suits that demand risk-corridor payments.

Judge Margaret Sweeney will hear argument on Dec. 8 in Health Republic Insurance v. United States. Quinn Emanuel Urquhart & Sullivan represents the New Jersey-based health insurance provider.

Reed Smith represents First Priority Life Insurance Co. in its lawsuit over risk-corridor payments. No argument date is set. The firm also represents Blue Cross & Blue Shield of North Carolina in its suit in the Federal Claims court.

Instant Insights /

Judge, ruling against feds, won't freeze health insurer's ACA suit

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