- A federal judge tossed out Illinois health insurance co-op Land of Lincoln Health’s lawsuit seeking more than $75 million it claims it is owed by the government under the ACA’s risk corridors program.
- In a Nov. 10 ruling, Judge Charles Lettow of the U.S. Court of Federal Claims said the ACA public exchange issuer agreements aren’t binding but merely propose how the program should work.
- The ACA risk corridor program requires HHS to pay exchange plans that suffer high losses with money collected from highly profitable plans.
Judge Lettow’s decision could be a sign for similar lawsuits. In addition to Land of Lincoln, Highmark, Health Republic Insurance, Blue Cross and Blue Shield of North Carolina and Moda Health Plans have sued the government this year to collect risk corridor payments. Highmark has accused the government of paying just over a quarter of the $223 million it was owed in 2014 risk corridor payments.
Land of Lincoln sued the government in June for failing to pay millions of dollars in risk corridor payments. The Chicago-based startup reported losses of $90.8 million in 2015 and $7.1 million for the 2016 first quarter. The insurer claimed it set its premiums lower than it would have without the promise of the risk corridor funding.
At the time the lawsuit was filed, Land of Lincoln CEO Jason Montrie told The Chicago Tribune all insurers participating in the public exchanges “went in understanding that the first few years would have a lot of volatility. When one of the primary mechanisms designed to help stabilize the market is removed, it creates a lot of damage."
Faced with a $32 million bill from CMS, Land of Lincoln shuttered its operations and liquidated. The move followed an ill-fated attempt by Illinois insurance regulators to work out a deal with the federal government to keep the struggling co-op alive.
On Oct. 1, HHS officials announced the risk corridor program had taken in less than originally anticipated and could pay only a fraction of the payments owed for 2014, 2015 and 2016, according to NLJ.