On April 18, 2017, federal court of claims judge Lydia Griggsby dismissed a risk corridor lawsuit brought by Blue Cross and Blue Shield of North Carolina (BCBSNC). The case was one of approximately two dozen lawsuits now pending in the federal court of claims brought by insurers who have been denied the full payment they believe is due them under the Affordable Care Act’s risk corridor program for 2014 and 2015.
Also, on April 17, the Supreme Court denied certiorari (review) in West Virginia v. the Department of Health and Human Services. West Virginia had sued HHS claiming that the 2013 “administrative fix,” which had allowed states to permit insurers to continue to offer ACA-noncompliant “transitional” or “grandmothered” health plans after December 2013, was illegal. And on April 6, CMS announced that HealthCare.gov would not, after April 1, 2017, be granting special enrollment periods with retroactive coverage effective during 2016, except when retroactive coverage was due to a successful eligibility appeal.
The Latest Risk Corridor Payment Judicial Decision
Health Affairs Blog readers should by now be familiar with the litigation over risk corridor payments. By way of quick summary, the ACA included a risk corridor program under which the government would share losses or profits of insurers who offered qualified health plans during 2014, 2015, and 2016 if those losses or profits exceeded certain thresholds. During 2014 and 2015, insurer losses far exceeded profits, and the government limited payments under the program to the amount of program collections. BCBSNC claimed that this policy resulted in it being paid $140 million less in 2014 than it was owed and sued for this amount.
BCBSNC claimed that the government’s failure to pay the full amount due violated statutory obligations imposed under the ACA, as well as the government’s obligations under an express contract, an implied-in-fact contract, an implied contractual covenant of good faith and fair dealing, and the Constitution’s Takings Clause (which prohibits the government from taking property without just compensation). The government moved to dismiss the BCBSNC complaint, arguing that it had no legal obligation under any of these theories. It further asserted, however, that the court of claims lacked jurisdiction over the case because BCBSNC was not presently due anything: Full risk corridor payments would only be due, if ever, when a final accounting for the program is made at the end of 2017 or beginning of 2018.
Judge Griggsby accepted the government’s argument that the BCBSNC claims were not presently due under any of BCBSNC’s theories and dismissed the case. She expressly did not reach the question, however, of whether full payment will be due when the program winds up.
Judges in four earlier risk corridor cases rejected the government’s argument that adjudication of the risk corridors was premature before the program winds up. One of these judges proceeded to dismiss the claim on the merits, while another ruled for the insurer. The BCBSNC decision is the first risk corridor decision, I believe, to dismiss a case because it is premature. But, in any event, the Land of Lincoln decision for the government has been appealed to the federal circuit court of appeals, which is likely to address the legal issues raised by these cases on the merits at some point in the next year.
Supreme Court Denies Review Of Ruling Against Challenge To ‘Administrative Fix’
With the Supreme Court denial of certiorari in West Virginia v. the Department of Health and Human Services, no Affordable Care Act cases remain pending before the Supreme Court to my knowledge. If one counts the various contraceptive cases as ACA cases, this is, I believe, the first time in years that this has been true.
West Virginia had sued HHS claiming that the 2013 “administrative fix,” which had allowed states to permit insurers to continue to offer ACA-noncompliant “transitional” or “grandmothered” health plans after December 2013, was illegal. West Virginia argued that the policy violated the ACA itself as well as the Administrative Procedures Act and that it also impinged on state sovereignty under the Tenth Amendment and unlawfully delegated federal executive and legislative power to the states. West Virginia did not ask the court to invalidate the transitional policy, however, but rather asked it to declare invalid the HHS position that the decision to enforce or not enforce the transitional policy was up to the states.
The district court dismissed the case, holding that West Virginia did not have standing to sue because it was not concretely injured by the administration’s action. The District of Columbia Circuit Court of Appeals affirmed. West Virginia asked the Supreme Court to take certiorari and reverse this decision.
West Virginia’s primary argument for standing was that it had been injured by the HHS transition plan policy because the policy made the state “politically accountable” for enforcement of the law while the ACA itself imposed the political accountability for enforcing the law on the federal government. West Virginia claimed that its citizens who wished to see the ACA enforced would blame it for non-enforcement when the real blame belonged with the federal government. The courts below held that this is not the kind of concrete injury required to establish standing. The Trump administration Justice Department filed a brief agreeing with this position and urging the Court to reject the state’s position. (The Trump administration also extended the challenged transitional policy for another year.)
The Supreme Court apparently agreed with the administration and the lower courts. West Virginia’s claim is now at an end.
CMS Limits Retroactive Effect Of Special Enrollment Periods, Following Past Practice
On April 6, 2017, CMS announced that HealthCare.gov would not, after April 1, 2017, be granting special enrollment periods with retroactive coverage effective during 2016, except when retroactive coverage was due to a successful eligibility appeal. This is in accordance with past CMS practice.