United States Court of Federal Claims Certifies a Class in ACA Litigation

Insurance Law Alert

January 5, 2017

Cynthia J. Borrelli

Cynthia J. Borrelli


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By Order filed on January 3, 2017, the United States Court of Federal Claims (Court), in Health Republic Insurance Company v. United States, certifies the proposed class, which includes:

All persons or entities offering Qualified Health Plans under the Patient Protection and Affordable Care Act (ACA) in the 2014 and 2015 benefit years, and whose allowable costs in either the 2014 or 2015 benefit years, as calculated by the Centers for Medicare and Medicaid Services, were more than 103 percent of their target amounts (as those terms are defined in the Patient Protection and ACA).

This is one of the more than 12 lawsuits that have been instituted by insurers in the Court of Claims challenging the failure of the government to pay insurers writing in the Federally Facilitated Marketplace and other state hosted exchange markets amounts that they claim were due to them under the ACA’s risk corridor program, one of the three programs intended to protect against the negative effects of adverse selection and risk selection, and also work to stabilize premiums, particularly during the initial years of implementation of the ACA. The risk corridor limits losses and gains beyond an allowable range.
 
Excluded from the class are the United States (Government) and its members, agencies, divisions, departments, and employees. The Order provides that the class claim is for amounts allegedly owed to the class by the United States pursuant to Section 1342 of the ACA and 45 C.F.R. § 153.510(b). Pursuant to the Order, by no later than Friday, January 13, 2017, the Government shall provide to plaintiff a list of potential class members, which shall include all entities that offered Qualified Health Plans under the ACA in the 2014 and 2015 benefit years, and whose allowable costs in either the 2014 or 2015 benefit years, as calculated by the Centers for Medicare and Medicaid Services, were more than 103 percent of their target amounts (as those terms are defined in the ACA). By no later than Monday, January 23, 2017, lead counsel for the class, Quinn Emanuel Urquhart & Sullivan, LLP, is required to submit to the Court a proposed notice plan and opt-in schedule that complies with the requirements of RCFC 23(c)(2)(B).

Given the state of the ACA marketplace and the number of Consumer Operated and Oriented Plans (CO-OPs) 1 which are in some type of insurance delinquency proceedings, it is expected that the size of the class’s claims will be substantial. If successful, the class action could provide further fuel for comprehensive reform or even a wholesale repeal of the ACA by President Elect Trump and Congress.



1 CO-OPs were created by the Patient Protection & Affordable Care Act (ACA). The CO-OP program was designed to help create nonprofit, member-controlled health insurance plans that would offer ACA-compliant policies in the individual and small business markets. A 15-member advisory board made recommendations to HHS regarding grants and loans for CO-OPs. Twenty-four states had CO-OP plans available in their exchanges starting in October 2014, but a large number of them have been forced to close due to solvency concerns and the initiation of insurance delinquency proceedings by state insurance regulators.