Although a federal judge ruled last week that Molina Healthcare Inc. is owed more than $52 million under an Affordable Care Act program meant to incentivize participation in the public exchanges, the California-based insurer may not see the money anytime soon.
With one claim still pending, the case is among more than two dozen winding their way through the U.S. Court of Federal Claims, as the health care industry faces increasing uncertainty: Just two days before Judge Thomas Wheeler's ruling in Washington, D.C., last week, Molina announced that it will exit the marketplaces in Utah and Wisconsin by year's end. It experienced losses of $230 million in the second quarter.
Wheeler on Aug. 4 granted partial summary judgment in favor of Molina, ruling that the federal courts have the authority to get the cash for the risk corridor program payments from the federal Judgment Fund, an indefinite, unlimited appropriation available to pay court judgments entered against the United States. The decision marks the second win for insurers in a spate of risk-corridor litigation.
The ACA risk corridor program was established under the Obama administration to ease insurers into participating in the public exchanges by dispelling their fears of financial losses from covering previously uninsured Americans.
The idea was to use money from insurers that did well on the exchanges in 2014, 2015 and 2016 to help insurers that did poorly. Near the end of 2014, however, a Republican Congress, led by Florida Sen. Marco Rubio, slipped into its enormous 2015 spending bill an unrelated health care provision that prohibited the U.S. Department of Health and Human Services from making risk corridor payments in excess of collections.
In October 2015, HHS officials announced that the program had taken in only enough cash from exchange plan insurers that did well in 2014 and 2015 to pay about 16 percent of the amounts owed to the struggling insurers for 2014. The program did not pay out anything to struggling insurers for 2015.
All told, the government is on the hook for about $8.3 billion in risk corridor payments to offset losses on the exchanges in 2014 and 2015. More than a dozen health insurance companies have sued for failure to make the payments.
In his ruling, Wheeler denied the government's motion to dismiss Molina's breach of the implied covenant of good faith and fair dealing claim, leaving that claim to proceed in the case.
"We have another step before the decision can be appealed by the government where we either proceed and litigate that claim, or take other action to recover for risk corridor amounts due for 2016," Molina's lead attorney, Reed Smith partner Lawrence Sher, said in an interview Tuesday.
"Until that remaining claim is resolved, the government cannot appeal Friday's ruling."