Readers of this blog may recall that on September 9, 2016, the federal Department of Health and Human Services (HHS) – through its Centers for Medicare and Medicaid Services (CMS) – announced that it is open to discussing resolution of claims made by the Qualified Health Plans (QHPs) providing coverage on the Affordable Care Act (ACA) exchanges seeking payment of amounts owed under the Risk Corridors program. That announcement also said that “[a]s in any lawsuit, the Department of Justice is vigorously defending those claims on behalf of the United States.” In Motions to Dismiss filed in the lawsuits seeking Risk Corridors payments brought by Blue Cross and Blue Shield of North Carolina, Moda Health Plan and Land of Lincoln Health Insurance Company, the Department of Justice (DOJ) has delivered on that promise.
Notably, the arguments in the DOJ’s motions go further than the arguments it has made in the past in other cases, such as the putative class action filed by the Oregon co-op, Health Republic Insurance Company (Health Republic of Oregon), and assert that the government is under no obligation to make the Risk Corridors payments if the program is not funded. The House of Representatives, observing that the DOJ did not file a similar motion to dismiss in the Health Republic of Oregon case, requested that it be permitted to file an amicus brief in that case to bring the arguments in the recent DOJ motions to the court’s attention.
In its recent briefs, the DOJ has reiterated the arguments it has made previously in the Health Republic Oregon case stating that because the three-year payment framework for Risk Corridors has not yet run its course, QHPs have no present right to full payment of their receivables from the program. Even though additional funding in the near future seems improbable, DOJ nevertheless argues that whether sufficient funds will be available to make full payment of claims for any particular benefit year or at some point in the future is unknown. As a result, DOJ asserts the claims cannot be brought at this time.
But, in a significant expansion of the arguments made previously in Risk Corridors litigation, in the motions to dismiss, DOJ also argues that the ACA does not require that risk corridors payments be made in excess of collections from QHPs. According to the DOJ, the program was intended to be self-funding pointing out that the ACA contains no reference to any other source of funds.
The DOJ refers to the appropriations riders that Congress enacted after the ACA’s passage that prohibit HHS from using other sources of money to fund the Risk Corridors program to reinforce its position that liability for Risk Corridors payments is limited to amounts collected under the Risk Corridors program. The DOJ relies on cases where courts have said that provisions enacted in annual appropriations laws can amend money-mandating provisions in previously enacted law, which allows a subsequent law to eliminate or reduce the government’s obligation to pay.
The QHPs have also argued that the government’s failure to make Risk Corridors payments violates the contracts QHPs must sign to offer plans on the exchanges. The DOJ’s response is that the QHP contracts are limited in scope and don’t apply to Risk Corridors payments. They assert that the United States has no contractual obligation to make Risk Corridors payments and that any amounts determined to be owed or due for Risk Corridors arise only as a matter of statute and regulation. As a result, the only recourse for QHPs is through Congress or HHS, not through the courts.
The DOJ also rejects the argument that there is an implied contractual obligation that the government make Risk Corridors payments because the QHP contracts don’t require the payments and insurers such as Moda operating in states with their own exchanges don’t even have QHP agreements with HHS. To arguments that the QHPs are relying on promises and statements made by HHS that the payments will be made, the DOJ says that such promises and statements don’t create a legal obligation for the United States. According to DOJ, “[a]n agency simply cannot bind itself to the payment of money through its oral or written statements— absent express contracting authority bestowed by Congress.”
The categorical rejection of the QHPs’ claims for Risk Corridors payments in the motions is curious in light of the prior CMS announcement of its interest in settling the litigation. Whether the legal positions asserted by DOJ are intended to provide leverage in settlement negotiations or indicate a change in or divergence of opinion within the government will be closely watched as the issues surrounding the Risk Corridors program continue to develop.
The motions have received considerable attention, including from the House of Representatives. The House, seeing that the new arguments had not been made in the Health Republic of Oregon case, filed an amicus brief reiterating the DOJ’s new arguments so the court can consider those arguments in that case.
The next step in these cases will include the filing of responses by the QHPs to the motions seeking to counter the DOJ’s arguments.
As we approach the end of the Obama administration we can anticipate a flurry of activity surrounding the Risk Corridors program in the courts, in settlements talks between the QHPs and the administration, and in the Congress. Stay tuned as we continue to track these matters.
The links below are to the motions and briefs: