Moda Health Plan wins $215 million judgment for risk-corridors payment

In a first-of-its-kind victory for an insurer, a Court of Federal Claims judge has ruled against the government and granted Moda Health Plan $215 million in risk corridor payments.

Moda operates in Alaska, Oregon and Washington.

The federal government is expected to appeal the case to the Federal Circuit Court, and it, and similar cases brought by insurers, could eventually end up in the Supreme Court, according to a Health Affairs blog by Timothy Jost.

The risk corridors program was set up under the Affordable Care Act to encourage insurers to offer products on the exchanges. The government was supposed to pay insurers for losses suffered during the first three years of the ACA, from 2014 to 2016.

[Also: Humana writes off $591M in risk corridor payments]

Insurers that made money would pay the government a percent of any profits they received in each of the first three years.

However, Congress determined it did not approve the funding for risk corridors in the ACA. The program became budget neutral, with insurers receiving partial funding for their losses.

Moda said it lost money offering exchange plans during 2014 and 2015. It brought the case in June 2016 to obtain full risk corridor payments of $214 million for 2014 and 2015.

After hearing oral arguments on Jan. 13, the court on Feb. 9 found the government had unlawfully withheld risk corridors payments from Moda.

"There is no genuine dispute that the Government is liable to Moda," Judge Thomas C. Wheeler ruled. "Whether under statute or contract, the court finds that the government made a promise in the risk corridors program that it has yet to fulfill. Today, the court directs the government to fulfill that promise. After all, to say to [Moda], 'The joke is on you. You shouldn't have trusted us,' is hardly worthy of our great government."

[Also: Justice Department seeks dismissal of Moda, BlueCross BlueShield risk corridor lawsuits]

The judge's ruling of a partial summary judgment for Moda goes against another court ruling that found in favor of the government. In November 2016, a court ruled against Land of Lincoln Mutual Health Insurance Company's claim to get risk corridors payments.

There are at least 17 cases brought by insurers pending in the Court of Federal Claims, according to the Health Affairs blog. Another is pending on appeal in the United States Court of Appeals for the Federal Circuit.

In the ruling, Moda and the federal government have been ordered to submit a joint status report on or before March 1, indicating the schedule to complete the resolution of the order.

Twitter: @SusanJMorse