LEWISTON — A federal judge has ruled that Community Health Options, Maine’s only health insurance co-op, can proceed with its $22.9 million lawsuit against the federal government.
The Department of Justice had asked to stay the co-op’s lawsuit, saying the government was dealing with several similar suits and it wanted to hold Community Health Options’ until those active cases could be handled.
The co-op argued that the federal government was essentially seeking to put off the lawsuit indefinitely and it didn’t have that right.
Judge James Merow of the U.S. Court of Federal Claims in Washington, D.C., ruled Friday in Community Health Options’ favor, saying simultaneous litigation is common and the federal government is not overburdened by facing multiple similar lawsuits.
“Thirteen does not strike the court as an overwhelming number of cases,” Merow wrote in his order. “Moreover, if those cases are indeed as related as the government suggests, the same arguments and legal authority should be applicable to each.”
However, Merow did extend the time the federal government has to respond to the co-op’s motion for summary judgment to Jan. 13.
Community Health Options, based in Lewiston, filed suit last summer claiming the government owes it nearly $23 million in promised payments under the “risk corridor” program, which was established with the Affordable Care Act to help stabilize the country’s new health insurance marketplace.
The risk-corridor program spread around money and risk by requiring health insurers with lower-than-expected costs to pay the government part of that profit and by requiring the government to give money to health insurers with higher-than-expected costs.
Community Health Options saw low costs in 2014 and paid the federal agency more than $2 million under the program. But the co-op’s costs soon skyrocketed and it began losing money in 2015.
Under the risk corridor rules and federal law, co-op officials say the government now owes the co-op $22.9 million.
“We followed the law and helped expand the Maine market in terms of individual coverage through the marketplace,” said Kevin Lewis, head of Community Health Options, in a statement about Friday’s ruling. “When the law dictated, we made payments into the program. It’s important for the government to make good on its payment obligations.”
Community Health Options isn’t the only insurer that hasn’t been paid under the program and doesn’t expect to be. Last year, the federal government announced that the program did not take in enough money and could not pay out as expected. Insurers were told they’d receive a fraction of what they expected: 12.6 cents on the dollar.
Co-ops aren’t the only insurers affected, but many co-ops were already in a precarious financial situation last year and the loss of that promised risk-corridor money proved devastating. Half of the country’s 23 co-ops have since closed.
Community Health Options stayed open, but it suspended sales of individual policies in December 2015. Its finances became so worrisome that the Maine Bureau of Insurance kept watch over it.
The co-op has since started to stabilize.
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