UPDATED 1:30 p.m.: LEWISTON — A federal court has ruled against Lewiston-based Community Health Options in its $23 million lawsuit against the federal government.
But the head of Community Health Options called the decision “a temporary setback.”
“We remain very confident in the merits of our case,” said CEO Kevin Lewis.
Community Health Options, a nonprofit and the state’s only health insurance co-op, had claimed U.S. Department of Health and Human Services owed it millions in payments promised under the Affordable Care Act’s “risk corridor” program, which was established to help stabilize the country’s new health insurance marketplace.
The program spread around money and risk by requiring health insurers with lower-than-expected costs to pay the government a portion of that profit and by requiring the government to give money to health insurers with higher-than-expected costs.
Community Health Options said it 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.
Community Health Options officials claimed that under the risk corridor rules and federal law, the government owed it $22.9 million. Instead, the program said it would pay only 12.6 cents on the dollar.
The co-op filed suit.
In a ruling issued this week, the United States Court of Federal Claims in Washington, D.C., dismissed the co-op’s claim, saying Congress expressly prohibited the program from using any funds other than its user fees to pay health insurers. There wasn’t enough money to go around.
“The government’s obligation was thus capped to the amount brought in from user fees,” Judge Eric Bruggink wrote in the ruling filed Monday. “We are not presented with possible exceptions to this outcome.”
Community Health Options is appealing the decision. It’s argument: Federal law requires the government to pay.
“We paid in when we had to pay in in 2014. Now that it’s the government’s turn to pay out, we think the government needs to follow the law,” Lewis said.
Several other insurers have also filed suit against the government claiming they weren’t paid what they should have been under the program. Some of those lawsuits have been dismissed or decided in the government’s favor.
At least one — brought by Moda Health in Oregon — was successful. In February, U.S. Court of Federal Claims Judge Thomas Wheeler ruled the government owed Moda $214 million.
Bruggink acknowledged the contradictory decision in this week’s ruling.
“We recognize that Judge Wheeler arrived at a different conclusion in Moda Health after examining the same cases,” he wrote. “We respectfully disagree with his conclusion.”
The government is appealing the Moda decision.
Community Health Options lost so much money in 2015 that it suspended sales of individual policies in December of that year. Its finances became so worrisome that the Maine Bureau of Insurance kept watch over it.
The co-op has since started to stabilize. Lewis said Friday that Community Health Options is in the black now and it expects to end the year that way.
“It’s important to note that this (ruling) doesn’t affect our existing financials,” Lewis said. “Nevertheless, we find it important for our government to follow the law and make good on its contractual obligation to Community Health Options, restoring considerable amounts of capital to the company which would provide greater security for the future, just as the law intended.”
Comments are not available on this story.
Send questions/comments to the editors.
