Moda Challenges Federal Ruling

The insurer has been fighting for two years to be paid funds it says were guaranteed under the Affordable Care Act.


Moda Health on Monday asked federal courts to give it another chance at the $214 million payment it was denied last month.

The insurer has been fighting for two years to be paid funds it says were guaranteed under the Affordable Care Act -- first appearing to win in a 2017 ruling, then suffering a setback last month when a three-judge panel of the U.S. Court of Appeals for the Federal Circuit in Washington D.C, ruled against it.

At issue is a program known as “risk corridors,” designed to compensate health insurers that saw higher-than-expected financial losses after the Affordable Care Act forbid them from rejecting applications based on preexisting medical conditions. After the program was created, Republicans in Congress voted to limit its funding, leaving only enough to cover an eighth of what insurers were originally told to expect in 2014, and nothing for 2015.

Dozens of insurers reported financial hardship as a result, including Oregon-based Health Republic, which failed after its risk-corridor payments were far lower than originally mandated by the Affordable Care Act.

When U.S. Court of Federal Claims Judge Thomas Wheeler considered Moda’s case in 2017, he ruled that the government had unlawfully withheld payments from the insurer. But the U.S. Department of Justice appealed.

In overturning that decision, the panel ruled that Moda’s expectation of payment was based on legislation, not a contract, and thus Moda did not have a reasonable basis for its lawsuit.

Moda’s attorneys have submitted what’s called an “en banc” appeal, asking for the full U.S. Court of Appeals for the Federal Circuit to reconsider that decision.

Moda attorney Steven Rosenbaum asked the full federal appeals court to reconsider in his filing on Monday.

“The government induced health insurers to participate in brand-new health care marketplaces by promising that it would ‘share the risk’ of any financial losses, but now – only after it achieved its goal and reaped the multi-billion dollar direct financial benefit of that promise – purposed to rewrite the term of the deal through the appropriations process,” Rosenbaum wrote in his petition for a new hearing.

Changing how much Moda would get paid only after the fact, Rosenbaum wrote, “constituted a breach of contract, and the panel was wrong to dismiss Moda’s contract claim as involving an ‘incentive’ program and ‘not the traditional quid pro quo.’”

Jonathan Nicholas, spokesman for Moda Health, has declined to comment on this latest filing in the case.


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