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Moda Will Take Its Case To U.S. Supreme Court

A federal appeals court rejected Moda's request on Tuesday to rehear its petition for millions in payments from the federal government over losses under the Affordable Care Act, but the case is not closed.
November 7, 2018

A federal court has rejected a request from Moda Health to consider its appeal in a case involving millions in federal funds that’s been bouncing around the courts for two years.

While voters were flocking to the polls on Tuesday, the U.S. Court of Appeals for the Federal Circuit declined to rehear a petition from Moda Health over so-called risk corridor payments. The health insurer claims the federal government owes it $214 million under a provision of the Affordable Care Act designed to encourage insurers to offer plans to those with pre-existing conditions. In return, the act provided that risk corridor payments would be paid to insurers who lost money using funds from profitable insurers.

The bill nationwide for insurers covering people who were sicker than expected surpassed $12 billion.

But the Republican-controlled Congress limited the payouts to an eighth of what insurers were originally told to expect in 2014 and authorized nothing for 2015.

Moda and other insurers sued.

The Oregon company won its case in 2017 in the U.S. Court of Federal Claims. The government appealed and won. In July, Moda’s attorneys submitted an “en banc” appeal, asking for the full U.S. Court of Appeals for the Federal Circuit to reconsider that decision.

“Obviously we are disappointed by this decision,” Robert Gootee, president and CEO of Moda told The Lund Report in a statement. “We continue to believe, as the trial court did, that the government’s obligation to us is clearly stated in the law.”

He said Moda will take its case to the Supreme Court.

When Moda started it's litigation, it desperately needed the money after reporting negative net incomes in 2014, 2015 and 2016. Its losses peaked in 2015 with nearly $50 million in negative net income. Towards the end of that year, Oregon Health & Science University swooped in, giving Moda a $50 million loan with the possibility of converting that into a 25 percent equity share. OHSU eventually decided against taking a share. 

But it's situation has vastly improved this year, with Delta Dental of California agreeing to invest $155 million in the Oregon insurer. The money will give Delta Dental a 50 percent stake in Moda, allowing it to diversify and offer integrated health-care solutions that are seen as the wave of the future.

You can reach Lynne Terry at [email protected].