Federal judge: Community Health Options' $23M lawsuit can proceed
File Photo / Tim Greenway
Kevin Lewis, CEO of Community Health Options, left, and Robert Hillman, COO, in the nonprofit health insurer's headquarters within Lewiston's historic Bates Mill complex. The company learned Friday that its federal lawsuit seeking almost $23 million in "risk corridor" payments from the federal government can proceed.
A federal judge ruled Friday that Lewiston-based health insurer Community Health Options can proceed with its $22.9 million lawsuit against the federal government seeking payments it says it is owed under the Affordable Care Act's "risk corridors" program.
Judge James F. Merow, a senior judge in the U.S. Court of Federal Claims, rejected the federal government’s assertion that it needed more time to prepare its legal defense for claims sought by CHO and other insurers filing similar lawsuits in at least 12 other cases.
“Thirteen [cases] does not strike this court as an overwhelming number of cases,” Merow wrote in his Dec. 2 order. “Moreover, if those cases are indeed as related as the government suggests, the same arguments and legal authority should be applicable to each.”
Merow also acknowledged that for CHO, “a speedy resolution of this matter is of existential importance.”
Merow gave the federal government a deadline of Jan. 13 to respond to CHO’s motion for summary judgment.
CHO’s lawsuit, filed earlier this summer, claims that in 2014 it paid $2 million into the program — which was created to offset risks for insurance companies offering plans in the ACA’s public insurance exchanges — but got nothing back for its costs in 2015, when it reported a $31 million loss. At that time, Kevin Lewis, CEO of CHO, told newspapers that fairness was at the heart of the company’s lawsuit and that the government should make good on its payment obligations.
Of the 23 consumer-operated and -oriented health insurance companies, or CO-OPs, created under the ACA, CHO is one of only a handful still surviving. With guidance from the Maine Bureau of Insurance, it set aside $43 million in reserves for possible losses in 2016 and has been issuing monthly public reports on its performance this year.
In the Bureau of Insurance’s November statement, detailing CHO’s results year to date through September, the bureau reported that the insurer’s results were “generally consistent with its plan” but noted that its full-year performance will hinge significantly on its fourth-quarter performance.
In its Dec. 5 statement, released after an earlier version of this story was posted online, the bureau reported CHO's results through October. "Total expenses in October were 10.7% lower than Plan for the month. YTD expenses are 1.9% lower than Plan," the bureau reported. "October’s net loss was 31.3% worse than Plan and YTD total net losses are 6.9% worse than Plan."
The statement also noted that the October change in the $43 million "premium deficiency reserve" account established Dec. 31, 2015, to cover losses that might exceed its premium rates, was 31.3% worse than the plan for October "but the YTD PDR drawdown is 1.3% better than Plan."
"October’s results were in line with the company’s most recent fourth quarter projections," the bureau concluded, adding that it is "closely following CHO’s operating results and will continue to report on at least a monthly basis regarding developments."
Editor's note: This story has been updated to include the Maine Bureau of Insurance's most recent report on Community Health Options' financial performance, which was made public after the original version of this story was published online.
Most Recent
Most Recent
Comments