Supreme Court Rules Insurers Can Collect $12 Billion From Congress for ACA Losses

April 27, 2020 by Dan McCue
Supreme Court Rules Insurers Can Collect $12 Billion From Congress for ACA Losses
A sign is held up that reads "ACA Is Here To Stay"after ruling was announced in favor of the Affordable Care Act. June 25, 2015 in Washington, DC. (Mark Wilson/Getty Images)

WASHINGTON – The U.S. Supreme Court ruled Monday that Congress acted unlawfully when it reneged on a commitment to shield Affordable Care Act insurers from financial losses in the early years of its implementation.

In an 8-1 ruling, the justices held insurers are entitled to the money under a provision of the health care act that promised to provide them with a cushion against losses they might incur by selling coverage to people through health care marketplaces.

The provision, known as the “Risk Corridors” program, was a temporary framework inserted into the law to limit the plans’ profits and losses during the exchanges’ first three years (2014 through 2016).

The program established a bar under which the federal government would compensate insurers for unexpectedly unprofitable plans; under the same formula, insurers that made significant profits had to pay the government.

Some plans did indeed make money and the government collected the money owed. But when insurers suffered losses and sought reimbursement, the government balked.

It did this by an act of Congress — a provision inserted into the Health and Human Services Department’s spending bills from 2015 to 2017 — that limited payments under the “risk corridors” program.

Both the Obama and Trump administrations had argued that the provision means the government has no obligation to pay.

In their petitions to the Supreme Court, the insurers cite Health and Human Services Department statistics to claim they are owed $12 billion.

Writing for the majority, Justice Sonia Sotomayor said “in establishing the temporary Risk Corridors program, Congress created a rare money-mandating obligation requiring the federal government to make payments under §1342’s formula.

“[B]y failing to appropriate enough sums for payments already owed, Congress did simply that and no more: The appropriation bills neither repealed nor discharged §1342’s unique obligation,” she continued. “Lacking other statutory paths to relief … petitioners may seek to collect payment through a damages action in the Court of Federal Claims.”

Sotomayor went on to say the court’s holding reflects “a principle as old as the nation itself: The Government should honor its obligations.”

“Soon after ratification,” the justice wrote, “Alexander Hamilton stressed this insight as a cornerstone of fiscal policy. ‘States,’ he wrote, ‘who observe their engagements … are respected and trusted: while the reverse is the fate of those … who pursue an opposite conduct.’”

Sotomayor was joined in the majority by Chief Justice John Roberts, and Justices Ruth Bader Ginsburg, Elena Kagan, Steven Breyer and Brett Kavanaugh. Justices Clarence Thomas and Neil Gorsuch joined the majority in all but one part of the decision.

The lone dissenter, Justice Samuel Alito, said in his view, in order for the petitioners to recover the money sought, federal law must provide a right of action for damages.

He says that while the Tucker Act, under which the petitioners brought their lawsuit, provides a waiver of sovereign immunity and a grant of federal-court jurisdiction, “it does not create any right of action.”

“Nor does any other federal statute expressly create such a right of action,” Alito continued. “The Court, however, holds that §1342 of the Affordable Care Act does so by implication.

“Because §1342 says that the United States ‘shall pay’ for the companies’ losses, the Court finds it is proper to infer a private right of action to recover for these losses,” he said. “This is an important step. Under the Court’s decision, billions of taxpayer dollars will be turned over to insurance companies that bet unsuccessfully on the success of the program in question. This money will have to be paid even though Congress has pointedly declined to appropriate money for that purpose.

“Not only will today’s decision have a massive immediate impact, its potential consequences go much further. The Court characterizes provisions like §1342 as ‘rare,’ but the phrase the “Secretary shall pay”– the language that the Court construes as creating a cause of action — appears in many other federal statutes,” Alito warned.

A+
a-
  • Affordable Care Act
  • insurers
  • Risk Corrdiors
  • Supreme Court
  • In The News

    Health

    Voting

    Supreme Court

    Supreme Court Says Fuel Groups Have Standing to Fight Emissions Waiver

    WASHINGTON — The Supreme Court on Friday held that fuel industry groups can challenge the Clean Air Act waiver granted... Read More

    WASHINGTON — The Supreme Court on Friday held that fuel industry groups can challenge the Clean Air Act waiver granted by the Environmental Protection Agency that allowed California to set its own greenhouse gas emissions standards for vehicles. A lower court, the D.C. Circuit, had ruled... Read More

    June 20, 2025
    by Dan McCue
    Justices Open Door to Multiple-Venue Challenges to E-Cigarette Rules

    WASHINGTON — The Supreme Court on Friday held that retailers who would sell a new tobacco product if not for... Read More

    WASHINGTON — The Supreme Court on Friday held that retailers who would sell a new tobacco product if not for the Food and Drug Administration’s rejection of the product, can sue to seek judicial review of the agency’s decision. The 7-2 ruling by the court in... Read More

    June 18, 2025
    by Dan McCue
    Supreme Court Upholds Tennessee Ban on Gender-Affirming Care for Minors

    WASHINGTON — A divided Supreme Court on Wednesday upheld a Tennessee law banning gender-affirming medical care for minors, a ruling... Read More

    WASHINGTON — A divided Supreme Court on Wednesday upheld a Tennessee law banning gender-affirming medical care for minors, a ruling seen as a significant setback for those advocating for greater transgender rights. The ruling in United States v. Skrmetti, written by Chief Justice John Roberts, upholds... Read More

    June 6, 2025
    by Tom Ramstack
    Supreme Court Says Secular Nonprofit Organizations Can Receive Religious Tax Exemptions

    WASHINGTON — The Supreme Court ruled Thursday that a religious charitable foundation can opt out of paying taxes for unemployment... Read More

    WASHINGTON — The Supreme Court ruled Thursday that a religious charitable foundation can opt out of paying taxes for unemployment compensation in a decision that threatens to revamp part of the federal-state insurance program. Unemployment compensation provides financial benefits to workers who lose their jobs through... Read More

    June 3, 2025
    by Tom Ramstack
    Supreme Court Lets Bans Stand on Semi-Automatic Weapons

    WASHINGTON – The Supreme Court on Monday upheld a ban on assault weapons but avoided a detailed explanation of the... Read More

    WASHINGTON – The Supreme Court on Monday upheld a ban on assault weapons but avoided a detailed explanation of the constitutional issues involved. The dispute arose from a Maryland law that bans weapons like the AR-15, whose high muzzle bullet speed and easy accessibility at gun... Read More

    June 2, 2025
    by Dan McCue
    Justices Agree to Hear Soldier’s Injury Claims Against Fluor

    WASHINGTON — The Supreme Court on Monday agreed to review a veteran’s lawsuit against defense contractor Fluor Corp., over injuries... Read More

    WASHINGTON — The Supreme Court on Monday agreed to review a veteran’s lawsuit against defense contractor Fluor Corp., over injuries he sustained in a 2016 suicide bombing in Afghanistan. As recounted in his petition to the high court, former U.S. Army Specialist Winston Hencely was just... Read More

    News From The Well
    scroll top