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

April 27, 2020 by Dan McCue
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enough sums for payments already owed, Congress did simply that and no more: The appropriation bills neither repealed nor discharged §1342’s unique obligation,” she continued.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.

Supreme Court

High Court Blocks NY Coronavirus Limits on Houses of Worship
Supreme Court
High Court Blocks NY Coronavirus Limits on Houses of Worship

WASHINGTON (AP) — As coronavirus cases surge again nationwide the Supreme Court late Wednesday barred New York from enforcing certain limits on attendance at churches and synagogues in areas designated as hard hit by the virus. The justices split 5-4 with new Justice Amy Coney Barrett in the... Read More

Alito: COVID Crisis Has Been a ‘Constitutional Stress Test’
Supreme Court
Alito: COVID Crisis Has Been a ‘Constitutional Stress Test’
November 13, 2020
by Dan McCue

WASHINGTON - Justice Samuel A. Alito, Jr., told the Federalist Society in a keynote address Thursday night the coronavirus pandemic has led to "previously unimaginable restrictions on individual liberty." "I am not diminishing the severity of the virus's threat to public health," Alito continued in a... Read More

Supreme Court Appears Likely to Preserve Most of Affordable Care Act
Supreme Court
Supreme Court Appears Likely to Preserve Most of Affordable Care Act
November 10, 2020
by Dan McCue

WASHINGTON -- So much for the new conservative majority of the Supreme Court dismantling the Affordable Care Act. On Tuesday, during oral arguments for California v. Texas, one of this term's most anticipated cases, two members of that majority, suggested they're not inclined to strike down... Read More

All About the New ACA Challenge Before the Supreme Court
Supreme Court
All About the New ACA Challenge Before the Supreme Court
November 10, 2020
by Kate Michael

WASHINGTON — This morning, the Supreme Court will hear oral arguments on a legal challenge seeking to overturn the Affordable Care Act.  This third major challenge to the ACA heard by the Supreme Court, Texas v. California seeks to decide whether Congress, by eliminating the penalty... Read More

Political Gaze Shifts to the Supreme Court as Justices Hear Pivotal Health Care Case
Supreme Court
Political Gaze Shifts to the Supreme Court as Justices Hear Pivotal Health Care Case

WASHINGTON — The Supreme Court with new Justice Amy Coney Barrett hears oral argument Tuesday in a case that threatens to wipe out the 2010 health care law, likely the term's most consequential case, under a political spotlight that rarely shines brighter on justices who would rather stay out of it.... Read More

Supreme Court Blocks Injured Officer's Suit Against Leader of Black Lives Matter Rally
Supreme Court
Supreme Court Blocks Injured Officer's Suit Against Leader of Black Lives Matter Rally

WASHINGTON — The Supreme Court on Monday set aside an appeals court ruling by a panel of conservative judges that held an injured police officer could sue and win damages from the leader of a Black Lives Matter protest rally. The case had raised alarms among civil libertarians, who said it... Read More

News From The Well
scroll top