Appeals Court Rules 2-1 for Government in Risk Corridors Payment Challenge

In a 2-1 ruling today, the U.S. Court of Appeals for the Federal Circuit reversed a lower court ruling that the federal government failed to satisfy its payment obligations to insurer Moda Health Plan under the Affordable Care Act’s temporary risk corridors program. “Although section 1342 [of the ACA] obligated the government to pay participants in the [health insurance] exchanges the full amount indicated by the formula for risk corridor payments, we hold that Congress suspended the government’s obligation in each year of the program through clear intent manifested in appropriations riders,” wrote Chief Judge Sharon Prost in the opinion for the court. “We also hold that the circumstances of this legislation and subsequent regulation did not create a contract promising the full amount of risk corridors payments. Accordingly, we hold that Moda has failed to state a viable claim for additional payments under the risk corridors program under either a statutory or contract theory.” Circuit Judge Pauline Newman dissented. For the same reasons, the panel also ruled 2-1 today to affirm a lower court ruling in a companion case denying payments to Land of Lincoln Mutual Health.