Feds move to throw out ObamaCare lawsuits

The Obama administration is seeking to toss out a pair of high-profile healthcare lawsuits in which insurers claim they are owed millions of dollars under the Affordable Care Act.

The two insurers, Moda Healthcare and BlueCross BlueShield of North Carolina, have sued the federal government over a combined $338 million in ObamaCare payments they argue are overdue.

{mosads}The Justice Department filed motions to dismiss both lawsuits on Friday, arguing that the federal government isn’t responsible for those payments at all.

That argument — which goes further than the department’s move to dismiss a similar case in June — could have a major ripple effect throughout the marketplace.

Tim Jost, a health policy professor and long-time observer of the Affordable Care Act, said the federal government is now digging in on the merits of the cases for the first time. 

“It seems to me that HHS is clearly changing its position in these cases,” Jost said Monday. “The motions filed in both of these cases is a full-throated repudiation of any obligation [of the payments.”

Both lawsuits involve a piece of the Affordable Care Act intended to reduce risks in the new marketplace known as the “risk corridors” program.

Though the funding program became law as part of ObamaCare in 2010, Republicans in Congress have since passed budget rules that restrict those payments, resulting in a major shortfall.

Insurers had paid $363 million into the program during its first year in 2014, but that total was ultimately far short of the $2.87 billion in payments sought by insurers to make up for poorer finances that year. 

In their new documents, Justice officials argued that the Department of Health and Human Services (HHS) does not owe that money to insurance companies, in part because Congress has “directly spoken” about its intent to limit the use of federal dollars into the program.

“Under Moda’s interpretation, HHS would be the uncapped insurer of the insurance industry itself,” the Justice Department wrote. “Congress did not intend that result.”

One Republican lawmaker who was briefed on the case, Rep. Morgan Griffith (R-Va.), said about the case Monday: “It sounds like DOJ is agreeing with us.”

The cases are being closely watched by hundreds of insurers nationwide, particularly those facing larger-than-expected financial losses in the third year of the law.

The stakes in these cases became even higher over the last several weeks after the agency overseeing ObamaCare, the Centers for Medicare and Medicaid Services (CMS), released a memo hinting that it would be willing to settle with insurers.

The move has been seen as a way to go around Congress to make the payments, infuriating the Republican lawmakers who worked to restrict insurer funding over the last two years.

In the combined 102 pages of documents, observers say the Justice Department is presenting a stronger argument than its last attempt to dismiss a similar case in June.

In the two motions filed Friday, the department argues that Congress never gave itself authority to pay for the “risk corridors” program, and that the insurers may never need to be paid.  

“I do think the developments are meaningful,” said Chris Jacobs, a former policy adviser for House Republicans on ObamaCare. “They’re coming out and saying, there is no contract.”

While the 2010 healthcare law would have given the federal government the authority to make the payments, the DOJ argues that Congress later decided to limit that authority.

Justice also argued that insurers aren’t currently owed any money because the federal government didn’t set a deadline — an argument that was also made in the Health Republic case.

“Under this framework, HHS does not owe Moda, or any other issuer, final payment before the end of the program,” the department wrote in its argument.

– This story was updated at 4:13 p.m.