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Payers Sue to Collect 2017 Cost Sharing Reduction Payments

Payers are turning to the courts to collect cost sharing reduction (CSR) payments withheld by the federal government in 2017.

Payers are filing lawsuits to recover CSR funds.

Source: Thinkstock

By Thomas Beaton

- Payer organizations are exercising their right to use the court system to collect cost sharing reduction (CSR) payments that were not provided in the last quarter of 2017.

A number of lawsuits are challenging the government’s authority to withhold the payments after the White House declared that it would not pay insurance companies.

In the wake of the announcement, payer organizations and actuaries voiced strong criticisms of the cuts and argued that the CSRs help stabilize insurance premiums.

Several lawsuits are now winding their way through the courts as payers seek recompense for the missing funds.

Montana Health Co-Op wins $5 million in CSR funds

Montana Health Co-Op, a payer that sells qualified health plans (QHPs) has won a lawsuit contesting that the government owed the payer over $5 million in CSR payments.

Judge Elaine D. Kaplan agreed with Montana Health that Congress is required to administer the CSRs for a full plan year under the ACA. The government had contended that Congress was not required to provide the money.

Kaplan cited direct language from the ACA that states “an issuer of a qualified health plan making reductions under this subsection shall notify the [HHS] Secretary of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions.”

In her ruling, Kaplan stated, “The Court concludes that Montana Health has the better of the arguments. It agrees that the government violated a statutory obligation created by Congress in the ACA when it failed to provide Montana Health its full cost-sharing reduction payments for 2017, and that Congress’s failure to appropriate funds to make those payments did not vitiate that obligation.”

“Accordingly, the government’s motion to dismiss is denied and Montana Health’s cross-motion for summary judgment is granted,” Kaplan said.

Common Ground Healthcare Cooperative files class-action lawsuit to collect CSRs

Common Ground Healthcare Cooperative has filed a class action lawsuit against the federal government for not paying insurers their CSRs in the last quarter of 2017.

Judge Margaret M. Sweeney granted Common Ground’s request to file the lawsuit as a class action in April of 2018. The plaintiffs include private payers that are seeking CSRs payments.

Sweeney explained that private payers are entitled to the class action lawsuit because the insurers will be able to increase the effectiveness and coordination of legal arguments in court.

“There can be no question that the consolidation of cost-sharing reduction claims would be more cumbersome than allowing insurers to pursue their claims in a class action,” Sweeney said. “In sum, the court finds that plaintiff has satisfied its burden of establishing that a class action is superior to other methods of resolving insurers’ cost-sharing reduction claims.”

Sanford Health Plan faces Department of Justice motion to dismiss a CSR lawsuit

Sanford Health Plan, a North Dakota insurer, will face extended legal arguments from Department of Justice (DoJ) attorneys after Judge Nancy B. Firestone granted the government extra time to argue Sanford’s CSR claims.

The Department of Justice filed a motion to dismiss Sanford’s lawsuit and argued that HHS is not responsible for the CSR payments because there was no specific contract that requires HHS to pay the remaining CSRs.

The DoJ also stated that Congress has the authority to manage federal spending and is not required to spend federal funds when there is no set appropriation for spending.

“Statutory language that authorizes a Federal program does not suffice, by itself, to allow an agency to expend funds on the program,” the DoJ said.

“In addition, an appropriation is required before the program may be implemented. ‘Authorizing legislation’ is legislation that ‘establishes and continues the operation of a federal program or agency either indefinitely or for a specific period, or that sanctions a particular type of obligation or expenditure within a program.’”


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