Bloomberg Law
- Health plan won judgment on claim for cost-sharing damages
- Can collect award of $17.8 million for 2017, 2018 damages
A qualified health plan sold on California’s Affordable Care Act exchange can recover over $17.8 million in cost-sharing reduction payments the federal government failed to pay it in 2017 and 2018, because the government unquestionably owes it the money, the federal claims court said.
But Local Initiative Health Authority for L.A. County, known as L.A. Care, can’t yet recover the full amount it says it’s owed for the first half of 2019 because the amount isn’t yet final, the U.S. Court of Federal Claims said.
The court granted L.A. Care’s motion for final judgment on the 2017 and 2018 payments, but denied its request as to the 2019 payments.
Insurers participating in Obamacare health insurance marketplaces, also called exchanges, agreed to reduce some members’ out-of-pocket costs for items such as deductibles and copays in exchange for the government’s promise to reimburse them for the discounts.
But Congress never appropriated the money to pay the insurers. In 2017, the Trump administration declared it would no longer do so.
The ACA, however, says the U.S. “shall make” cost-sharing payments, the claims court has said in several cases. Congress’s failure to include a funding mechanism in the ACA doesn’t reflect an intent to foreclose the government’s liability, the court has said.
The court previously awarded L.A. Care summary judgment on its claims for 2017 and 2018. The amount claimed for those years is final, as the government has confirmed it through its reconciliation process and stipulated to the amount it owes, the court said.
But the 2019 cost-sharing payment damages aren’t yet final, the court said. The Health and Human Services Department determines the cost-sharing amount owed to a plan at the end of each benefit year. The second half of 2019 could affect the amount the government owes L.A. Care for 2019, it said.
Judge Thomas C. Wheeler wrote the opinion.
Reed Smith LLP represented L.A. Care. The U.S. Department of Justice represented the government.
The case is Local Initiative Health Auth. for L.A. Cty. v. United States , 2019 BL 442761, Fed. Cl., No. 17-cv-1542, 11/18/19 .