Justia Insurance Law Opinion Summaries

Nevada Health CO-OP, a health insurance provider, received two loans from the Centers for Medicare & Medicaid Services (CMS) under the Affordable Care Act’s CO-OP program. These loans included a start-up loan and a solvency loan. In 2015, Nevada Health faced financial difficulties and was placed into receivership by the Nevada Commissioner of Insurance. CMS subsequently terminated the loan agreement and began offsetting payments owed to Nevada Health against the start-up loan debt.The United States Court of Federal Claims reviewed the case and granted summary judgment in favor of the Nevada Commissioner of Insurance, acting as the receiver for Nevada Health. The court found that the government improperly withheld statutory payments owed to Nevada Health under the ACA. The court also held that the government could not invoke 31 U.S.C. § 3728 to withhold these payments in the future.The United States Court of Appeals for the Federal Circuit reviewed the case. The court affirmed the lower court’s judgment that the government improperly withheld payments owed to Nevada Health. The court held that the loan agreement subordinated the government’s claim to those of policyholders and basic operating expenses, thus precluding the government from asserting offset rights to jump ahead of these senior creditors. However, the appellate court vacated the portion of the lower court’s order that addressed the government’s ability to invoke 31 U.S.C. § 3728, ruling that the lower court exceeded its jurisdiction by addressing this issue, which was not raised by the parties. View "Richardson v. United States" on Justia Law

The 2010 ACA (Patient Protection and Affordable Care Act; Health Care and Education Reconciliation Act) created a three-year Risk Corridors program with the creation of new health-insurance marketplaces, which presented uncertain risks for participating health-insurance companies. Qualified health-plan issuers (QHP issuers) that offered their products in the new marketplaces were entitled to payments from HHS if they suffered sufficient losses, 42 U.S.C. 18062(b).The government failed to make those payments. QHP issuers sued under the Tucker Act, 28 U.S.C. 1491(a)(1). In two such lawsuits, the Quinn law firm was lead counsel for classes of QHP issuers seeking payments. In the opt-in notices sent to potential class members with court approval, Quinn represented that it would seek attorney’s fees out of any recovery, that it would seek no more than 5% of any judgment or settlement, and that the Claims Court would determine the exact amount by considering how many issuers participated, the amount at issue, and a “lodestar cross-check” (based on hours actually worked). Meanwhile, the Supreme Court, in other cases, held that QHP issuers were entitled to collect ACA-promised payments.The Claims Court entered judgments in favor of the classes, totaling about $3.7 billion, then awarded Quinn 5% of the common funds, rejecting objections. The total fee was about $185 million. The Federal Circuit vacated. The Claims Court’s analysis was inconsistent with the class opt-in notices and did not adequately justify the extraordinarily high award. View "Health Republic Insurance Co. v. United States" on Justia Law

Van Dermark served in the Navy from 1963 until his 1976 honorable discharge. The VA found Van Dermark to be totally and permanently disabled due to service-connected injuries. Van Dermark received treatment in Thailand (where he lived) at non-VA facilities, from physicians and others not affiliated with VA, in 2016 and in 2018, both times for cardiac conditions not related to his service-connected disability. For each of the two instances of treatment abroad, Van Dermark filed a claim with VA under 38 U.S.C 1728 and 1725 seeking VA payment—to him or his medical creditors—for the surgical or other heart-related treatment he received abroad.VA Community Care denied both claims. The Board of Veterans’ Appeals maintained the denials. The Veterans Court and Federal Circuit affirmed. Section 1724(a) prohibits the VA from “furnish[ing] hospital . . . care or medical services” abroad, where the care or services are unrelated to the service-connected disability. The “furnishing” phrase encompasses the payment for a veteran’s hospital care or medical expenses abroad at issue here; sections 1728 and 1725 do not override that prohibition. View "Van Dermark v. McDonough" on Justia Law

Lanclos was born in 1982 at the Keesler Air Force Base Medical Center. During childbirth, she was seriously injured and as a result, suffers from Athetoid cerebral palsy. The settlement agreement for Lanclos’s medical malpractice suit required the government to make lump sum payments to Lanclos’s parents and their attorney; Lanclos would receive a single lump sum payment followed by specific monthly payments for the longer of 30 years or the remainder of her life. The government would purchase an annuity policy to provide the monthly payments. The government selected Executive Insurance to provide the monthly annuity payments. Executive encountered financial difficulties and, in 2014, reduced the amount of the monthly payments by 42%. Lanclos estimates that the reduction will result in a shortfall of $731,288.81 from the amount described in the settlement agreement.The Court of Federal Claims reasoned that the “guarantee” language in the Lanclos agreement applies to the scheduled monthly structure of the payments but not the actual payment of the listed amounts and that the government was not liable for the shortfall. The Federal Circuit reversed. Under the ordinary meaning of the term “guarantee” and consistent with the agreement as a whole, the government agreed to assure fulfillment of the listed monthly payments; there is no reasonable basis to conclude that the parties sought to define “guarantee” or to give the term an alternative meaning. View "Lanclos v. United States" on Justia Law

Wolfe, who was enrolled in VA health care, obtained emergency treatment at a non-VA health care facility, incurring expenses of $22,348.25. Her employer-sponsored healthcare contract covered most of the expenses. She was responsible for a copayment of $202.93 and coinsurance of $2,354.41. The VA denied reimbursement of those expenses; 38 U.S.C. 1725(c)(4(D) bars reimbursement for “any copayment or similar payment.” Wolfe filed a Notice of Disagreement; rather than await the outcome of her appeal, Wolfe also filed a mandamus petition. The Veterans Court certified her requested class and granted her petition, invalidating a VA regulation prohibiting the reimbursement of deductibles and coinsurance for being within the category of “similar payments,” and requiring the VA to re-adjudicate claims denied under the invalidated regulation.The Federal Circuit reversed. Deductibles are excluded from reimbursement under the correct interpretation of the statute and other adequate remedies (appeal) were available with respect to coinsurance, so mandamus was inappropriate. Coinsurance is the type of partial coverage that Congress did not wish to exclude from reimbursement. View "Wolfe v. McDonough" on Justia Law

When a Colorado court ordered Colorado Health Insurance Cooperative into liquidation, the government owed Colorado Health $24,489,799 for reinsurance debts under the Patient Protection and Affordable Care Act (ACA), 42 U.S.C. 18061. The reinsurance program, which only lasted three years, collected yearly payments from all insurers and made payments to insurers of particularly costly individuals that year. Colorado Health owed the Department of Health and Human Services $42,000,000 for debts under ACA’s risk adjustment program, which charges insurers of individuals who had below-average actuarial risk and pays insurers of individuals who had above-average actuarial risk. The government attempted to leapfrog other insolvency creditors through offset, rather than paying its debt and making a claim against Colorado Health’s estate as an insolvency creditor.The Federal Circuit affirmed the Claims Court in ordering the government to pay. Neither state nor federal law affords the government a right to offset. Colorado law concerning the liquidation of insurance companies is limited to offsetting debts and credits in contractual obligations. ACA does not preempt Colorado insolvency law; a “Netting Regulation” is directed to an ancillary issue, payment convenience. The government has not shown a “significant conflict between an identifiable federal policy or interest and the operation of state law.” View "Conway v. United States" on Justia Law

In the Patient Protection and Affordable Care Act (ACA), Congress directed each state to establish an online exchange through which insurers may sell health plans if the plans meet certain requirements. One requirement is that insurers must reduce the “cost-sharing” burdens—such as the burdens of making co-payments and meeting deductibles—of certain customers. When insurers meet that requirement, the Secretary of Health and Human Services shall reimburse them for those cost-sharing reductions, 42 U.S.C. 18071(c)(3)(A). In October 2017, the Secretary stopped making reimbursement payments, due to determinations that such payments were not within the congressional appropriation that the Secretary had, until then, invoked to pay the reimbursements. Sanford, a seller of insurance through the North Dakota, South Dakota, and Iowa exchanges, and Montana Health, a seller through the Montana and Idaho exchanges, sued.The trial courts granted the insurers summary judgment, reasoning that the ACA reimbursement provision is “money-mandating” and that the government is liable for damages for its failure to make reimbursements for the 2017 reductions. The court did not reach the contract claim in either case. The Federal Circuit affirmed, citing the Supreme Court’s 2020 “Maine Community,” addressing a different payment-obligation ACA provision. Maine Community indicates that the cost-sharing-reduction reimbursement provision imposes an unambiguous obligation on the government to pay money; that obligation is enforceable in the Claims Court under the Tucker Act, 28 U.S.C. 1491(a)(1). View "Sanford Health Plan v. United States" on Justia Law

The Patient Protection and Affordable Care Act (ACA), 124 Stat. 119, directed each state to establish an online exchange through which insurers may sell health plans that meet certain requirements. Insurers must reduce the “cost-sharing” burdens, such as co-payments and deductibles, of certain customers. When insurers meet that requirement, the Secretary of Health and Human Services (HHS) shall reimburse them for the required cost-sharing reductions, 42 U.S.C. 18071(c)(3)(A). In October 2017, the Secretary stopped making reimbursement payments, due to determinations that such payments were not within the congressional appropriation that the Secretary had invoked to pay the reimbursements. Insurers sued.The Federal Circuit affirmed summary judgment in favor of the insurers on liability, reasoning that the ACA reimbursement provision is “money-mandating” and that the government is liable for damages. The court cited the Supreme Court’s 2020 “Maine Community,” addressing a different ACA payment-obligation as indicating that the cost-sharing-reduction reimbursement provision imposes an unambiguous obligation on the government to pay money; that obligation is enforceable through a damages action under the Tucker Act, 28 U.S.C. 1491(a)(1). The court remanded the issue of damages. The government is not entitled to a reduction in damages with respect to cost-sharing reductions not paid in 2017. As to 2018, the Claims Court must reduce the insurers’ damages by the amount of additional premium tax credit payments that each insurer received as a result of the government’s termination of cost-sharing reduction payments. View "Community Health Choice, Inc. v. United States" on Justia Law

In 2010 San Diego Sherriff’s Deputy Collier died following an accident while on duty. Collier owned a house together with his fiance, Li, who was also designated as Collier’s beneficiary for his retirement benefits and as a dependent for purposes of workers’ compensation. The two were to have been married three months after the date of Collier’s death; Collier had repeatedly stated, including on a video, that he had made arrangements for Li to be taken care of in the event of his death. Stamp, Collier’s former girlfriend, was named as the beneficiary of his life insurance. Stamp and Li agreed to split the proceeds; Li received $560,920 and Stamp received $25,000. The Bureau of Justice Assistance denied Li’s claim for benefits under the Public Safety Officers’ Benefits Act, 34 U.S.C. 10281, because Li was not the designated beneficiary on Collier’s life insurance policy. The Federal Circuit affirmed. Rejecting Li’s argument that the Bureau should have considered the “totality of the circumstances,” the court stated that Li was not the designated life insurance beneficiary. California law requires strict compliance with the requirement of a policy to change the beneficiary; Collier’s policy required a written designation. There was no written designation and none of the exceptions apply. View "Li v. Department of Justice" on Justia Law

A three-year “risk corridors” program described in the Patient Protection and Affordable Care Act, 42 U.S.C. 18001, implemented by the Department of Health and Human Services (HHS), was intended to promote participation in insurance exchanges. Participating insurers, whose costs of providing coverage exceeded the premiums received (using a statutory formula) were to be paid a share of their excess costs while participating plans whose premiums exceeded their costs would pay in a share of their profits. The program “permit[ted] issuers to lower [premiums] by not adding a risk premium" for uncertainties in the 2014-2016 markets. The actual total "payments in"were less than requested "payments out" and Congress prohibited HHS from using its appropriations for the program. Prorated payments were issued. The insurer filed suit. The Federal Circuit affirmed summary judgment in favor of the government. The statute created an obligation of the government to pay exchange participants the amount indicated by the statutory formula but riders in the FY 2015 and 2016 appropriations bills repealed or suspended the obligation to make payments out in an aggregate amount exceeding payments in. Congress made the policy choice to cap payments. No statement or action by the government evinced an intention to form a contract; the risk corridors program was simply an incentive program. Because there was no contract, the insurer’s “takings” claim also failed. View "Land of Lincoln Mutual Health Insurance Co. v. United States" on Justia Law