In 2017, Common Ground Healthcare Cooperative, a small Wisconsin-based nonprofit health cooperative, filed a putative class action against the federal government alleging that the U.S. had not fully paid the risk corridors program and cost-sharing reduction (CSR) payments for some plan years as required under the Patient Protection and Affordable Care Act (ACA).

According the government’s own estimates, qualified health plans (QHPs) incurred compensable losses of nearly $2.9 billion in 2014, $5.8 billion in 2015 and $3.95 billion in 2016 under the risk corridors program. The government did not object to certification of this class and the Court of Federal Claims granted class certification for the risk corridors class on January 8, 2018. []

However, the government did contest certification of the CSR payments class.

The CSR provision of the ACA was intended to reduce the out-of-pocket costs of healthcare services to individuals. Under the provision, insurers offering QHPs in the Marketplace are required to reduce costs such as deductibles, copayments and coinsurance for individuals whose household income is between 100 percent and 250 percent of the federal poverty line.

The Obama administration made monthly advance payments for CSR payments to QHP issuers.  These payments continued under the Trump administration until October 11, 2017 when Attorney General Sessions advised the Departments of Treasury and Health and Human Services (HHS) that because Congress had not made a permanent appropriation to fund the CSR payments, the Departments could no longer make the CSR. The next day, HHS announced it would no longer make the CSR payments.

Although the reimbursements have stopped, QHP issuers are still required to reduce the out-of-pocket reductions to individuals. The Congressional Budget Office estimates that CSR reimbursements to QHP issuers will be $7 billion in FY 2017, $10 billion in FY 2018 and as much as $16 billion in 2027.

In opposing certification of the CSR class, the government argued that proceeding as a class action was not superior to individual lawsuits because the class action could still result in “multiple-complex mini-suits each requiring individual damages determinations.” However, the government did not argue against the commonality of the underlying factual and legal issues or that the liability determination in the mini-suits would differ and did not explain how hundreds of separate suits would advance “the efficiency and economy of litigation.”

Further, the government did not argue any of the other factors in making a Rule 23 determination, including numerosity, commonality, typicality or adequacy or representation.

On April 17, 2018, the Court of Federal Claims issued a ruling certifying the proposed CSR class.   In discussing the disputed issue of superiority, the Court rejected the government’s position that many insurers would not have damages at all because their CSR liabilities were offset by increased premium tax credit payments, stating the government had not identified any statutory provision that allowed such an offset.

The Court of Federal Claims appointed Quinn Emanuel as class counsel for the CSR class. Quinn Emanuel was earlier appointed a class counsel for the risk corridors class.

Although contested class certifications as typically appealed, the government has yet to file a notice of appeal regarding the risk corridors class.

The Court has approved Common Ground’s class notice plan with notice going out to class members no later than June 13, 2018. Class members will have until August 13, 2018 to opt into the class.

 

This post was written by Melissa D. Berry, principal attorney editor, Governance, Risk and Compliance, Thomson Reuters.