Highmark Inc. ACA Litigation Fact Sheet
May 17, 2016
- Highmark Inc. and certain of its health insurance subsidiaries and affiliates ("Highmark") today filed litigation in the U.S. Court of Federal Claims to recover damages owed for the federal government's failure to honor its statutory and contractual obligations related to the insurer's participation in the health care exchanges created by the Patient Protection and Affordable Care Act ("ACA").
- The ACA's introduction of millions of previously uninsured or underinsured citizens into the health care marketplace posed great uncertainty to health insurers, including Highmark, that had no previous experience or reliable data to meaningfully assess the risks and setting of premiums for this new population of insureds under the ACA.
- Congress, recognizing such uncertainty for health insurers, included in the ACA three premium-stabilization programs to help protect health insurers against risk selection and market uncertainty, including the temporary risk corridors program, which mandated that certain health insurers which incurred losses under the ACA be paid annual risk corridor payments based on a statutorily prescribed formula to provide such insurers with stability as insurance market reforms began. This program was modeled on a similar program in Medicare Part D signed into law by President George W. Bush.
- This lawsuit arises out of the United States' failure or refusal to make timely and full risk corridor payments to the Highmark insurers for CY 2014, in breach of explicit obligations created by statute, regulation, express contracts and implied-in-fact contracts, and in contravention of statements made by the government that induced the Highmark insurers to participate in the ACA marketplace. The government's failure to pay also breached its duties of good faith and fair dealing implied in all of its contracts with Highmark.
- The government's withholding of the risk corridor payments due also effected a taking of Highmark's property without just compensation in violation of the Fifth Amendment of the United States Constitution.
- Highmark's repeated efforts to resolve the United States' failure or refusal to timely pay the full amount of CY 2014 risk corridors payments owed have been unsuccessful, necessitating the filing of this lawsuit.
- Should the Court determine that the United States breached its statutory, regulatory and contractual obligations to provide full and timely CY 2014 risk corridor payments to the Highmark insurers, Highmark seeks additional declaratory relief that the government's CY 2015 and CY 2016 risk corridor payments must be made on time and in full, in accordance with the government's legal obligations.
- Highmark is represented by Reed Smith LLP in the action filed in the U.S. Court of Federal Claims in Washington, D.C. on May 17, 2016.