U.S. Supreme Court

Health law requires US to pay insurers that lost money, Supreme Court rules

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Insurers that lost money participating in the Affordable Care Act’s insurance marketplace have a right to reimbursement under the law, the U.S. Supreme Court ruled Monday.

Section 1342 of the law promised the money to compensate insurers that offered unprofitable health plans during the first three years of the law, according to the majority opinion.

The law provided that the government “shall pay” insurers that lost a certain amount of money, and that insurers “shall pay” the government if they made a certain amount of money. The government never paid insurers for their losses.

During the three years of the program, the government owed insurers about $12 billion more than it received from profitable plans.

Justice Sonia Sotomayor wrote the majority opinion. Justice Samuel A. Alito Jr. dissented.

The relevant section of the law was known as the Risk Corridors statute.

“We conclude that §1342 of the Affordable Care Act established a money-mandating obligation, that Congress did not repeal this obligation, and that petitioners may sue the government for damages in the Court of Federal Claims,” Sotomayor wrote.

The court ruled in three consolidated cases brought by insurers who say Congress used appropriations riders to deny the funds in “a bait-and-switch of staggering dimensions.”

Two justices in the eight-person majority—Clarence Thomas and Neil M. Gorsuch—did not join Sotomayor’s opinion in full.

Alito’s dissent argued that the court has to consider how its decision fits with its approach to inferred rights of action.

The court has twice made the point this term that it has “basically gotten out of the business of recognizing private rights of action not expressly created by Congress,” Alito wrote.

“Today, however, the court infers a private right of action that has the effect of providing a massive bailout for insurance companies that took a calculated risk and lost,” Alito wrote.

The cases are Maine Community Health Options v. United States, Moda Health Plan v. United States and Land of Lincoln Mutual Health Insurance Co. v. United States.

Hat tip to SCOTUSblog.

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