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Shutterstock.com[/caption] A federal court dealt a major blow to a couple of health insurers’ attempts to recoup millions of dollars they say they are owed under an Affordable Care Act program designed to incentivize participation in public exchanges. In a pair of closely watched cases, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit on Thursday ruled that the U.S. Department of Health and Human Services does not owe Moda Health Plan Inc. about $200 million nor Land of Lincoln Mutual Health Insurance Co. about $76 million under the ACA risk corridors program. Although the opinions apply to Moda Health and Land of Lincoln, they are likely to have implications for a spate of other pending risk corridor-related litigation, mainly in the U.S. Court of Federal Claims. Insurers claim that, all told, the government is on the hook for about $8.3 billion in risk corridor payments. The ACA risk corridors program was established during the Obama administration to provide funding to insurers worried about losses they might suffer from covering previously uninsured Americans through the exchange system. The idea was to use money from insurers that did well on the exchanges in 2014, 2015 and 2016 to help insurers that did poorly. Near the end of 2014, however, a Republican Congress, led by Florida Sen. Marco Rubio, slipped into its enormous 2015 spending bill an unrelated health care provision that prohibited HHS from making risk corridor payments in excess of collections, a so-called appropriations rider that played a major role in both oral arguments and the Federal Circuit’s Thursday opinion. In October 2015, HHS officials announced that the program had taken in only enough cash from exchange plan insurers that did well in 2014 and 2015 to pay about 16 percent of the amounts owed to the struggling insurers for 2014. The program did not pay out anything to these insurers for 2015. In February 2017, in a lawsuit brought by Moda Health the year before, a Federal Claims judge granted partial summary judgment in favor of the Portland, Oregon-based insurer, saying that the federal courts have the authority to get the cash for the risk corridors program payments from the federal Judgment Fund. The judge ruled that Moda Health has an implied-in-fact contract with the risk corridors program and criticized the idea that the government has the right to refuse to make the payments because Congress changed program funding rules a year after the program managers had already articulated the terms of the arrangement. Just a few months earlier, in November 2016, another Federal Claims judge dismissed all claims brought by Chicago-based Land of Lincoln over the nonpayment of risk corridor funds. Rejecting the breach-of-contract argument that succeeded in the Moda Health case, the Land of Lincoln judge ruled that the ACA public exchange issuer agreements that HHS required the company to sign described how the agency thought the risk corridors program would work, but did not amount to a binding contract. The cases were combined before Federal Circuit Judges Sharon Prost, Pauline Newman and Kimberly Moore. Prost, the chief judge, wrote the opinion on behalf of the court, and Newman filed a dissent. The overwhelming majority of the nearly 55-page Moda Health opinion was adopted in the Land of Lincoln three-page opinion. In its opinion, the court ruled that Congress’ “intent to temporarily cap payments out at the amount of payments in was clear from the appropriations riders and their legislative history.” “We simply cannot infer, as Moda’s position would require, that upon enacting the appropriations riders, Congress intended to preserve insurers’ statutory entitlement to full risk corridors payments but to require insurers to pursue litigation to collect what they were entitled to,” Prost wrote. “That theory cannot displace the plain implication of the language and legislative history of the appropriations riders.” On the breach-of-contract issue, the court found that the risk corridors statute, its enabling regulations and HHS’s conduct “all simply worked towards crafting an incentive program” rather than “evinc[ing] an intention to form a contract.” In addition to stating that the lower court ruled correctly in finding an implied-in-fact contract between Moda Health and the government, Newman said in her dissent that the obligation to make the risk corridor payments in full was not canceled by the appropriations riders. “The government’s ability to benefit from participation of private enterprise depends on the government’s reputation as a fair partner,” she wrote. “By holding that the government can avoid its obligations after they have been incurred, by declining to appropriate funds to pay the bill and by dismissing the availability of judicial recourse, this court undermines the reliability of dealings with the government.” Steven Rosenbaum of the Washington, D.C., office of Covington & Burling is the lead attorney for Moda Health. In an emailed statement, he said, "Moda Health is disappointed by the decision, and is actively considering its options for further pursuit of the litigation." Land of Lincoln lead attorney Jonathan Massey of Massey & Gail provided via email a statement from Jennifer Hammer, director of insurance of the state of Illinois and the statutory and court-affirmed liquidator. The state agency began liquidating the nonprofit, member-owned health startup in September 2016 due to the federal government’s failure to make good on its obligations under the risk corridors program, the insurer said. “The federal government’s failure to honor its promises and obligations caused 50,000 Illinoisans to lose their health insurance in 2016,” Hammer said in the statement. “As Receiver, I will continue to vigorously defend the rights of Land of Lincoln and the consumers of this state. I anticipate we will be filing a request for rehearing before the Federal Circuit, as today’s decision is inconsistent with existing precedent.” Alisa Klein with the U.S. Department of Justice's appellate unit of its Civil Division is the lead attorney for the United States. The DOJ, through a representative, declined to comment on the case.