Community Health Options, a Maine health insurance provider that offers plans through the Affordable Care Act marketplace, has won a case against the federal government that went all the way to the U.S. Supreme Court.

The insurer sued over $59 million in unpaid subsidies it argued it was owed by the federal government. In an 8-1 vote on Monday, the Supreme Court sided with Community Health Options and three other insurance companies in North Carolina and Illinois, on the now-defunct “risk corridors” program. The total amount to be paid out to insurers is $12 billion.

The risk corridors program, which operated from 2014 to 2016, was designed to help keep insurance companies financially solvent by paying them if they took on a disproportionate share of patients at higher risk of disease, such as older patients with chronic conditions.

Heather Bouffard, a Community Health Options spokeswoman, said the nonprofit heath insurer – which has about 30,000 policyholders – was “very pleased” with the decision.

“We paid into the risk corridor program in our first year of operations, but when it came time for the risk corridor program to offset some of our losses in 2015 and 2016, the government yanked away that mitigation in defiance of the law,” Bouffard said in an email response to questions. “The Supreme Court’s verdict is a vindication of the rule of law and should restore faith that a contract with the government is not by itself a risky undertaking.”

The money will go into Community Health Options’ surplus funds, she said.

“The funds will go to replenish our surplus, which further strengthens Health Options for the long haul – especially at a time where there is great economic uncertainty,” Bouffard said.

Community Health Options argued before the court that it had designed hundreds of ACA health care policies operating under the risk corridors formula, which called for reimbursing the insurer if it suffered losses on the policies. Congress later reduced the amount it would pay insurers, but it did not repeal the ACA, leaving language in the law requiring the payments, the Supreme Court ruled.

“Congress created a rare money-mandating obligation requiring the federal government to make payments,” according to the decision, authored by Justice Sonia Sotomayor. “These holdings reflect a principle as old as the Nation itself: The Government should honor its obligations.”

Community Health Options was formed under a provision in the ACA for nonprofit cooperatives. These were created to help increase choices on state ACA marketplaces, especially in places that might be underserved, such as rural areas. The Lewiston-based Community Health Options at first thrived, but then ran into financial hardship in 2016 from which it has since recovered.

Most of the 23 cooperatives formed under the ACA have folded, and Health Options is one of only four that continue to offer coverage in five states: Montana, Idaho, Maine, New Mexico and Wisconsin, according to the National Association of Insurance Commissioners.

Community Health Options and other insurers filed a federal lawsuit in 2016 that was eventually appealed to the Supreme Court. Oral arguments were made before the court in December.

« Previous

More $1,200 stimulus checks are on the way. When will they arrive?

Next »

Thousands already lined up for $310 billion in small business loans. The money could run out in days.