FLASHBACK: Trump stiffed contractors for billions last year as well…and they’re winning lawsuits

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The Ring of Fire / YouTube Trump s GOP Suffers Historic Healthcare...
The Ring of Fire / YouTube

In the midst of the ongoing #TrumpShutdown, where hundreds of thousands of federal employees are either off the job altogether or having to work without being paid and hundreds of federal contractors are being stiffed for the work they’ve done in good faith, I just wanted to remind folks that Donald Trump also screwed over several hundred insurance carriers in October 2017 when he cut off contractually-owed Cost Sharing Reduction reimbursement payments to insurance carriers nationwide.

Once again, the very short version is this:

  • The contract insurance carriers sign when they offer policies on the ACA exchanges is to cover a chunk of low-income enrollee deductibles, co-pays and other out-of-pocket costs which would normally be the enrollees’ responsibility. These are called Cost Sharing Reductions.
  • The carriers then submit their CSR invoices to the federal government, which is supposed to reimburse the insurance carriers every month.
  • Donald Trump cut off contractually-required CSR reimbursement payments to insurance carriers in October 2017…and hasn’t made any payments since.

(I’m not going to rehash how Trump was able to cut off those payments with a Thanos-like snap of his fingers; suffice to say it’s connected to a lawsuit filed so long ago that John friggin’ Boehner was still Speaker of the House at the time).

  • That means insurance carriers were effectively stiffed for October, November and December CSR payments in 2017…totaling upwards of $2 billion or so collectively.
  • However, Silver Loading/Switching didn’t do anything to make up their losses for the last three months of 2017.
  • Therefore, they sued.

I realize that very few people are going to cry over the plight of the health insurance industry, but it’s important to keep in mind that:

  • Not every insurance carrier is a multi-billion dollar corporate behemoth; there are some small guys who got hurt by this as well, and some carriers large and small are non-profit (or at least not-for-profit).
  • You may not give two hoots about the $2 billion that the carriers lost in the final quarter of 2017 as a result of the CSR cut-off, but you absolutely should care if you were one of several million people who were enrolled in an individual market policy last year, earned more than 400% of the Federal Poverty Level and weren’t fortunate enough to be able to take advantage of the Silver Switcharoo workaround…because it means you had to shell out a whopping ~$780 apiece on average more last year as a result.

Note: This is in addition to the $580/apiece Trump Tax which unsubsidized 2019 enrollees are being forced to pay due to the GOP repealing the individual mandate penalty & expanding junk plans.

In any event, as I noted above, a bunch of the insurance carriers did sue the federal government to get the money they’re still owed from Q4 2017…and so far, they appear to be winning:

Montana insurer wins lawsuit against feds over unpaid cost-sharing reduction payments

Several health insurers have sued the U.S. government over its failure to make cost-sharing reduction payments that help lower healthcare costs for certain consumers. One just scored the first victory. The U.S. Court of Federal Claims ruled in favor of Montana Health Co-op, which sued the federal government for $5.3 million in unpaid cost-sharing reduction payments, finding that the government violated its obligation under the Affordable Care Act when it stopped paying the CSRs in October 2017.”

That was pretty much the last I had heard about the CSR lawsuits, but a week or so ago Katie Keith posted some more updates over at HealthAffairs:

With many of these cases now resolved, this post focuses on the status of lawsuits brought by insurers for unpaid CSRs. These lawsuits began as early as November 2017 when Common Ground Healthcare Cooperative, an insurer based in Wisconsin, amended its class action lawsuit on risk corridor payments to additionally contest the government’s failure to make CSR payments. This was followed by separate challenges from several other insurers.

To date, two insurers—Maine Community Health Options and Sanford Health Plan—have succeeded in their challenges. …The federal government intends to appeal both cases to the Federal Circuit, and the cases will likely be consolidated on appeal.

As of September 2018, 91 insurers had opted in to the class action lawsuit. Judge Margaret M. Sweeney has scheduled an oral argument in this case—alongside the challenges brought by Maine Community Health Options and Community Health Choice—for January 29. Judge Thomas C. Wheeler will also hear oral argument over a challenge brought by the L.A. Health Care Plan on January 4.

Other lawsuits, such as those brought by Health Alliance Medical Plans and Blue Cross Blue Shield of Vermont, are proceeding and awaiting additional briefing or a hearing. At the same time, new lawsuits continue to be filed. Guidewell Mutual Holding Corporation (which includes Blue Cross and Blue Shield of Florida, Florida Health Care Plan, and Health Options) filed a CSR lawsuit on November 20, seeking a total of about $223 million for unpaid CSRs from 2015, 2016, and 2017Harvard Pilgrim Health Care, based in Massachusetts, filed a much smaller lawsuit on November 27 for unpaid CSRs from 2017.

A significant challenge brought by Molina for nearly $160 million remains stayed by Judge Wheeler; both parties requested the stay until after a final, non-appealable judgment is issued in Moda Health Plan. This means the Molina case will not proceed until after the Supreme Court decides whether to hear Moda Health Plan, or issues a decision if it takes the case.

I’m not sure what the deal is regarding the 2015 and 2016 CSR payments; it sounds like those are more of a dispute between the Florida carriers and the government over how much they’re owed for those years.

Anyway, the point is that Donald Trump promised to run the federal government the way he ran his businesses…and it appears that this is one promise that he’s actually keeping: Stiffing contractors out of money they’re contractually owed, forcing them to turn to costly litigation to get paid.

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1 Comment on "FLASHBACK: Trump stiffed contractors for billions last year as well…and they’re winning lawsuits"

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Alfred Higgins
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Alfred Higgins

tRump running the Federal Government as a confidence game????
Well,……. “No sh*t, Sherlock”!