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KTMC Secures Important Win for Pension Plan Clients

August 17, 2021

A recent decision by Judge Eleni M. Roumel in the United States Court of Federal Claims could pave the way for sizable recoveries by certain self-insured health and welfare benefit plans organized under ERISA.  The Affordable Care Act (“ACA”) created a reinsurance pool to benefit commercial insurers by reimbursing them for new costs associated with covering high-risk persons who were denied coverage previously, a key reform of the ACA. To fund this pool, formally called the Transitional Reinsurance Program (“TRP” or “Program”), Congress imposed a fee on commercial insurers; this made sense, as commercial insurers rated persons based on risk and should have borne the expense of the rate stabilization measures.  

Congress delegated authority to HHS to implement the Program, which was to run from 2014 to 2016.  HHS included self-insured, self-administered plans in its definition of entities responsible for paying the TRP fee.  We alleged on behalf of these plans that their inclusion by HHS as covered entities was unlawful.  Judge Roumel, in a 41-page opinion, agreed.  The Court held that the government’s collection of fees from these plans may have constituted an illegal exaction – we are evaluating a potential motion for summary judgment on this point.  The decision also discusses a takings claim on behalf of other self-insured ERISA plans.  Here the Court indicated that further record development is necessary to determine whether there was a property interest in the funds paid over to the government, a prerequisite to a successful takings claim.  Importantly, the case has not proceeded beyond the government’s motion to dismiss, or in the alternative for summary judgment, which has now been largely denied by the Court.  The parties are due to file a status report in the next few days which should give some detail on a path forward.
 

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