Agency’s Offset of Insurer’s Debt Violated Colo. Liquidation Law, Federal Appeals Court Affirms

WASHINGTON, D.C. — Colorado law bars the U.S. Department of Health and Human Services (HHS) from using money owed to an insolvent insurer to pay sums the insurer owes under the Patient Protection and Affordable Care Act’s (ACA) reinsurance and risk-adjustment programs, a federal appeals court has affirmed.

In a May 17 opinion, the U.S. Court of Appeals for the Federal Circuit agreed with the lower court that HHS’s offset violated Colorado’s insurance liquidation priority scheme by leap-frogging claimants with higher priority.

As part of the ACA, Congress created the Consumer Operated and Oriented Plan (CO-OP) program to ensure that …