Ommen v. United States
17-957
| Fed. Cl. | Sep 5, 2017Background
- CoOportunity Health, a non-profit ACA "Co-Op" insurer, became insolvent after 2014 and was placed in liquidation by an Iowa state court in March 2015.
- The Liquidator and Special Deputy Liquidator sued HHS in federal district court challenging HHS’s offsets of funds and its risk-adjustment methodology; the district court dismissed for lack of jurisdiction (claims for money damages belong in the Court of Federal Claims).
- The Liquidators filed in the Court of Federal Claims; after dismissing a pending Eighth Circuit appeal to avoid 28 U.S.C. § 1500 issues, they refiled their complaint alleging unpaid risk-corridor amounts, wrongful setoff, and improper risk-adjustment charges.
- Plaintiffs concede the core risk-corridor claim should be stayed pending Federal Circuit decisions in Land of Lincoln and Moda Health, but they seek to proceed immediately on setoff and risk-adjustment claims.
- The government moved to stay all proceedings, arguing the setoff and risk-adjustment issues are intertwined with the risk-corridor questions on appeal and that any resolution would depend on the Federal Circuit’s rulings.
- The Court of Federal Claims granted the stay, finding the related issues would benefit from the Federal Circuit decisions and that any judgment on the ancillary issues could not be entered independently before resolution of the risk-corridor issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether proceedings should be stayed pending Federal Circuit decisions in Land of Lincoln and Moda Health | Liquidators: stay risk-corridor claim only; setoff and risk-adjustment claims can and should proceed to aid liquidation | Govt: setoff and risk-adjustment claims are interwoven with risk-corridor issues on appeal; resolution depends on those decisions | Court granted a stay of the entire case pending the Federal Circuit decisions |
| Whether HHS’s temporary hold and subsequent setoff violated the state liquidation order prohibiting setoff | Liquidators: HHS’s hold/setoff unlawfully withheld risk-corridor payments owed to CoOportunity | Govt: amounts were effectively paid via setoff and are part of risk-corridor accounting | Court treated setoff claim as a component of the risk-corridor dispute and found it should await appellate rulings |
| Whether HHS’s risk-adjustment methodology was arbitrary or improperly applied to a failed insurer | Liquidators: methodology ignored the insurer’s early failure and was arbitrary and capricious | Govt: risk-adjustment charges are elements of risk-corridor calculations and tied to appeal issues | Court concluded the risk-adjustment claim is related to the risk-corridor claim and should be stayed |
| Whether any decision on setoff or risk-adjustment could be entered separately now | Liquidators: resolution would aid liquidation and is not indefinite | Govt: any judgment would be intertwined and cannot be entered independently under Rule 54(b) | Court found such decisions would not produce an immediately separable judgment and therefore stayed briefing and consideration |
Key Cases Cited
- Landis v. North Am. Co., 299 U.S. 248 (1936) (authorizes district court stays as incidental to docket-control power)
- Cherokee Nation v. United States, 124 F.3d 1413 (Fed. Cir. 1997) (stay analysis must consider court's obligation to exercise jurisdiction and require a showing of pressing need)
- Land of Lincoln Mut. Health Ins. Co. v. United States, 129 Fed. Cl. 81 (2016) (Federal Claims decision on risk-corridor payments; appeal pending)
- Moda Health Plan, Inc. v. United States, 130 Fed. Cl. 436 (2017) (Federal Claims decision on risk-corridor issues; appeal pending)