Lawsuit Dismissed Against DFS from UnitedHealthCare Over Risk Adjustment Payments

By Dan M. Clark

A federal judge deemed actions by the state Department of Financial Services over risk adjustment payments as constitutional, and dismissed a lawsuit from UnitedHealthCare against the state agency.

U.S. District Judge John Koeltl of the Southern District of New York granted a motion to dismiss DFS, which was defending its method of distributing risk adjustment payments alongside a federal program.

DFS was sued by UnitedHealthCare of New York and Oxford Health Insurance in October for promulgating a regulation that allowed it to modify the federal risk adjustment program that was implemented in New York by the U.S. Department of Health and Human Services.

A risk adjustment program requires insurers with healthier, or low-risk, enrollees to pay into a common fund. Money from that fund is then distributed to insurers who incur higher claim costs due to less healthy enrollees. The system is designed to ensure that insurers do not only seek out the healthiest, and therefore least expensive, enrollees. 

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Source: New York Law Journal

Statement from Governor Andrew Cuomo 

"UnitedHealthcare of New York's lawsuit against the state attempted to put the profits of a large insurance company over the stability of New York's health insurance market. In dismissing the suit, the federal court has not only affirmed that the Affordable Care Act expressly provides states with the authority to implement their own risk adjustment rules, but upheld New York's right and responsibility to promote and protect its health insurance market and broad access to affordable care for all New Yorkers. 

"In New York, we believe health care is a right, not a luxury. While President Trump tries to tear health care away from millions of Americans, New York is committed to ensuring that every New Yorker has access to quality, affordable health care. We are proud that a record 95 percent of New Yorkers have health insurance coverage, and we won't let President Trump or wealthy insurance companies take us backwards." 

Source: The Office of Governor Andrew M. Cuomo