UnitedHealthcare and Kaiser appeal ACA Risk Corridor settlement

A group of insurers led by UnitedHealthcare and a subsidiary of Kaiser Foundation Health Plan asked a federal judge to cut $184 million in attorneys’ fees after winning $3.7 billion in two class-action lawsuits related to the now-expired Affordable Care Act program dollar health plan.

On Jan. 20, more than 30 insurers wrote to the U.S. Court of Appeals for the Federal Circuit, saying Quinn Emanuel Urquhart & Sullivan’s 10,000 hours on the case did not guarantee them $184 million, which 34 health plans described as ” The epitome of a windfall.” The law firm’s collection represents 5% of the total settlement received by the hundreds of insurers sued in the class action, the highest amount the law firm can get from a deal.

Quinn Emanuel on behalf of the payer group that first sued the U.S. government Unpaid Risk Corridor Fund This was promised to them during the first three years of the Affordable Care Act exchange. The government has said it will take fees from profitable health plans and pass them on to insurers with larger losses, on the idea that subsidizing insurers will help keep consumer premiums stable.

But the government failed to pay insurers the full amount owed, arguing that Congress eliminated its obligations by passing an appropriation rider and made the program largely budget-neutral. The Supreme Court disagreed and ruled in 2020 that the federal government owes insurers more than $12 billion.

In September, a judge in the U.S. Court of Federal Claims ruled that the $184 million the insurer owed Quinn Emanuel was a reasonable return given the complexity of the case. Justice Kathryn Davis wrote that in mutual fund cases — where plaintiffs sign off knowing they will only pay if their attorneys win a settlement — part of the fund ruling is a common fee structure for attorneys.

The insurance company contends that Quinn Emanuel’s fees are calculated by assessing the number of billable hours the attorney actually handled the case, a process known as a lodestar cross-check. Under this approach, Judge Davis wrote in September that Queen Emanuel would be paid $10 million. They asked the appeals court to vacate the $184 million ruling and send the case back to court for a lodestar cross-examination.

“Class lawyers deserve fair compensation for their work,” the insurance company’s lawyers wrote. “What class lawyers don’t deserve, however, is the astronomical reward the claims court has bestowed on it: the full 5% of the class fund, totaling more than $184 million, Over $18,000 an hour.”

Stephen Swedlow, managing partner of Quinn Emanuel’s Chicago office, said insurers were given a fair warning that when they signed up to participate in the class action, Quinn Emanuel may Fees of up to $184 million will be charged. He added that 5 percent is lower than the percentage typically collected in large fund cases that result in settlements of more than $1 billion.

“We took something that had little value and turned it into billions of dollars,” Swedlow said. “In our notice, we said we might charge 5 percent and then you as a customer can choose whether you want to participate or not. This case. It’s the epitome of full vigilance, if we recover, you could pay 5% hundreds of millions of dollars, and that’s what happened.”

Quinn Emanuel will submit a brief justification for the reimbursement amount by March 1. Swedlow said he wasn’t sure when the appeals court would hear the case.

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