SUPERINTENDENT OF FINANCIAL SERVICES ANNOUNCES RESOLUTION OF LAWSUIT OF HEALTH REPUBLIC IN LIQUIDATION AGAINST FEDERAL GOVERNMENT
Settlement Yields $220,838,583 and Health Republic will Pay All Policyholder Claims in Full
Superintendent of Financial Services Linda A. Lacewell announced today that Health Republic Insurance of New York, Corp. in liquidation (“Health Republic”) has obtained a judgment to recover $220,838,583 from the United States. The judgment resolves a lawsuit commenced by the Superintendent as Liquidator of Health Republic against the Federal Government in the United States Court of Federal Claims in 2017.
“The judgment is a significant victory for the New York policyholders of Health Republic, including many large hospital systems,” said Superintendent Lacewell. “This demonstrates that even when an insurance company is unable to continue operating, we work hard to protect policyholders and others from the hardships of insolvency.”
Health Republic was a not-for-profit health insurer providing affordable health insurance to New Yorkers under the Patient Protection and Affordable Care Act (“ACA”). The company participated in a number of ACA federal programs designed to help insurers address the uncertainty of underwriting in the initial years of the new health insurance marketplace. In the first three years of the ACA, however, the Federal Government failed to honor its obligation to pay full balances due under a significant program known as Risk Corridors. The Superintendent in her capacity as Liquidator commenced this lawsuit in 2017 demanding that the Federal Government pay the amounts it was mandated to pay under this program.
The $220.8 million settlement amount will allow the Liquidator to pay all policyholder level claims in full, including many New York hospital systems and other health care providers. In addition, the Liquidator anticipates that there will be sufficient assets to pay New York State and local government claims of approximately $19.1 million and a substantial portion of general creditor claims according to the priority scheme established under New York Insurance Law Article 74.