UnitedHealthcare and Kaiser appeal ACA risk settlement deal

A group of insurers, led by subsidiaries UnitedHealthcare and Kaiser Foundation Health Plan, have asked a federal judge to cut $184 million in attorneys’ fees owed after insurance plans won $3.7 billion from two class action lawsuits related to the Act’s now expired program. about affordable health care.

On Jan. 20, more than 30 insurance companies wrote to the U.S. Court of Appeals for the Federal Circuit stating that Quinn Emanuel Urquhart & Sullivan’s 10,000 hours of work on the case did not justify their $184 million award, which 34 insurance plans described as the epitome of surprise.” The law firm’s fee is 5% of the total awarded to the hundreds of insurers who file class action claims, which is the maximum amount a law firm can receive from a deal.

Quinn Emanuel represented a group of payers who were the first to sue the US government over unpaid risk corridor funds that were promised to them during the first three years of the Affordable Care Act exchange. The government said it would collect payments from lucrative health insurance plans and pass them on to high-loss insurers, believing that subsidizing insurers would help keep consumer premiums stable.

But the government failed to pay the insurers the full amount owed, claiming that Congress canceled its obligations and made the program virtually budget-neutral. The Supreme Court disagreed and ruled in 2020 that the federal government owed insurers more than $12 billion in late payments.

In September, a U.S. Federal Claims Court judge ruled that the $184 million owed by insurers to Quinn Emanuel was a reasonable amount given the complexity of the case. Judge Katherine Davis wrote that in common fund cases where plaintiffs sign with the understanding that they will only pay if their lawyers win the settlement, the fund fee percentage is the usual fee structure for lawyers.

Insurers advocate that Quinn Emanuel’s fee be calculated by estimating the number of billable hours lawyers actually worked on a case, a process called guiding star cross-checking. Under this method, Quinn Emanuel will be paid $10 million, Judge Davis wrote in September. They are asking the appeals court to set aside the $184 million settlement and send the case back to the court, which will cross-check.

“A class lawyer deserves a fair reward for his work,” the insurers’ lawyers wrote. “However, Class Counsel does not deserve the astronomical award that the Court of Claims awarded him: a full 5% of the class fund, which is more than $184 million and works out to more than $18,000 an hour.”

Insurers were given fair warning that Quinn Emanuel could receive up to $184 million when they signed up to participate in the class action, said Steven Swedlow, managing partner of Quinn Emanuel’s Chicago office. He added that the 5% is a lower percentage than what is normally charged in cases of megafunds that result in settlements of more than $1 billion.

“We took what was nothing and turned it into billions of dollars,” Swedlow said. “In our notice, we said that we could collect 5% and then you, as a client, can choose whether you want to participate in the case or not. It is the epitome of full willingness that you can pay 5% if we make amends. hundreds of millions of dollars, which is exactly what happened.”

Quinn Emanuel will provide a brief justification for the refund amount by March 1st. Swedlow said he was not sure when the appeals court would hear the case.

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