CoOportunity, an insolvent Co-op created under the Patient Protection and Affordable Care Act and providing essential health coverage to Iowa and Nebraska members, filed suit yesterday in the U.S. District Court for the Southern District of Iowa. A copy of the Complaint may be found here. The relief sought bears some similarities to the lawsuit previously filed by the Oregon Co-op in the Court of Federal Claims.

CoOportunity’s complaint seeks declaratory and injunctive relief and, in particular, seeks a determination that:

  • the state insurance receivership priority rules apply;
  • prior set-offs against payments owed to CoOportunity were improper;
  • the start-up loan made by the Center For Medicare & Medicaid ("CMS") was subordinated by the terms of the Loan Agreement, such that the assertion of super-priority lien status by CMS fails;
  • the administrative hold on payments to members and other creditors was improper and thus should be released without reduction or offset; and
  • netting against 3R payments must account for all amounts due under the program.

The complaint is the second such attack against CMS and the federal government in connection with a Co-op’s financial demise and demonstrates substantial push back from the domestic insurance regulator against CMS in an effort to protect the interests of the consumers and providers resident in the state.