Court Dismisses FCA Allegations Against Milliman in ACA Rate Case

The U.S. District Court for the Western District of Virginia recently dismissed False Claims Act (FCA) allegations against Milliman, Inc., an actuarial firm, in a case questioning the integrity of ACA premium rates in Virginia.

In the case of U.S. ex rel. Dixon v. Sentara Health Plans, Milliman was accused of inflating premium rates for Optima Health Plan in 2018. These rates had been scrutinized and approved by the Virginia Bureau of Insurance (BOI) and the Centers for Medicare & Medicaid Services (CMS), following the market's destabilization due to a major insurer's withdrawal. Despite the allegations made by three Virginia residents claiming misleading assumptions and excessive taxpayer costs, the BOI defended the rates as actuarially sound. The relators, however, moved forward independently in court without the Department of Justice's intervention.

The Federal Filed-Rate Doctrine's Role

The district court's dismissal highlights the impact of the federal filed-rate doctrine, which restricts courts from challenging rates that regulators have approved. This doctrine played a key role, as the court emphasized it couldn't declare these rates unreasonable once sanctioned by governing bodies. The decision to dismiss the case with prejudice prevents the plaintiffs from refiling, although they plan to appeal the decision.

Implications for the Insurance Industry

For actuaries and insurance carriers operating within the ACA marketplace, this ruling reaffirms the protections afforded by regulatory approvals of rate filings. Carriers can draw from this case to understand the robustness required in their rate justification processes, particularly amid market uncertainties similar to those observed in 2017. Actuaries might consider this a moment to review their practices, ensuring compliance with market conditions and regulatory expectations to withstand judicial scrutiny.

This case serves as a vital reminder of the legal threshold required to challenge approved insurance rates, emphasizing due diligence in the rate-setting process for insurers and actuarial consultants alike.