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Molina wins $52M from feds in ObamaCare lawsuit

August 7, 2017

Molina Healthcare got some good news to follow up this week’s disappointing earnings report — a federal judge on Friday handed down a decision ordering the government to pay the Long Beach company more than $52 million.

Judge Thomas C. Wheeler of the U.S. Court of Federal Claims issued the ruling. His decision follows Molina Healthcare’s filing of a lawsuit in January contending the federal government’s administration of an Affordable Care Act provision intended to control risks among participating insurers shortchanged the company by some $52 million.

The program, called “risk corridors” applied to insurers who sold health insurance plans through government-sponsored marketplaces like Covered California. In February, then-Molina Healthcare chief executive J. Mario Molina pointed to the company’s objections to the government’s ability to manage risk transfer payments as a reason executives were considering pulling out of Affordable Care Act marketplaces on a state-by-state basis.

This past Wednesday, Molina Healthcare announced the company would drop out of marketplace programs in Utah and Wisconsin after the end of this year. Executives also plan to curtail Molina Healthcare’s involvement in Washington state’s marketplace program.

Molina Healthcare’s board fired J. Mario Molina and John Molina from their respective jobs as chief executive and chief financial officer in May, and new company Chairman Dale Wolf then declared a need to improve the firm’s financial performance.

The company declared a $230-million loss for its April-to-June quarter on Wednesday. Interim Chief Executive Joseph White said that day the company is in the midst of a restructuring, and recently-announced layoffs may lead to some 1,500 jobs being eliminated from the company’s nationwide payroll.


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