Iowa insurance commissioner sues feds over failed co-op

Iowa insurance commissioner Nick Gerhart has filed suit against HHS and CMS, alleging federal health officials are withholding $20 million owed to a failed Iowa health insurance co-op, reports Insurance Journal.

Des Moines, Iowa-based CoOportunity was a federally funded nonprofit established to provide healthcare to residents in Iowa and Nebraska. Mr. Gerhart took over the co-op in January to liquidate it after officials found the nonprofit's medical claims would exceed its available cash.

The disagreement centers on the federal government's position it has priority ahead of all CoOportunity's other investors as Mr. Gerhart liquidates company assets. The federal government loaned $147 million to the insurer in 2014. The lawsuit claims HHS and CMS agreed to make their loans subordinate to policyholders' claims.

In a statement released by the insurance commissioner's office, Mr. Gerhart said, "The federal government has tried to jump ahead of the creditor line, but it is not following Iowa or federal law in withholding more than $20 million due to CoOportunity."

CoOportunity is one of 12 co-ops to close on Affordable Care Act exchanges.


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