Failed S.C. co-op sues feds over reinsurance payments

Consumers’ Choice Health Insurance Co., the failed insurance co-op for South Carolina, has sued the federal government, alleging it’s illegally trying to collect loan repayments from the co-op.

Consumers’ Choice claims the feds owe it $37 million in reinsurance payments under the Affordable Care Act. An ACA provision requires the CMS to abide by state laws when it seeks repayment of loans from co-ops. South Carolina law doesn’t allow lenders to offset debt from loans until they fulfill their own financial obligations.

The federal government appropriated billions of dollars to fund co-ops across the country. South Carolina received an $18 million startup loan and a $68 million solvency loan to form Consumers’ Choice.