Iowa Insurance Commissioner Nick Gerhart has filed a lawsuitagainst the U.S. Department of Health and Human Services and the Centers forMedicare and Medicaid Services in U.S. District Court in Iowa, alleging thatthe federal government has unlawfully withheld millions of dollars owed toCoOportunity Health.

Gerhart, who is acting as liquidator of CoOportunity Health, said the federalgovernment is claiming it has "super priority" over other creditors,including those with policyholder level claims, in CoOportunity Health'sreceivership.

"The federal government has tried to jump to the headof the creditor line, but is not following Iowa or federal law in withholdingover $20 million due to CoOportunity," Gerhart said in a statement.

The federal government loaned $147 million to CoOportunityHealth when it entered the health care market in Iowa and Nebraska in 2014. Hesaid that HHS and CMS contractually agreed to make those loans subordinate topolicyholder level claims in the case of the $14.7 million start-up loan and toall other creditors under the $132 million insolvency loans. Separately, thefederal government owes CoOportunity Health another $130 million in riskcorridor funds under the Affordable Care Act, Gerhart noted.

The May 3 suit asks the court to declare that the Iowa lawis applied in determining the priority of creditor claims in the CoOportunityHealth estate.