Alignment Healthcare filed suit against CMS in federal court in the District of Columbia on Friday, October 9, a day after CMS posted the 2027 Star Ratings and Alignment disclosed in an SEC filing its largest contract, California HMO H3815, had fallen from four stars to 3.5. The company says CMS set important parts of the Star Ratings methodology through technical notes instead of the formal rulemaking process the Administrative Procedure Act requires, and the company is asking the court to order a recalculation of its scores in line with the Clover ruling from earlier this year.
What Alignment filed and why
In its October 8 filing, Alignment said contract H3815 serves about 75 percent of its health plan membership, while its other six eligible contracts kept ratings of four stars or higher. Alignment reported about 25 percent of its members now sit in plans rated four stars or higher for 2027, compared with all of its members in the 2026 ratings, and the company described reputational and financial harm from the change. Alignment also said the 2027 ratings are not expected to affect its revenue in 2026 or 2027, since the ratings determine quality bonus payments in 2028, with provider risk-sharing arrangements expected to offset part of the effect. The company said in the same filing the company would pursue administrative appeals of certain CMS calculations alongside litigation.
In the complaint, Alignment argues CMS has departed from the structure Congress set for the Star Ratings program by establishing how the ratings work through technical notes rather than regulations adopted with public notice and comment. In its statement on the suit, the company said the lawsuit aims to make sure the Star Ratings program operates as Congress intended, which the company describes as a way for Medicare Advantage beneficiaries to make informed decisions. No CMS response to the filing has appeared in the coverage reviewed for this article.
How the suit connects to the Clover ruling
The suit builds on Clover Insurance Company v. HHS, in which the Southern District of Georgia found CMS relied on data sources outside its statutory authority for 10 Star Ratings measures and adopted 10 others without notice-and-comment rulemaking. After the ruling, CMS recalculated the 2026 ratings and set aside the 10 measures tied to its authority, while keeping the 10 adopted through technical notes. Alignment says CMS carried the same approach into the 2027 ratings, which is the practice its new suit challenges. CMS has appealed the Clover decision to the Eleventh Circuit, so the question of how far the ruling extends to other plans remains open.
Where the suit sits among the other cases
The October 9 filing is the latest in a series of Star Ratings cases, and for Alignment the filing follows several earlier steps. The D.C. Circuit affirmed judgment for the government on July 14 in Alignment's challenge to its 2025 ratings, a case we covered in our look at where the cases stand centered on survey administration more than the data-source and rulemaking questions raised in Clover. Alignment filed a separate suit on July 10 in the District of Columbia, before Judge Christopher Cooper, asking the court to apply the Clover approach to its 2026 ratings, and the docket shows the government filed its reply on its cross-motion for summary judgment on October 6, which completes the briefing. SCAN Health Plan filed in the District of Columbia on July 7 and Elevance filed in the Southern District of Georgia on July 1, so several plans are now asking courts to decide the same underlying questions from different directions.
What the ratings set for 2028
The 2027 ratings fix the 2028 quality bonus year, which gives the contract-level result real weight for a plan whose membership sits largely in one contract. Our report on the 2027 Star Ratings results covers the CMS figures and how carriers landed, and our earlier article on how the Clover ruling prompted more plans to speak up traces how the first wave of challenges developed. Any ruling in the new case would likely come after the Eleventh Circuit and the pending District of Columbia cases give more guidance, which leaves the 2027 and 2028 results open to change as the courts work through the questions.
The RISE Star Ratings Master Class takes these questions apart in detail. The program runs December 14 to 16 at the Fairmont Scottsdale Princess in Scottsdale, Arizona, and covers Stars program changes, how recent lawsuits affect MA plans, and quality improvement innovation, with workshops on Stars Math, the Quality Data Deep Dive, and the Cutpoint Hackathon. Learn more about the Star Ratings Master Class.