Health Plans Losing Court Battles in No Surprises Act Cases

The fate of the No Surprises Act's independent dispute resolution (IDR) clause continues to hang in the balance as it winds its way through the courts. The No Surprises Act, signed into law in 2020 by President Donald Trump, was intended to protect patients from unexpected bills for care from out-of-network providers and to ensure fair contracts between health plans and physicians. It requires health plans and providers to resolve their billing disputes by establishing an IDR arbitration process in which the insurer and the provider each come up with an offer and an independent third party chooses one of the two. Last month, U.S. District Judge Thomas Thrash Jr., in Atlanta, dismissed a lawsuit by a Georgia subsidiary of health insurer Elevance against HaloMD, a medical billing company, and two physician groups. The insurer alleged that HaloMD and the physicians had defrauded Elevance by initiating thousands of out-of-network billing disputes in the second 6 months of 2024, garnering close to $6 million in awards that Elevance alleged were improper. The judge didn't rule on the merits of the case itself, but instead said that the court lacks jurisdiction to re-litigate the awards, especially since the law deliberately protects them from further legal review. Elevance plans to appeal the decision, according to a report in Becker's Payer Issues. The judge also gave some clues as to how he might rule given the opportunity. "The Court notes that the plaintiff argues that it loses a lot of IDR arbitrations," he wrote. "For example, it says that of the 228 IDRs the defendants initiated on May 3, 2024, the plaintiff lost 192. It cites CMS data that providers prevailed in 85% of IDR payment determinations." "It is highly improbable to infer from these facts that there is a vast conspiracy of providers and IDR entities that have conspired to defraud the plaintiff of millions of dollars in thousands of No Surprises Act IDR proceedings over many years," he continued. However, "it is highly plausible to infer that the plaintiff engages in a consistent practice of submitting low-ball offers to out-of-network providers in an effort to maximize its profits." The Georgia lawsuit is one in a string of many on this particular issue, Wendell Potter, former vice president of corporate communications at a leading health insurance company, wrote Tuesday in a Substack post. In April, Anthem Blue Cross's California lawsuit against HaloMD was dismissed outright, and a case brought by Aetna in Florida against Radiology Partners was also dismissed. In May, seven claims brought by Blue Cross Blue Shield of Texas against HaloMD and affiliated providers were dismissed. "Whichever way it lands, it will be the first ruling in this litigation wave to address whether insurers can reach past the corporate defendant to the individuals who run it -- a theory none of the other ... courts needed to touch since they disposed of the underlying claims first," Potter wrote. "So the pattern will keep testing itself in front of new judges, but so far, every court to look at it has reached the same conclusion: Congress built IDR specifically to keep these disputes out of federal court, and insurers don't get to use fraud and racketeering claims as a side door back in." America's Health Insurance Plans (AHIP), a health insurer trade group, blasted the decision. "Abuse of the No Surprises Act by some out-of-network providers and IDR middlemen is adding billions in wasteful spending and raising healthcare costs for everyone," AHIP spokesman Chris Bond said in an email. "Policy action is needed to put an end to this gold rush and protect consumers from this unconscionable price gouging." Providers aren't happy with the system either. In April, dozens of physician groups, including the American Medical Association and the American College of Emergency Physicians, sent a letter to HHS and other federal agencies urging stronger enforcement of the law. They cited "problematic conduct," such as payers losing IDR decisions and then reprocessing claims, and forcing patients to pay higher cost-sharing amounts. Providers also claim that health plans are delaying payment, making only partial payments, or not paying at all. A survey of clinicians found that 22% of IDR awards owed to physicians and other providers in 2023 and 11% of awards in 2024 had not been paid. Stacey Lee, JD, professor of law and ethics at Johns Hopkins University Bloomberg School of Public Health in Baltimore, told MedPage Today in an email that when it comes to the Georgia case, "aggregate allegations are not enough. A party claiming fraud must identify the specific misrepresentation, who made it, and how it affected the proceeding." She pointed out that the court also emphasized that the insurer had an opportunity to raise eligibility concerns during the IDR process. While the circumstances in all these cases are not identical, "the direction is increasingly clear: Courts are reluctant to allow dissatisfied parties to repackage IDR challenges as collateral litigation," Lee wrote. On the other hand, "the practical asymmetry remains: The payer still controls payment," she added. "Providers have also encountered serious limits when attempting to use the courts to enforce unpaid IDR awards. The Fifth Circuit held that the [No Surprises] Act does not create a standalone private right of action to enforce an award, and the Supreme Court declined to review that ruling in January." "The awards are binding in the sense that the parties generally cannot relitigate the merits," said Lee. "But providers may still have to rely primarily on the administrative complaint and enforcement process when a payer does not pay." She added that "volume alone is not proof of abuse in either direction. High provider win rates are consistent with several competing explanations, including inappropriate provider submissions, insurer offers that are systematically too low, or both. The available data does not settle that question." As the legal machinations continue, so does the filing of IDR cases. An analysis of federal data by Modern Healthcare found that CMS and its contractors can't keep up with the number of IDR disputes, with plans and providers filing 1.43 million IDR applications from January through May 2026, 46% more than during the comparable period in 2025. The system resolved 1.36 million cases over those 5 months, the analysis found. Separately, the Congressional Budget Office found that in IDR cases, providers prevail 80% of the time and secure payments up to five times the average contracted rate.