__________

The No Surprises Act

INFORMATION AND UPDATES: For Employers Plan Sponsors, Third Party Administrators, Brokers, Payers, and Patients

Litigation Updates

The No Surprises Act (the “NSA”) has generated (and will continue to generate) a significant amount of litigation. The Plaintiffs, who are primarily medical provider organizations, used the practice of forum shopping to bring their cases in the court that will treat them most favorably — the United States District Court for the Eastern District of Texas. The primary and most influential cases are being presided over by Judge Jeremy Kernodle. Prior to being confirmed, he was a partner at Haynes and Boone, LLP where he focused on representing healthcare providers in Federal courts throughout the country.

Below is a running summary of the key NSA litigation:

2024 Key Updates:

QPA Litigation (TMA III): https://www.healthcaredive.com/news/appeals-court-reverses-lower-court-rulings-surprise-billing/731855/

Summary: Ghost rates, risk sharing, bonus, penalty, and other incentive based payments are permitted to be included in the QPA calculation. Single-case agreements and narrow agreements for specific services are excluded from the QPA calculation.

A copy of the Court’s decision can be found here.

NSA Regulations Cases

February 6, 2023: Texas Medical Association, et al. v. U.S. Department of Health and Human Services, et al., U.S. District Court for the Eastern District of Texas Case No. 6:22-cv-372

The Court entered a final judgment that vacated certain provisions of Requirements Related to Surprise Billing: Final Rules because it improperly restricted arbitrators’ discretion and unlawfully “titl[ed]” it in favor of the Qualifying Payment Amount (“QPA”). The Court found that the Final Rules improperly required the arbitrators to consider the QPA first and then the remaining factors and required the IDR Entities to presume the credibility of the QPA, but not the other factors. The Court then vacated additional provisions. A copy of the Amended Part II with the vacated provisions struck out can be found here. The vacated provisions can be found starting on page 28.

HHS appealed this case on April 18, 2023 and the appeal is pending before the Fifth Circuit Court of Appeals. Oral arguments were held on February 5, 2024. The three judge panel asked questions suggesting that they were uncertain as to whether the agencies had rulemaking authority to determine how the QPA is calculated. Their questions also suggested that they will side with TMA regarding its standing to bring this lawsuit. A decision will be issued at a later date.

January 30, 2023: Texas Medical Association, et al. v. U.S. Department of Health and Human Services, et al., U.S. District Court for the Eastern District of Texas Case No. 6:23-cv-00059

In this litigation, Texas Medical Association challenges the sevenfold increase in the nonrefundable administrative fee (from $50 to $350) that each party must pay to the government to participate in the IDR (arbitration) process.

The Complaint can be found here. The parties filed cross-motions for summary judgment. On August 23, 2023, the Court issued its decision vacating the December 2022 Fee Guidance that increased the fee to $350.

November 30, 2022: Texas Medical Association, et al. v. U.S. Department of Health and Human Services, et al., U.S. District Court for the Eastern District of Texas Case No. 6:22-cv-450

Texas Medical Association filed a lawsuit asserting that Requirements Related to Surprise Billing; Part I (“Part I”) materially deviated from the No Surprises Act “by issuing a methodology for calculating QPAs that artificially deflates [] insurer-calculated metrics.” TMA is attacking the method of calculating QPAs set forth in Part I TMA lists four ways that Part I drives down QPAs and results in under-reimbursement to healthcare providers:

  • Part I tells insurers to include rates in their QPA calculations that the NSA requires them to exclude (so called “ghost rates”).
  • Part I instructs insurers to separately calculate rates by specialty “only where the [insurer] otherwise varies its contracted rates based on provider specialty” whereas the NSA requires insurers always to calculate QPAs bsed on rates of providers “in the same or similar specialty.”
  • Part I requires insurers to use include “risk sharing, bonus, penalty, or other incentive-based or retrospective payments or payment adjustments” in calculating the contracted rate, whereas the NSA provides that the contracted rate used in a QPA calculation is “the total maximum payment … under such plans or coverage.”
  • Part I permits group health plans to allow TPAs to determine the QPA by using the contracted rates recognized by all its self-insured group health plans it administers, whereas the NSA requires that each plan only use its own contracted rates when calculating QPAs.

The Complaint can be found here. The parties filed cross-motions for summary judgment. On August 24, 2023, the Court issued an Order granting in part and denying in part the cross-motions for summary judgment. A copy of the Court’s Decision can be found here. The Court found that the following regulations were unlawful and set them aside: (1) including contracted rates for services that providers have not provided in the QPA; (2) including out-of-specialty rates in the QPA; (3) excluding risk sharing, bonus, penalty, or other payment adjustments in the QPA calculation; (4) allowing self-insured group health plans to use rates from all plans administered by a TPA in the QPA calculation; (5) starting the 30-day notice of denial when the insurer receives the information necessary to decide the claim; (6) requiring two separate IDR proces for a single medical air transport; and (7) excluding case specific or single case agreements from air ambulance service QPAs.

The parties have filed cross-appeals in the United States Circuit Court for the Fifth Circuit (Case No. 23-40605). Briefs have not been filed yet. They are currently due on March 13, 2024.

February 23, 2022: Texas Medical Association, et al. v. U.S. Department of Health and Human Services, et al., U.S. District Court for the Eastern District of Texas Case No. 6:21-cv-00425

The Court entered a final judgment that eliminated the rebuttable presumption that the qualifying payment amount is the appropriate out-of-network rate. The original Requirements Related to Surprise Billing; Part II can be found here with the provisions vacated by the Court struck out. The vacated provisions can be found on pages 372, 383-388, 416, 427-432, 462, and 472-478.

This case was appealed to the Fifth Circuit Court of Appeals. The appeals case was voluntarily dismissed on October 24, 2022.

Enforcement of Award Cases

There is currently a split in the districts on key issues. See the November 1, 2023 and January 5, 2024 cases.

July 31, 2024: Guardian Flight, L.L.C. v. Medical Evaluators of Texas ASO, L.L.C., et al., U.S. Court of Appeals for the Fifth Circuit Case No. 24-20051.

Medical Evaluators of Texas, Guardian Flight, L.L.C., Reach Air Medical Services, L.L.C. and Calstar Air Medical Services, L.L.C. appealed the decisions out of the U.S. District Court for the Southern District of Texas in Case Nos. 4:22-cv-03805 and 4:22-cv-3979.

The Opening Brief of Plaintiffs-Appellants was filed on July 31, 2024. A copy can be found here. This Appeal is in its early stages.

May 22, 2024: Med-Trans Corporation, et al. v. Capital Health Plan, et al., U.S. Court of Appeals for the Eleventh Circuit Case Nos. 24-10134 and 24-10135

Med-Trans Corporation and REACH Air Medical Services LLC appealed the decisions out of the U.S. District Court for the Middle District of Florida in Case Nos. 2:33-cv-01077 and 3:22-cv-01153.

The Opening Brief of Plaintiffs-Appellants was filed on May 22, 2024. A copy can be found here. This Appeal is in its early stages.

January 5, 2024: Guardian Flight, LLC v. Aetna Health, Inc., et al., U.S. District Court for the Southern District of Texas Case No. 4:22-cv-03805 consolidated with Reach Air Medical Services LLC, et al. v. Kaiser Foundation Health Plan, Inc., et al., U.S. District Court for the Southern District of Texas Case No. 4:22-cv-3979.

Guardian Flight, LLC, CALSTAR and Reach Air alleged that Aetna did not calculate its QPA in accordance with federal standards, thereby misrepresenting its QPA during the IDR process. They also alleged that the IDR Entity violated the NSA by applying an illegal presumption in favor of Aetna’s QPA.

This case was originally stayed pending the outcome of the Middle District of Florida case decided by Chief Judge Corrigan discussed below.

The Guardian Flight Court adopted Chief Judge Corrigan’s rulings regarding how the NSA and FAA intersect and the proper way to seek judicial review of IDR awards. Procedurally, the Guardian Flight Court held that Reach was barred from bringing the case in its Court because it was a party to the case in front of Chief Judge Corrigan (it already had its day in court). 

Guardian and CALSTAR did not meet the pleading requirements to set forth a valid claim under one of the four scenarios set forth above as against the payers. However, the Guardian Flight Court departed from Chief Judge Corrigan’s ruling with regard to whether IDR Entities are proper parties to the lawsuits.  The Guardian Flight Court held that it will not assume that the protection afforded arbitrators under federal common law automatically extend to IDR Entities because the NSA is silent as to whether IDR disputes receive the same protections as arbitrations (including immunity to protect IDR entities). The IDR Entity in this case is MET. The Guardian Flight Court held that the allegations of Guardian and CALSTAR suggest that MET may have exceeded its powers in violation of the fourth scenario above. Therefore, the Court reasoned, that it can judicially review the award and the case is moving forward on the claims against the IDR Entity MET.

A copy of the decision can be found here.

November 1, 2023: Med-Trans Corporation v. Capital Health Plan, Inc. and C2C Innovative Solutions, Inc., U.S. District Court for the Middle District of Florida Case No. 3:22-cv-1077, consolidated with Reach Air Medical Services LLC v. Kaiser Foundation Health Plan and C2C Innovative Solutions, U.S. District Court for the Middle District of Florida Case No. 3:22-cv-1153

In this case Med-Trans Corporation and Reach Air challenged the reimbursements they received under the IDR process on both procedural and legal grounds. The parties asked the Court to determine how the NSA and the Federal Arbitration Act intersect, and the proper pay to seek judicial review. The case also asked whether IDR Entities are proper parties to a lawsuit or whether they have immunity.

The Court made several key rulings. First, it held that there are four scenarios in which a court may vacate an arbitration award under the No Surprises Act: (1) where the award was procured by corruption, fraud, or undue means; (2) where the arbitrator acted with evident partiality or corruption; (3) misbehavior or misconduct by the arbitrator; and (4) where the arbitrator exceeded his power. Second, it held that the FAA’s procedural requirements do not apply, but it does control judicial review of the decisions (which is limited to the grounds set forth above). Third, the language in the NSA does not expand the scenarios under which a court may vacate an award. Finally, the Court held that the IDR Entities (the arbitrators) are not proper parties to the lawsuit because they are immune and the NSA does not create a right of action against the IDR Entities.

Ultimately, the Court dismissed the parties’ Complaints for failure to state a claim because they did not plead sufficient facts to show that the IDR Entities actions or award fit one of the four scenarios set forth above.

A copy of the decision can be found here.

September 8, 2023: GPS of New Jersey M.d., P.C. A/S/O T.U. v. Horizon Blue Cross & Blue Shield, U.S. District Court for the District of New Jersey Case No. 22-6614

Petitioner sued to vacate an IDR award and Respondent cross-claimed, seeking confirmation of the award. Unlike the other enforcement cases, this Court presumed that the confirmation provisions of the Federal Arbitration Act apply. Therefore, this case is missing the detailed analysis of the above discussed Texas and Florida cases. A copy of the Court’s Order can be found here.

March 6, 2023: Reach Air Medical Services, LLC, et al. v. CIGNA Health and Life Insurance Company, U.S. District Court for the Southern District of Texas Case No. 4:23-cv-00826

Plaintiffs filed suit to recover unpaid air ambulance IDR awards from Defendant. The claims are action for non-payment of an IDR award, improper denial of benefits, and violation of state prompt pay statutes.

This case was consolidated with the case below (Case No. 4:23-cv-00805).

March 3, 2023: Reach Air Medical Services, LLC, et al. v. Aetna Health, Inc., et al., U.S. District Court for the Southern District of Texas Case No. 4:23-cv-00805

Plaintiffs filed suit to recover unpaid air ambulance IDR awards from Defendants. The claims are action for non-payment of an IDR award, improper denial of benefits, and violation of state prompt pay statutes.

AETNA filed a Motion to Dismiss asserting that: the NSA does not provide a private right of action for the Court to “confirm” an IDR award; Plaintiffs do not have standing to enforce the IDR awards under ERISA; and the NSA preempts the state-law prompt pay statutes. Plaintiffs filed a Motion to Supplement the Complaints. This motion is currently pending and has not been ruled on.