Judge Rules Against HHS in Another No Surprises Act Lawsuit

By Jonathan Springston, Editor, Relias Media

A federal judge has struck down a rule regarding the arbitration process for disputing payments that is included in the No Surprises Act, a federal law designed to protect consumers from unexpected medical bills.

U.S. District Court Judge Jeremy Kernodle ruled in favor of the Texas Medical Association (TMA) in their lawsuit against the Department of Health and Human Services (HHS). In the suit, TMA argued the implementation of the final rule regarding the No Surprises Act arbitration process is flawed. Judge Kernodle concurred, writing the rule “improperly restrict[s] arbitrators’ discretion and unlawfully tilt[s] the arbitration process in favor of the QPA [qualifying payment amount].”

“The decision will promote patients’ access to quality care when they need it most and help guard against health insurer business practices that give patients fewer choices of affordable in-network physicians and threaten the sustainability of physician practices,” TMA President Gary W. Floyd, MD, said in a statement.

This is the second time a court has ordered HHS to revisit this rule in the wake of a legal challenge. After a judge said the original independent dispute resolution rule restricted the discretion of arbitrators, HHS made some changes and released a revised rule in August 2022. TMA sued again, leading to the latest ruling on Feb. 6.

The American College of Emergency Physicians, American College of Radiology (ACR), and American Society of Anesthesiologists have been leading critics of the implementation of this rule.

“The Texas court is right to strike down provisions that would have required arbiters to prioritize their determinations on the qualified payment amount, a figure that insurers miscalculate and artificially drive lower to the detriment of physicians and patients. Instead, this ruling restores fairness to the process, allowing the No Surprises Act to protect patients without compromising access to care,” the groups said in a joint statement. “This ruling means that arbiters will now consider all of the factors mentioned in the legislation instead of giving undue preference to the QPA in arbitration.”

The American Hospital Association (AHA) and the American Medical Association (AMA) filed an amicus brief in support of the TMA suit in October 2022. Both groups also cheered the judge’s Feb. 6 ruling.

“The district court correctly observed that the government’s final rule would have tilted arbitrations in favor of insurers, thereby inappropriately lowering payments to healthcare providers and threatening patient access to care. With the court now having struck down two regulations as inconsistent with the No Surprises Act, we hope the departments will work with hospitals and health systems to implement the fair process Congress intended,” AHA General Counsel and Secretary Melinda Hatton said in a statement.

“Arbitrators must be able to settle billing disputes between providers and health insurers without having their hands tied by misguided rules that conflict with the letter of the law. The AMA continues to support the act’s goal of protecting patients from surprise medical billing, but we remain very concerned that the implementation of the statute has not supported physicians’ ability to meaningfully engage in the dispute resolution process, contrary to the intent of Congress,” AMA President Jack Resnick, Jr., MD, said in a statement.

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