District Court Rules NSA Does Not Create a Cause of Action to Enforce Arbitration Awards

On May 30, 2024, the federal district court in the Northern District of Texas issued an order granting Health Care Service Corporation's (HCSC) motion to dismiss the claims of plaintiffs Guardian Flight LLC and Med-Trans Corporation against HCSC.

Plaintiffs are air ambulance providers who provided services out-of-network and went through the Independent Dispute Resolution (IDR) process with the defendant to settle a payment dispute. Established under the No Surprises Act (NSA), which protects patients from surprise medical bills and balance billing, the IDR process is a dispute resolution system for when healthcare providers and insurers dispute surprise medical bills. The plaintiffs claimed that HCSC failed to pay the awards determined through the IDR process, that HCSC improperly denied benefits to its beneficiaries by failing to pay the IDR awards, and that they did not provide HCSC with any direct benefit.

The district court concluded that the NSA does not provide a private cause of action to enforce an IDR award and convert that award to a final judgment, and that the court lacks subject-matter jurisdiction over the ERISA claim because the plaintiffs do not have standing to bring that claim. (Note that a district court in New Jersey came to an opposite conclusion in 2023 and determined the Federal Arbitration Act did provide a mechanism to enforce IDR awards.)

However, the plaintiffs are appealing the district court decision. On June 21, 2024, the plaintiffs filed a notice of appeal of the district court’s final judgment (and from all orders and decisions encompassed therein) to the Fifth Circuit Court of Appeals.

Plan sponsors should be aware of this development. From a sponsor’s perspective, the question remains as to whether and to what extent the NSA will achieve the intended effect of lowering out-of-network costs for group health plans as well as participants. The NSA envisioned that the NSA and IDR process would largely result in out-of-network rates becoming more aligned with the median contracted in-network rates for items or services in a particular geographic region, which are termed qualifying payment amounts (QPAs) under the NSA. But successful healthcare provider legal challenges have resulted in the QPAs being emphasized less in the IDR process and also calculated more favorably to providers; please see our prior article in the May 9, 2024 edition of Compliance Corner for further information. Accordingly, the recent district court decision just adds additional uncertainty regarding the IDR process and whether the NSA’s cost-saving goals will be achieved.

Northern District of Texas Memorandum Opinion and Order »
Northern District of Texas Plaintiffs' Notice of Appeal »