The U.S. Court of Appeals for the Fifth Circuit reversed a Texas federal district court’s vacatur of certain provisions of the No Surprises Act, finding that the provisions were neither arbitrary nor capricious. However, the Court affirmed the district court’s vacatur of a provision of the Act related to insurers’ deadlines. The case is Texas Medical Association et al. v. U.S. Department of Health and Human Services, case number 23-40605, U.S. Court of Appeals for the Fifth Circuit.
The district court vacated provisions in the Act dictating how qualifying payment amounts (QPAs) should be calculated. The district court found that because the calculation included a contracted rate regardless of the number of claims paid at that rate, it unlawfully allowed insurers to bill for services that certain providers never performed.
U.S. Circuit Judge Catherine Haynes, writing for the Fifth Circuit three-judge panel, disagreed, ruling that the Act does not require a provider to have previously performed a service for that rate to be included in the QPA calculation. She also noted that, as written, the law ensures the QPA for a certain service excludes rates from providers outside the same specialty or geographical area. Overall, Judge Haynes approved three QPA calculation provisions in the Act.
However, the Fifth Circuit ruling affirmed the district court’s vacatur of an Act provision that requires insurers to either make an initial payment or send notice of payment denial to providers no later than thirty calendar days after a provider sends its bill. Judge Haynes concluded that this provision contradicted the unambiguous terms of the Act and that the Act does not delegate the authority to alter deadlines to the federal agencies.
Congress passed the No Surprises Act in 2020 to protect consumers from surprise medical bills, including those from most emergency care services at out-of-network providers and emergency facilities, some non-emergency care services from out-of-network providers and in-network facilities, and out-of-network air ambulance services. The Texas Medical Association sued the U.S. Department of Health and Human Services (HHS) after the Act went into effect in 2022, arguing that the agency unlawfully promulgated rules implementing the Act’s provisions. The suit later was consolidated with a similar suit filed by helicopter ambulance operators and one of their billing entities.
After dueling motions for summary judgment in the case, the district court vacated various provisions of the Act. HHS, the U.S. Department of Labor, and the Treasury Department appealed to the Fifth Circuit, arguing that they appropriately exercised their rulemaking authority to determine the method for calculating QPAs consistent with the statute.
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