The U.S. Court of Appeals for the Fifth Circuit recently heard arguments over the fairness of an arbitration provision in the No Surprises Act. Some medical providers, including the Texas Medical Association, challenged the provision in court, alleging that the arbitration provision unfairly favored insurers and inhibited arbitrators’ discretion to resolve certain disputes under the No Surprises Act. The case is Texas Medical Association et al. v. HHS et al., case number 23-40217, U.S. Court of Appeals for the Fifth Circuit.
During the hearing before a three-judge panel of the Fifth Circuit, the federal government argued that the No Surprises Act allows them to limit the factors that arbitrators can consider in settling disputes. The purpose of these limitations, the government asserted, is to promote uniformity in the outcome of cases.
The No Surprises Act creates a new way of resolving compensation disputes for out-of-network healthcare providers. The Act aims to prevent healthcare providers from billing patients for amounts more than their cost-sharing obligations. If the healthcare provider and insurer cannot agree on compensation, an arbitrator must choose between each side’s proposed payment amount.
The dispute’s central factor is the qualifying payment amount (QPA) or the insurer’s median in-network rate. Under the so-called “double-counting rule,” arbitrators cannot consider factors outside the QPA if the QPA already considers those factors. The government argues that arbitrators are explicitly instructed not to presume that the QPA is correct and that the plaintiff’s medical providers could not show that the rule skewed the results of arbitrations. However, the plaintiffs responded that arbitrators cannot know the factors considered in calculating the QPA, as insurers set it based on their records.
The judges also appeared skeptical of the government’s argument that the plaintiffs have no standing to challenge the arbitration provision. The government claimed that the plaintiffs failed to show any material harm suffered due to the provision, which is necessary to establish standing. Nonetheless, one judge pointed out that the plaintiffs were alleging that the rule would affect the outcome of arbitrations.
A federal district court ruled in favor of the plaintiffs in February 2023, finding that the No Surprises Act didn’t direct that more weight be placed on the QPA than other factors. That court ruling also found that the federal government failed to comply with the notice-and-comment provisions of the Administrative Procedure Act in implementing the interim rule. The federal government filed its appeal to the Fifth Circuit in July 2023.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 678-439-6236.
Hall Benefits Law, LLC
Latest posts by Hall Benefits Law, LLC (see all)
- Colorado First State to Place Price Cap on Prescription Drug - November 27, 2025
