Healthcare / Payor-Provider Disputes · No Surprises Act · Independent Dispute Resolution (IDR) · Vacatur

Introduction

Beginning in 2024, several large insurers sued providers and entities that assist in filing independent dispute resolution (IDR) cases on providers’ behalf under the federal No Surprises Act (NSA), alleging they flooded the process with ineligible disputes and collected awards to which they were never entitled. The insurers framed their cases in several ways: civil RICO, ERISA, state fraud and unfair-competition law, along with requested remedies to vacate the awards outright. Between April and July 2026, district courts in California, Florida, Texas and Georgia dismissed all four suits discussed here, and the insurers appealed to the Fifth, Ninth and Eleventh Circuits. The bottom line, explored in more detail below: the loser in an NSA case can’t sue to vacate the award except on the narrow grounds the NSA borrows from the Federal Arbitration Act (FAA).

Executive Summary

The NSA was intended to address the practice by out-of-network providers of balance billing their patients for the difference between their billed charges and amounts paid by the patient’s health insurer. The NSA established the IDR process, in which independent arbitrators resolve disputes between the provider and the health insurance payor, eliminating the provider’s right to balance bill the patient except for previously agreed co-pays and deductibles. The NSA requires the insurer to provide a “qualifying payment amount,” or QPA, which is essentially a median calculation of the insurer’s negotiated rates for the services at issue. After a period of negotiation, the provider and the insurer each make an offer (the insurer’s typically at or near the QPA, the provider’s typically some multiple of it), and the IDR arbitrator must choose, “baseball-style,” one of the two numbers to award.

In each of the three years for which the federal government has published full-year data, IDR entities have chosen the provider’s offer in most disputes: 81% of the time in 2023, 85% in 2024 and 85% to 88% in 2025, according to the Centers for Medicare & Medicaid Services (CMS). In light of these numbers, and other alleged practices by providers and the entities that represent them in IDR proceedings, several insurance companies have gone to court, challenging a system they argue is not working as Congress intended.

The defendants in three of the four cases addressed here are HaloMD, a Texas-based company that files IDR disputes on behalf of out-of-network providers, together with, in various combinations, its president Alla LaRoque, Scott LaRoque and his company MPOWERHealth, and physician groups that use HaloMD’s services. According to CMS, HaloMD, TeamHealth and SCP Health together accounted for about 44% of IDR disputes initiated in the first half of 2025. CMS, Supplemental Background on Federal Independent Dispute Resolution Public Use Files (January 1, 2025 – June 30, 2025). Anthem affiliates in California and Georgia and Blue Cross Blue Shield of Texas alleged that HaloMD and its clients filed disputes that were never eligible for IDR (hundreds in the California case, thousands in Georgia and more than 42,000 in Texas), covering claims already resolved, services the patient’s plan didn’t cover and similar defects, and attested to eligibility anyway. In the fourth case, Aetna alleged that Radiology Partners, a private-equity-backed aggregator of radiology practices, ran other Florida practices’ claims through the tax identification number of one acquired practice, Mori, Bean and Brooks. Aetna ended that practice’s network contract over the routing, and Radiology Partners kept it up afterward, filing tens of thousands of IDR disputes that misidentified who had performed the services.

Each district court dismissed the insurers’ claims. Across the four decisions, the courts barred the insurers’ claims on various bases, including: 1) the NSA bars judicial review of IDR determinations beyond the FAA’s vacatur grounds; 2) whether a dispute is eligible for IDR is for the IDR entity to decide; 3) fraud an insurer knew about, or had the chance to raise, during the IDR process cannot support vacatur afterward; and 4) RICO, ERISA, state-law and declaratory-judgment claims seeking the same relief are attempts to get around those limits. Not every court reached every point. The vacatur claims (in California, Florida and Georgia) failed on the merits; the other claims failed for lack of jurisdiction or, in Florida, on preemption. Three of the four dismissals were with prejudice; in the California case, the court dismissed the federal claims without leave to amend and declined to exercise supplemental jurisdiction over the state-law claims, dismissing them without prejudice. All four insurers have appealed to their respective circuits. None of the appeals has yet been argued.

Background

Providers Prevail in the Majority of IDR Proceedings

The outcomes of the IDR process have run heavily one way. In the second half of 2025, providers, facilities and air ambulance providers were the prevailing party in about 85% of payment determinations, down from 88% in the first half of the year, and the prevailing offer exceeded the QPA in about 87% of determinations. CMS, Supplemental Background on Federal Independent Dispute Resolution Public Use Files (July 1, 2025 – December 31, 2025). Researchers at Georgetown University’s Center on Health Insurance Reforms, analyzing CMS data, put the provider share at 81% in 2023 and 85% in 2024. Jack Hoadley, Kennah Watts, Katie Keith & Ellie DeGarmo, The No Surprises Act IDR Process: An Early Look at 2025 Data, Health Affairs Forefront (Mar. 2026). A “win” means the IDR entity chose the provider’s offer, not that the provider received any particular amount, and a small number of high-volume filers account for much of the volume. That record is the backdrop for the suits discussed here. The insurers read it as evidence that the process is being gamed; providers read it as evidence that plans’ QPAs are routinely understated.

Why providers prevail so often is itself disputed. Researchers at the Brookings Institution offered several possible explanations: providers may take their strongest claims to IDR and settle the rest; IDR entities may give weight to the higher out-of-network amounts plans paid before the NSA, which the median awards resembled more closely than in-network rates; plans’ QPAs may understate actual in-network rates; and after courts set aside the agencies’ rules directing IDR entities to give the QPA special weight, IDR entities had little substantive guidance. Matthew Fiedler & Loren Adler, A First Look at Outcomes Under the No Surprises Act Arbitration Process, Brookings Institution (Mar. 27, 2024). Others look at the IDR entities themselves. Researchers at Georgetown University’s Center on Health Insurance Reforms found that provider win rates ranged from 19% to 99% depending on the IDR entity, and raised concerns about fee incentives and the absence of written reasons. Kennah Watts & Jack Hoadley, No Surprises Act Arbitrators Vary Significantly In Their Decision Making Patterns, Health Affairs Forefront (June 24, 2025). Paragon Health Institute, a market-oriented health policy group, reported that IDR entities handling more disputes tend to favor providers more often, and noted that “[a]rbitrators are not paid until they award disputes.” Jackson Hammond & Katherine Hall, Fixing the No Surprises Act: Scaling Back and Reforming the Federal Arbitration System, Paragon Health Institute (Sept. 14, 2026). Provider groups read the record differently. In an analysis sent to Congress, the American College of Emergency Physicians, the American College of Radiology and the American Society of Anesthesiologists said that insurers lost about a quarter of 2025 line items by default and offered $1 or less on 8.2%, and argued that “the QPA is unreliable, fundamentally flawed, and used by insurers to game the system.” Insurers Are Undermining the No Surprises Act, Then Claiming IDR Process Is Broken, New Analysis Sent to Congress Explains, ACEP Now (Oct. 1, 2026).

The NSA Provides Limited Review for the Results of the IDR Process

The NSA makes an IDR entity’s payment determination “binding upon the parties involved, in the absence of a fraudulent claim or evidence of misrepresentation of facts presented to the IDR entity involved regarding such claim,” and provides that it “shall not be subject to judicial review, except in a case described in any of paragraphs (1) through (4) of section 10(a) of title 9.” 42 U.S.C. § 300gg-111(c)(5)(E)(i); 29 U.S.C. § 1185e(c)(5)(E)(i). Those are the FAA’s grounds for vacating an arbitration award: corruption, fraud or undue means; evident partiality or corruption in the arbitrator; specified misconduct; and an arbitrator exceeding its powers. 9 U.S.C. § 10(a)(1)–(4).

The Eleventh Circuit has held that this cross-reference imports the FAA’s existing case law. REACH Air Medical Services LLC v. Kaiser Foundation Health Plan Inc., 160 F.4th 1110, 2025 WL 3222820, at *4 (11th Cir. Nov. 19, 2025). Under that FAA case law, a party seeking to vacate an award for fraud must prove it by clear and convincing evidence, show that it couldn’t have been discovered with due diligence before or during the arbitration, and show that it related materially to an issue in the arbitration. Id. at *6. REACH came from the provider side: an air-ambulance company challenged an award Kaiser won, alleging Kaiser had given the IDR entity a lower QPA than it had given the provider, and the Eleventh Circuit affirmed dismissal. The Florida court applied REACH directly, and the California court applied the same test from Ninth Circuit precedent.

Contested Eligibility Decisions

Not every out-of-network claim qualifies for IDR. Before an IDR entity picks between the parties’ offers, federal regulations require it to determine that the dispute is eligible. 45 C.F.R. § 149.510(c)(1)(v). The insurers’ core theory is that this screening has failed at scale and that high-volume filers have taken advantage of it. In the Texas case, the defendants answered with the government’s own figures: in 2024, non-initiating parties objected to eligibility in 44% of disputes, but only 19% were found ineligible. Blue Cross Blue Shield of Texas, slip op. at 5. The providers’ answer on the law, which the courts have so far accepted, is that the eligibility decision is part of the IDR entity’s determination, and therefore inside the NSA’s limit on judicial review. As the California court put it, “An IDRE’s payment determination necessarily includes a determination of eligibility.” Anthem, 2026 WL 982629, at *9.

Providers’ Avenues for Review Are Also Limited

Two circuits have addressed the reverse posture: a provider holding an unpaid award. East Coast Advanced Plastic Surgery, LLC v. Cigna Health & Life Insurance Co., No. 25-2204, ___ F.4th ___ (2d Cir. Sept. 17, 2026) (ECAPS); Guardian Flight, L.L.C. v. Health Care Service Corp., 140 F.4th 271 (5th Cir. 2025), cert. denied, No. 25-441 (U.S. Jan. 12, 2026). Both courts held that the NSA creates no private right of action to enforce an award, and that enforcement is left to the Department of Labor, the Department of the Treasury, the Department of Health and Human Services and state insurance regulators. The Fifth Circuit went further and held that the NSA’s limit on judicial review bars suits to confirm IDR awards; the Second Circuit left that question open. The Supreme Court denied review in Guardian Flight in January 2026. We discussed ECAPS in an earlier Case Spotlight.

The District Court Decisions

• Anthem Blue Cross Life & Health Insurance Co. v. HaloMD LLC, 2026 WL 982629 (C.D. Cal. Apr. 9, 2026). Anthem asserted RICO, a claim to vacate under the NSA, an ERISA claim under 29 U.S.C. § 1132(a)(3), declaratory relief and California law. The district court dismissed the vacatur claim because Anthem knew of the alleged false eligibility attestations and objected to them during the IDR process, so the fraud was not undiscoverable; adopting one group of defendants’ phrase, the court said that “Anthem has pleaded itself out of court.” Id. at *8. The court also held that the fee structure Congress built into the IDR process is not “undue means,” and that because IDR entities are authorized to decide eligibility, the claim that they exceeded their powers collapsed into the fraud claim. Id. It dismissed the RICO, ERISA and declaratory claims for lack of subject-matter jurisdiction: “These theories are all end runs around the NSA’s limits on judicial review.” Id. at *10. It declined supplemental jurisdiction over the state-law claims, dismissing them without prejudice, and denied leave to amend. Id. at *10–11.
• Aetna Health Inc. v. Radiology Partners, Inc. (M.D. Fla. Apr. 16, 2026). Aetna sought to vacate the awards and recover arbitration fees and overpayments. In one example the court described, an IDR entity awarded $752.00 on a claim whose in-network rate was $78.89. Id., slip op. at 7. The district court found that Aetna had pleaded fraud with the particularity Rule 9(b) requires. But applying REACH, it held that the fraud was discoverable with due diligence before the IDR proceedings, because Aetna had terminated the practice’s network contract over the same conduct. The court called it “a close call,” but held that Aetna’s admission that it ended the contract over that conduct was “fatal to Aetna’s position,” and that neither the volume of claims nor the defendants’ efforts to conceal the scheme could “excuse Aetna’s failure to raise the issue in the IDR disputes.” Id. at 8–9. It also declined to screen disputes that hadn’t yet been filed, noting that Aetna can challenge them before the IDR entity. It treated the remaining claims as an attempt to “end-around the NSA and FAA strictures,” held them preempted, and dismissed with prejudice. Id. at 9–10.
• Blue Cross Blue Shield of Texas v. HaloMD, LLC (E.D. Tex. May 22, 2026). Blue Cross Blue Shield of Texas alleged that HaloMD, Alla LaRoque and Scott LaRoque used more than 42,000 ineligible IDR disputes, under both the federal process and Texas’s own arbitration process, to obtain tens of millions of dollars in awards. The district court held that the NSA’s bar on review of payment determinations extends to eligibility decisions and that the suit was an impermissible collateral attack on the awards, observing that the plaintiff “is attempting to relitigate issues previously decided by the IDR entities.” Id., slip op. at 11. It reached the same result for the disputes under Texas’s own arbitration statute, and dismissed every claim with prejudice for lack of subject-matter jurisdiction. Id. at 14–18.
• Blue Cross Blue Shield Healthcare Plan of Georgia, Inc. v. HaloMD, Inc. (N.D. Ga. July 10, 2026). The Georgia plan alleged that HaloMD and two Georgia physician groups that are HaloMD clients submitted thousands of ineligible disputes, and asserted RICO, ERISA and Georgia-law claims along with a claim to vacate the awards. The district court held that it lacked jurisdiction over every claim except vacatur, because each would require it to re-examine eligibility and payment decisions the IDR entities had already made. It dismissed the vacatur claim on the merits: the fraud allegations didn’t meet Rule 9(b), in part because the plan had the opportunity to object before the IDR entities; nothing alleged rose to “undue means”; and IDR entities that decide eligibility don’t exceed their powers. It also found no personal jurisdiction over HaloMD. Responding to the plan’s point that providers prevail in 85% of payment determinations, the court wrote that it was “highly improbable” to infer a conspiracy of providers and IDR entities from those numbers, and “highly plausible to infer that the Plaintiff engages in a consistent practice of submitting lowball offers to out-of-network providers in an effort to maximize its profits.” Id., slip op. at 62. It dismissed the case with prejudice.

Legal Analysis

• Eligibility belongs to the IDR entity. The California, Georgia and Texas courts each treated the eligibility decision as part of the IDR determination rather than a separate question a court can revisit. (The Florida court didn’t need to reach it.) That reading matters because nearly every insurer theory, whatever its label, depends on showing that particular disputes should never have reached IDR. The California court noted the consequence of the contrary view: “nearly every eligibility determination disputed by an IDR participant would be subject to review.” Anthem, 2026 WL 982629, at *8.
• Fraud known during the IDR process cannot support vacatur afterward. The FAA’s fraud ground requires fraud that could not have been discovered through due diligence. In the California, Florida and Georgia cases, the insurers’ own allegations showed that they knew of the conduct before or during the IDR proceedings. In California, they objected to it, and in Georgia they had the chance to. The Florida court’s message was that an insurer with evidence of ineligibility or misrepresentation must raise it in the IDR dispute, not hold it for later litigation.
• Relabeling the claim does not change the analysis. RICO, ERISA, declaratory-judgment and state-law claims all sought to recover or nullify IDR awards. The courts treated them as attempts to obtain the judicial review the NSA does not allow. California, Georgia and Texas framed the result as a lack of jurisdiction, with Georgia and Texas calling the claims collateral attacks on the awards; Florida framed it as preemption of claims resting on the same facts. California didn’t reach the state-law claims, dismissing them without prejudice.
• The insurers’ position on appeal. The insurers argue that the courts have read the judicial-review limit to cover conduct outside the arbitration itself, leaving no forum for what they describe as systematic abuse of the process. Elevance said after the Georgia ruling that the decision “misinterprets the No Surprises Act and improperly limits judicial review.” Health plan and employer groups — America’s Health Insurance Plans; the American Benefits Council, the ERISA Industry Committee and the Business Group on Health; and the California Association of Health Plans and the Association of California Life & Health Insurance Companies — have filed amicus briefs supporting Anthem in the Ninth Circuit. The providers respond that Congress chose a closed, arbitration-based process with limited review, and that the FAA’s vacatur grounds and agency oversight are the remedies it provided.

What to Watch

• The Eleventh Circuit, twice. Aetna v. Radiology Partners, No. 26-11607, will be fully briefed when Aetna files its reply, due October 14, 2026, and Blue Cross Blue Shield of Georgia v. HaloMD, No. 26-12777, is at an earlier stage: the Georgia plan’s opening brief is due October 15, 2026. Both will be decided against the court’s own REACH decision, which supplied the vacatur standard the Florida court applied.
• The Ninth Circuit, without an NSA precedent. Anthem v. HaloMD, No. 26-2355, comes to a court that hasn’t yet ruled on IDR review, with health plan and employer amici already filed, although the district court found the vacatur claim controlled by the Ninth Circuit’s existing FAA case law. Anthem filed its opening brief on August 5, 2026, the defendants filed their answering briefs on October 5, and Anthem’s optional reply is due November 27, 2026. It is the most likely source of a different answer.
• The Fifth Circuit, against Guardian Flight. Blue Cross Blue Shield of Texas v. HaloMD, No. 26-40316, will be decided by the court that held the NSA’s limit on judicial review bars suits to confirm IDR awards. How that court applies the same limit to an insurer seeking to undo awards will be worth watching.
• Timing. No argument dates have been set in any of the four appeals. Decisions before spring 2027 would be unusual. A circuit split on insurer challenges would raise a question about the IDR process that the Supreme Court has so far declined to take up from the provider side.

What This Means for Resolving Payor-Provider Disputes

If the circuits affirm, the IDR award becomes close to final in both directions: hard for the losing insurer to undo and, after ECAPS and Guardian Flight, hard for the winning provider to collect through a lawsuit. The courts’ emphasis on raising eligibility and misrepresentation objections inside the IDR proceeding also moves the real contest earlier, into the dispute itself, where each side’s record is made.

For parties with disputes running in both directions — unpaid awards on one side, claimed overpayments and ineligible filings on the other — litigation offers neither side a clean path. That tends to push the numbers toward negotiation, often across a portfolio of claims rather than one dispute at a time. The awards themselves still matter there: each one is a neutral’s answer to what a set of services was worth, and a large body of them gives both sides a shared reference point for resolving the rest.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Healthcare / Payor-Provider Disputes · ERISA Preemption · Out-of-Network Reimbursement

Updated October 18, 2026, to reflect post-decision filings. See the dated update under What to Watch.

Introduction

Out-of-network providers face a structural problem. ERISA lets participants and beneficiaries sue for benefits, but not providers, so a provider without an effective assignment of benefits from the patient must look to state law. Plans answer that ERISA § 514(a), which preempts state laws that “relate to” an employee benefit plan, closes that door. Two circuits, seven weeks apart, have now taken up that answer from opposite ends of the claims process. On June 24, 2026, in Ahn v. Cigna Health & Life Insurance Co., the Third Circuit held that ERISA preempts a physician’s defamation claim over what Cigna told its members, in explanation of benefits (EOB) forms, about why his claims were denied. On August 11, 2026, in Healthcare Ally Management of California, LLC v. WSP USA, Inc., the Ninth Circuit held that ERISA does not preempt a surgery center’s negligent misrepresentation claim over what the plan’s administrator told it on a verification call before the surgery, while affirming dismissal of a companion promissory estoppel claim. The Ninth Circuit didn’t cite Ahn, and the two cases involve different conduct at different points in the claims process. Read together, however, they suggest a line drawn through the life of a claim: what a plan says to a provider before the service, and what it says to its members afterward. Or they could mean different approaches to the same preemption by different circuits. Read on for more.

Factual Background and Litigation Proceedings

The Ahn Litigation

Dr. Jeffrey M. Ahn is an otolaryngologist licensed in New Jersey and New York who does not participate in Cigna’s provider network. He alleged that Cigna denied his claims about 50 times and that many of the EOBs it sent explained the denials on the ground that Cigna didn’t pay for services by unlicensed providers, effectively telling his patients he wasn’t licensed to practice medicine. Dr. Ahn filed suit in 2019 in New Jersey state court for defamation, defamation per se, and tortious interference. The case was removed to federal court. The district court first deferred the preemption question because it couldn’t tell from the complaint which EOBs related to ERISA plans. After discovery, Cigna showed that the plans were governed by ERISA, Dr. Ahn offered no contrary evidence, and he didn’t challenge that finding on appeal. Ahn, 2026 WL 1813215, at *1 & n.1. Discovery also showed that after Dr. Ahn appealed the denials, Cigna allowed them in whole or in part, or denied them for a reason unrelated to his licensure. Id. at *1.

Federal jurisdiction rested on diversity, so preemption arose only as Cigna’s § 514(a) defense. Id. at *2 n.2. The District Court for the District of New Jersey granted Cigna summary judgment on ERISA preemption grounds. The Third Circuit affirmed, holding that communicating benefits determinations to members is a central matter of plan administration, and, independently, that state defamation law can’t regulate EOB content without undermining uniform plan administration.

The Healthcare Ally Management Litigation

In Healthcare Ally Management, La Peer Surgery Center, an out-of-network provider, sought coverage verification from Aetna, which administered WSP USA’s employee health plan, before surgery on an Aetna member. According to the complaint, Aetna said the plan would pay at the usual, customary, and reasonable (UCR) rate and not on the Medicare Fee Schedule. Aetna ultimately paid at the Medicare rate, which came to five percent of La Peer’s bill. La Peer’s successor, Healthcare Ally Management of California (HAMOC), sued, and the Central District of California dismissed its state-law claims as preempted. The Ninth Circuit reversed on the negligent misrepresentation claim and affirmed dismissal of the promissory estoppel claim under its 2024 decision in Bristol SL Holdings, Inc. v. Cigna Health & Life Insurance Co., 103 F.4th 597 (9th Cir. 2024).

The Ninth Circuit described the verification call as a standard feature of out-of-network practice: a provider without a contract calls the administrator “to confirm that the patient is eligible for coverage, to ascertain that the particular procedure is covered, and to learn the likely reimbursement rate.” Healthcare Ally Management, 2026 WL 2319896, at *2. Aetna allegedly said that “payment would not be based on the Medicare Fee Schedule,” and neither defendant mentioned any limiting plan term or gave La Peer a copy of the plan. Id. The complaint doesn’t say whether the plan explained why it paid the Medicare rate. Id. at *3.

The patient assigned reimbursement rights to La Peer, which assigned them to HAMOC, but the district court held that HAMOC lacked derivative standing to bring an ERISA benefits claim, and HAMOC didn’t appeal that ruling. Id. at *2 n.3, *3 & n.6, *5 n.8. After removal, HAMOC had dropped its contract and Unfair Competition Law claims, leaving negligent misrepresentation and promissory estoppel.

Legal Analysis

• For the Third Circuit, the EOB is the plan’s statutory duty, so a defamation claim over its contents targets plan administration. ERISA § 503 requires plans to give written notice to any participant or beneficiary whose claim is denied, “setting forth the specific reasons for such denial.” 29 U.S.C. § 1133(1). Cigna discharges that duty with the EOB, so the court held that its statements about the reasons for a denial are “inseparable from Cigna’s duty to provide a written explanation of claim denials under ERISA.” Ahn, 2026 WL 1813215, at *3. Relying on Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 148 (2001), the court held that communicating claim decisions to members is a “central matter of plan administration.” Id.
  • The Fifth Circuit’s support. The court relied on Mayeaux v. Louisiana Health Service & Indemnity Co., 376 F.3d 420 (5th Cir. 2004), which affirmed dismissal of a physician’s tort claims challenging an insurer’s “handling, review, and disposition of a request for coverage.” Ahn, 2026 WL 1813215, at *3 (quoting Mayeaux, 376 F.3d at 432). Such claims, Mayeaux said, “would undoubtedly jeopardize the relationships among the traditional ERISA entities, of which the treating physician is not one.” Id. (quoting Mayeaux, 376 F.3d at 433).
  • The physician’s argument. Dr. Ahn argued that calling a physician unlicensed has nothing to do with fiduciary standards. The court said that was the wrong question: “the relevant inquiry is not whether defaming providers is central to an administrator’s fiduciary duties. It is not. The right question to ask is whether communicating benefits determinations to subscribers and beneficiaries is a central matter of plan administration. It is.” Ahn, 2026 WL 1813215, at *4.
• The Third Circuit’s second, independent ground is uniformity. Because ERISA already gives participants and beneficiaries a way to challenge benefits decisions, the court said, “there is no need to subject explanation of benefits forms to state tort claims like defamation.” Id. at *4. Otherwise, administrators wording a denial would have to account for the common law of every state where members live or get care. The court held that “allowing state defamation laws to regulate the content of EOBs would undermine uniformity in plan administration.” Id.
• The Third Circuit turned aside the physician’s authorities without retreating from them. Dr. Ahn argued that a claim that neither seeks plan benefits nor requires more than a cursory look at the plan isn’t preempted, relying on the Third Circuit’s decision in Plastic Surgery Center, P.A. v. Aetna Life Insurance Co., 967 F.3d 218 (3d Cir. 2020). The court responded that “Plastic Surgery applied the same standards we apply today.” Ahn, 2026 WL 1813215, at *4. It also noted that Dr. Ahn had no assignment, and that an assignment would bear only on an ERISA § 502(a) claim, “a claim that Dr. Ahn concedes he has not asserted here.” Id.
• For the Ninth Circuit, the provider-administrator relationship isn’t one ERISA regulates. Under the Ninth Circuit’s “relationship test” for “connection with” preemption, “the pertinent question is not whether an ERISA-regulated relationship exists but whether the claim itself bears upon that relationship. It does not.” Healthcare Ally Management, 2026 WL 2319896, at *7. Because § 502(a) gives providers no cause of action, the court read the provider-administrator relationship as one Congress didn’t mean to regulate. Id. The court relied on Depot, Inc. v. Caring for Montanans, Inc., 915 F.3d 643 (9th Cir. 2019). Id.
• The claim isn’t one a patient could assign. On “reference to” preemption, the court asked whether the claim is one “that a participant, beneficiary, or their assignee could have asserted as a § 502(a) benefits claim or is otherwise dependent on an ERISA-covered plan.” Id. at *8. It followed its own decisions in Meadows v. Employers Health Insurance, 47 F.3d 1006 (9th Cir. 1995), and Cedars-Sinai Medical Center v. National League of Postmasters of the United States, 497 F.3d 972 (9th Cir. 2007), and the Fifth Circuit’s decision in Access Mediquip L.L.C. v. UnitedHealthcare Insurance Co., 662 F.3d 376 (5th Cir. 2011), vacated, 678 F.3d 940 (5th Cir.), reinstated on reh’g, 698 F.3d 229 (5th Cir. 2012) (en banc). The patient got the covered surgery, so the claim doesn’t turn on any denial of benefits. “Because the injury alleged is not rooted in a plan term,” the claim is nonderivative, and HAMOC sues as an “independent entity claiming damages.” Healthcare Ally Management, 2026 WL 2319896, at *12 (quoting Meadows, 47 F.3d at 1008).
  • Consulting the plan isn’t enough. The parties may look to the plan on whether Aetna had reasonable grounds for its statement, but consulting a plan, or using it to calculate damages, doesn’t require preemption, and damages could be measured by the value of the services. Id. at *13.
  • Existence or extent of coverage. The court declined to distinguish between misstatements about whether there is coverage and misstatements about how much: “A misrepresentation regarding the existence of coverage causes the same financial injury to a provider as a misrepresentation about the extent of coverage.” Id. It described its conclusion as “in line with those of several other circuits,” citing decisions of the Fifth, Eighth and Eleventh Circuits. Id. at *14.
• The Ninth Circuit’s view of congressional purpose. Nothing in ERISA, the court said, suggests Congress meant a provider’s state-law remedy to disappear only when the patient’s coverage is employer-sponsored. Id. at *14. Where a plan bars assignments, preemption would mean “providers would simply be stuck with the bill, regardless of what the plan administrator told them.” Id. at *15.
• The plans’ position, and why promissory estoppel came out differently. WSP and Aetna’s principal argument was that Bristol controls. Id. at *15. There, a treatment facility claimed that Cigna’s verification calls created oral contracts, but Cigna had denied the claims under a plan term permitting denial for fee-forgiveness, and the court held the contract and promissory estoppel claims preempted. The panel agreed that Bristol controls the promissory estoppel claim, because the causes of action “are therefore analogous in all legally meaningful respects.” Id. at *16. But it held that Bristol had expressly left negligent misrepresentation open, and that the contract theory there was “an attempt to supplant the terms of an ERISA plan with a new, legally enforceable agreement.” Id. at *15, *17. Timing mattered too: Cigna didn’t know of the fee-forgiveness when it first made its statements, while HAMOC alleges that Aetna knew when it took the call that it wouldn’t pay the UCR rate. Id. at *17.
• Tension or reconciliation. The two opinions don’t address each other, and they are arguably reconcilable on their facts. Ahn involved statements to beneficiaries that ERISA requires; Healthcare Ally Management emphasized that the claim before it “concerns only representations made by the plan administrator about the content of a plan and would not change the benefits due to the beneficiary.” Id. at *18. Each side will still find language to use. Plans can point to Ahn’s uniformity reasoning, and to Mayeaux’s description of the provider as outside the “traditional ERISA entities,” as reasons to resist state-law liability for what administrators say about coverage. Providers can point to Healthcare Ally Management’s reading of that same outsider status as a reason state law must remain available to them. Both courts drew on the Fifth Circuit, Ahn on Mayeaux and Healthcare Ally Management on Access Mediquip, and both cited the Third Circuit’s Plastic Surgery Center decision.

Holding

Ahn: Affirmed. ERISA § 514(a) preempts a provider’s state-law defamation per se claim based on allegedly false statements in EOB forms sent to beneficiaries, on two independent grounds: it governs a central matter of plan administration, and it interferes with nationally uniform plan administration.

Healthcare Ally Management: Affirmed in part, reversed in part and remanded. ERISA § 514(a) does not preempt an out-of-network provider’s California negligent misrepresentation claim based on coverage and rate representations a plan administrator made on a verification call before services were rendered, under either the “connection with” or the “reference to” test. ERISA preempts the provider’s promissory estoppel claim under Bristol.

What to Watch

• The merits on remand in Healthcare Ally Management. The court noted that “it is far from obvious that HAMOC’s claim can succeed on the merits.” Healthcare Ally Management, 2026 WL 2319896, at *17 n.13. HAMOC wasn’t the provider, and it will have to prove what was asked and said on the call, what La Peer knew about how Aetna applied the UCR and Medicare rates, and whether Aetna and WSP intended to induce reliance. Id.
• Further review. Absent a rehearing petition, a petition for certiorari in Healthcare Ally Management would be due November 9, 2026.
• Update (October 18, 2026). After obtaining an extension, WSP and Aetna petitioned for panel rehearing and rehearing en banc on September 23, 2026. The Ninth Circuit denied the petition on October 16, 2026, and no judge requested a vote on rehearing en banc. Order, Healthcare Ally Management, No. 24-3479 (9th Cir. Oct. 16, 2026), Dkt. No. 54. A petition for certiorari is now due January 14, 2027, 90 days after the denial. See Sup. Ct. R. 13.3.
• The ground between the call and the EOB. Ahn addressed statements to beneficiaries in EOBs; Healthcare Ally Management addressed statements to a provider before treatment. Neither addressed a plan’s post-service statements to the provider itself, or an EOB that repeats a pre-service misstatement.
• Verification-call claims in the Third Circuit. Bristol, as quoted in Healthcare Ally Management, listed Plastic Surgery Center among decisions permitting providers’ misrepresentation-of-coverage claims to proceed. Healthcare Ally Management, 2026 WL 2319896, at *16. Ahn said Plastic Surgery Center applied the same standards it did, and didn’t address pre-service representations.

What This Means for Resolving Payor-Provider Disputes

Preemption is usually the first fight in an out-of-network payment case. These decisions sort it by timing and audience. In the Third Circuit, a tort claim challenging what the plan told its members about a benefits decision is preempted, giving plans a firm answer to providers who recast a denial as defamation or a similar tort. In the Ninth Circuit, a negligent misrepresentation claim that rests on what the administrator told the provider before the service survives preemption at the pleading stage, while a promissory estoppel claim on the same facts doesn’t.

That moves the dispute from a legal question to a factual one, and the factual one is narrow: what was said on the call, what the administrator knew when it said it, and what the provider’s services were worth. Verification calls usually leave records on both sides. A provider with a well-documented call, or a plan that can show its statement matched what it knew at the time, has a clearer view of its exposure than either had while the case turned on a preemption motion. And the Ninth Circuit’s own caution about the merits gives both sides a reason to value the claim realistically. Disputes that turn on a shared record, rather than an open legal question, tend to resolve. Other circuits may view these issues differently, creating uncertainty in the legal landscape and making resolution more difficult.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Healthcare / Payor-Provider Disputes · No Surprises Act · Qualifying Payment Amount (QPA) · Administrative Procedure Act

Updated October 18, 2026, to reflect post-decision filings. See the dated update under What to Watch.

Introduction

The No Surprises Act (NSA) sends out-of-network payment disputes to “baseball” arbitration, and the courts have spent 2026 defining what that process produces. This one is about where the numbers start. Every independent dispute resolution (IDR) case begins with the qualifying payment amount (QPA), which the health plan calculates, and providers have argued that the federal rules for calculating it push QPAs below the market rates Congress meant them to reflect. On August 11, 2026, the en banc Fifth Circuit decided three of those challenges. First, it held that insurers may not include non-negotiated “ghost rates” for services a provider doesn’t provide. Second, it held that insurers may not exclude bonus and incentive payments, which may or may not be tied to the provision of specific items and services. Third, it held that insurers may exclude one-off, single-case agreements, which are common in air ambulance billing. The court also approved vacatur as the remedy, despite six judges’ view that the case should be remanded without vacatur.

Executive Summary

The plaintiffs are the Texas Medical Association, Tyler Regional Hospital and a physician, along with a second group the court calls “the air ambulance plaintiffs.” They sued the U.S. Department of Health and Human Services (HHS), the U.S. Department of Labor (DOL), the U.S. Department of the Treasury (Treasury) and the Office of Personnel Management (OPM) under the Administrative Procedure Act (APA), challenging the July 2021 interim-final rule in which the agencies set the QPA methodology, along with the FAQs the agencies issued in August 2022, as contrary to the NSA and arbitrary and capricious. The U.S. District Court for the Eastern District of Texas ruled for the plaintiffs and vacated the agencies’ actions. A Fifth Circuit panel reversed, and the full court granted rehearing, which vacated the panel opinion.

The en banc court affirmed in part, reversed in part and remanded. A majority held that, under the plain language of the NSA, the QPA: 1) must not include ghost rates; 2) must include bonus and incentive payments, which may or may not be tied to the provision of specific items and services; and 3) does not include single-case agreements. It held that the district court appropriately vacated the agencies’ actions. Three judges wrote separately: Judge Ho in a concurrence questioning universal vacatur, Judge Oldham in a partial concurrence that would have decided the case on APA notice-and-comment grounds, and Judge Haynes, joined by five judges, in a partial dissent on the first two issues and the remedy.

Background

What the QPA does in IDR

The NSA defines the QPA as “the median of the contracted rates recognized by” a plan “as the total maximum payment . . . for the same or a similar item or service that is provided by a provider in the same or similar specialty and provided in the geographic region in which the item or service is furnished.” 42 U.S.C. § 300gg-111(a)(3)(E)(i)(I). The statute builds it from the plan’s contracted rates as of January 31, 2019, for the same or a similar service, by providers in the same or similar specialty in the same geographic region, and takes the median, adjusted for inflation in later years. Id. § 300gg-111(a)(3)(E)(i). The court’s translation: “The QPA is the median of the total maximum rates in an insurer’s contract for an item or service that a provider provides and furnishes, sorted by specialty and geographic region.” Texas Medical Association, 2026 WL 2322331, at *1.

The QPA thus is a stand-in for what the plan would have paid an in-network provider. It does two jobs. First, in most cases it sets the patient’s cost-sharing, which keeps the patient out of the payment fight and prevents balance billing. Second, it is the starting point in IDR. As Judge Oldham’s opinion summarizes, the patient’s cost-sharing is calculated as a portion of the QPA, and the provider and insurer negotiate the rest. Id. at *10 (Oldham, J., concurring in part). When negotiation fails, the dispute goes to IDR, where each side submits an offer and the IDR entity picks one. The per curiam described the QPA’s role this way: “Congress intended the QPA to serve as a focal point of provider-insurer negotiations.” Id. at *3 (citing 42 U.S.C. § 300gg-111(c)(5)(C)(i)(I)).

That’s why the calculation matters to both sides. A plan’s offer is often built from the QPA, and a provider’s offer has to justify departing from it. Inputs that pull the median down, such as low non-negotiated rates, move the starting point toward the plan. Inputs that push it up, such as bonus payments tied to a service, move it toward the provider. Each of the three rules challenged here changed which rates go into the median.

Offers and outcomes in IDR

The QPA is the one figure the IDR entity is always required to consider, alongside other information the parties submit, such as the provider’s training and experience, the complexity of the case and the parties’ contracting history. 42 U.S.C. § 300gg-111(c)(5)(C). The plan calculates its QPA itself and discloses it with its initial payment or denial. A plan’s offer typically sits at or near its QPA, and providers argue for more. The Centers for Medicare & Medicaid Services (CMS) has reported that plans “often benchmarked their offers to the QPA,” while providers pointed to past out-of-network payments and in-network rates. CMS, Supplemental Background on Federal Independent Dispute Resolution Public Use Files (July 1, 2025 – December 31, 2025).

What a plan reports as its QPA can matter as much as how the QPA is calculated. In REACH Air Medical Services LLC v. Kaiser Foundation Health Plan Inc., Kaiser paid an air ambulance provider $24,813.48 and told it that amount was its QPA. In IDR, Kaiser offered the same $24,813.48 but told the IDR entity its QPA was $17,304.29. According to the provider, the lower figure made Kaiser’s offer look well above the QPA. The Eleventh Circuit held that those allegations were not pleaded with enough particularity and did not decide whether they were true. 160 F.4th 1110, 2025 WL 3222820, at *2, *7 (11th Cir. Nov. 19, 2025).

The outcomes of the IDR process have run heavily one way. In the second half of 2025, providers, facilities and air ambulance providers were the prevailing party in about 85% of payment determinations, down from 88% in the first half of the year, and the prevailing offer exceeded the QPA in about 87% of determinations. CMS, Supplemental Background, supra. Researchers at Georgetown University’s Center on Health Insurance Reforms, analyzing CMS data, put the provider share at 81% in 2023 and 85% in 2024. Jack Hoadley, Kennah Watts, Katie Keith & Ellie DeGarmo, The No Surprises Act IDR Process: An Early Look at 2025 Data, Health Affairs Forefront (Mar. 2026). A “win” means the IDR entity chose the provider’s offer, not that the provider received any particular amount, and a small number of high-volume filers account for much of the volume. Insurers read that record as evidence that the process is being gamed; providers read it as evidence that plans’ QPAs are routinely understated.

The rules and the record

The interim-final rule, issued without notice and comment by the agencies in July 2021, instructed insurers to treat “each contracted rate for a given item or service” as a “single data point when calculating a median contracted rate . . . regardless of the number of claims paid at that contracted rate.” Id. at *1 (quoting 86 Fed. Reg. 36,872, 36,889 (July 13, 2021)). Insurers often offer providers a form fee schedule covering every service, and providers negotiate only the rates for services they plan to bill. The rest, the “ghost rates,” can be very low, in some cases $0. Id. at *2. In FAQ 14 of the August 2022 FAQs, the agencies instructed insurers that they “should not include $0 amounts in calculating median contracted rates,” but left non-$0 ghost rates in. Id.

The July 2021 rule also excluded bonus and incentive payments, 45 C.F.R. § 149.140(b)(2)(iv), and single-case agreements from the QPA calculation. Id. at *4, *6.

The per curiam pointed to the IDR numbers as evidence of the effect: arbitrations exceeded the agencies’ expectations by a factor of 84, providers prevailed in over 80% of them, and arbitrators selected a rate above the QPA in 85%. Id. at *3.

On single-case agreements, the original panel had rejected the plaintiffs’ challenge to their exclusion. Texas Medical Association, 120 F.4th at 506. The plaintiffs did not ask the full court to rehear that ruling in their joint en banc petition, but the air ambulance plaintiffs raised it again in their supplemental en banc brief. Texas Medical Association, 2026 WL 2322331, at *6.

Legal Analysis

• Ghost rates are not rates for services “provided by a provider.” The majority held that by requiring “each contracted rate” regardless of claims paid, the July rule swept in rates for services that were neither “provided by a provider” nor “furnished,” as the statute requires. Id. at *2. It called $0 rates “the clearest example,” noting that “it is undisputed that no provider ever agreed to provide any item or service for $0.” Id. And it read FAQ 14 as underscoring the problem rather than fixing it: if a $0 rate must come out because the provider obviously didn’t agree to it, the same is true of a below-market $1 rate. “Either the provider contracted for the rate, or he did not.” Id. at *3.
• The agencies’ textual and practical defenses didn’t carry. The agencies argued that the “same or similar specialty” limit already screens out ghost rates; the court answered that providers within a specialty often don’t offer overlapping services. Id. at *3. To the agencies’ arguments that providers need only make a service “available,” or might provide it in the future, the court answered that even on those readings the rules still include rates for services the agencies themselves described as ones providers are “not equipped to furnish.” Id. at *4. The agencies also asked what time period would determine whether a provider “provides” a service. The court called that “a fair question,” but one the agencies could have answered through notice and comment rather than an interim-final rule. Id.
• “Total maximum payment” includes bonus and incentive payments. Relying on dictionary definitions of “total” and “maximum,” the majority read the phrase to mean “the whole, entire payment and the sum of all payments from the insurer to the provider for the given item or service.” Id. at *4. The agencies argued that these payments are “rarely tied to specific contracted rates” and are usually paid “as an annual lump sum.” The court responded that some are tied to services, and that the rulemaking provision, which says the agencies “shall take into account payments that . . . are not on a fee-for-service basis,” 42 U.S.C. § 300gg-111(a)(2)(B), means they “cannot ignore or exclude them.” Id. at *5. On infeasibility, the court again said the agencies could have built a record through notice and comment. Id.
• Single-case agreements are not “contracted rates” recognized “under” a plan. Here the majority sided with the agencies. A “rate,” it reasoned, “connotes a per-unit price for multiple units,” which doesn’t naturally fit one-off agreements. Id. at *6. Even if it did, those agreements aren’t rates “recognized” “under” the plan, because they arise in emergencies “when insurers pay out-of-network providers at exceedingly high rates apart from any generally applicable health plan.” Id. The court added that a statute keyed to rates in effect on January 31, 2019 is “difficult to square with single-use agreements.” Id. It rejected the air ambulance plaintiffs’ counterarguments, including that the agencies treat single-case agreements as a “contractual relationship” elsewhere, 45 C.F.R. § 149.30. Id. at *7. On arbitrary-and-capricious review, it observed that because “the air ambulance business model is built on avoiding in-network contracts, we cannot say it was arbitrary or capricious to exclude them from a scheme built on in-network contracts.” Id. The plaintiffs also argued that including unpaid rates while excluding single-case agreements was internally inconsistent. The court agreed, and resolved the inconsistency by vacating the ghost-rate provisions. Id. at *7 n.4.
• Vacatur, not remand. Following circuit precedent that vacatur of unlawful agency action is the APA’s default remedy, the en banc court held that the district court appropriately vacated the agencies’ actions. Id. at *8 (citing Cargill v. Garland, 57 F.4th 447, 472 (5th Cir. 2023) (en banc), aff’d, 602 U.S. 406 (2024)). The agencies and insurers warned that recalculating QPAs would take time and that patients could lose balance-billing protection while that process unfolds. The court answered that “[t]he APA . . . does not embrace a too-big-to-vacate principle,” and pointed to the district court’s observation that the agencies “can exercise their enforcement discretion to allow insurers to continue using their existing QPAs until new QPAs are calculated consistent with the Act,” as they had been doing during the appeal. Id.
• Judge Ho: concurring, with reservations about universal vacatur. The government asked the court to revisit whether universal vacatur of an agency rule is lawful under the APA. Judge Ho laid out the arguments against it, drawing on Trump v. CASA, Inc., 606 U.S. 831 (2025), but concurred because circuit precedent goes the other way and there “is not presently interest [sic] to revisit that precedent.” Id. at *8–9 (Ho, J., concurring).
• Judge Oldham: concurring in part, on procedural grounds. Judge Oldham would have held FAQ 14 invalid because an agency “cannot fix a substantive error in a formal legislative rule through an informal FAQ document.” Id. at *12 (Oldham, J., concurring in part). On his view, the July rule’s inclusion of $0 ghost rates was contrary to law, FAQ 14 amended a legislative rule without notice and comment and was “a legal nullity,” and the court should remand with instructions to follow notice-and-comment procedure without reaching the other substantive challenges. Id. at *12–14, *18.
• Judge Haynes: concurring in part and dissenting in part. Judge Haynes, whose opinion refers in a footnote to “my panel opinion,” was joined by Judges Stewart, Graves, Higginson, Douglas and Ramirez. She agreed on single-case agreements and would have remanded rather than vacated. Id. at *18 & n.1 (Haynes, J., concurring in part and dissenting in part). On ghost rates, she read “provided” to mean “available” and viewed the $0 exclusion as essentially extinguishing the likelihood of rates for services a provider would never provide. Id. at *18–19. On bonuses, she read § 300gg-111(a)(2)(B) as authority for the agencies to decide how to treat those payments, and noted that some incentive adjustments, such as penalties, decrease payment. Id. at *19–20.

Holding

Affirmed in part, reversed in part and remanded for further proceedings consistent with the opinion, with the agency rules vacated. The court held that the July 2021 rule, as modified by FAQ 14, unlawfully requires insurers to include non-negotiated ghost rates in the QPA, and that the rule’s exclusion of bonus and incentive payments, 45 C.F.R. § 149.140(b)(2)(iv), conflicts with the statute’s “total maximum payment” language. It held that the exclusion of single-case agreements from “contracted rates” is consistent with 42 U.S.C. § 300gg-111(a)(3)(E)(i)(I) and is not arbitrary or capricious. It held that the district court appropriately vacated the agencies’ actions. Per the opinion’s opening footnote, nine judges joined the per curiam in full; Judge Southwick concurred in Parts I (ghost rates) and III (single-case agreements); and Judge Oldham concurred in part. Id. at *1 n.*.

What to Watch

• Further review. The government’s deadline to petition for certiorari is November 9, 2026, 90 days from the August 11, 2026 judgment, unless the deadline is extended.
• Update (October 18, 2026). The government filed its petition for certiorari on October 14, 2026, ahead of the deadline. Department of Health and Human Services v. Texas Medical Association, No. 26-491 (U.S. filed Oct. 14, 2026). The petition does not ask the Supreme Court to review the en banc court’s holdings on ghost rates, bonus and incentive payments, or single-case agreements. It presents only the remedy question: “[w]hether the Administrative Procedure Act . . . authorizes courts, in Section 706(2), to enter universal vacatur of agency rules that courts have held unlawful and, if so, in what circumstances.” That is the issue on which Judge Haynes, joined by five other judges, would have remanded rather than vacated. The government relies on Trump v. CASA, Inc., 606 U.S. 831 (2025), and acknowledges that there is no circuit split. The response is due November 13, 2026. The Fifth Circuit’s mandate issued October 2, 2026.
• New QPAs and the interim period. The court contemplated a period in which insurers recalculate QPAs, and the agencies use enforcement discretion to let existing QPAs stand in the meantime. The “fair question” the court left open is how to tell whether a provider “provides” a service and over what time period. This question will have to be answered—presumably by the agencies after a notice-and-comment period—before ghost rates can be screened out.
• Bonus and incentive payments in practice. The majority held that these payments must be included in the QPA “for the relevant item or service.” The agencies’ infeasibility objection, and Judge Haynes’s point that some adjustments are penalties that decrease payment, preview the questions that will arise in applying that holding.

What This Means for Resolving Payor-Provider Disputes

IDR is final-offer, or “baseball,” arbitration in which the reference point does much of the work. The QPA is that reference point. When it moves, both offers move with it: the plan’s number is anchored to it, and the provider’s argument is measured against it. The en banc court has moved two inputs in the providers’ direction and left a third, single-case agreements, where it was, so disputes over air ambulance services will continue to be built without those rates.

The near-term effect on resolution of these disputes runs in two directions. Until QPAs are recalculated, the parties are negotiating against a number the Fifth Circuit has held was calculated unlawfully, which gives providers an argument for discounting it and plans an argument that it remains the operative figure. That kind of disagreement over the starting point tends to keep claims in IDR. Once new QPAs are in place, though, a QPA that both sides regard as properly calculated is a more useful shared reference point than one either side treats as skewed. With continued litigation over the contours of the IDR process from both providers and payors, the number the process starts from carries more weight, and settling how it’s calculated may do more to narrow the range of outcomes—and promote more settlements in advance of IDR—than any later fight over an award.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.

Healthcare / Payor-Provider Disputes · No Surprises Act · Independent Dispute Resolution (IDR)

Updated October 18, 2026, to reflect post-decision filings. See the dated update under What to Watch.

Introduction

The No Surprises Act (NSA) was designed to replace balance billing of patients and payment fights between payors and out-of-network providers with a streamlined arbitration process. When a provider and a health plan can’t agree on what an out-of-network service is worth, each submits an offer, and a certified independent dispute resolution (IDR) entity picks one of the numbers — it’s “baseball” arbitration. The statute provides that the result is “binding” and must be paid within 30 days, but does not say what happens when the plan doesn’t pay. Providers holding unpaid awards have argued that a binding award must be enforceable in court; health plans have argued that Congress left enforcement to regulators. District courts are divided, including within the Second Circuit, and in 2025 the Fifth Circuit adopted the plans’ reading in Guardian Flight, L.L.C. v. Health Care Service Corp., 140 F.4th 271 (5th Cir. 2025). On September 17, 2026, the Second Circuit agreed. In East Coast Advanced Plastic Surgery, LLC v. Cigna Health & Life Insurance Co., the court held that the NSA does not create an implied private right of action to enforce IDR awards, and that the Declaratory Judgment Act cannot supply one. It expressly left open another question the Fifth Circuit had answered: whether the NSA’s limit on judicial review bars suits to confirm IDR awards altogether.

Executive Summary

East Coast Advanced Plastic Surgery (ECAPS) performs breast reconstruction surgery for patients who have undergone mastectomies. It has no network contract with Cigna, but it does have a contract with MultiPlan, which sells network access to plan administrators including Cigna, under which Cigna was to pay a “Contract Rate” of 85% of ECAPS’s billed charges. According to the complaint, Cigna paid far less in the “overwhelming majority” of cases. ECAPS took the claims through the NSA’s IDR process and won awards exceeding $3 million. Cigna paid none of them. Cigna, for its part, alleges that ECAPS billed fraudulently and that Cigna overpaid it by $8.5 million, and it sued ECAPS under ERISA, the Declaratory Judgment Act and Connecticut law. ECAPS then sued Cigna, seeking a declaration that Cigna violated the NSA by failing to pay the award amounts.

The district court dismissed ECAPS’s complaint, holding that the NSA contains no express or implied private right of action to enforce IDR awards and that the Declaratory Judgment Act is not an independent source of one. The Second Circuit affirmed.

Background

The IDR process

Under the NSA, an out-of-network provider bills the patient’s plan rather than the patient, and the plan must make an initial payment or send a notice of denial within 30 days. A provider that disagrees can open negotiations and, if those fail, initiate the IDR process. Each side submits an offer, and the certified IDR entity selects one of them. The determination “shall be binding upon the parties involved” and “shall not be subject to judicial review, except in a case described in any of paragraphs (1) through (4) of section 10(a) of title 9” — the Federal Arbitration Act’s grounds for vacating an arbitration award. 29 U.S.C. § 1185e(c)(5)(E)(i)(I)–(II). Payment is due within 30 days of the determination. Id. § 1185e(c)(6).

Three codifications, three agencies

Congress conferred jurisdiction over the NSA on three different federal agencies: the Department of Labor (DOL), as the administrator of ERISA § 716, 29 U.S.C. § 1185e; the Department of the Treasury (Treasury), through the Internal Revenue Service (IRS), as the administrator of I.R.C. § 9816; and the Centers for Medicare & Medicaid Services (CMS) of the Department of Health and Human Services (HHS), which administers Public Health Service Act § 2799A-1, 42 U.S.C. § 300gg-111. Each codification reads the same, and the agencies execute them concurrently, including joint issuance of the IDR regulations and sharing responsibility for certifying IDR entities and setting the methodology for awards. CMS runs the federal IDR portal on behalf of all three agencies.

The NSA defines the jurisdiction of each agency by the type of coverage involved, so that each agency reaches a different set of plans and parties:

• Private employer-sponsored group health plans, whether self-funded or insured, are covered by both the ERISA and Internal Revenue Code versions. DOL and Treasury share enforcement over them.
• Church plans, which fall outside ERISA, answer only to the Code, and so to Treasury.
• Non-federal governmental plans, such as those sponsored by state and local governments, fall under the Public Health Service Act and HHS.
• Health insurance issuers are also governed by the Public Health Service Act, whether they sell group or individual coverage. Here the states are the primary enforcers, and CMS steps in only where a state lacks the authority or doesn’t substantially enforce.
• Providers, facilities and air ambulance providers have their balance-billing obligations under the Public Health Service Act alone, enforced by the states and CMS.

The categories overlap in predictable ways. When an employer buys insurance, the insurer answers to the state or CMS, and the employer’s plan answers to DOL and Treasury.

This overlapping structure became the center of the ECAPS case. Each of the three statutes Congress amended comes with its own enforcement machinery. ERISA authorizes DOL to sue. The Code imposes an excise tax on the plan sponsor. The Public Health Service Act lets HHS impose civil money penalties and leaves the states to police insurers. The question was whether Congress, having spread enforcement across all of those mechanisms, also meant to let a provider holding an unpaid award go to court on its own.

The divided lower courts

Before ECAPS, district courts had gone both ways, including two in the District of Connecticut. Compare Guardian Flight LLC v. Aetna Life Ins. Co., 789 F. Supp. 3d 214, 229 (D. Conn. 2025) (finding an implied right of action), with Axis Neuromonitoring, LLC v. Aetna Inc., 824 F. Supp. 3d 217, 224 (D. Conn. 2026) (finding none, “as have most courts to consider the issue”).

Legal Analysis

• The starting presumption runs against the provider. The court framed the question of a private right of action through Alexander v. Sandoval, 532 U.S. 275, 286–87 (2001), and two 2026 Supreme Court decisions applying the same approach, FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., 608 U.S. 608, 613 (2026), and Cisco Systems, Inc. v. Doe I, 146 S. Ct. 1882, 1890 (2026). Where a statute has no express private right of action, courts begin with the presumption that Congress did not intend one, and the text and structure must show “a clear manifestation” of intent to create both a private right and a private remedy. Lopez v. Jet Blue Airways, 662 F.3d 593, 596 (2d Cir. 2011).
• “Shall pay” is rights-creating language, but it isn’t enough. The court accepted that the NSA’s payment provisions are the kind of rights-creating language that can imply a cause of action, citing its own decision in Murphy Medical Associates, LLC v. Yale University, 120 F.4th 1107, 1112 (2d Cir. 2024). But under Gonzaga University v. Doe, 536 U.S. 273, 284 (2002), a plaintiff must also show an intent to create a private remedy, and that is where ECAPS’s argument failed.
• Congress imported the FAA’s vacatur provision, not its confirmation provision. The NSA incorporates FAA § 10, which lets a court vacate an award, but not FAA § 9, which lets a party confirm one. Congress has incorporated § 9 elsewhere — the Administrative Dispute Resolution Act makes awards enforceable “pursuant to sections 9 through 13 of title 9,” 5 U.S.C. § 580(c) — and the court read the omission here as deliberate, as the Fifth Circuit had. See Guardian Flight, 140 F.4th at 276–77. ECAPS argued that Congress didn’t need § 9 because it applies to arbitration under an agreement rather than a statute. The court pointed out that § 10 applies to agreement-based arbitration too, and Congress incorporated it anyway.
• The enforcement scheme is administrative, and it interlocks. This is where the overlapping administrative structure set up by Congress becomes key. DOL can sue to enjoin violations by private employer-sponsored plans, 29 U.S.C. § 1132(a)(5). Treasury can impose an excise tax on a non-governmental plan that fails to meet the requirements, which include timely payment of IDR awards. I.R.C. § 4980D(a). HHS can impose civil money penalties on state and local governmental plans, 42 U.S.C. § 300gg-22(b)(2)(A). And states can enforce the requirements against health insurance issuers, id. § 300gg-22(a)(1). Under Sandoval, 532 U.S. at 290, the express provision of one method of enforcement suggests Congress meant to preclude others.
• How vigorously the agencies enforce is beside the point. ECAPS made four related arguments, and the court rejected each.
  • No enforcement power in the NSA. ECAPS argued that the NSA itself confers no enforcement power on DOL or Treasury. The court answered that Congress didn’t need to grant any. The NSA was written into ERISA and the Internal Revenue Code, and both already authorize agency enforcement: DOL’s power to sue dates to ERISA’s enactment in 1974, and Treasury’s excise tax was added to the Code in 1996. Once the NSA’s requirements became part of those statutes, the existing enforcement tools applied to them.
  • Minimal enforcement by DOL. ECAPS argued that DOL’s enforcement of IDR awards has been minimal. The court held that the relevant question is whether Congress authorized agency enforcement, not how actively the agency uses it.
  • Treasury can waive the tax. ECAPS pointed out that Treasury may waive the tax when a late payment isn’t due to willful neglect. The court said that an agency’s discretion to waive enforcement is no evidence that Congress intended a private right of action.
  • The tax falls on the employer. For most plans, the tax falls on the employer rather than on the plan that failed to pay. The court noted that ECAPS cited no authority requiring enforcement power to run against the noncomplying entity itself.
• “Binding” does not say who enforces. The court held that ECAPS’s reliance on the provision making the IDR entity’s choice between the two offers “binding upon the parties involved,” 29 U.S.C. § 1185e(c)(5)(E)(i)(I), begged the question, because the provision says nothing about who may enforce the determination. Cases enforcing “binding” awards under arbitration agreements did not address a statutory process subject to administrative enforcement.
• Vacatur still has work to do without private enforcement. ECAPS argued that incorporating the grounds for vacatur under FAA § 10 would be pointless if no one could be compelled to pay. The court disagreed: a plan facing an unfavorable award may prefer to seek vacatur rather than ignore the award and risk administrative action, and a provider that believes the process was tainted and produced too low an award can seek vacatur as well. Quoting Guardian Flight, the court observed that Congress “may have judged it better to have an administrative enforcement mechanism handle most award disputes instead of throwing open the floodgates of litigation.” 140 F.4th at 277.
• The Tucker Act and § 1983 analogies did not carry over. ECAPS relied on Maine Community Health Options v. United States, 590 U.S. 296 (2020), where the Supreme Court held that the Affordable Care Act’s command that the HHS Secretary “shall pay” insurers under the risk-corridors program let those insurers sue the government for the payments Congress later declined to fund. The Court observed there that “shall pay” language “often reflects congressional intent to create both a right and a remedy under the Tucker Act.” Id. at 324. But that holding arose under the Tucker Act, which waives the federal government’s sovereign immunity for money claims but requires a plaintiff to identify a separate statute that “can fairly be interpreted as mandating compensation by the Federal Government.” Id. at 322–23. Maine Community answered that money-mandating question. ECAPS presented a different one: whether Congress implied a private right of action against a private health plan, with no sovereign immunity and no Tucker Act claim involved. The court also rejected ECAPS’s reliance on 42 U.S.C. § 1983. In § 1983 cases, the statute itself supplies the remedy, so a plaintiff needn’t show that Congress intended one, but ECAPS’s claim rested on an implied right of action, where the plaintiff carries that burden.
• No end-run through the Declaratory Judgment Act. Because the Declaratory Judgment Act does not create an independent cause of action, and ECAPS had no substantive claim of right under the NSA, its declaratory claim fell with its implied-right claim.

Holding

Affirmed. The NSA does not create an implied private right of action for a provider to enforce payment awards obtained through the IDR process, and the Declaratory Judgment Act does not supply an independent cause of action. The court assumed, without deciding, that the NSA’s judicial-review provision, 29 U.S.C. § 1185e(c)(5)(E)(i)(II), does not itself bar ECAPS’s suit.

What to Watch

• The question the court reserved. Cigna argued that the NSA’s limit on “judicial review” bars any suit to confirm or enforce an IDR award, and the Fifth Circuit adopted that reading in Guardian Flight. The Second Circuit did not decide it. The difference matters only at the margins today, since neither circuit allows a private enforcement suit, but it would matter if a provider framed a claim some other way.
• Further review. Two circuits now agree, and the court cited no circuit decision going the other way, which makes this an unlikely candidate for Supreme Court review unless a split develops. Absent a rehearing petition, a petition for certiorari would be due 90 days after judgment, on or about December 16, 2026.
• Update (October 18, 2026). ECAPS petitioned for panel rehearing and rehearing en banc on October 1, 2026, and the petition is pending. Pet. for Reh’g, East Coast Advanced Plastic Surgery, No. 25-2204 (2d Cir. Oct. 1, 2026), Dkt. No. 82. The Emergency Department Practice Management Association and EMS Alliance filed an amicus brief supporting rehearing on October 13, 2026. If the court denies the petition, a petition for certiorari would be due 90 days after the denial. See Sup. Ct. R. 13.3.
• Agency enforcement. With private suits foreclosed in two circuits, whether an unpaid IDR award gets paid now depends on DOL, Treasury, HHS and state insurance regulators. ECAPS’s argument that DOL enforcement has been minimal did not move the court, but it identifies the pressure point providers are likely to press next.
• Claims the decision does not reach. The opinion addresses a claim to enforce the NSA itself. It does not address whether a provider can pursue other claims arising from the same services — for example, claims under a separate network agreement like the MultiPlan contract described in the complaint. Cigna’s related action against ECAPS, alleging $8.5 million in overpayments, was not before the court on this appeal.

What This Means for Resolving Payor-Provider Disputes

Arbitration finality means an award is hard to undo. Under the NSA as these two circuits read it, an IDR award is both hard to undo and unenforceable by the winner in court. The award still binds the parties, but its practical weight now depends on the regulatory risk the losing party runs by not paying, rather than on the threat of a judgment.

That changes what an unpaid award is worth at the negotiating table rather than whether it is worth anything. An IDR determination remains a neutral’s answer to what a set of services was worth, which gives both sides a shared reference point. Where, as here, a provider’s unpaid awards sit alongside a plan’s overpayment and fraud claims against the same provider, the disputes tend to travel together, and the two numbers tend to be resolved together rather than one at a time.

John Libby is an arbitrator, mediator, and settlement counsel with LibbyADR LLC. This post contains his own summaries of the decisions discussed, prepared for general informational purposes only. The summaries are not intended to be a complete statement of any court’s reasoning, nor should they be taken to indicate how he would rule as an arbitrator in any particular case. In addition, the summaries are not legal advice, nor should they be construed as legal advice. Readers should not act on these posts, but should review the decisions themselves and consult with legal counsel.