Summary
The Fifth Circuit and the Federal District Court of Connecticut have issued conflicting decisions on whether service providers may sue to enforce arbitration awards under the No Surprises Rules in the Consolidated Appropriations Act, 2021. While the Connecticut court found that a service provider may request a court to order an insurance company to pay out an arbitrator's award, the Fifth Circuit (which includes Louisiana, Mississippi, and Texas) ruled that service providers may only file a complaint with the Department of Health and Human Services if they are not paid according to the arbitrator's decision.
The Upshot
- The Federal District Court of Connecticut ruled that an implied private right of action to enforce arbitration decisions exists under the No Surprises Rules.
- The Fifth Circuit ruled that no implied private right of action to enforce arbitration decisions exists under the No Surprises Rules.
Background
The No Surprises Rules Act under the Consolidated Appropriations Act, 2021, prohibits health care providers from billing patients for "surprise" out-of-pocket costs to patients for out-of-network care in specified circumstances where the patient does not have a meaningful choice in service providers. In particular, these circumstances arise when a patient requires emergency care, seeks care at an in-network facility that uses out-of-network service providers, or requires air ambulance services. Under the No Surprises Rules, patients in these situations pay only the cost-sharing amounts (i.e., coinsurance, copayments, and deductible amounts) that they would be required to pay in-network for the services provided. They cannot be billed for any other amounts, including any balance that the plan does not cover. The plan pays what is due under the terms of the plan; however, the service provider and plan may disagree about the amount that should be paid. If they cannot resolve their differences through negotiation, either party may submit the dispute to "baseball style" arbitration. In this arbitration, each party submits an offer with a proposed payment amount (and support for that amount), and an independent arbitrator selects one of the two offers as the amount owed to the service provider. The No Surprises Rules provide that such arbitration awards must be paid within thirty days of the arbitrator's determination. However, if a plan does not pay within thirty days, a question arises as to how service providers can enforce their arbitration award. This question has been the subject of recent litigation, and currently courts are split as to whether service providers have a private right of action to enforce such arbitration awards.
Case Ruling that there is a Private Right of Action to Enforce Surprise Billing Awards:
In Guardian Flight, L.L.C. v. Aetna Life Insurance Company, the Connecticut District Court held that service providers who are not paid within thirty days may sue under the No Surprises Rules for enforcement of the arbitration award. The court noted that although the No Surprises Rules do not contain explicit language creating a private right of action to enforce arbitration awards, they contain "strong, mandatory language" that supports the conclusion that Congress intended there to be an implicit private right of action. The court reasoned that without the ability for judicial enforcement, the arbitration awards would be "meaningless" and held that the judiciary can intervene to enforce arbitration decisions.
Case Ruling that there is No Private Right of Action to Enforce Surprise Billing Awards:
In Guardian Flight, L.L.C. v. Health Care Service Corporation, the Fifth Circuit came to the opposite conclusion and held that the No Surprises Rules do not create a private right of action to enforce arbitration awards. Instead, service providers must file a complaint with the Department of Health and Human Services (HHS), which may assess penalties against the plan (the insurer in this case). The court emphasized the No Surprises Rule's plain language that states arbitration awards "shall not be subject to judicial review" outside of narrow, explicit grounds outlined in the Federal Arbitration Act (FAA). The court noted that, while Congress included the ability to confirm or deny arbitration awards in the FAA, similar language does not appear in the No Surprises Rules. The court thus concluded that Congress intended HHS to be the sole avenue for complaints regarding a failure to comply with an arbitration award and that service providers cannot use the courts to seek enforcement of arbitration decisions.
Takeaway:
The issue is currently settled in states within the Fifth Circuit (Mississippi, Louisiana, and Texas). Outside of those states, it is possible that courts will enforce an arbitration award under the No Surprises Rules. Continued litigation on this issue might produce a more uniform resolution in the future. For now, ironically, the No Surprises Rules, which aim to provide an efficient, alternative means of resolving disputes, continue themselves to spawn litigation battles to be resolved in the courts.
The authors appreciate Summer Associate Connor Stoker's assistance in the drafting of this advisory.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
