The No Surprises Act: Litigation Continues

The No Surprises Act (the “NSA”) has generated (and will continue to generate) a significant amount of litigation. The Plaintiffs, who are primarily medical provider organizations, used the practice of forum shopping to bring their cases in the court that will treat them most favorably. For the rule-making cases, the most favorable is the United States District Court for the Eastern District of Texas presided over by Judge Jeremy Kernodle. Prior to being confirmed, he was a partner at Haynes and Boone, LLP where he focused on representing healthcare providers in Federal courts throughout the country.

Here is the current status of the key cases.

Agency Rule-Making Cases (TMA I, II, III, and IV)

TMA I: Texas Medical Association challenged the rebuttable presumption that the Qualifying Payment Amount (“QPA”) is the proper reimbursement amount and the offer closest to the QPA in the arbitration should be selected by the arbitrator. Judge Kernodle agreed with TMA and entered an order vacating the provisions of the NSA that created the rebuttable presumption. Initially, the government agencies appealed this decision, but later voluntarily dismissed the appeal, opting to redraft the rules.

TMA II: Texas Medical Association challenged certain provisions of the Requirements Related to Surprise Billing: Final rules because it improperly required the arbitrators to presume the credibility of the QPA and consider it first before any remaining factors were considered in selecting the winning notice of offer. Again Judge Kernodle agreed with TMA and entered an order vacating the provisions related to the presumption and weight of the QPA. The government agencies appealed this decision. Oral arguments were held before the 5th Circuit Court of Appeals on February 5, 2024. The three judge panel asked questions suggesting that they were uncertain as to whether the agencies had rulemaking authority to determine how the QPA is calculated. Their questions also suggested that they will side with TMA regarding its standing to bring this lawsuit. A decision will be issued at a later date.

TMA III: Texas Medical Association challenged the provisions of the Requirements Related to Surprise Billing; Part I setting forth the methodology for calculating QPAs. It argued that the methodology artificially deflated the QPA. Judge Kernodle again agreed (no surprise!) and struck the provisions in Part I that addressed the methodology for calculating the QPA. This decision was appealed and the parties’ briefs are currently due to the 5th Circuit Court of Appeals on March 13, 2024.

TMA IV:  Texas Medical Association challenged the increase in administrative fees from $50 to $350. Judge Kernodle vacated the fee guidance that increased the fee to $350. This case was not appealed.

Accordingly, the only two active cases are TMA II and TMA III.

Enforcement Cases – A Split in the Courts

Med-Trans Corporation v. Capital Health Plan, Inc. et al. and Reach Air Medical Services LLC v. Kaiser Foundation Health Plan, et al.

In this case filed in the U.S. District Court for the Middle District of Florida, Med-Trans Corporation and Reach Air challenged the reimbursements they received under the IDR process on both procedural and legal grounds. The parties asked the Court to determine how the NSA and the Federal Arbitration Act intersect, and the proper pay to seek judicial review. The case also asked whether IDR Entities are proper parties to a lawsuit or whether they have immunity.

The Court made several key rulings. First, it held that there are four scenarios in which a court may vacate an arbitration award under the No Surprises Act: (1) where the award was procured by corruption, fraud, or undue means; (2) where the arbitrator acted with evident partiality or corruption; (3) misbehavior or misconduct by the arbitrator; and (4) where the arbitrator exceeded his power. Second, it held that the FAA’s procedural requirements do not apply, but it does control judicial review of the decisions (which is limited to the grounds set forth above). Third, the language in the NSA does not expand the scenarios under which a court may vacate an award. Finally, the Court held that the IDR Entities (the arbitrators) are not proper parties to the lawsuit because they are immune and the NSA does not create a right of action against the IDR Entities.

Ultimately, the Court dismissed the parties’ Complaints for failure to state a claim because they did not plead sufficient facts to show that the IDR Entities actions or award fit one of the four scenarios set forth above.

Guardian Flight, LLC, CALSTAR and Reach Air alleged that Aetna did not calculate its QPA in accordance with federal standards, thereby misrepresenting its QPA during the IDR process. They also alleged that the IDR Entity violated the NSA by applying an illegal presumption in favor of Aetna’s QPA.

The Guardian Flight Court adopted the Florida Court’s rulings regarding how the NSA and FAA intersect and the proper way to seek judicial review of IDR awards. Procedurally, the Guardian Flight Court held that Reach was barred from bringing the case in its Court because it was a party to the Florida case (it already had its day in court).

Guardian and CALSTAR did not meet the pleading requirements to set forth a valid claim under one of the four scenarios set forth above as against the payers. However, the Guardian Flight Court departed from the Florida Court’s ruling with regard to whether IDR Entities are proper parties to the lawsuits.  The Guardian Flight Court held that it will not assume that the protection afforded arbitrators under federal common law automatically extend to IDR Entities because the NSA is silent as to whether IDR disputes receive the same protections as arbitrations (including immunity to protect IDR entities). The IDR Entity in this case is MET. The Guardian Flight Court held that the allegations of Guardian and CALSTAR suggest that MET may have exceeded its powers in violation of the fourth scenario above. Therefore, the Court reasoned, that it can judicially review the award and the case is moving forward on the claims against the IDR Entity MET.

For more information and links to the decisions, visit