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Appeals court rejects doctors’ challenge to No Surprises Act

Industry Dive

Opponents of the No Surprises Act experienced another setback this week after an appeals court dismissed a lawsuit seeking to overturn the law.

In an order released Tuesday, a three-judge panel of the U.S. Court of Appeals for the Second Circuit dismissed claims challenging the constitutionality of the No Surprises Act — but did leave doctors with the possibility of repleading the case down the line.

The law bans out-of-network providers from hitting patients with unexpected medical charges. It’s proved deeply unpopular with some physician groups — especially emergency medicine providers — that say it will cut into their profits, sparking multiple lawsuits since the law was passed three years ago.

Physician Daniel Haller and his colleagues at Long Island Surgical filed the suit in question against the No Surprises Act in December 2021. Long Island Surgical is a practice that generally performs procedures on patients admitted to the hospital after an emergency department visit, and as such is almost always out-of-network with insurers.

The doctors argued that the law supplanted their right to sue patients for the value of providing emergency medical services, and therefore amounts to an illegal seizure of their property.

A New York district court moved to dismiss the case in August 2022. Haller tried a new argument on appeal, reasoning that the physicians had the right to sue insurers for the payments before the No Surprises Act was passed.

The appeals court on Tuesday upheld the district court’s decision, saying the doctors’ argument that a future income stream had been taken from them was “vague and speculative.” Judges did give Long Island Surgical the ability to replead the case with that new argument concerning insurers in district court if they decide.

In other suits, providers have taken specific issue with how federal regulators interpreted the No Surprises Act in creating an arbitration process to resolve out-of-network bills that they believe favors insurance companies.

The HHS was forced to stop and restart the independent dispute resolution process multiple times in 2023, following a rapid-fire series of lawsuits from the Texas Medical Association.

The choppy rollout has contributed to procedural delays and the backlog of billing disputes, according to a government watchdog.

A handful of lawsuits over No Surprises and the particulars of the arbitration process are still ongoing, including two filed by the Texas Medical Association that are currently in an appeals court.

This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter.

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