On June 12, the U.S. Court of Appeals for the Fifth Circuit issued a significant opinion in the case involving Guardian Flight, LLC and Med-Trans Corporation, two air ambulance providers, against the defendant insurance company. This case centered around the enforcement of Independent Dispute Resolution (IDR) awards under the No Surprises Act (NSA), a law enacted in 2022 to protect patients from unexpected medical bills from out-of-network providers during emergencies.
Case Overview
The NSA was designed to shield patients from financial liability for surprise medical bills and established an IDR process for resolving billing disputes between out of network healthcare providers and insurers. This process involves negotiations between the provider and insurer, and if unsuccessful, a certified independent dispute resolution entity (CIDRE) is selected to determine the payment amount through a “baseball-style” resolution. The NSA mandates that IDR awards be binding and paid within 30 days, with enforcement overseen by the Department of Health and Human Services (HHS).
Here, Guardian Flight and Med-Trans Corporation initiated IDR proceedings to resolve billing disputes with the defendant. After receiving IDR awards, the providers sued the defendant for allegedly failing to pay these awards timely, claiming violations of the NSA, ERISA, and unjust enrichment under Texas law. However, the district court dismissed the complaint, ruling that the NSA does not provide a private right of action for enforcing IDR awards, the providers lacked standing under ERISA, and the quantum meruit claim was invalid because the services were rendered for the patients’ benefit, not the defendant.
Key Holdings
- NSA Claim: The court held that the NSA does not provide a private right of action for enforcing IDR awards. The NSA explicitly bars judicial review of such awards except under specific circumstances outlined in the Federal Arbitration Act, which were not applicable in this case. The court emphasized that Congress intended for the NSA to be enforced administratively by the HHS, not through private litigation.
- ERISA Claim: The providers lacked standing to bring an ERISA claim because they could not demonstrate that the beneficiaries suffered a concrete injury. The NSA protects beneficiaries from liability for out-of-network costs, meaning they did not experience harm from the defendant’s actions. The court noted that any breach of contract claim was abstract and insufficient for Article III standing.
- Quantum Meruit Claim: The court dismissed the quantum meruit claim, stating that the providers did not perform services for the defendant’s benefit but rather for the patients. Texas law requires that services be rendered for the benefit of the party charged, which was not the case here.
The court also upheld the district court’s decision to deny leave to amend the complaint, as the providers did not propose any new facts that could remedy the deficiencies in their claims.
Our Take
This opinion provides binding authority within the Fifth Circuit and persuasive authority elsewhere, supporting payors’ defenses against judicial enforcement of IDR awards. However, a parallel case, Guardian Flight LLC (Guardian Flight II) in the District of Connecticut, could lead to a circuit split if the Second Circuit finds that the NSA provides a private right of action for IDR awards.
As the legal landscape continues to evolve, we will monitor these cases closely and provide updates.