Dive Brief:
- A federal judge has dismissed Blue Cross Blue Shield of Texas’ lawsuit against billings intermediary HaloMD, ruling Friday that the courts don’t have the authority to weigh in on arbitration decisions over surprise out-of-network bills under the No Surprises Act.
- With the dismissal, the Eastern District of Texas became the fourth federal court in six weeks to reject payer attempts to relitigate No Surprises determinations, according to HaloMD.
- The flurry of dismissals has thrown cold water over insurers’ legal efforts to restrict what they say is a raft of fraud in No Surprises arbitration, though payers have continued to pursue that goal in the courts. BCBS Texas has already notified that it plans to appeal.
Dive Insight:
The No Surprises Act has protected millions of Americans from surprise medical bills since taking effect in 2022. While the law has shielded consumers, it’s also created major headaches for insurers and providers that find themselves at odds over how to resolve out-of-network disputes, and for regulators looking to fairly referee the process.
Over the last few years, providers have emerged on top in arbitration determinations from No Surprises, a process known as independent dispute resolution or IDR. The lion’s share of disputes have been settled in favor of providers — a whopping 88%, according to the most recent data — and providers are often awarded three or four times above comparable in-network rates when they win.
Insurers have been crying foul as a result, accusing a small group of providers and their billings contractors of gaming the arbitration process to inflate their profits. Much of the criticism has fallen on HaloMD, a company formed in 2022 to help providers submit and win surprise billing contests.
The firm has grown quickly since, and now initiates more IDR disputes than any other company, according to government data. And HaloMD’s founders, Alla and Scott LaRoque, have enjoyed a lavish lifestyle on the back of the company’s work, according to a recent investigation from Stat News.
HaloMD has been the defendant in a number of lawsuits from insurers hoping the courts could overturn what they say were improper IDR awards due to the company’s actions.
BCBS Texas, a subsidiary of Chicago-based Health Care Service Corporation, filed the lawsuit last summer, arguing HaloMD and the the LaRoques bilked millions of dollars from the insurer by flooding IDR with tens of thousands of ineligible requests for payment. As a result, BCBS Texas has been hit with tens of millions of dollars in improper awards, the insurer’s complaint argues.
But on Friday, Judge Robert W. Schroeder III of the Eastern District of Texas became the latest judge to rule it’s not the court’s place to decide whether a dispute is ineligible. That decision should should be left up to the IDR arbiter, Schroeder said.
“Here, Plaintiff is attempting to relitigate issues previously decided by the IDR entities,” Schroeder emphasized in his 18-page ruling.
This spring, the courts have also thrown out similar legal challenges from insurers, including a near-identical suit from Elevance in California, one from CVS’ Aetna in Florida and one from UnitedHealth in Pennsylvania, against HaloMD and other providers accused of gaming No Surprises.
Lawsuits in Georgia and Ohio are ongoing.
“The court got this case exactly right. The NSA forecloses judicial review of IDR awards,” Justin Carangelo, HaloMD’s general counsel and chief compliance officer, said in a statement Wednesday. “Insurers engaged in similarly wasteful litigation should assess whether continuing to do so is an intelligent use of resources.”
