🔒CT care providers, insurers square off in lawsuits tied to federal surprise-billing law

A flurry of lawsuits filed in a Connecticut federal court since late July highlight the growing frustration among local medical providers with some of the nation’s largest health insurers. Since July 23, at least 20 lawsuits have been filed in U.S. District Court in New Haven on behalf of five Connecticut-based providers — all of them plastic surgery or reconstructive surgery groups represented by the same law firm. The lawsuits seek to force four insurers — Aetna, Anthem, Cigna and UnitedHealthcare — to pay arbitration awards, some of which were imposed more than a year ago. The cases stem from disputes over how much insurers owe the providers for out-of-network care, and are a direct result of the federal No Surprises Act, which was approved in 2020 and took effect in 2022. The law is designed to protect patients from unexpected medical bills, and it created an independent dispute resolution process to settle payment fights between insurers and providers. While the law has lowered patients’ out-of-pocket costs — one recent study found annual spending has fallen by nearly $600 per patient — providers say insurers are refusing to honor arbitration rulings. That has prompted doctors to ask courts to confirm the decisions and order payment. The new cases in Connecticut mirror a national surge in arbitration disputes. Providers argue insurers are dragging their feet on payments, while insurers say some arbitration decisions are flawed or overly generous. Judges in Connecticut have yet to rule on the latest batch of cases. But their decisions could determine how aggressively local courts enforce the process — and whether more providers pile on lawsuits to collect what they say they are owed. Meanwhile, conflicting federal court rulings have muddied the No Surprises Act’s enforcement. A federal court in Connecticut has ruled that doctors may sue insurers directly to enforce arbitration awards. But a Texas federal court — in a decision later upheld by the U.S. Court of Appeals for the Fifth Circuit in New Orleans — concluded that enforcement rests solely with the U.S. Department of Health and Human Services, not with providers themselves. The issue could end up in the Supreme Court, legal experts said.

CT suits

The 20 lawsuits in Connecticut were submitted on behalf of the five providers by attorney Clifford A. Merin of Merin Law in New Haven. Of the lawsuits he filed, 10 are on behalf of Shareef Jandali Plastic Surgery in Trumbull; four are on behalf of DIEP Group CT, a reconstructive surgery practice in Trumbull; and two each are filed on behalf of New England PA LLC, a plastic surgery provider based in Old Lyme; Northeast Plastic Surgery Center in Old Lyme; and Plastic & Reconstructive Surgery Group in Greenwich. Most of the lawsuits arise from procedures performed by doctors who were outside a patient’s insurance network. In several instances, insurers declined to pay anything after receiving the bills. Under the No Surprises Act, both sides must first attempt to resolve such disputes during a 30-day negotiation window. When no agreement is reached, the case moves into the law’s independent arbitration process. Merin, in a statement to the Hartford Business Journal, said out-of-network providers are frustrated that, even after going through arbitration, insurers often fail to pay the amounts awarded. “This continues to occur despite the fact that the federal law, passed by a bipartisan Congress, requires payment within 30 days of issuance of the arbitration award,” Merin said. “Having exhausted non-litigation efforts, these types of cases are a last resort in compelling payment of the outstanding awards.”

Playing hardball

Dr. Gregory Shangold, a managing partner of Northeast Emergency Medicine Specialists and a past president of both the Connecticut College of Emergency Physicians and Connecticut State Medical Society, likened the independent dispute resolution process to Major League Baseball arbitration, where teams and players each submit proposals and an arbitrator decides which side prevails. In healthcare disputes, providers put forward the payment they believe is fair, while insurers offer their “qualifying payment amount,” or QPA — essentially the insurer’s median rate for a certain procedure. The arbitrator then picks one figure, with no middle ground. Shangold said that, initially in 2022, 83% of arbitration decisions favored the providers, and that has since increased to 86%. “And why is that? Because the QPA is artificially low,” he said. Shangold’s concerns echo findings in the recent Connecticut federal court decision, which described insurers as using a “low pay, late pay or no pay scheme” in the arbitration process. The court said that practice has become “widespread,” pointing to numerous awards that were either unpaid or delayed, and noting how many providers have failed to receive timely compensation. On average, the court found, providers are owed nearly 150% more than what insurers initially offered. It also cited more than $20 million in arbitration awards that were either late-paid or not paid at all. “There’s no teeth in the (No Surprises Act),” Shangold said. “There’s no teeth that says, ‘hey, you have to pay.’” He said insurers play hardball in the process because it allows them to hold onto and invest the money they should pay to providers. Chris Bond, a spokesperson for AHIP, the national trade association for health insurers, says providers also are at fault. “Congress designed the No Surprises Act to protect American patients from exorbitant, unfair billing practices, not to pad private equity-backed provider profits on the backs of patients,” he said via email. “Research clearly shows that some provider groups are abusing the arbitration process intended to resolve surprise billing disputes, saddling American employers and consumers with billions of dollars in unnecessary costs.”

‘Bill collectors’

Arnold Menchel, a partner in the Hartford-based law firm Halloran Sage and chair of the firm’s healthcare practice, said the U.S. District Court decision in Connecticut represents “one more chapter, from the healthcare providers’ viewpoint, in their ongoing saga of trying to get health insurance companies to pay healthcare providers what they are owed under the law.” “The question has become, ‘what happens if the insurer does not pay, or does not pay timely?’” he said. Stephen Cowherd, an attorney with Pullman & Comley who chairs that firm’s health practice, says people observing the disputes between health providers and insurers likely feel little sympathy for either side.

“Who feels really sorry for the heart surgeon?” he asked, while adding, “who’s really bearing the brunt and the burden of this law? It’s clearly the provider.” Cowherd said consumers have benefited from the No Surprises Act, as noted in the study published in August, while insurance companies making billions of dollars can drag out the administrative process to delay paying providers for months or even years. The providers, meanwhile, remain unpaid while spending money to fight for what they believe they are owed. To fix the problem, Shangold said insurers’ payment calculations need more transparency and Congress must clarify how the No Surprises Act should be enforced. “We don’t want to be bill collectors with patients,” he said.