US District Court rules in favor of Texas Medical Association over independent dispute resolution process


Boram Kim


US District Court Judge Jeremy Kernodle ruled in favor of the Texas Medical Association (TMA) on Monday in its case against the federal government over the arbitration process for resolving out-of-network medical billing disputes between providers and payers. 


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TMA’s suit against the departments of Health and Human Services, Labor, and the Treasury filed in October, alleged that final rules in the government’s arbitration for disputed medical claims, also known as Independent Dispute Resolution (IDR), unfairly favor insurers.

Federal Judge Kernodle of the Eastern District of Texas held that the government’s revised IDR rules for determining the qualifying payment amount under the No Surprises Act skews the arbitration process in favor of insurers and violates the act. The decision now vacates the arbitration regulations nationwide. 

“The court concludes that the challenged portions of the Final Rule are unlawful and must be set aside under the Administrative Procedure Act (“APA”),” wrote Judge Kernodle. “… arbitrators will decide cases under the statute as written without having their hands tied by the departments.”

TMA and the federal government have been at odds since October 2021 over the arbitration process. In a statement issued following the ruling, TMA President Gary W. Floyd, MD, expressed his satisfaction with the decision.

“TMA is pleased the court granted its motion for summary judgment in its lawsuit challenging certain components of the federal agencies’ final rules relating to the federal IDR process under the No Surprises Act,” Floyd said. “This is an important next step after TMA successfully challenged an interim final rule that similarly skewed the IDR process in health plans’ favor.

This decision is a major victory for patients and physicians. It also is a reminder that federal agencies must adopt regulations in accordance with the law. The decision will promote patients’ access to quality care when they need it most and help guard against health insurer business practices that give patients fewer choices of affordable in-network physicians and threaten the sustainability of physician practices.”

TMA filed another case against the US Department of Health and Human Services last week. That lawsuit challenges the federal government’s 600% increase in IDR administrative fees, asserting that the expense unfairly penalizes providers for seeking payment resolution.