Health Law Daily Wrap Up, BILLING AND CODING—E.D. Pa.: UnitedHealthcare’s suit against out-of-network anesthesia provider dismissed, (May 1, 2026)

By Donielle Tigay Stutland, J.D.

The court dismissed the No Surprises Act-related state law claims for lack of jurisdiction.

The federal district court for the Eastern District of Pennsylvania dismissed a suit brought by insurer UnitedHealthcare of Pennsylvania, Inc. against out-of-network provider NorthStar Anesthesia of Pennsylvania, LLC alleging that it abused the No Surprises Act by fraudulently submitting a claim which did not qualify. The court concluded that UnitedHealthcare’s state law fraud claim did not arise under federal law and did not necessarily raise a federal issue. Ultimately, the court determined that it did not have subject matter jurisdiction for UnitedHealthcare’s common law fraud claim or the insurer’s requests for declaratory and injunctive relief and dismissed the suit (UnitedHealthcare of Pennsylvania, Inc. v. NorthStar Anesthesia of Pennsylvania, LLC, No. 25-7187 (E.D. Pa. Apr. 28, 2026)).

Background. The state of Pennsylvania contracted with UnitedHealthcare of Pennsylvania, Inc. to provide health insurance coverage to Medicaid-eligible Pennsylvanians. A Pennsylvanian eligible for Medicaid required anesthesia services while delivering a baby at St. Mary’s Hospital in Langhorne, Pennsylvania in January 2025. An anesthesiologist affiliated with NorthStar Anesthesia of Pennsylvania, LLC, which is not an in-network approved provider of UnitedHealthcare, provided her with anesthesia. NorthStar submitted a claim to UnitedHealthcare for its anesthesia services provided to the Medicaid patient in the amount of $6,450.00. UnitedHealthcare calculated the payment due to NorthStar at $1,440.72 as determined by the government-mandated reimbursement amount for its insured under its managed Medicaid plan. NorthStar did not appeal UnitedHealthcare’s payment on the claim.

Two months later, NorthStar began a dispute resolution process for the anesthesia services rendered to the Medicaid patient under the federal No Surprises Act. Despite the Medicaid payment of $1,440.72, NorthStar, through HaloMD, sought $7,075.00 for the disputed claim—$625.00 more than the $6,450.00 NorthStar initially billed UnitedHealthcare. UnitedHealthcare alleged NorthStar added $625.00 to the disputed claim to cover HaloMD’s contingent fee. UnitedHealthcare immediately objected to the Independent Dispute Resolution (IDR) process based on the patient’s Medicaid status, asserted the claim is not eligible for the IDR process, and provided documentation of the patient’s status as Medicaid insured. Additionally, UnitedHealthcare told the IDR entity the claim is not eligible for dispute resolution because the patient is enrolled in Medicaid.

Despite the objection and documentation, the IDR entity ruled for NorthStar and ordered UnitedHealthcare to pay the full $7,075. NorthStar later conceded in court that the IDR process does not apply to Medicaid patients. It attributed the filing to a data-entry error (a processor selected the wrong UnitedHealthcare plan type from a drop-down menu) and stated it should not have initiated the dispute. NorthStar also took “prompt corrective action” to improve its claims processing procedures. UnitedHealthcare sued NorthStar for common law fraud seeking declaratory and injunctive relief. NorthStar moved to dismiss.

Discussion. The court concluded that it did not have subject matter jurisdiction as it determined that UnitedHealthcare’s common law fraud claim does not “necessarily raise” a federal issue.

The court outlined that UnitedHealthcare must show that its common law fraud claim “necessarily raise[s]” a federal issue. A federal issue is “necessarily raised” where the “vindication of a right under state law . . . necessarily turn[s] on some construction of federal law.” First, the court found that UnitedHealthcare’s fraud claim failed both the “necessarily raised” and “substantial” prong. UnitedHealthcare’s allegation was that NorthStar “fraudulently attested” to the Independent Dispute Resolution entity the services at issue are qualified items and services within the scope of the Independent Dispute Resolution process; NorthStar initiated the Independent Dispute Resolution process “with full knowledge of, or at the very least with reckless disregard to, the falsity of [its] attestation;” and that NorthStar “knew that the dispute it was initiating was ineligible for the [Independent Dispute Resolution] process.” Here, the court determined that as the No Surprises Act does not apply to Medicare, Medicaid, and other federal insurance programs, UnitedHealthcare’s common law fraud claim does not necessarily depend on a resolution of the No Surprises Act.

The court also disagreed with UnitedHealthcare’s argument that resolving its common law fraud claim necessarily requires that the court must interpret the No Surprises Act on whether the Act’s administrative remedies preclude, or must be exhausted before pursuing, judicial relief for fraud. The court indicated that Congress already provided a specific, limited remedy in the No Surprises Act and UnitedHealthcare bypassed that remedy and tried to use a state fraud claim plus the Declaratory Judgment Act to obtain relief.

The court next found that UnitedHealthcare’s common law fraud claim did not fall within the narrow category of claims raising a “substantial federal issue.” First the court noted that here, all parties agreed the patient’s Medicaid claim is not eligible for the IDR process under the Act. As such, the court examined whether NorthStar knew the Medicaid claim was not eligible for the Independent Dispute Resolution process but fraudulently initiated the process anyway in an attempt to secure “a windfall for itself.” The court found here, this was a fact dispute over one $7,075 IDR award and one alleged processing error. The court stressed that it did not present a question of federal law that will govern numerous future cases or implicate a strong federal interest.

The court concluded that it lacked subject matter jurisdiction and dismissed the suit without prejudice to allow UnitedHealthcare to pursue its common law fraud claim against NorthStar in state court.

The case is No. 25-7187.

Judge: Kearney, M.

Attorneys: David J. Tolley (Latham & Watkins LLP) for United Healthcare of Pennsylvania, Inc. Brian R. Stimson (Arnall Golden Gregory LLP) for NorthStar Anesthesia of Pennsylvania LLC.

Companies: United Healthcare of Pennsylvania, Inc.; NorthStar Anesthesia of Pennsylvania LLC

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