Health Law Daily Wrap Up, BILLING AND CODING—N.D. Ill.: Healthcare provider challenge to ERISA plan payment rate under No Surprises Act fails, (Jun 9, 2026)

By Justin Marcus Smith, J.D.

The No Surprises Act included mandatory payment language, but the HHS enforcement mechanism meant there was no clear intent by Congress to create an implied private right of action.

Healthcare providers failed to state a claim for violation of the Employee Retirement Income Security Act (ERISA) based on a disagreement about the rate of the insurer’s payment for services rendered, held the federal district court in Chicago. First, the healthcare providers failed to state a claim for improper denial of benefits under ERISA where the providers were challenging the amount of payment, i.e., the payment rate, not payment itself. A challenge to the payment rate was outside the ERISA “zone of interests.” Second, the court denied the healthcare providers’ count for confirmation of their purported independent dispute resolution (IDR) award pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. § 9, because there was no arbitration agreement. Last, the court analyzed that the No Surprises Act (NSA) did not provide a private right of action to enforce an NSA IDR award. The NSA text did not expressly provide for a private right of action, and the fact that Congress provided a Department of Health and Human Services (HHS) enforcement mechanism, complete with civil money penalties, meant there was no implied right of private action. The court dismissed the federal claims with prejudice. The court also dismissed state law claims for lack of supplemental jurisdiction and complete diversity among the parties, without prejudice (SpecialtyCare Inc. v. Health Care Service Corp., No. 1:24-cv-12902 (N.D. Ill. Jun .2, 2026)).

Background. SpecialtyCare Inc., Remote Neuromonitoring Physicians, and Sentient Physicians (collectively, the healthcare providers) sued Health Care Service Corporation, doing business as Blue Bross Blue Shield of New Mexico (BCBSNM). The healthcare providers alleged BCBS failed to pay $42,312 owed to SpecialtyCare Inc. for healthcare services provided to BCBSNM members, or patients who received their insurance from self-funded ERISA plans that BCBSNM administered, after completion of an IDR process pursuant to the No Surprises Act. Congress passed the No Surprises Act to protect patients from surprise medical bills for out-of-network services. The Act created an IDR process for billing disputes between providers and insurers under 42 U.S.C. § 300gg-111(c).

The first amended complaint contained four counts pertinent to federal law or claims:

1. Petition to confirm arbitration awards under the Federal Arbitration Act (FAA), 9 U.S.C. § 9;

2. Action for nonpayment of IDR determination under the No Surprises Act (NSA), 42 U.S.C. § 300gg-111(c)(6);

3. NSA implied right of action;

4. Improper denial of benefits under ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B).

The healthcare providers alleged that BCBSNM improperly denied the benefit of right to payment under ERISA. BCBSNM moved to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6), for lack of subject matter jurisdiction, insofar as the service providers ostensibly lacked “statutory standing.” The service providers countered that they were “real parties” in interest to their ERISA claim as beneficiaries and therefore had standing.

The court described the core issue as whether the healthcare providers’ claim came within the zone of interests regulated by a specific statute, ERISA. It was not about jurisdictional standing. That meant R. 12(b)(6) pertained, not R. 12(b)(1). The answer to whether dismissal for failure to state a claim was appropriate would turn on whether the healthcare providers were ERISA participants or beneficiaries.

Zone of interests. The court held the healthcare providers’ claim fell outside the ERISA “zone of interests.” The court interpreted that the healthcare providers were not ERISA plan participants. They were beneficiaries because certain participants had assigned their rights under the plan. The assignment included any entitlement to payment for healthcare services.

The difficulty for the healthcare providers was that they alleged they were underpaid, not that BCBSNM denied them payment altogether. The court construed that the right to payment falls within the ERISA “zone of interests,” but the rate of payment depends on terms outside the plans themselves, and involved the NSA IDR process.

The participants did not have a right to dispute the rate of payment. The plan participants were not parties to the IDR process, so they could not have assigned what they did not have. The healthcare providers accordingly failed to state a claim for improper denial of benefits under ERISA. The court dismissed count 4 with prejudice.

FAA inapplicable. The healthcare providers urged the court to confirm the IDR award through FAA § 9, but the court held the FAA did not apply because there was no arbitration agreement.

The healthcare providers countered FAA § 9 did not require an arbitration agreement, but the court disagreed on the basis that the plain language of § 9 requires an “agreement” between the parties to enter judgment on an arbitration award. The IDR process was not the result of an arbitration agreement, it resulted from a statute, the NSA, that authorized the process. Each of the cases the healthcare providers cited involved an arbitration agreement. The fact that the NSA references another part of the FAA, 9 U.S.C. § 10(a), which provides for vacatur of an arbitration award, did not mean that it also incorporated FAA § 9 to confirm an award.

For lack of an arbitration agreement, the court dismissed count 1, the petition to confirm arbitration awards under the FAA § 9.

No private right. As for the allegation that BCBSNM violated the NSA, the court held there was no express private right of action. The NSA was silent on this point, and it barred judicial review of a certified IDR determination except in circumstances not relevant here. The court also disagreed with the healthcare providers’ argument that implying a private right to seek confirmation or enforcement of an IDR award is not “judicial review.” The court reasoned that confirmation of an arbitrator’s award is included within the meaning of judicial review.

Even if it were not judicial review, the language of the NSA did not reflect an intent to create a private remedy necessary to find an implied cause of action. Although the NSA confers a right to provider payment, mandatory payment language alone was not enough to create an implied private right of action. Congress must intend to do that, but Congress expressed its intent by providing an enforcement mechanism under the NSA, such that the Department of Health and Human Services (HHS) is to assess penalties against insurers for failure to comply with the NSA. HHS implementing regulations also described processes for investigating potential violations and assessing civil money penalties. The court found the explicit HHS enforcement mechanism to be the most revealing clue that Congress did not intend to create a private remedy for providers.

The court dismissed counts 2 and 3, action for nonpayment of IDR determination under the No Surprises Act (NSA), and implied right of action, respectively, because there was no implied right of action to bring claims for violations of the NSA.

State law claims. The court dismissed the state law claims for open account, bad faith, and unjust enrichment. With no federal claims remaining, and incomplete diversity among the parties, there was no basis for federal jurisdiction over the state claims.

The case is No. 1:24-cv-12902.

Judge: Shah, M.

Attorneys: Joshua Arters (Polsinelli PC) for SpecialtyCare, Inc. Martin J. Bishop (Crowell & Moring LLP) for Health Care Service Corp.

Companies: SpecialtyCare, Inc.; Health Care Service Corp.

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