Health Law Daily Wrap Up, GENERAL HEALTH CARE NEWS—2d Cir.: Challenge to agencies’ lack of action under No Surprises Act fails , (Jul 25, 2025)

By Sherri M. Schroeder, J.D.

A health care provider claimed that a backlog of disputes awaiting resolution caused substantial harm due to the failure of those agencies charged with its implementation.

Substantially agreeing with the conclusions of a New York district court, the U.S. Court of Appeals for the Second Circuit has affirmed the dismissal of the claims made by the Neurological Surgery Practice of Long Island, PLLC (NSP). NSP had filed action under the Administrative Procedure Act (APA) and the Due Process Clause claiming that HHS, the Department of the Treasury, the Department of Labor, and the Secretaries of those agencies (“the agencies”) caused NSP to suffer substantial harm in the form of unpaid or delayed reimbursement from health care plans due to a backlog of disputes awaiting resolution caused by the agencies’ failure to lawfully implement the No Suprises Act (the Act). Although the appeals court disagreed with the district court’s conclusion that the reopening of the portal used by providers to initiate independent dispute resolution (IDR) mooted NSP’s remaining claims, it agreed that NSP lacked standing to compel the agencies to enforce the Act’s deadlines for reimbursement on third parties, agreed that NSP’s challenge to the agencies’ failure to certify a sufficient number of arbitrators was foreclosed by the APA because the Act does not prescribe discrete actions that the agencies must take to achieve that goal, and agreed that NSP’s challenge to the agencies’ failure to issue guidance on New York’s surprise billing law failed to state a claim under the APA because it failed to allege that doing so is a discrete agency action that the agencies were required to take (Neurological Surgery Practice of Long Island v. HHS, No. 24-1884 (2d Cir. July 22, 2025)).

No Surprise Act. NSP is a health care provider that provides out-of-network medical services governed by the No Surprises Act, which went into effect in January 2022. The Act mandates that out-of-network health care providers may not bill patients for certain services or items directly; instead, they must seek compensation from the patient’s health care plan. If the provider and the plan cannot agree on appropriate compensation, the Act provides for an IDR process in which a certified private arbitrator selects between the submitted compensation proposals. The agencies are charged with implementing and administering the Act.

NSP alleges that since the Act was implemented, a backlog of disputes awaiting resolution has accumulated, causing NSP to suffer substantial harm in the form of unpaid or delayed reimbursement from health care plans. NSP alleges these delays are the result of the agencies’ failure to lawfully implement the Act, in violation of the APA and the Due Process Clause, specifically alleging that the agencies failed to certify a sufficient number of IDR entities and failed to compel plans and IDR entities to follow the Act’s set deadlines.

Moot? The district court concluded that NSP’s claims were rendered moot by the reopening of the portal used by providers to initiate IDR proceedings, which had been paused after a Texas district court vacated portions of the regulations governing the IDR process. The appeals court concluded that only the challenge to the closure of the portal was moot because any order requiring the agencies to restart the already operational IDR process would be pointless. The court also found no abuse of discretion in the district court’s determination that another pause is likely to recur. However, the appeals court found the district court’s approach in dismissing all of NSP’s claims as moot based on the reopening of the IDR portal to be an incorrect approach because the other claims were unaffected by the port reopening.

Standing. The appeals court agreed with the district court that NSP lacked standing to compel the agencies to enforce the Act’s deadlines for different stages of the IDR process on third parties. Noting that NSP’s APA challenge to the agencies’ nonenforcement of deadlines was forfeited by the failure to include it in NSP’s amended complaint, the appeals court concluded NSP’s due process claim failed to carry its burden of alleging causation and redressability because the amended complaint suggested NSP’s injury was caused by the health care plans and IDR entities, not the agencies. In the eyes of the court, NSP’s speculative inference that these third parties would follow deadlines if the agencies enforced them failed to allege any facts the agencies would. Furthermore, because NSP cannot show its injury was caused by the agencies’ inaction, it also cannot show that the relief it seeks would redress its injury.

Arbitrators. The appeals court also agreed with the district court that NSP’s claim that the agencies failed to certify a sufficient number of arbitrators was foreclosed by the APA because the Act does not identify a discrete action that the agencies must take to comply with that mandate. Per the court, APA claims are limited to discrete agency actions that agencies are required to take. Here, the court found that the Act does not require a discrete action from the agencies. Rather, the agencies are required to “establish a process to certify” a “sufficient number” of IDR entities. Per the court, it is undisputed that the agencies have done so, and NSP did not identify a discrete action that the agencies failed to take. The court notes that the Act does not provide that the agencies must take additional discrete measures, such as monitoring the output of the certification process to ensure a sufficient number of entities are certified.

Guidance. Finally, the appeals court also agreed that NSP’s claim that the agencies failed to provide guidance on New York’s surprise billing law is also foreclosed by the APA for failure to state a claim because the Act did not identify any discrete action that the agencies must take.

The case is No. 24-1884.

Judge: Nardini, W.

Attorneys: Roy W. Breitenbach (Harris Beach Murtha Cullina PLLC) for Neurological Surgery Practice of Long Island, PLLC. Sarah Clark Griffin, U.S. Department of Justice, for U.S. Department of Health and Human Services, U.S. Department of the Treasury and U.S. Department of Labor.

Companies: Neurological Surgery Practice of Long Island, PLLC; U.S. Department of Health and Human Services; U.S. Department of the Treasury; U.S. Department of Labor

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