Health Law Daily Wrap Up, GENERAL HEALTH CARE NEWS—E.D.N.Y.: Surgery practice’s challenge to No Surprises Act dismissed, (May 30, 2025)

By Wendy Biddle, J.D.

HHS fulfilled its statutory obligation of establishing a method of IDR entity selection.

The district court in Brooklyn, NY dismissed a surgery practice’s challenge to the No Surprises Act’s independent dispute resolution (IDR) entity selection process, holding that while the plaintiff had standing, the agencies fulfilled their statutory duties, and the court lacked authority to order changes to the selection procedures under the Administrative Procedure Act (APA) or mandamus (Neurological Surgery Practice of Long Island, PLLC v. HHS, No. 24-CV-4503 (HG) (E.D.N.Y. May. 23, 2025)).

Background. The plaintiff, Neurological Surgery Practice of Long Island (NSPLI), is a private neurosurgery practice in New York providing out-of-network services to health plan enrollees. Since January 2022, NSPLI services have been governed by the No Surprises Act. The Act prohibits out-of-network providers from balance billing patients; providers must seek payment from health plans. If payment disputes arise, the No Surprises Act establishes an independent dispute resolution (IDR) process using a private arbitrator. The IDR process includes deadlines: 30 days for payment decision, 30-day negotiation, and a three-day window to jointly select an IDR entity. The regulation allows the non-initiating party (usually the payer) to propose an alternative IDR entity late in the selection period. If the initiating party does not respond in time, the payer’s proposed IDR entity is automatically selected.

NSPLI alleged that payers exploit this system by proposing alternatives at the last minute, limiting the plaintiff’s ability to object. NSPLI claimed this resulted in selection of IDR entities favoring payers and causing delayed reimbursements. The plaintiff provided eight examples where payers selected Maximus, an IDR entity allegedly favoring payers and causing delays. HHS has proposed a rule to address these IDR selection issues, but it is not yet final.

NSPLI filed suit alleging HHS failed to lawfully implement the No Surprises Act, violating the Administrative Procedure Act. HHS moved to dismiss for lack of subject matter jurisdiction and failure to state a claim.

Standing. To establish standing, the plaintiff must show that they suffered an injury in fact; that the injury was traceable to the challenged conduct; and that the injury is likely to be redressed by a favorable decision.

Injury in fact. The court determined that the plaintiff had established an injury in fact that was concrete and particularized harm. The plaintiff alleged that HHS’ failure to properly implement the No Surprises Act (NSA) caused two main harms: the IDR entity selection “forced” on NSPLI by payers statistically and historically favors payers, resulting in lower reimbursement values for Plaintiff; and the IDR entity typically selected by payers takes longer than average to come to a determination, causing delays in the plaintiff receiving additional reimbursement if it prevails. NSPLI also provided eight examples where payers made late IDR entity proposals, leading to the selection of Maximus, an IDR entity allegedly favoring payers and causing delays.

The court recognized that even if the plaintiff ultimately prevails in IDR, the delayed payment itself constitutes a concrete injury. The court cited precedent that the deprivation of the time-value of money suffices, at the pleading stage, to establish a concrete injury for standing purposes. The harm is not hypothetical but actually occurred, as the plaintiff was deprived of timely reimbursement.

Traceability. The plaintiff needed to show that its injury is “fairly traceable” to the defendants’ challenged conduct. NSPLI alleged that HHS failed to comply with their obligations under the No Surprises Act by not protecting providers’ ability to object to payers’ proposed IDR entities, which effectively forced acceptance of Payers’ choices.

The court found a causal nexus existed. If HHS had established a process preventing payers from unilaterally selecting slower-resolving IDR entities, NSPLI would have received its reimbursements more promptly, avoiding the financial harm from delayed payments. The court noted that even though payers are the ones allegedly gaming the system, the indirectness of the injury does not defeat traceability, as the injury can still fairly be traced to HHS’ alleged failure to act.

Redressability. The plaintiff requested injunctive relief requiring HHS to take steps to honor their statutory obligations, including requiring payers to propose alternative IDR entities early enough for providers to respond.

The court found that if it were to order HHS to act as NSPLI requested, at least some of the plaintiff’s harms could be remedied. NSPLI did not need to show that a favorable decision would relieve every injury, only that it would at least partially redress the alleged injury.

HHS did not contest this element, and the court concluded that NSPLI’s injury is likely to be redressed by a favorable decision. Therefore the court concluded that NSPLI met the standing requirement.

Ripeness. The court next determined if the issue was ripe for review. The court determined that the claims were ripe for review and addressed both constitutional and prudential ripeness. The court noted that in most cases, when a plaintiff has Article III standing, the claim is constitutionally ripe. Because the court found that the delayed reimbursement due to the IDR selection process was a concrete injury in fact, the court also found that the claim was constitutionally ripe.

As for prudential ripeness, the court stated that NSPLI’s claims would not benefit from any further factual development and that it would be in no better position to adjudicate the issues in the future than it is now, despite HHS’ objections that the rule-making process might resolve the plaintiff’s concerns.

Failure to state a claim. The court emphasized that the APA only empowers courts to compel an agency to perform a ministerial or non-discretionary act, or to take action upon a matter, but not to direct how the agency must act. This means courts cannot rewrite agency rules or dictate the substance of agency decision-making—only require that the agency act where the law demands it.

The No Surprises Act requires the agencies to “provide for a method” for the parties to jointly select an IDR entity within a specific period. The court found that, even if the current process is flawed, the agencies did create such a method through their regulations. General deficiencies or policy disagreements about how the process works do not amount to a failure to perform a discrete, required act under the APA.

NSPLI argued that the agencies were required to create an IDR selection process that prevents any party from unilaterally selecting the IDR entity and sought a court order requiring, for example, that non-initiating parties provide at least 36 hours’ notice for alternative selections. The court found that neither the No Surprises Act nor the APA specifically mandates such procedures, so the court could not order the agencies to adopt them.

The court stressed that it is not the court’s role to rework legislative or executive programs or to impose its own procedural preferences on agencies. The best recourse for the plaintiff is to pursue relief through the administrative rule-making process, not through the courts.

The court noted that the standards for relief under the All-Writs Act (mandamus) are co-extensive with those under the APA. Because the plaintiff’s APA claim failed, so too did its claim for mandamus.

The court dismissed the complaint with prejudice.

The case is No. 24-CV-4503 (HG).

Judge: Gonzalez, H.

Attorneys: Roy W. Breitenbach (Harris Beach Murtha Cullina PLLC) for Neurological Surgery Practice of Long Island, PLLC. Anna Lynn Deffebach, U.S. Department of Justice, for U.S. Department of Health and Human Services, U.S. Department of the Treasury, U.S. Department of Labor, Xavier Becerra, Janet Yellen and Julie A. Su.

Companies: Neurological Surgery Practice of Long Island, PLLC

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