On July 22, 2025, the United States Court of Appeals for the Second Circuit affirmed the judgment of the United States District Court for the Eastern District of New York, which dismissed an amended complaint brought by Neurological Surgery Practice of Long Island, PLLC (“Neurological Surgery”) that sought to enforce aspects of the No Surprises Act related to the Act’s Independent Dispute Resolution (“IDR”) process. Neurological Surgery brought claims against the United States Department of Health and Human Services, Department of Treasury, Department of Labor, and the Secretaries of those agencies (collectively, “Departments”), alleging that the Departments violated the Administrative Procedure Act (“APA”) and the Due Process Clause of the Fifth Amendment by failing to lawfully implement portions of the No Surprises Act, and that the IDR process was backlogged as a result.
Under the No Surprises Act, which went into effect in January 2022, if an out-of-network healthcare provider and a patient’s healthcare plan are unable to agree on a compensation amount for the services rendered, the parties may engage in a streamlined baseball-style arbitration proceeding called the IDR process to determine the out-of-network rate. Under the statute, the IDR decision is binding on the parties. The No Surprises Act provides that the Departments will implement regulations to operationalize the IDR process.
Since implementation, the IDR process has been backlogged. Neurological Surgery alleged that the delays in resolution of its unpaid claims caused it to suffer substantial harm, placing it “in danger of financial collapse.” Specifically, Neurological Surgery alleged that the Departments violated the APA by failing to ensure a sufficient number of IDR entities were certified to timely decide disputes. Neurological Surgery also alleged that the Departments issued incorrect guidance about New York’s version of the No Surprises Act. Additionally, plaintiffs claimed that the Departments violated the Due Process Clause by failing to “compel healthcare plans and IDR entities to comply with the deadlines set the by [No Surprises] Act.” The Departments moved to dismiss these claims. Around the same time, the Departments paused operation of the IDR portal in order to make changes pursuant to a current Texas district court’s opinion that overturned portions of the Departments’ rulemaking governing the IDR process. Neurological Surgery subsequently challenged this temporary suspension of the IDR process.
Neurological Surgery amended its complaint, dropping the APA challenges. Notwithstanding the Amended Complaint, the district court dismissed all of Neurological Surgery’s claims. The district court held that Neurological Surgery lacked “standing to compel the Departments to enforce the Act’s deadlines for different stages of the IDR process on third parties,” and that since the No Surprises Act does not require the Departments to take specific actions regarding the number of arbitrators available for the IDR process, Neurological Surgery’s claims failed under the APA. The district court also held that Neurological Surgery’s claims regarding access to the IDR portal were moot because the portal has since re-opened.
The Second Circuit generally upheld the district court’s decision. However, the Second Circuit did not agree with the district court dismissing plaintiff’s claims as moot based on the reopening of the IDR portal. Instead, the Second Circuit concluded the plaintiff’s other claims that did not challenge the pause on the IDR portal “remain unaffected by the reopening of the portal,” and chose to dismiss them on other grounds. Because Neurological Surgery failed to include an APA claim in its amended complaint, the Second Circuit only addressed plaintiff’s lack of standing to bring a due process claims, reasoning: “[w]e read Neurological Surgery’s complaint to suggest its injury has been caused by the actions of healthcare plans and arbitrators, not the Departments.”
A copy of the Second Circuit’s opinion is available here.
