Full Fifth Circuit Hears Fight Over Surprise Medical Billing Law

The full Fifth Circuit confronted the limits of agency rulemaking in arguments over a Biden administration rule for a surprise medical billing law.

The en banc appellate court in New Orleans heard an appeal Wednesday on whether federal agencies exceeded their authorities in a rule on the calculation of a key figure under the No Surprises Act. That law is meant to protect patients from excessive medical bills.

The billing law mandates that medical providers and health insurers settle out-of-network disputes through arbitration. The measure is aimed at protecting patients from medical bills stemming from out-of-network emergency care and from out-of-network clinicians’ care received at in-network facilities.

Justice Department attorney Kevin Soter told the appellate court’s 17 active judges that the statute left it up to federal agencies—the Department of Labor, the Department of Health and Human Services, and the Office of Personnel Management—to come up with details on the arbitration process for surprise medical bill disputes.

Judges Leslie Southwick and Catharina Haynes asked about impact of the US Supreme Court’s 2024 ruling in Loper Bright Enterprises v. Raimondo, which eliminated deference to agencies in interpreting vague laws. Soter said that through the statute, “Congress did clearly put this in the hands of the departments.”

A three-judge panel in October issueda mixed ruling that upheld the Biden administration’s method for calculating the median in-network rate, or qualifying payment amount, which plays a key role in billing arbitration.

US District Judge Jeremy Kernodle of the Eastern District of Texas in 2023 found the administration had gone beyond the limits of the statute in creating the methodology for the QPA and vacated that section of the rule, among others.

The Justice Department in its briefs also asked the appeals court to “provide clarity on these important and recurring issues” on remedies under the Administrative and Procedure Act, the law that challengers are using the challenge the rule.

Chief Judge Jennifer Walker Elrod noted that the en banc court in 2023 upheld the use of universal vacatur as an appropriate remedy for cases brought under the APA.

When asked which remedy DOJ is seeking, Soter didn’t have a direct answer. He said the department was asking the appeals court to “ensure that district courts are asking the right questions” in determining the remedy.

Jillian Sheridan Stonecipher, a Sidley Austin partner representing the Texas Medical Association and other challengers, told the court that the rule violates several aspects of the No Surprises Act.

She said if the appeals court were to remand the case to the trial judge without vacating the challenged aspects of the rule, the departments would have “no incentive” to craft new regulations that are in line with the statute.

Max Straus with Susman Godfrey also argued on behalf of air ambulance plaintiffs led by LifeNet, Inc. They’re challenging the departments’ exclusion of “single-case agreements,” or frequently used deals between air ambulance services and insurers on rates, from the calculation of the QPA.

The case is Texas Medical Association v. HHS, 5th Cir. en banc, No. 23-40605, oral argument 9/24/25