What a new federal lawsuit says about the growing strain on No Surprises Act arbitration—and why it matters for payors, providers, and policymakers.
In early January 2026, Anthem Blue Cross entities filed a sweeping federal lawsuit in the Central District of California alleging that a group of Prime Healthcare–owned hospitals systematically abused the No Surprises Act (“NSA”) independent dispute resolution (“IDR”) process to extract millions of dollars in improper payments .
The complaint paints a detailed picture of how a process designed to protect patients from surprise medical bills has, according to Anthem, become a revenue-generating mechanism for certain out-of-network providers—at significant cost to health plans and, ultimately, consumers.
The No Surprises Act: From Consumer Protection to Arbitration Explosion
Congress enacted the No Surprises Act to end the practice of “surprise billing,” particularly in emergency situations where patients have no ability to choose an in-network provider. The law bars balance billing in defined circumstances and shifts payment disputes away from patients and into a structured process between payors and providers.
Central to that framework is the federal IDR process. When a payor and provider cannot agree on payment for a qualified out-of-network service, either party may initiate arbitration after completing a mandatory open negotiation period. An independent dispute resolution entity (“IDRE”) then selects one of the parties’ proposed payment amounts.
But the Anthem complaint argues that the IDR system has become overwhelmed—far beyond what Congress anticipated—and that this imbalance has created opportunities for exploitation. According to federal data cited in the lawsuit, providers now initiate the overwhelming majority of IDR disputes and prevail in roughly 85% of payment determinations, often at multiples of median in-network rates
Anthem’s Core Allegation: Thousands of Knowingly Ineligible Disputes
At the heart of Anthem’s lawsuit is the claim that Prime Healthcare–affiliated hospitals knowingly initiated thousands of IDR proceedings for services that were categorically ineligible for the federal process.
According to the complaint:
- Since at least January 2024, the defendant hospitals initiated more than 9,000 IDR proceedings involving over 8,000 claims and nearly 90,000 individual services
- Anthem alleges that more than 75% of these disputes were plainly ineligible for IDR.
- Despite this, the hospitals allegedly secured over $15 million in additional payments above Anthem’s original reimbursements, while Anthem incurred more than $2 million in administrative and arbitration-related fees
The complaint asserts that this volume was not accidental. Rather, Anthem alleges a deliberate strategy to “flood” the IDR system with ineligible disputes, overwhelming both payor review processes and IDREs tasked with screening eligibility.
Why the Disputes Were Allegedly Ineligible
The complaint details multiple categories of alleged ineligibility, including disputes involving:
- Services governed by California law
Many claims involved fully insured California plans subject to the Knox-Keene Act, a state surprise billing statute that provides its own payment methodology. Under the
- Medicaid or other government coverage
The NSA does not apply to Medicare or Medicaid claims, yet Anthem alleges IDR was initiated for such services anyway.
- Failure to conduct mandatory open negotiations
Providers must initiate and exhaust a 30-business-day open negotiation period before filing for IDR. Anthem alleges many disputes were initiated without any compliant negotiation.
- Untimely filings
Some disputes were allegedly initiated months—or even years—after statutory deadlines had expired.
- In-network services
In at least some instances, Anthem alleges IDR was initiated for services provided under active network contracts, which are outside the scope of the NSA altogether.
In each case, Anthem alleges the hospitals falsely attested—through the federal IDR portal—that the services were “qualified IDR items or services,” a prerequisite to accessing arbitration.
Alleged Misrepresentations and System Design Flaws
A striking feature of the complaint is its description of how the federal IDR portal itself is structured to prevent mistakes. According to Anthem, the portal requires initiating parties to answer eligibility “qualification questions” and affirmatively attest that statutory prerequisites are met—meaning ineligible disputes can only proceed if the provider inputs false or misleading information
Anthem further alleges that, even when it objected to eligibility within the regulatory window and provided documentation showing state law preemption or other defects, disputes frequently proceeded to payment determinations anyway.
The complaint also highlights incentives affecting IDREs: they are paid only when disputes reach a payment determination, not when disputes are dismissed as ineligible, potentially skewing outcomes in high-volume environments
The “Prime Portal” Allegations
Beyond eligibility, Anthem alleges that Prime Healthcare used a proprietary online messaging system—the “Prime Portal”—to deliver open negotiation notices and IDR communications in a manner that was not “readily accessible,” as required by federal regulations.
According to the complaint:
- Notices were sent via secure links accessible only to a single Anthem email address.
- Only one Anthem employee could access the portal at a time.
- Messages auto-deleted after 30 days, potentially before the statutory negotiation period concluded.
- The system allegedly increased the risk of missed deadlines and default awards in favor of providers
Anthem characterizes this design as intentional and incompatible with good-faith participation in the NSA process.
What Anthem Is Seeking
Anthem’s lawsuit asserts claims under federal and state law, including:
- Unfair competition under California law,
- ERISA-based claims for equitable relief,
- Vacatur of allegedly tainted IDR awards, and
- Declaratory and injunctive relief to halt ongoing conduct.
More broadly, the case seeks judicial scrutiny of how the NSA’s IDR process is functioning in practice—and whether systemic incentives have undermined its original purpose.
Why This Case Matters
Although the allegations remain unproven, the lawsuit underscores a growing concern across the healthcare industry: the IDR system has become a major cost driver rather than a backstop of last resort.
If Anthem’s claims gain traction, the case could:
- Prompt closer judicial review of IDR eligibility determinations,
- Encourage payors to challenge IDR awards more aggressively,
- Accelerate regulatory reforms to curb high-volume arbitration filings, and
- Reshape how providers approach out-of-network reimbursement strategy.
At minimum, the complaint serves as a detailed case study in how statutory design, economic incentives, and operational scale can collide—sometimes in ways Congress never intended.
