June 3, 2025
Statement by Texas Medical Association (TMA) President Jayesh "Jay" Shah, MD, in response to Friday's order by the U.S. Court of Appeals for the 5th Circuit granting TMA’s petition for rehearing en banc in TMA’s third No Surprises Act (NSA) lawsuit, which vacates the circuit panel’s Oct. 30, 2024 opinion and will result in a hearing by the full panel of judges at a later date. 
“TMA appreciates the federal appellate court’s order granting TMA’s petition for rehearing by the full court.
“The provisions TMA challenged – which permitted inclusion of ghost rates and required exclusion of bonus and incentive payments when calculating the qualifying payment amount – unfairly disadvantage physicians in federal arbitrations conducted to resolve out-of-network payment disputes with insurers under the No Surprises Act. TMA looks forward to another opportunity for the court to hear our arguments on these important issues.
“TMA repeatedly urged the federal government under the Biden administration to implement the NSA in a manner that is lawful and preserves patient access and physician practice viability. The appellate order is another step in the right direction.”
NSA Case History
TMA filed this lawsuit challenging the No Surprises Act’s interim final rules, TMA III, in November 2022. The federal agencies involved – the U.S. departments of Health and Human Services, Labor, and the Treasury, along with the Office of Personnel Management – appealed the initial decision by the U.S. District Court for the Eastern District of Texas. That initial decision held in TMA’s favor that the federal rules unlawfully deflated the qualifying payment amount (QPA) that arbitrators consider, among other statutory factors, when resolving disputes over health plans’ payment for certain out-of-network care in federal arbitrations under the No Surprises Act by:
- Including “ghost rates” – or contract rates with physicians and other health professionals who don’t provide the particular service;
- Including rates of physicians who are not in the same or similar specialty as the physicians involved in the dispute;
- Requiring payers to use an amount other than the total maximum payment in calculating a QPA when a contracted rate includes contingent payments, such as risk sharing or incentive-based bonuses; and
- Permitting self-insured plans to essentially opt in to a lower QPA for payment disputes with physicians by using the rates of other self-insured plans.
Early in their briefing on appeal, federal regulators dropped their appeal of two of the four provisions (ultimately only appealing the district court’s ruling prohibiting the inclusion of ghost rates and requiring the inclusion of bonus and incentive payments in QPA calculations). That left intact TMA’s district court win on two of its four challenges in this lawsuit.
The U.S. Court of Appeals for the 5th Circuit then found in favor of the federal agencies on the remaining two issues. This order vacates that decision and sets the case for rehearing by the full 5th Circuit.
TMA’s first NSA rules lawsuit – filed in October 2021, and which TMA won at the federal district court level – alleged that in the interim final rules governing federal arbitrations between insurers and physicians to address out-of-network payment disputes under the No Surprises Act, the agencies unlawfully required arbitrators to “rebuttably presume” the offer closest to the QPA was the appropriate out-of-network rate. The federal agencies did not appeal the district court’s decision. Instead, the agencies adopted new rules that were challenged in TMA II.
TMA filed its second lawsuit in September 2022 challenging the NSA’s August 2022 final rules published by the federal agencies, arguing that the final rules unfairly advantage health insurers by requiring arbitrators to give outsized weight or consideration to the QPA. The district court ruled in TMA’s favor on that case in January 2023. The federal agencies appealed the decision to the U.S. Court of Appeals for the 5th Circuit, which upheld TMA’s favorable district court decision in August 2024.
The district court ruled largely in TMA’s favor in August 2023 in the association’s fourth NSA lawsuit, which TMA filed in January 2023. The federal agencies did not appeal this decision.
TMA is the largest state medical society in the nation, representing more than 59,000 physician and medical student members. It is located in Austin and has 110 component county medical societies around the state. TMA’s key objective since 1853 is to improve the health of all Texans.
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TMA Contacts: Brent Annear (512) 370-1381
Swathi Narayanan (512) 370-1382
Last Updated On
June 03, 2025
Originally Published On
June 03, 2025