Anthem Blue Cross is suing 11 Prime Healthcare hospitals in California, accusing them of defrauding the insurer by “knowingly flooding” the No Surprises Act’s independent dispute resolution process with thousands of claims they knew were ineligible for arbitration.
The complaint, filed Jan. 5 in a California federal court, alleges that starting in January 2024, the Prime hospitals submitted more than 6,000 ineligible disputes and extracted more than $15 million in improper IDR awards. The typical award was more than six times what a contracted provider would receive from Anthem for the same service, according to the filing.
Anthem claims more than 75% of disputes submitted by Ontario, Calif.-based Prime were ineligible for the IDR process. Since early 2024, the hospitals initiated more than 9,000 IDR proceedings involving more than 8,000 distinct claims and 89,000 separate services against Anthem, the complaint says. Anthem also says it paid more than $2 million in IDR-related fees as a result of the alleged scheme.
Anthem is also alleging that the hospitals knowingly submitted false attestations claiming eligibility for disputes involving services covered by California’s Knox-Keene Act (which preempts the federal IDR process), services not covered by the patient’s health plan, disputes where the hospitals failed to start required open negotiations, and services provided while hospitals were in-network with Anthem.
“Rather than engaging with the IDR process as a forum for resolving good faith payment disputes over ‘qualified IDR items or services,’ defendants use it as an extractive tool to gouge the healthcare system,” the complaint states.
The lawsuit also takes aim at the hospitals’ communication practices, alleging they route all IDR-related notices through a restrictive online portal that only allows one Anthem employee to access it at a time. Messages automatically delete after 30 days, which Anthem says makes it “all but impossible” to effectively respond to the volume of disputes.
Prime Healthcare called the lawsuit ‘meritless’ in a statement shared with Becker’s, adding that the health system “does not balance bill any patients and acted in compliance with the Act and its independent dispute resolution process, which Congress established to promote equity and transparency.”
“Anthem’s lawsuit ignores the reality that certain large health plans, including Anthem, amass record profits by underpaying providers, delaying or denying care, and burdening patients with administrative barriers, practices that have eroded the public trust,” the spokesperson said.
Anthem is seeking monetary damages, a cancellation of the IDR awards to Prime, and an injunction to prevent the hospitals from continuing to submit what it characterizes as fraudulent claims.
“We are holding billing companies and out-of-network providers accountable for what we believe are fraudulent and abusive practices that result in excessive healthcare costs, burden consumers, and undermine the integrity of our healthcare system,” an Anthem spokesperson told Becker’s, noting that the company supports the intent of the No Surprises Act. “This legal action is another powerful step in our efforts to shield consumers from these harmful practices and restore trust.”
The lawsuit is the latest in a wave of legal battles between payers and providers over outcomes of the IDR process.
Elevance Health, parent of Anthem, sued three Georgia provider groups in May, accusing them of submitting thousands of ineligible disputes. A recent survey from AHIP and BCBSA found that health plans identified 39% of provider disputes as ineligible for arbitration.
Health systems, meanwhile, have pushed back on what they characterize as payer underpayment and resistance to arbitration outcomes, where providers are winning about 80% of cases.
