LI surgeon's lawsuit seeks to overturn 'No Surprises' protections on medical bills

A Long Island doctor is set to argue in federal court next month that a federal law shielding patients from surprise emergency medical bills should be overturned.

Dr. Daniel Haller, a surgeon with Long Island Surgical PLLC in Rockville Centre who treats patients at three Nassau County hospitals, argues in his lawsuit that elements of the No Surprises Act violate the U.S. Constitution. Judge Ann M. Donnelly is scheduled to hold a hearing on the case in Central Islip on June 7.

The law, which took effect this year, prohibits hospitals and other providers from billing insured patients for out-of-network services at higher than in-network rates under certain circumstances — for instance, in an emergency, or if a patient scheduled a procedure at an in-network facility but received care from an out-of-network doctor.

In his 18-page complaint, Haller wrote that the law “takes the physicians’ property without just compensation by prohibiting physicians from recovering the balance of the fair value of their services from their patients.” Haller and Long Island Surgical filed the lawsuit against the federal Department of Health and Human Services and other agencies and officials on Dec. 31, the day before the law took effect.

Federal officials argued last month in a 50-page response that the law is constitutional and the lawsuit should be dismissed. Before the No Surprises Act, patients faced “staggering, and sometimes ruinous" charges for out-of-network care, such as a bill for $101,000 sent to a spinal surgery patient, even though the patient had confirmed that her surgeon was in-network, federal officials wrote.

Haller and his attorney, Edward A. Smith of Abrams Fensterman, LLP in White Plains, did not respond to requests for comment. 

Consumer advocates say Haller's lawsuit is targeting a measure that protects patients from potentially devastating medical bills. The lawsuit seeks “to dismantle the consumer protections against surprise medical bills that Congress put in place … on a very popular, broadly bipartisan basis," said Katie Keith, director of the Health Policy and the Law Initiative at Georgetown University Law Center’s O’Neill Institute for National and Global Health Law. 

And the federal law protects everyone who pays for insurance, since it sets limits on the high out-of-network rates that drive up the cost of health insurance premiums for everyone, Keith said.

In the lawsuit, Haller wrote that he and other surgeons at Long Island Surgical perform nearly 2,700 emergency consultations and surgical procedures on patients admitted to hospital emergency rooms every year, and about 78% of those patients are enrolled in plans that are out-of-network for the practice. A website in the practice's name, lisurgical.com, lists Haller and four other doctors.

State vs. federal law

The No Surprises Act received bipartisan support and was signed by President Donald Trump in 2020.

A state law that took effect in 2015 also prohibits providers from sending "surprise" bills to insured patients for out-of-network care.  Under both federal and state law, insured patients are protected from paying fees that exceed their in-network rates even if they receive out-of-network care in an emergency, or if they receive care from out-of-network providers at an in-network facility. If providers charge out-of-network rates that exceed the in-network rates, the providers need to seek the difference from insurers, not patients. And if a dispute over payment arises, the provider and insurer go to arbitration.

Haller contends in his lawsuit that the federal law imposes restrictions that are tougher than those in the New York law and unfair to providers.

In an emergency, when the patient “has not agreed with the physician on the physician’s fee,” under New York State law, the doctor is entitled “to be paid for the services he or she has rendered on the basis of an implied contract with the patient,” Haller argued. 

The amount due under New York law is based on the “reasonable value” of the services, based on an analysis of providers' "usual and customary charges," he wrote. The state determines those values based on regional data.

InBy contrast, Haller argued, the federal law “deprives the physician of this right.” In arbitrated payment disputes under the federal law, he wrote, arbiters must consider insurers' in-network rates, and are not allowed to consider "usual and customary charges," he wrote.

Such "customary" charges are typically higher than negotiated in-network rates, health policy analysts said.

Two months after Haller filed his lawsuit, in a separate case, a federal judge in Texas struck down those restrictions on what arbiters can consider, writing that they place a "thumb on the scale" in favor of insurers' in-network rates. The federal government is expected to issue a new set of arbitration rules this summer. 

Dispute over how to set rates

Wendy Darwell, president and CEO of the Hauppauge-based Suburban Hospital Alliance of New York State, which represents hospitals on Long Island and in the Hudson Valley, declined to comment on Haller’s lawsuit.  

Darwell said hospitals have “enthusiastically supported” state and federal laws that protect insured patients from unexpected out-of-network medical bills, but hospitals oppose the arbitration rules that she said placed too much emphasis on insurers’ in-network rates.

In an emergency, she said, “consumers should not have to think about anything else besides getting the care that they urgently need, as quickly as they can get it."

However, Darwell said, many hospitals and doctors oppose the arbitration rules that she said put hospitals and other medical providers at a disadvantage in payment disputes with insurers. The Texas judge's ruling "invalidated" those rules, and it "seems likely" that the federal government's final rules for arbiters will allow them to consider a range of factors, Darwell said.

Some health policy analysts and consumer advocates continue to argue in favor of measures that would require arbiters to use in-network rates as a benchmark. 

Haller chairs the department of surgery at Mercy Hospital in Rockville Centre, and he also has privileges at St. Joseph Hospital in Bethpage, but he is not a Catholic Health employee, according to the Rockville Centre-based Catholic Health system, which includes both hospitals. In addition, he has privileges at Mount Sinai South Nassau in Oceanside, part of the Manhattan-based Mount Sinai Health System, but he is not an employee there either, according to Mount Sinai South Nassau.

Both Catholic Health and Mount Sinai South Nassau declined to comment on his lawsuit. 

By Maura McDermott

maura.mcdermott@newsday.commauramcdermott

Maura McDermott covers education. Since joining Newsday in 2012, she also has worked on the investigations team and covered real estate and the business of health care.