Skip to main content

The ERISA Edit: Florida Surprise Billing Law Subject to Jury's Interpretation

Employee Benefits Alert

Eleventh Circuit Says Jury Must Decide "Usual and Customary" Emergency Services Rate

The U.S. Court of Appeals for the Eleventh Circuit handed eight Florida hospitals a win when it vacated summary judgment in the hospitals' surprise-billing lawsuit challenging the out-of-network emergency services payment rates of Cigna Health and Life Insurance Company (Cigna). North Shore Med. Ctr., Inc. v. Cigna Health & Life Ins. Co., No. 22-10514 (11th Cir., May 25, 2023). Florida's surprise billing law, Fla. Stat. §§ 627.64194 and 641.513(5)(b), requires insurers to pay the "usual and customary provider charges for similar services in the community where the services were provided" for out-of-network emergency care. The hospitals, located in Palm Beach and Miami-Dade counties, asserted that Cigna underpaid them for out-of-network emergency services, when their own data showed they normally receive five times Cigna's allowance. Cigna said that the relevant "community" for purposes of determining the "usual and customary" rate under the Florida law extended beyond the plaintiff hospitals and included other providers in the two counties, making the hospitals' data irrelevant. 

The district court agreed with Cigna, but in a surprising move, the Eleventh Circuit remanded the case with instructions that a jury must decide the "community" rates. The appellate panel determined that even if the relevant "community" extended beyond the eight plaintiff hospitals, "their receipts alone are enough to create a genuine factual dispute about what the 'community rates' are."

Contrary to Cigna's contention, we think that the plaintiff hospitals' rates alone could be enough to support a factfinder's reasonable determination of the "usual and customary" rates in the Palm Beach/Miami-Dade "community." Cigna insists—and we'll accept for present purposes—that there are "over a dozen other providers of ER services" in the two-county area. But we can see no reason why, as a matter of law, eight good data points—out of, say, 20, or even 30—can't support a reasonable inference about the whole set.

The court also stated that Cigna will have an opportunity at trial to challenge the hospitals' estimate by showing that other providers in the "community" charge less than the plaintiff hospitals. In a concurring opinion, one member of the three-judge panel emphasized that the opinion of Cigna's expert — that Cigna underpaid the hospitals under one of the calculations she used to determine the appropriate rate — served as an alternative basis for vacating summary judgment.

The meaning of a statutory term like "community" is traditionally a question of interpretation left to the courts. The Eleventh Circuit considered several dictionary definitions of the word "community" but found they failed to prescribe an area of particular size, scope, or makeup. The holding, which leaves juries to interpret the term on a case-by-case basis, adds confusion to how issuers are to determine the out-of-network rates under the state law, but also provides leeway for doing so. 

IRS Issues Guidance on SECURE 2.0 Expansion of EPCRS 

The Internal Revenue Service (IRS) has issued Notice 2023-43 providing interim guidance on section 305 of the SECURE 2.0 Act of 2022. Section 305 expands the Self-Correction Program under the Employee Plans Compliance Resolution System (EPCRS) and requires that Revenue Procedure (Rev. Proc.) 2021-30 be revised to consider the provisions of section 305 no later than two years after the date of enactment of SECURE 2.0 (December 29, 2022). The notice is intended to assist taxpayers by providing interim guidance in advance of the update to Rev. Proc. 2021-30.

Among other things, the interim guidance addresses:

  • Which eligible inadvertent failures can be self-corrected in accordance with Rev. Proc. 2021-30 before it is updated.
  • Which eligible inadvertent failures cannot be self-corrected before Rev. Proc. 2021-30 is updated.
  • Which provisions of Rev. Proc. 2021-30 concerning self-correction of eligible inadvertent failures no longer apply.
  • When an eligible inadvertent failure is deemed to be identified by the Secretary, rendering it ineligible for self-correction.
  • Factors to be used in determining whether a plan sponsor has demonstrated a specific commitment to implement a self-correction.
  • Self-correction of eligible inadvertent failures that occurred prior to December 29, 2022.

The Department of the Treasury and IRS invite comments on the guidance on or before August 23, 2023.

In the News

Joanne Roskey was quoted in Law360 on what would be helpful from DOL as it prepares for new mental health parity guidance, saying an example of a compliant comparative analysis would be "a welcome form of guidance." 

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.