The Medicare Advantage, ACA and No Surprises Act lawsuits to watch

Modern Healthcare – Monday, August 18, 2025
By Bridget Early

Legal challenges to Medicare Advantage marketing, health insurance exchange regulations and the No Surprises Act are working their way through the courts with major implications for the healthcare sector.

Here are some key cases that could change how health insurance companies sell Medicare plans, how insurers and providers resolve out-of-network billing disputes, how consumers sign up for health insurance exchange plans, and how preventive healthcare is covered.

Medicare Advantage marketing

In 2021, a whistleblower sued health insurers and online brokerages alleging they engaged in an illegal scheme to steer customers to certain Medicare Advantage plans. In May, the Justice Department joined the case before the U.S. District Court for the District of Massachusetts.

The plaintiffs claim that CVS Health subsidiary Aetna, Elevance Health and Humana paid hundreds of millions of dollars in kickbacks between 2016 and 2021 to eHealth, GoHealth and SelectQuote in violation of the False Claims Act of 1863.

“We are committed to rooting out illegal practices by Medicare Advantage insurers and insurance brokers that undermine the interests of federal healthcare programs and the patients they serve,” then-Deputy Assistant Attorney General Michael Granston said in a news release May 1.

Insurers and brokers repudiate the accusations. “EHealth continues to firmly deny the allegations in the government’s False Claims Act lawsuit,” the company said in a statement Friday. “We intend to vigorously challenge all claims in court,” the company said.

The Justice Department’s involvement is another signal that President Donald Trump’s administration is closely scrutinizing Medicare Advantage, said Andrew Twinamatsiko, a director of the Center for Health Policy and the Law at the Georgetown University Law Center’s O’Neill Institute for National and Global Health Law.

Exchange enrollment

The U.S. District Court for the District of Massachusetts is also hearing a lawsuit initiated by 20 Democratic state attorneys general and Pennsylvania Gov. Josh Shapiro (D) in July, which seeks to block a regulation that stiffens eligibility and enrollment requirements for health insurance exchange plans and subsidies.

The plaintiffs seek an injunction to suspend the rule, which takes effect next Monday, while the lawsuit proceeds. Up to 1.8 million people could lose coverage because of the policy next year, the Centers for Medicare and Medicaid Services forecasted.

The Democratic state officials base their arguments on procedural matters. According to the plaintiffs, CMS didn’t allow sufficient time for public comment and lacks the authority to carry out elements of the rule, such as shortening the open enrollment period, mandating a minimum $5 monthly premium for people automatically reenrolled into fully subsidized plans and imposing more stringent income verification requirements.

The Justice Department counters that the state officials have neither the justification for a preliminary injunction, nor the grounds to succeed in their case.

“[The Administrative Procedures Act] is not a vehicle through which plaintiffs can challenge policies and regulations merely because they disagree with them,” the government wrote in a legal brief Aug. 7.

This rule will impose significant barriers to health coverage, according to the Center on Budget and Policy Priorities, a left-leaning think tank.

“While the details are technical, the result is not complicated: The changes will raise the annual cost of health coverage by hundreds of dollars for most of the 23 million people who get coverage through the [Affordable Care Act of 2010] marketplace,” the center’s Gideon Lukens and Elizabeth Zhang wrote Aug. 1.

No Surprises Act arbitrations

The Texas Medical Association’s challenge to regulations implementing the No Surprises Act independent dispute resolution process could give providers an edge if it succeeds.

Under the No Surprises Act, out-of-network providers and insurers bring billing disagreements before third-party mediators with the authority to decide how much providers are reimbursed.

The CMS regulation detailing how this process works instructs arbitrators to base their rulings on factors including median in-network rates, known as qualified payment amounts.

In 2022, the Texas Medical Association alleged the Health and Human Services, Labor and Treasury departments overstepped their authority by altering the methodology used to calculate qualified payment amounts.

The U.S. District Court for the Eastern District of Texas ruled for the physician society in 2023 and the government appealed to the U.S. Court of Appeals for the 5th Circuit last year.

A 5th Circuit panel reversed parts of the lower court decision last October. CMS followed in January with a guidance document saying it would require a “good faith” approach to those payment negotiations.

That offered clarity to all parties, but it was short-lived because the full 5th Circuit court agreed to rehear the case in May, said Katie Keith, a director of Georgetown’s Center for Health Policy and the Law.

“We’re back into a holding pattern,” Keith said.

Preventive care coverage

Christian employers challenged the authority of semi-independent HHS committees to set policy on what preventive care must be covered without cost-sharing under the ACA. The Supreme Court decided part of this case in June, but coverage of services such as vaccination, contraception, and pre-exposure prophylaxis, or PrEP, to prevent HIV infection is still tied up in litigation.

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