A federal judge in Texas has dismissed Blue Cross Blue Shield of Texas' lawsuit against HaloMD with prejudice, handing a victory to the health care claims management firm in one of the latest legal battles over the federal No Surprises Act arbitration system.
In an 18-page ruling, U.S. District Judge Robert W. Schroeder III dismissed all seven claims brought by Blue Cross Blue Shield of Texas, a division of Health Care Service Corp., against HaloMD and other defendants in the U.S. District Court for the Eastern District of Texas.
HaloMD is a Texas-based firm that helps doctors, hospitals and other health care providers negotiate with insurers and employer health plan administrators over disputed out-of-network medical claims. The company specializes in managing Independent Dispute Resolution (IDR) filings under the federal No Surprises Act and similar state surprise billing laws.
The lawsuit, filed in August 2025, alleged HaloMD and affiliated providers improperly exploited the federal IDR process to secure inflated out-of-network reimbursements. Blue Cross Blue Shield of Texas asserted claims under the federal Racketeer Influenced and Corrupt Organizations Act, along with state-law fraud claims, arguing the defendants submitted allegedly ineligible arbitration disputes under the No Surprises Act. Judge Schroeder rejected the insurer's attempt to relitigate issues already decided through the IDR process, according to HaloMD's announcement of the ruling.
"The court got this case exactly right," Justin Carangelo, HaloMD's general counsel and chief compliance officer, said in a statement. "The NSA forecloses judicial review of IDR awards. This is the fourth federal court to reject attempts to weaken the NSA in the last six weeks."
Court records show Blue Cross Blue Shield of Texas filed a notice of appeal on May 22, signaling the legal battle over the scope and finality of No Surprises Act arbitration decisions is likely to continue.
The ruling also applied to disputes arising under Texas Senate Bill 1264, the state's own surprise billing law enacted before the federal No Surprises Act took effect.
The case reflects growing tensions surrounding the No Surprises Act arbitration framework, which Congress created to protect patients from unexpected out-of-network bills while establishing a binding dispute resolution process between insurers and providers.
Since the law took effect in 2022, the IDR system has become a major battleground between insurers, employers, providers and the specialized firms that now manage arbitration filings at scale.
Insurers and employer plan sponsors have increasingly argued that the arbitration process is driving up health care costs by encouraging aggressive reimbursement strategies and overwhelming the system with disputes. In separate litigation, Blue Cross Blue Shield Healthcare Plan of Georgia, a subsidiary of Elevance Health, accused HaloMD of attempting to "break" the arbitration system by flooding it with large volumes of allegedly meritless claims.
Elevance said at the time that it was attempting to hold billing companies and out-of-network providers accountable for what it described as abusive practices that increase health care costs for employers and families. HaloMD has pushed back forcefully against those allegations, arguing insurers are attempting to undermine a dispute resolution system they increasingly dislike because providers are winning substantial arbitration awards.
The Texas dismissal also follows a similar recent defeat for Aetna in litigation involving Radiology Partners, another major participant in the No Surprises Act arbitration system. In that case, a federal judge in Florida dismissed Aetna's lawsuit accusing Radiology Partners of manipulating out-of-network billing and flooding the IDR process with arbitration claims to secure higher reimbursements.
Like the HaloMD ruling, the Florida court concluded Aetna could not use the courts to relitigate disputes already decided through the arbitration framework established by the No Surprises Act.
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