NorthStar Anesthesia Lawsuit: Dismissal and Aetna-Cigna Countersuit

The NorthStar Anesthesia lawsuit that drew national attention was UnitedHealthcare of Pennsylvania Inc. v. NorthStar Anesthesia of Pennsylvania LLC, filed in federal court in December 2025 and dismissed less than five months later. UnitedHealthcare accused NorthStar of fraud for using the No Surprises Act’s arbitration system to collect on claims that were never eligible for it. On April 28, 2026, a federal judge threw the case out, ruling that a state-law fraud dispute did not belong in federal court.¹

What UnitedHealthcare Accused NorthStar Of

UnitedHealthcare of Pennsylvania filed suit on December 19, 2025 in the U.S. District Court for the Eastern District of Pennsylvania (Case No. 2:25-cv-07187).² The core allegation was that NorthStar was abusing the federal Independent Dispute Resolution (IDR) process to collect inflated out-of-network payments on claims that should never have gone to arbitration.³

The case turned on one bill. NorthStar had provided anesthesia services to a Medicaid-eligible patient at St. Mary’s Hospital in Langhorne, Pennsylvania, and billed $6,450 for the work. UnitedHealthcare paid $1,440.72 at the Medicaid-mandated rate. NorthStar then took the underpayment to federal arbitration, and the arbitrator awarded $7,075, including a $625 contingency fee for HaloMD, the third-party intermediary that filed the dispute on NorthStar’s behalf.⁴

The problem was that the No Surprises Act does not apply to Medicaid patients at all. NorthStar conceded that point in court and acknowledged the dispute “should not have been filed.”⁴ UnitedHealthcare argued that submissions like this one were not isolated. It pointed to an abnormally high volume of NorthStar arbitration filings and asked the court to declare the submissions unlawful, invalidate existing awards, and issue an injunction barring similar filings going forward. The insurer’s legal theory pushed hard: it argued that even an inadvertent submission of an ineligible claim amounted to fraud.⁵

NorthStar’s Explanation: A Drop-Down Menu Error

NorthStar moved to dismiss on March 6, 2026, and blamed the filing on its billing vendor, Arietis Health.² According to NorthStar’s motion, an Arietis employee selected the wrong plan from a drop-down menu, choosing a UnitedHealthcare commercial plan instead of the correct managed Medicaid plan. That single mistake pushed the claim into the IDR pipeline, where HaloMD filed it and won an award.⁶

NorthStar said Arietis issued a written warning to the responsible employee, retrained them, and updated its systems to flag Medicaid and Medicare Advantage plans before disputes are forwarded to HaloMD.⁶

The American Society of Anesthesiologists filed an amicus brief supporting NorthStar on March 19, 2026. The ASA argued that IDR eligibility is a legal question that turns on incomplete data insurers themselves provide, and that honest errors cannot support a common-law fraud claim. It also noted that CMS already has an administrative process for reopening IDR decisions when eligibility mistakes come to light, and warned that letting insurers bypass that process with fraud suits would “destabilize the IDR system and threaten patient access to care.”⁷

Why the Judge Dismissed the Case

District Judge Mark A. Kearney dismissed the lawsuit for lack of subject matter jurisdiction. In plain terms, he ruled that UnitedHealthcare’s claim was a state-law fraud claim, and nothing in it required a federal court to answer a substantial federal question about the No Surprises Act.¹

Judge Kearney applied the Grable/Gunn test, which federal courts use to decide when a state-law claim can nonetheless be heard in federal court because it turns on federal law. The claim failed on two of the test’s prongs. Because NorthStar had already conceded the patient was ineligible for the IDR process, the court did not have to interpret the No Surprises Act to resolve the fraud question, so no federal issue was “necessarily raised,” and no federal issue in the case was “substantial.”¹

The tone of the opinion was blunt. Kearney wrote that UnitedHealthcare “misunderstands the limited nature of our subject matter jurisdiction,” and that the court had “no basis for subject matter jurisdiction to resolve an insurer’s unhappiness with a Congressional mandate as some form of policy fiat.”¹

Two things follow from the ruling. First, because it was a jurisdictional dismissal, the court never reached NorthStar’s other arguments for dismissal, and never ruled on whether the conduct actually was fraud. Second, the dismissal was without prejudice. That means UnitedHealthcare could refile the claim in state court, and Kearney explicitly noted the insurer could challenge its roughly $5,000 reimbursement obligation in an appropriate state forum. As of June 2026, UnitedHealthcare had not appealed or refiled.²

Where This Case Fits in the Broader Insurer Fight

The NorthStar suit was one of at least nine similar cases Georgetown Law researchers were tracking by March 2026, part of a coordinated effort by major insurers to challenge how provider groups and billing intermediaries use the IDR system.⁸

The insurers’ frustration has numbers behind it. Federal officials had originally projected around 17,000 IDR cases a year. Instead, 4.8 million disputes had been filed through the end of 2025, with 2.6 million in 2025 alone. In the first half of 2025, the top 10 initiating parties accounted for nearly 70% of all disputes, with HaloMD, TeamHealth, and SCP Health responsible for about 44%. Providers initiated 99.9% of disputes and won 88% of them.⁹

Anthem Blue Cross ran a parallel play against HaloMD in the Central District of California, alleging RICO violations and fraudulent submission of ineligible disputes. A judge dismissed that case too, and Anthem has appealed.¹⁰¹¹ A separate UnitedHealthcare suit against Concord Company of Tennessee, built on similar allegations, remained in briefing as of late May 2026.¹² The early pattern: federal judges have been reluctant to entertain insurer fraud suits that seek to reopen the outcomes of a federal arbitration system Congress created.

On May 28, 2026, the Trump administration finalized a rule (CMS-9897) that tackled several of the issues driving the litigation. The rule cut the per-party administrative fee from $115 to $15 per dispute, capped batching at 50 items per filing, and required insurers to use standardized claim codes so providers can tell earlier whether a claim qualifies for arbitration. It also began a phased rollout of a new IDR Gateway portal. Insurers acknowledged the rule as a step forward but said it did not add an appeals process or specific penalties for entities that repeatedly submit ineligible claims.¹³¹⁴

NorthStar’s Countersuit Against Aetna and Cigna

The insurer fraud case was not the only NorthStar-related lawsuit filed in December 2025. In the same month, a group of 33 NorthStar anesthesia providers sued Aetna and Cigna in the U.S. District Court for the District of Connecticut, alleging the insurers had failed to pay nearly 1,500 claims totaling roughly $4.1 million after arbitration decisions went in the providers’ favor. The providers said the insurers either did not pay at all or paid late without the interest required by the No Surprises Act’s 30-day payment window. Cigna was allegedly on the hook for more than $2.3 million and Aetna for more than $1.7 million.¹⁵

Taken together, the two December filings capture the pincer that the No Surprises Act arbitration system has become: insurers accusing provider groups of gaming eligibility rules, and providers accusing insurers of ignoring arbitration awards they lose. The federal court in Pennsylvania answered one narrow question in that fight, and left the rest for another day and another forum.

1
Justia. UnitedHealthcare of Pennsylvania Inc. v. NorthStar Anesthesia of Pennsylvania LLC, Memorandum
2
CourtListener. UnitedHealthcare of Pennsylvania Inc. v. NorthStar Anesthesia of Pennsylvania LLC
3
Georgetown Law Litigation Tracker. UnitedHealthcare of Pennsylvania Inc. v. NorthStar Anesthesia of Pennsylvania LLC
4
Casemine. UnitedHealthcare of Pennsylvania Inc. v. NorthStar Anesthesia of Pennsylvania LLC
5
American Society of Anesthesiologists. ASA Amicus Brief Update: United Lawsuit Against Anesthesiology Group Dismissed
6
Georgetown Law Litigation Tracker. Defendants’ Motion to Dismiss
7
American Society of Anesthesiologists. National Health Insurers vs. Anesthesiology Practices: ASA Weighs in on No Surprises Act Dispute
8
Georgetown University Center on Health Insurance Reforms. The No Surprises Act IDR Process: An Early Look at 2025 Data
9
Healthcare Dive. No Surprises Disputes IDR 2025 CMS
10
STAT News. Halo MD No Surprises Act Lawsuit Blue Cross California
11
Georgetown Law Litigation Tracker. Anthem Blue Cross Life and Health Insurance Company et al. v. HaloMD LLC et al.
12
Georgetown Law Litigation Tracker. United Healthcare Services Inc. v. Concord Company of Tennessee PLLC
13
CMS. Federal Rule Takes Aim at Health Care Bureaucracy Reducing Dispute Fees Boosting Transparency
14
Healthcare Dive. Surprise Billing IDR Final Rule Insurers Lash Out
15
Becker’s Payer Issues. 33 NorthStar Anesthesia Providers Sue Aetna, Cigna for $4.1M in Underpayments