Payers don’t always play fair. Many physicians have stared at their reimbursement statements wondering how they’re being paid less than what was promised—or not being paid at all for services clearly covered under contract.
So, can you sue a payer if you believe they’ve breached the agreement?
Yes, but litigation is not always the first or best move.
Before reaching for your lawyer’s number, go back to the contract. Review it line by line. Many payer agreements are vague, confusing, or riddled with “gotchas.” Common issues include:
- Ambiguous language about reimbursement rates
- Hidden clauses limiting recourse
- Lack of clarity on how disputes must be handled (e.g., mandatory arbitration)
In many cases, what feels like a breach may fall into a gray area of interpretation.
If you suspect underpayment or wrongful denial, start gathering records: EOBs, billing submissions, correspondence with the payer, and notes on any calls. Patterns matter. One mistake is unfortunate. A trend is potentially actionable.
Before suing, it’s often better to escalate the issue internally. Payers have provider reps or internal appeals processes. File a formal grievance. Push it up the chain. Document the steps you take.
Sometimes these issues get resolved faster—and with less financial cost—through aggressive but professional follow-up.
Also, your patients can be helpful allies. If you saved a patient’s life, they’ll likely believe the $72 you were paid by the carrier undervalued the service you provided. Some of these policies are funded by large employers and the claims are managed by Blue Cross or United Health. The patient may be able to persuade their employer (which, after all, is footing the true bill) to tell the claim adjustor to properly pay what was billed.
Don’t overlook your state’s Department of Insurance or the Department of Managed Health Care. Some states allow you to file complaints that can trigger payer audits or investigations. That can create pressure without having to foot a legal bill. Meaning, you’d be sitting on the sidelines eating popcorn while the matter is adjudicated at the regulatory level.
If you’ve exhausted internal and regulatory options and you still believe the payer is violating the contract, you can sue. But litigation is expensive, slow, and uncertain. You’ll need:
- A clearly documented breach
- Legal analysis to confirm the contract terms support your position
- A good healthcare attorney familiar with payer-provider disputes
- And, most importantly, a good legal theory
Also, be aware that many contracts include mandatory arbitration clauses, meaning your day in court may never come. Arbitration can still result in recovery—but the rules and process differ.
Some doctors have found strength in numbers—banding together with other physicians who have experienced similar issues. In certain situations, this can give rise to a class-action lawsuit or collective arbitration.
Suing a payer is possible, but it should be a deliberate and well-informed decision, not an emotional reaction to a confusing denial code. Understand your rights, review your contracts, and document everything. Then decide if a legal fight is the right move or just a distraction. Don’t forget making your patients allies in any such disputes.
What do you think?
