In a strategically significant victory for payors in – and potentially beyond – Tennessee, the Sixth Circuit on July 1, 2025, affirmed the dismissal of an unjust enrichment lawsuit relating to a health insurer's alleged underpayment for hospital services, finding that neither the Affordable Care Act (ACA) nor state statutes require insurers to pay for the "full value" of out-of-network (OON) emergency care. The decision could mark a significant pivot in payors' favor, as it suggests that an insurer cannot be forced via an unjust enrichment theory to pay more for medical care than is required by the terms of its contracts with its insureds.
Originally filed in the Western District of Tennessee at Memphis in 2021, the case centered on a complaint put forth by two OON hospitals who sought payment of their full billed charges for emergency services from a national insurer, asserting Tennessee common law theories of quantum meruit and unjust enrichment. The plaintiffs argued that, because the federal Emergency Medical Treatment and Labor Act (EMTALA) requires the provision and coverage of emergency services for all patients regardless of their ability to pay, a quasi-contractual relationship must exist between the hospitals and the insurer. They contended that even without an express contract, this relationship obligated the insurer to pay the "full" or "reasonable" value of the emergency services provided to its insureds.
Such arguments are not uncommon, and courts sometimes permit medical providers to assert quasi-contract claims on the premise that an insurer can be held liable to pay a "reasonable value" for services delivered to insureds even if its contract with the insured limits the insurer's liability to an amount less than what the provider alleges is reasonable. The Sixth Circuit, however, approached this premise with skepticism, questioning whether a 2002 decision referenced by the providers – and commonly cited by Tennessee providers – can be used to suggest that a quasi-contractual relationship between insurers and providers obligates full-price payment for OON emergency services.
Sixth Circuit finds OON providers’ unjust enrichment claims are limited by terms of insurance contracts
In River Park Hospital, Inc. v. BlueCross BlueShield of Tennessee, Inc., 173 S.W.3d 43 (Tenn. Ct. App. 2002), the Tennessee Court of Appeals reviewed a lawsuit involving claims that BlueCross BlueShield of Tennessee had underpaid for emergency services delivered by a TennCare provider to Medicaid beneficiaries. The court ultimately ruled in the provider's favor, determining that because the insurer maintained a contract with the state of Tennessee (which obligated the insurer to pay the full cost of care for Medicaid beneficiaries in exchange for a flat monthly fee), the provider could reasonably pursue an unjust enrichment claim under state law. In the more than two decades since, this ruling has been used to support quasi-contract claims and validate arguments that Tennessee common law imposes an equitable duty on insurers to pay up to the full cost of their insureds' OON emergency care.
In its July 2025 decision, in AMISUB (SFH), Inc. v. Cigna Health & Life Ins. Co., No. 23-5714 (6th Cir. 2025), the Sixth Circuit found the 2002 ruling in River Park Hospital to be limited by its circumstances, where the Medicaid managed care organization defendant had contracted with the state Medicaid program to pay up to the full amount billed by the provider. However, the court noted that an insurer does not typically agree to pay the full amount of an insured's medical care; instead, it pays per the terms defined in its insurance contract. Given that the payor did not have a contract with the state – and since neither federal law (e.g., ACA, EMTALA) nor Tennessee law imposes a duty on insurers to pay the full value of OON emergency services – the payor's only obligation was to pay according to the terms of its insurance contracts with its members. Moreover, because the payor’s payment practices complied with its contractual and legal obligations, the providers could not plausibly allege an unjust retention of a benefit.
Put another way: the Sixth Circuit found that even if a quasi-contractual relationship could be implied between the hospitals and the insurer, the insurer would not be compelled to pay providers' billed rates and was only obligated to pay up to the amount required by its insurance contract.
Looking ahead: Implications for insurers
For years, courts have permitted providers to assert quasi-contract claims on the premise that an insurer can be held liable to pay for the "reasonable value" of their services even if the insurer's contracts limit its liability to an amount below a provider's billed charge. The Sixth Circuit approached the issue with a common-sense perspective, acknowledging that insurers usually do not contract to pay a provider’s billed charge and so cannot be unjustly enriched if they have paid the amount they contracted with their insured to pay.
As a result of the Sixth Circuit's ruling, medical providers in Tennessee must now prove that an insurer owes a contractual obligation to its insured to pay the amount the provider is seeking in order to state a claim for quasi-contract. Payors in Tennessee will benefit directly from this case law development – and this decision may find traction elsewhere, given its common-sense and compelling focus on the insurer’s limited obligations under its insurance contract.
Client Alert 2025-180
