Reed Smith Client Alerts

Key takeaways

  • Sixth Circuit affirms dismissal of unjust enrichment lawsuit alleging payor underpayment for emergency services
  • Court confirms neither federal nor Tennessee law requires full-price payment of out-of-network (OON) claims—payor obligations are defined by member contracts
  • Tennessee providers seeking full-price payment must prove insurers are obligated to pay the sought amount to state a quasi-contract claim

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.