Court denies North Carolina State Health Plan’s injunction bid against Atrium

A North Carolina Superior Court judge has denied the North Carolina State Health Plan’s request for a temporary injunction against Charlotte, N.C.-based Atrium Health’s new affordability program, ruling the plan is unlikely to succeed on the merits of its case, according to an Oct. 13 news release the system shared with Becker’s.

The State Health Plan and North Carolina State Treasurer Brad Briner sued Atrium Oct. 9 in Wake County Superior Court. They alleged the health system acted in bad faith by launching the program just before open enrollment, misled members by implying the plan endorsed it, and unlawfully took over the treasurer’s authority. The lawsuit asked the court to declare the program void.

Atrium announced the program Oct. 6. It waives deductibles and coinsurance for enrolled State Health Plan members who get primary, specialty, outpatient and inpatient care at Atrium, and replaces them with copays lower than members would pay at the plan’s own preferred tier. Atrium covers the cost by collecting less from patients after the plan processes each claim. The program does not change plan benefits or raise what the plan pays Atrium, according to the system. 

The dispute centers on the Preferred Provider Program that Mr. Briner is launching in 2027. It sorts providers into three tiers: preferred, access and nonpreferred. Winston-Salem, N.C.-based Novant Health, Chapel Hill-based UNC Health and Statesville-based Iredell Health System joined the preferred tier, while many Atrium locations landed in the nonpreferred tier. A September agreement moved Atrium One Health providers into the preferred tier and some Atrium locations and services into the access tier.

The lawsuit argues Atrium’s program threatens the finances of a plan that covers about 750,000 North Carolinians. Mr. Briner has warned the program could cost the plan more than $100 million next year. In 2025, he projected deficits of $500 million in 2026 and $1 billion in 2027.

Atrium said the plan has not shown how it reached its premium projections. The system points to the plan’s years of drawing down reserves to hold premiums flat, a reported $507 million deficit, premium and deductible increases that came before the program, and $100 million in added 2026 funding from the North Carolina General Assembly.

Atrium said it has repeatedly offered since July to match preferred-tier discounts and designation, and that the plan turned down each offer. The treasurer’s office has said Atrium’s offers did not match those of other systems and arrived after contracts were signed.

“From the very start, this has been about the people we serve: the more than 80,000 teachers, first responders, state employees and their families, from across North Carolina, who trust Atrium Health with their care,” Steve Smoot, president of Advocate Health’s North Carolina and Georgia division, which includes Atrium, said in the release. 

Mr. Smoot said Atrium remains “ready to sit down and find a path forward together, for every member the Plan serves.”

The State Health Plan and Mr. Briner said in their own Oct. 13 news release that they are exploring other legal options. 

“The State Health Plan is funded by member and taxpayer dollars and those resources are finite,” Mr. Briner said in the release. “When a single provider can manipulate the Plan’s cost structure, dictate how benefits are designed or undermine our tiered network, it won’t just be disruptive, it could be catastrophic for the Plan, its members and taxpayers.”

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