Out-of-state insurers cannot sidestep a New York lawsuit just because they pay claims through a local partner, a federal appeals court ruled.
On July 15, 2026, the Second Circuit Court of Appeals revived most of a lawsuit by Northwell Health - described by the court as one of the largest healthcare providers in New York - against Blue Cross Blue Shield insurers operating in Washington, D.C., Maryland and parts of Virginia.
Those insurers - Group Hospitalization and Medical Services, Inc. (GHMSI), CareFirst BlueChoice, Inc., CareFirst of Maryland, Inc. and CFA, LLC - hold no contract with Northwell. They pay the provider through Empire, the New York Blue Cross licensee that signed the provider agreement. Northwell says they underpaid, leaving "over $5.5 million" outstanding on care delivered between 2019 and 2022.
The insurers said their New York ties were too thin to support a suit. They do not advertise or sell plans in the state, are not regulated there as insurers, and never signed anything with Northwell. A lower court dismissed the case in December 2024. The appeals court disagreed. For more than a decade, it found, the insurers relied on Empire so their members could get in-network care from New York providers - a feature that made their coverage more valuable. That deliberate use of the New York market was enough to bring them within a New York court's reach.
The court leaned on the BlueCard Program, the Blue Cross system that, in the license agreement's words, "links participating healthcare providers and the independent Blue Cross Blue Shield companies across the country in a single electronic network for claims processing and reimbursement." That, the court said, showed the insurers meant to reach into New York.
The decision also let Northwell's contract claims proceed on a ratification theory - "the act of knowingly giving sanction or affirmance to an act which would otherwise be unauthorized and not binding," in the court's words. Even without their own contract, the insurers could be liable because they allegedly performed under the Empire agreement for years and accepted its benefits: discounted, in-network rates rather than higher out-of-network prices.
Northwell's quasi-contract claims survived as well. But the court agreed that its third-party beneficiary claims were rightly dismissed.
The takeaway for insurers and claims teams is plain. Paying and benefiting from claims through an in-network partner in another state can create both jurisdiction and liability exposure there. The court sent the case back for further proceedings.
