Judge won’t halt Atrium’s cheaper copays for State Health Plan members, for now

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Atrium Health’s program to lower out-of-pocket costs for State Health Plan members can go forward for now after a judge on Tuesday denied the plan’s emergency request to halt it while its lawsuit plays out.

The State Health Plan and Republican State Treasurer Brad Briner sued Atrium on Friday, days after the health system announced a program beginning in 2027 that would waive deductibles and coinsurance for plan members at Atrium and replace them with a copay. Atrium says that will give members lower out-of-pocket costs at Atrium than they would pay even at the hospitals the plan favors under its new tiered network through its Preferred Provider Program.

The plan argues that only the treasurer can set what members pay in copays, deductibles and coinsurance, and that because Atrium would keep charging the plan its current rates, all members would ultimately pay more through higher premiums.

Atrium counters in court filings that the program “does not change what the Plan pays,” so the plan hadn’t shown it was likely to win or that it would suffer immediate, irreparable harm. Atrium said that, “as it is contractually allowed to do,” it “has offered a way for patients to get out of the middle” by choosing to collect less from its own patients.

North Carolina Business Court Judge Matthew Houston sided with Atrium for now. In his written order, he said that he was not making formal findings, and that findings at this early stage aren’t binding.

Still, so far “plaintiffs have not demonstrated both a reasonable likelihood of success” and “a likelihood of irreparable harm resulting” from Atrium’s actions, Houston wrote in his order on Wednesday denying the temporary restraining order.

They’ve also not demonstrated that the pause is “necessary, as opposed to merely beneficial, to preserve their rights during the pendency of this litigation,” he wrote.

Houston wrote that the threat to the plan’s “structural and financial viability” is “undisputedly a serious issue.” But he said it is “primarily financial in nature,” and that the plan’s own complaint reflects it has long faced the likelihood of a “complete financial collapse” that predates Atrium’s conduct.

The plan, which covers more than 750,000 teachers, state employees, retirees and their dependents, projects it could run short of money to pay its bills as soon as January 2027. The new tiered network, which takes effect for hospitals in January and is projected by the plan to save more than $135 million next year, pushes members toward providers that charge the plan less. Some Atrium locations, including its urban hospitals, were placed in the lowest, “non-preferred” tier, where members would pay the most out of pocket. Several rural locations were placed in the middle-tier. UNC Health and Novant Health are designated preferred.

Steve Smoot, president of Advocate Health’s North Carolina and Georgia Division, of which Atrium Health is a part, praised the court’s ruling.

“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. Thousands of State Health Plan members have told us they didn’t want to choose between paying more and leaving the physicians and care teams who have walked with them through some of life’s most serious health challenges,” Smoot said.

In a news release, the State Health Plan said the ruling was not the outcome it had hoped for, but that the judge acknowledged its argument that Atrium’s program “could cause irreparable harm to the Plan.”

While “other legal pathways continue to be explored,” the plan said, it is now “forced to consider all options to keep the Plan solvent for 2027 and beyond.”

That includes possibly raising premiums for all members, whether or not they use Atrium, by as much as $50 a month in 2028 — which the plan said could more than double their 2027 premiums.

The plan’s lawsuit also asks the court to declare the program void and to rule that it unlawfully interferes with the treasurer’s authority to set copays, deductibles and coinsurance.

The News & Observer has asked the plan whether it will continue pursuing the other claims in its lawsuit.

Under Briner, the plan had already raised premiums for members, citing shortfalls.

Briner’s predecessor, Republican Treasurer Dale Folwell, held premiums flat for years, but deficits kept growing. Folwell’s 2019 attempt to cap what the plan paid hospitals at a set percentage of Medicare rates failed after most hospitals refused to sign on.

“The State Health Plan is funded by member and taxpayer dollars and those resources are finite. 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,” Briner said in the news release on Tuesday.

Open enrollment begins Monday and had been set to end later this month. The plan announced in a news release Friday that it is extending it through Nov. 6, to give “members more time to review information about the recently announced program and understand what it could mean for their 2027 coverage and costs.”

The lawsuit comes as Atrium seeks to merge with Raleigh-based WakeMed, a deal Wake County commissioners approved last month that now faces state and federal review.

While the proposed merger between Atrium and WakeMed “was a surprise, state employees have been hit with a surprise this past week by Atrium,” State Employees Association of North Carolina Executive Director Ardis Watkins said Wednesday during a press conference calling on the attorney general to scrutinize the merger deal.

“Treasurer Briner says (Atrium’s new program) might bankrupt the health plan. It’s that serious,” Watkins said. “There is a pattern of surprise here that we’re more than unhappy with.”

Briner has been critical of the merger, saying it could raise costs. State Health Plan Executive Administrator Thomas Friedman has previously said that a merger between WakeMed and Atrium Health could increase monthly health insurance premiums for every plan member by $7 to $11 per month and that Atrium charges 15% to 40% more for care than WakeMed.

This story was originally published October 14, 2026 at 2:03 PM with the headline “Judge won’t halt Atrium’s cheaper copays for State Health Plan members, for now.”