Air Ambulance Appeal Set for Argument; IAIABC Weighs In
The dispute over workers’ compensation carrier liability for air ambulance bills is about to be argued at the Texas Supreme Court. The case pits Texas workers’ compensation carriers against providers of air ambulance services to workers injured following a work-related accident. Ambulance providers want no regulations on the amount of their services while comp carriers argue that the providers are subject to regulation by the Texas Department of Insurance, Division of Workers’ Compensation.
Meanwhile, the International Association of Industrial Accident Boards and Commissions has authored a letter to members of a Federal Department of Transportation advisory committee (the Air Ambulance and Patient Billing Committee) recommending Federal legislation that would allow states to regulate air ambulance services under their workers’ compensation systems.
In December 2016 FOL published an FOL Advisory discussing the then current state of the litigation, which has been denominated as Texas Mutual Ins. Co. v. PHI Air Medical, LLC, Cause No. 18-0216. In that case, a Texas state district judge, agreed with carriers that air ambulance bills were subject to state regulation by the Texas Department of Insurance and the Division of Workers’ Compensation.
The Third Court of Appeals disagreed, siding with the air ambulance providers that the Airline Deregulation Act preempted state regulation of their bills. The Texas Supreme Court granted the carriers’ petition for review and the case is docketed for oral argument on February 25, 2020. The arguments will be live streamed by the Court, and an archive will be created for later viewing.
The liability of injured workers for the bills or at least a share of the bills is one significant issue the court must address. In an amicus brief, the Office of Injured Employee Counsel predicted that air ambulance carriers “will launch a second wave of litigation actions against injured employees” to collect amounts billed in excess of the fee schedule. It supports this assertion by citing to a series of news and public interest reports detailing the adverse financial consequences of balance billing in air ambulance cases.
News agencies continue to document the aggressive tactics employed by air ambulance firms to collect medical debt. John Tozzi, Air ambulances, backed by private equity firms, leave patients with $45,000 bills, L.A. Times, Jun. 11, 2018, available at http://www.latimes.com/business/la-fi-air-ambulance-cost-20180611- story.html (employee collapsed and hit head at work, flown 18 miles by helicopter, later dies and Air Methods’ subsidiary sent the family a bill for $34,495 and put a lien on estate). Susannah Luthi, Congress angles for air ambulance cost transparency, Modern Healthcare, Oct. 2, 2018, available at https://www.modernhealthcare.com/article/20181002/TRANSFORMATION04/18 1009977 (a lien was placed on one North Dakotan’s home; another had wages garnished; families have gone into bankruptcy). Angela Elizabeth Perry, Up in the Air: Inadequate Regulation for Emergency Air Ambulance Transportation, ConsumersUnion.org, Health Policy Report, March 2017, available at www.consumersunion.org available at https://advocacy.consumerreports.org/wpcontent/uploads/2017/04/Up-In-The-Air-Inadequate-Regulation-for-EmergencyAir-Ambulance-Transportation.pdf (Air Methods filed hundreds of debt collection 12 lawsuits against transported patients and their families over the last five years, including 104 lawsuits in South Carolina alone; In Maryland, patients testifying at a 2015 hearing complained about receiving balance bills from $20,000 to $40,000 from air ambulance companies, followed by weekly calls from bill collectors, who threatened to put liens on their homes).
The IAIABC’s plea for clarifying legislation argues that because of conflicting interpretations of the Federal Aviation Act and Airline Deregulation Act, “state workers’ compensation programs are without clear authority to set payment, utilization, or other guidelines for air ambulance services under state workers’ compensation systems.” The regulatory group explained:
Air ambulance services provide a valuable, and often critical, role in the transport and treatment of injured workers. The states do not want to impede a healthy competitive environment or to mandate a “one-size-fits-all” rate for air ambulance services. The states simply would like the opportunity to review and set guidelines to encourage transparency, competition, and safety in the care of injured workers.
Unfortunately, it appears the states are unable to do so without congressional intervention. Under current laws, there is no transparent, free market to encourage price competition. There is no federal oversight or regulation. There is no state oversight or regulation. On behalf of the IAIABC’s members, we urge you to recommend legislation clarifying that state workers’ compensation systems are free to regulate air ambulances under their system.
This is not the only air ambulance dispute working its way through the courts. Two years ago, a Federal District Judge in Austin joined several courts nationally in ruling that the Federal Airline Deregulation Act preempts state laws that attempt to place limits on the amount that air ambulances can charge workers’ compensation carriers for their services. In so doing, the Federal Court concluded that the McCarran-Ferguson Act, which commits the regulation of the business of insurance to the States and preempts the Federal government from interfering in those regulatory systems, does not reverse preempt the ADA because, it reasoned, the Texas Workers’ Compensation Act is not a regulation having to do with “the business of insurance.”
To be fair to Defendants, there is evidence supporting the argument that the Texas Legislature enacted the TWCA as a whole to regulate the business of insurance. In instituting the TWCA, the Texas Legislature attempted to design a workers’ compensation system by balancing the interests of the two types of insureds employees subject to the risk of injury and employers and insurance companies. In re Poly-Am., 262 S.W.3d at 352; see also Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 212 (Tex. 1988) (stating the TWCA addresses a three-party insurance agreement entered into by the employer, employee, and insurance carrier), overruled on other grounds by Texas Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012). But, to the extent the TWCA restricts the relationship between insurers and third-party service providers, the TWCA regulates the “business of insurance companies” rather than the “business of insurance.” See Pireno, 458 U.S. at 132 (“To grant the [cost savings] practices a § [101 2](b) exemption on such a showing would be plainly contrary to the statutory language, which exempts the ‘business of insurance’ and not the ‘business of insurance companies.” (internal quotation marks and citation omitted)).
The court’s opinion, authored by Senior Federal District Judge Sam Sparks, was appealed was appealed again to the Fifth Circuit Court of Appeals. The federal appellate court heard arguments on the case November 5, 2019. The case is pending in the Fifth Circuit and, eventually may be headed to the U.S. Supreme Court after that.
FOLIO
