Air Ambulance: Comparing the Texas Supreme Court and 10th Circuit Opinions
Thomas A. Robinson, at The Workcomp Writer, has done a deep dive into the air ambulance reimbursement issue. Last week, in Texas Mutual Ins. Co. v. PHI Air Medical, LLC, a divided Texas Supreme Court sided with workers’ comp carriers and injured employees, holding that the Airline Deregulation Act “does not preempt Texas’s general standard of fair and reasonable reimbursement as applied to air ambulance services, nor does it require that Texas compel private insurers to reimburse the full charges billed for those services.”
Mr. Robinson writes that the Texas decision “sidestepped a 2018 decision by the Tenth Circuit Court of Appeals [EagleMed LLC v. Cox, 868 F.3d 893, 902 (10th Cir. 2017)] that at least appears to be in conflict.”
The blog post contains a detailed review of the court’s majority, concurring, and dissenting opinions. In discussing the majority opinion which was authored by Justice Busby, Mr. Robinson highlighted a “slippery slope” argument that the majority found compelling.
Justice Bushby [sic] stressed that Texas’s fair and reasonable standard for reimbursement was generally applicable; it did not reference air carrier prices. Accordingly, it was for the court to apply the United States Supreme Court’s settled preemption test, asking whether that standard had the forbidden significant effect on PHI’s prices. According to the justice, on the record before the Court, PHI had not shown that the fair and reasonable standard for third-party reimbursement had a significant effect on its prices for carrying injured customers by air.
The justice applied an analogy:
The State Bar of Texas—an administrative agency that is part of our judicial branch— has a policy that it will reimburse speakers at its continuing legal education courses for “airline travel at coach rates,” but “such expenses [must] be reasonable according to the usual cost of products or services for which reimbursement is requested as determined by similar reimbursement requests of other participants, by practices applicable to other public agencies and institutions of the State of Texas, by other readily available reference information, and by State Bar staff experience,” as well as “location and other circumstances.” Thousands of state agencies nationwide likely have similar reasonableness standards for reimbursement of airfares. Because this standard dictates the amount the State Bar will reimburse for air carrier services, it would be preempted under PHI’s approach [Decision, p. 20-21].
In the comments, Professor Michael C. Duff notes that the case may eventually be decided by the U.S. Supreme Court.
The PHI case is not the only air ambulance dispute working its way through Texas courts. Two years ago, a Federal District Judge in Austin also concluded 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 was authored by Senior Federal District Judge Sam Sparks. The underlying judgment has been appealed to the Fifth Circuit Court of Appeals. The federal appellate court heard arguments on the case November 5, 2019 and the case remains pending in that court at this time.
FOLIO
