548 F.Supp.3d 580
S.D.W. Va2021Background
- Air Evac EMS operates federally‑regulated air ambulance services and sells a low‑cost prepaid membership that cancels members’ out‑of‑pocket ambulance balances (roughly < $100/yr per household).
- West Virginia enacted HB 2776 (effective July 9, 2021) adding W. Va. Code art. 11B to classify air‑ambulance membership programs as “in the business of insurance,” requiring state insurance licensing and subjecting providers to OIC regulation and penalties.
- Air Evac sued the West Virginia Insurance Commissioner seeking declaratory and injunctive relief, arguing the Airline Deregulation Act (ADA) preempts HB 2776; it previously prevailed in Air Evac EMS v. Cheatham on ADA preemption issues.
- A related case (Dodrill I) resulted in a TRO in favor of Air Evac; the interlocutory appeal was pending when this preliminary injunction motion was decided.
- The district court found Air Evac likely to prevail on the merits because HB 2776 "relates to" air carrier rates/services and therefore is preempted by the ADA, and concluded the McCarran‑Ferguson Act (MFA) does not reverse‑preempt HB 2776 because the membership program is not insurance under Pireno factors.
- The court granted a preliminary injunction enjoining enforcement of HB 2776 against Air Evac during the litigation and set Rule 65(c) security at zero.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Does ADA preempt HB 2776? | ADA bars state laws "related to" prices/services of air carriers; HB 2776 targets membership program that affects pricing/revenue. | State may regulate as insurance; HB 2776 merely designates the program as insurance and therefore is outside ADA. | Held: ADA likely preempts HB 2776 because it relates to air carrier services and pricing. |
| 2. Does the McCarran‑Ferguson Act reverse‑preempt ADA here? | MFA applies only if the state law was enacted "for the purpose of regulating the business of insurance" and the practice qualifies as insurance; Air Evac's program is not insurance. | MFA saves state law from federal preemption; legislature can define insurance to regulate program. | Held: MFA unlikely to apply; court found reverse preemption not readily applicable. |
| 3. Is Air Evac's membership program "the business of insurance"? | Program is a prepaid debt‑cancellation/membership, common outside insurance industry; fails Pireno criteria (especially not limited to insurance industry). | Program shares risk and resembles risk‑spreading, so it can be treated as insurance. | Held: Program likely not insurance under Pireno factors (third factor dispositive). |
| 4. Are preliminary‑injunction factors satisfied? | Likely to succeed on merits; irreparable harm from fines, lost revenue, program disruption; public interest favors preserving program. | State harms from delayed regulation and enforcement. | Held: All Winter factors met; injunction granted and enforcement of HB 2776 against Air Evac enjoined. |
Key Cases Cited
- Air Evac EMS, Inc. v. Cheatham, 910 F.3d 751 (4th Cir. 2018) (held ADA preempts state regulation of air ambulance pricing and related rules)
- Morales v. Trans World Airlines, 504 U.S. 374 (1992) (interpreting ADA "relating to" preemption broadly)
- Am. Airlines, Inc. v. Wolens, 513 U.S. 219 (1995) (explaining limits on state regulation vis‑à‑vis ADA; contractual claims exception)
- Northwest, Inc. v. Ginsberg, 572 U.S. 273 (2014) (statutes and regulations have "force and effect of law" for ADA preemption)
- Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (1982) (sets three‑factor test to determine what constitutes "business of insurance" under MFA)
- U.S. Dep’t of Treasury v. Fabe, 508 U.S. 491 (1993) (discusses MFA scope and focus on insurer–policyholder relationship)
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (establishes four‑factor preliminary injunction standard)