Air Evac EMS, Inc. v. Texas, Department of Insurance, Division of Workers' Compensation
2017 U.S. App. LEXIS 4952
| 5th Cir. | 2017Background
- Air Evac EMS (air-ambulance provider) sued Texas officials claiming the Airline Deregulation Act (ADA) preempts the Texas Workers’ Compensation Act (TWCA) as applied to air-ambulance reimbursement and balance-billing rules.
- TWCA: (1) sets maximum reimbursement rates (often tied to Medicare) payable by insurers; (2) bars providers from balance-billing workers’ comp claimants; DWC and the Texas Commission set rates and resolve disputes.
- Air-ambulance providers filed administrative challenges to a 125%-of-Medicare reimbursement rule; an ALJ later upheld TWCA and set 149%, state trial court affirmed preemption denial and 125% rate; appeals and many administrative disputes remained pending.
- Air Evac filed federal suit seeking declaratory and injunctive relief; district court dismissed under Eleventh Amendment, ruling Ex parte Young did not apply (insufficient direct enforcement/ threatened enforcement).
- Fifth Circuit reversed: found Article III standing, federal-question jurisdiction under Shaw, Ex parte Young applies to Texas officials’ role in rate-setting and enforcement, and Colorado River abstention was inappropriate; case vacated and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing | Air Evac: pecuniary injury from enforced reimbursement cap and balance-billing bar; causation and redress via injunction | State: TWCA is enforced against insurers, not Air Evac, so injury not traceable or redressable | Held: Air Evac has standing; TWCA enforcement duties traceably cause injury and relief would redress it |
| Federal-question jurisdiction | Air Evac: Shaw gives §1331 jurisdiction for preemption/injunctive claims | State: Armstrong requires plaintiffs to meet injunctive-relief standards at threshold, so no jurisdiction | Held: Shaw controls; federal-question jurisdiction exists; Armstrong does not override Shaw’s jurisdictional statement |
| Ex parte Young applicability | Air Evac: state officials have sufficient connection — set rates, resolve disputes, enforce balance-billing, so they may be enjoined | State: officials lack the required enforcement connection; need threatened/prospective enforcement against Air Evac | Held: Ex parte Young applies; officials have "some connection" (rate-setting, dispute resolution, enforcement) sufficient to permit prospective injunctive relief |
| Colorado River abstention | Air Evac: federal forum appropriate; state litigation differs in parties and issues | State: parallel state proceedings counsel abstention | Held: Declined to abstain; state action not sufficiently parallel and abstention is disfavored |
Key Cases Cited
- Ex parte Young, 209 U.S. 123 (establishes equitable exception to Eleventh Amendment allowing injunctive suits against state officers)
- Shaw v. Delta Air Lines, 463 U.S. 85 (federal-question jurisdiction exists for preemption-based challenges to state regulation)
- Armstrong v. Exceptional Child Ctr., 575 U.S. 320 (clarifies Supremacy Clause does not by itself create a private cause of action; equitable remedy principles govern suits to enjoin state officers)
- Verizon Maryland, Inc. v. Public Serv. Comm’n, 535 U.S. 635 (Ex parte Young inquiry is a "straightforward" look at whether complaint alleges ongoing violation and seeks prospective relief)
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (framework for discretionary abstention when parallel state proceedings exist)
- Okpalobi v. Foster, 244 F.3d 405 (Fifth Circuit en banc discussion of defendants' enforcement connection under Ex parte Young)
- K.P. v. LeBlanc, 627 F.3d 115 (Fifth Circuit: regulatory board members satisfied Ex parte Young where they applied statute in adjudicative context)
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (federal abstention is extraordinary; balance favors exercising jurisdiction)
- Va. Office for Prot. & Advocacy v. Stewart, 563 U.S. 247 (discusses Ex parte Young legal fiction and limits on Eleventh Amendment relief)
- Edelman v. Jordan, 415 U.S. 651 (limits Ex parte Young plaintiffs to prospective relief)