331 F. Supp. 3d 650
W.D. Tex.2018Background
- Plaintiff Air Evac EMS, Inc. is a Part 135 air carrier and DOT‑registered air taxi operator that provides emergency air ambulance transport and sued Texas officials for declaratory and injunctive relief.
- Under the Texas Workers' Compensation Act (TWCA) and associated Commission rules, workers' comp insurers reimburse medical providers according to Commission guidelines (generally tied to Medicare rates) or a DWC-determined "fair and reasonable" amount; Texas also prohibits balance billing.
- Air Evac alleges TWCA reimbursement rules have forced it to accept payments far below its billed charges and that application of TWCA pricing and billing rules to air ambulances is preempted by the Airline Deregulation Act (ADA), 49 U.S.C. § 41713(b)(1).
- Defendants (state officials and intervening insurers) argue the ADA does not clearly preempt state workers' compensation law, invoke a presumption against preemption for state police‑power regulation, and alternatively contend the McCarran‑Ferguson Act shields the TWCA from federal preemption.
- The court declined to strike defendants' expert evidence (bench trial context), conducted summary judgment briefing after limited discovery, and ultimately addressed (1) ADA preemption and (2) whether McCarran‑Ferguson protects the TWCA provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ADA preempts application of TWCA reimbursement and rate rules to air ambulances | ADA preempts because Air Evac is an "air carrier," the TWCA provisions are laws "having the force and effect of law," and they "relate to a price" of air transportation | State argues workers' comp is a traditional police‑power subject so a presumption against preemption applies and Congress did not clearly intend to displace workers' comp regulation | Court: ADA preempts the TWCA provisions as applied to Air Evac; no presumption against preemption applied and statutory text/precedent support broad ADA reach |
| Whether Air Evac qualifies as an "air carrier" under § 41713(b)(1) | Air Evac is a federally certified Part 135 carrier and DOT‑registered air taxi operator, thus an air carrier | State: § 41713(b)(1) should be limited to carriers holding Chapter 411 certificates (public convenience certificates) | Court: Air Evac is an air carrier for ADA purposes; Part 135/Part 298 air taxi operators fall within Subpart II's scope |
| Whether TWCA rules "relate to a price, route, or service" of an air carrier | TWCA reimbursement caps and fee‑determination rules directly affect what Air Evac can charge/receive, so they "relate to a price" | State: air ambulance pricing is not market‑driven consumer pricing the ADA meant to deregulate; emergency context counsels against preemption | Court: "Price" in ADA includes rates/charges generally; TWCA restrictions have the forbidden significant effect on air carrier prices and are preempted |
| Whether McCarran‑Ferguson Act insulates TWCA from ADA preemption | TWCA regulates workers' comp insurance benefits and thus was enacted to regulate the business of insurance | State: TWCA is an insurance‑regulating statute and falls within McCarran‑Ferguson protection | Court: McCarran‑Ferguson does not apply; the specific TWCA practices at issue (limiting third‑party provider reimbursements) do not regulate the "business of insurance" under Pireno factors and related precedent |
Key Cases Cited
- Northwest, Inc. v. Ginsberg, 572 U.S. 273 (Sup. Ct.) (interpreting ADA preemption scope)
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (Sup. Ct.) (broad ADA preemption for laws related to fares/rates/services)
- Am. Airlines, Inc. v. Wolens, 513 U.S. 219 (Sup. Ct.) (state consumer‑protection laws preempted by ADA principles)
- Bailey v. Rocky Mountain Holdings, LLC, 889 F.3d 1259 (11th Cir.) (air ambulance pricing preemption)
- EagleMed LLC v. Cox, 868 F.3d 893 (10th Cir.) (ADA preempts state rules limiting air ambulance charges)
- U.S. Dep't of Treasury v. Fabe, 508 U.S. 491 (Sup. Ct.) (McCarran‑Ferguson Act construction and scope)
- Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (Sup. Ct.) (factors for determining if a practice is "business of insurance")