8 F.4th 346
5th Cir.2021Background
- Air Evac EMS is an air-ambulance provider that bills workers’ compensation insurers for medical air transport; Texas law (TWCA and attendant regs) caps insurer reimbursements and bars balance billing to employers/employees.
- Air Evac sued Texas insurance and workers’ comp commissioners seeking a declaration that the Airline Deregulation Act (ADA) preempts the TWCA price/reimbursement caps and an injunction barring enforcement; it alternatively sought relief from the balance-billing prohibition.
- The district court granted summary judgment to Air Evac, enjoining enforcement of the TWCA reimbursement rules as applied to Air Evac; the State and several insurers appealed.
- The Fifth Circuit reviewed whether the ADA expressly preempts the TWCA reimbursement rules and whether the McCarran–Ferguson Act saves those state rules from federal preemption.
- The Fifth Circuit held the ADA preempts TWCA reimbursement caps as applied to air-ambulance services and that McCarran–Ferguson does not shield the TWCA rules because they regulate insurer–provider relations, not the insurer–policyholder “business of insurance.”
- The court affirmed, aligning with other circuits that struck similar state workers’ compensation price caps and disagreeing with a divided Texas Supreme Court decision on the issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ADA preempts TWCA reimbursement/price caps on air-ambulance services | ADA’s express preemption bars any state law related to price, route, or service of an air carrier; TWCA caps are related to price | TWCA is a traditional state workers’ comp regulation and not preempted | ADA expressly preempts the TWCA reimbursement rules as applied to air-ambulance services |
| Whether the TWCA provisions are “related to a price” under the ADA | TWCA reimbursement caps directly dictate the rates insurers pay and so relate to price | Price only means market-driven prices; regulatory rates are not "price" under ADA | TWCA reimbursement limits fall squarely within ADA’s definition of "price" and thus are "related to" price |
| Whether Air Evac qualifies as an “air carrier” that “may provide air transportation under this subpart” | Air Evac holds FAA Part 135 authority and DOT recognition; it provides air transportation | State argues ADA targets commercial passenger airlines, not air ambulances | Air Evac is an "air carrier" and provides transportation under subpart II, so ADA covers it |
| Whether McCarran–Ferguson saves TWCA from ADA preemption | Insurers: TWCA regulates insurance costs and spreads risk, so it is regulation of the "business of insurance" | Air Evac: TWCA governs insurer–provider relations (not insurer–policyholder), so it is not "business of insurance" | McCarran–Ferguson does not save TWCA rules because they regulate insurer–provider arrangements, not the insurer–policyholder relationship |
Key Cases Cited
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (ADA preemption provision has broad, expansive sweep)
- Northwest, Inc. v. Ginsberg, 572 U.S. 273 ("related to" language under ADA is broad)
- Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (McCarran–Ferguson focuses on insurer–policyholder relationship)
- U.S. Dep’t of Treasury v. Fabe, 508 U.S. 491 (framework for determining what counts as "business of insurance")
- Humana Inc. v. Forsyth, 525 U.S. 299 (McCarran–Ferguson preemption analysis principles)
- Union Lab. Life Ins. Co. v. Pireno, 458 U.S. 119 (additional Royal Drug criteria: risk-spreading and industry-limited practices)
- Air Evac EMS, Inc. v. Cheatham, 910 F.3d 751 (4th Cir.: ADA preempts state workers’ comp caps on air-ambulance reimbursements)
- EagleMed LLC v. Cox, 868 F.3d 893 (10th Cir.: same conclusion)
- Air Evac EMS, Inc. v. Tex., Dep’t of Ins., Div. of Workers’ Comp., 851 F.3d 507 (5th Cir. prior jurisdictional ruling in this litigation)
- Hodges v. Delta Airlines, Inc., 44 F.3d 334 (5th Cir.; construed "service" under ADA)
- Tex. Mut. Ins. Co. v. PHI Air Med., LLC, 610 S.W.3d 839 (Tex. 2020) (Texas Supreme Court reached contrary conclusion on preemption/McCarran–Ferguson)