Eaglemed LLC v. Cox
2017 U.S. App. LEXIS 15962
| 10th Cir. | 2017Background
- Wyoming's Workers' Compensation Act requires the Department of Workforce Services (the Division) to manage a self-supporting workers’ compensation fund, pay medical costs, and adopt fee schedules; §27-14-401(e) permits the Division to "allow a reasonable charge" for ambulance transport "at a rate not in excess of the rate schedule" the director establishes.
- The Division’s fee schedule set fixed maximum reimbursements for air-ambulance services (e.g., rotary-wing base plus per-mile rate).
- Air-ambulance providers brought suit seeking declaratory and injunctive relief, arguing the Airline Deregulation Act (ADA) preempts the Wyoming statute and Division rate schedule insofar as they set or cap prices for air carriers.
- The district court granted summary judgment for plaintiffs, held the ADA preempted the state statute/rate schedule as applied to air ambulances, and enjoined enforcement; after defendants argued that preemption left the Division with no statutory payment authority, the district court amended its judgment to require the State to pay air-ambulance charges in full.
- The Tenth Circuit affirmed preemption (state law cannot set maximum reimbursements for air-ambulance services) but reversed the amended injunction as overbroad, limiting relief to enjoining enforcement of the preempted statutory rate caps and leaving payment questions to state law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Airline Deregulation Act (ADA) preempts WY §27-14-401(e) and the Division's air-ambulance rate schedule | ADA preempts state laws that set or effectively regulate air carrier prices; the statute and schedule set mandatory maximum reimbursements for air carriers and therefore are preempted | The WY scheme does not impose state obligations on carriers but offers a voluntary contractual option: carriers may accept Division reimbursement (and forego billing patients) or bill patients directly, so Wolens saves the law from preemption | Affirmed: ADA preempts the statute and schedule to the extent they set mandatory maximum reimbursement rates for air-ambulance services; the statute is not a voluntary private ordering like Wolens found binding |
| Whether the preemption question required factual development about economic effect before summary judgment | Plaintiffs: statute/rule expressly sets maximum reimbursement rates for air-ambulances, so express-text preemption controls; no need to decide economic effect | Defendants: there is a factual dispute whether the state scheme meaningfully affects air-ambulance prices, so summary judgment was improper | Rejected defendants’ factual-efffect argument: because the law expressly establishes price limits for air carriers, the ADA’s express preemption applies and summary judgment was appropriate on preemption |
| Whether the McCarran–Ferguson Act (reverse preemption for insurance regulation) saves the WY law | Not applicable (plaintiffs did not rely on McCarran) | State/amicus: workers’ compensation laws regulate insurance and thus should be protected from federal preemption under McCarran–Ferguson | Rejected: §27-14-401(e) and the fee schedule are not laws "regulating the business of insurance" within the meaning of McCarran–Ferguson |
| Proper scope of injunctive relief after finding preemption | Plaintiffs sought complete relief from rate caps and (after district court) full payment of charges by the State | Defendants: remedy should be limited to enjoining enforcement of the preempted provisions; the federal court cannot compel state officials to pay claims under state law | Modified: injunction affirmed insofar as it permanently enjoins enforcement of the preempted statutory/rule price caps; reversed insofar as it ordered state officials to pay air-ambulance charges in full (that is a state-law matter) |
Key Cases Cited
- Am. Airlines v. Wolens, 513 U.S. 219 (contractual "privately ordered obligations" not preempted)
- Morales v. Trans World Airlines, Inc., 504 U.S. 374 (ADA expresses broad preemptive purpose over state laws related to airline rates, routes, services)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (McCarran–Ferguson requires law be specifically directed to business of insurance)
- Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (distinguishing insurance regulation from ordinary cost-savings arrangements)
- Puerto Rico v. Franklin Cal. Tax-Free, 136 S. Ct. 1938 (look to plain text of preemption clause where language is unambiguous)