991 F.3d 916
8th Cir.2021Background:
- Guardian Flight is a federally licensed air-ambulance provider that often treats and transports patients in emergencies who do not choose the provider and bills insurers and patients for services.
- Out-of-network air ambulances routinely balance-bill insured patients for the difference between their rates and insurer payments; bills frequently exceeded $20,000 per complaint records.
- North Dakota Senate Bill 2231 (SB 2231) contains: (1) a payment provision prohibiting balance billing and deeming insurer payment full and final; and (2) a subscription provision banning sale/solicitation of air-ambulance subscription agreements.
- Guardian Flight previously offered a low-cost subscription (AirMedCare) that prepaid any costs the company or affiliates might incur for members but did not guarantee transport or indemnify third-party charges.
- Guardian Flight sued asserting the Airline Deregulation Act (ADA) preempted both provisions; district court enjoined enforcement of the payment provision but upheld the subscription provision under the McCarran-Ferguson Act; the Eighth Circuit affirmed ADA preemption but held McCarran-Ferguson did not save either provision and remanded for judgment for Guardian Flight.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ADA preempts ND's payment and subscription provisions (they affect air-ambulance pricing/billing) | Guardian Flight: ADA preempts because the provisions relate to air carrier prices/services | Godfread/Stenehjem: Provisions are consumer/insurance regulation and too tenuously related to airline rates to trigger ADA preemption | ADA preempts both provisions (they have a connection to air-ambulance prices) |
| Whether the McCarran-Ferguson Act saves the provisions from ADA preemption (i.e., were they enacted for the purpose of regulating the business of insurance) | Guardian Flight: Provisions regulate relationships between providers and consumers, not the insurer-policyholder relationship, so MFA does not apply | Godfread/Stenehjem: Provisions regulate insurance/business of insurance and thus are saved by MFA | MFA does not apply to either provision; neither was enacted for the purpose of regulating the business of insurance; judgment for Guardian Flight |
Key Cases Cited
- Morales v. Trans World Airlines, 504 U.S. 374 (1992) (ADA’s "related to" language interpreted broadly to effectuate preemption of state laws touching air carrier price/route/service)
- Air Evac EMS, Inc. v. Cheatham, 910 F.3d 751 (4th Cir. 2018) (state statutes limiting air-ambulance payments and recovery found preempted by ADA)
- Bailey v. Rocky Mountain Holdings, LLC, 889 F.3d 1259 (11th Cir. 2018) (balance-billing restrictions for air ambulances not saved by McCarran-Ferguson)
- EagleMed LLC v. Cox, 868 F.3d 893 (10th Cir. 2017) (ADA preempted state statute that set mandatory maximum rates for air-ambulance services)
- Watson v. Air Methods Corp., 870 F.3d 812 (8th Cir. 2017) (en banc) (standards for reviewing ADA preemption issues in this circuit)
- United States Dep’t of Treasury v. Fabe, 508 U.S. 491 (1993) (McCarran-Ferguson saves state laws enacted to regulate the business of insurance—laws must aim to adjust/manage/control insurance)
- SEC v. Nat’l Sec., Inc., 393 U.S. 453 (1969) (state laws not aimed at insurer-insured relationship are not for purpose of regulating insurance under McCarran-Ferguson)
- Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (1982) (tests for defining the "business of insurance")
- Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (1979) (distinguishing prepaid plans from insurance for McCarran-Ferguson analysis)
- First Nat’l Bank of E. Ark. v. Taylor, 907 F.2d 775 (8th Cir. 1990) (debt-cancellation contracts not the business of insurance; relevant Eighth Circuit precedent on McCarran-Ferguson scope)