Hundley v. Air Evac EMS, Inc.
2:16-cv-12428
S.D.W. VaMar 29, 2019Background
- Plaintiff Connie Hundley purchased an AirMedCare Network membership for $300 and was transported by Med-Trans after a 2015 motorcycle accident; Med-Trans later billed her $33,893.22 for the flight.
- AirMedCare Network is a group membership program linking several air-ambulance providers (Air Evac, Med-Trans, EagleMed, REACH) and promises members no out-of-pocket costs for flights by participating providers when insurance/third parties do not cover costs.
- Hundley sued individually and as a class member for breach of contract (against AirMedCare and Med-Trans), WV Unfair Trade Practices Act violations, common-law bad faith, and illegal debt collection under the WV Consumer Credit and Protection Act (WVCCPA).
- Defendants moved to dismiss on multiple grounds: that the membership is not insurance, that non-contract claims are preempted by the Airline Deregulation Act (ADA), and that breach claims fail as a matter of law; removal was under CAFA.
- The court dismissed only the WVCCPA illegal debt collection claim (Count IV) but denied dismissal of the other claims, holding that factual development is needed to determine whether the membership program is insurance and whether ADA preemption applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $300 membership sale and related conduct constituted illegal debt collection under the WVCCPA | Hundley contended the $300 premium was an unlicensed insurance premium and its collection violated WVCCPA | AirMedCare argued the $300 was a point-of-sale membership fee, not a debt-collection claim | Court dismissed Count IV: sale was a point-of-sale exchange, not a WVCCPA "claim" for debt collection |
| Whether the AirMedCare membership is "insurance" under West Virginia law | Hundley argued membership functions as indemnification for members' air-ambulance debts (i.e., insurance) | AirMedCare argued the program is not insurance: it disclaims guaranty, may not provide service in some circumstances, and lacks third-party indemnification | Court declined to dismiss; found insufficient factual record to decide and left issue for further factual development |
| Whether state-law non-contract claims are preempted by the Airline Deregulation Act (ADA), or saved by McCarran-Ferguson if membership is insurance | Hundley argued that if membership is insurance, McCarran-Ferguson preserves state-law regulation from ADA preemption | Defendants argued ADA preempts state-law claims related to air carrier price/ service | Court deferred preemption ruling pending determination whether membership is insurance; noted different outcomes depending on that status |
| Whether breach-of-contract claims fail as a matter of law (affirmative defenses such as prior breach or contractual conditions precedent) | Hundley alleged AirMedCare/Med-Trans breached membership/contract obligations to relieve members of debt | Defendants argued contractual conditions required members to exhaust private insurance and asserted prior breach defense | Court denied dismissal: affirmative defenses not plainly established on complaint face; breach claims survive at pleading stage |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (complaints must plead more than legal conclusions)
- Am. Airlines, Inc. v. Wolens, 513 U.S. 219 (state-law claims against carriers preemption considerations; private-contract remedies distinguished)
- State ex rel. Safe-Guard Prod. Int'l, LLC v. Thompson, 235 W. Va. 197 (West Va. decision treating third-party debt-indemnifying products as insurance)
- Riffe v. Home Finders Assocs., Inc., 205 W. Va. 216 (labels in contract do not control; substance may render an agreement insurance)
- Life Partners, Inc. v. Morrison, 484 F.3d 284 (McCarran-Ferguson Act scope and "relate to" analysis)