Lenworth Bailey v. Rocky Mountain Holdings, LLC
889 F.3d 1259
11th Cir.2018Background
- On March 17, 2013 AMC (an air-ambulance provider and federally registered air carrier) transported a child injured in an auto accident; AMC billed $27,975.90. State Farm (PIP auto insurer) paid under a Medicare-based fee schedule an amount far less than AMC’s billed reasonable charge; AMC sought the unpaid balance from the insured, Lenworth Bailey.
- Bailey sued AMC in Florida state court (then removed), alleging AMC’s balance-billing violated Florida’s PIP statute and related consumer protection statutes (FDUTPA, FCCPA), seeking class relief and damages.
- Florida’s PIP statute offers two reimbursement methods: (1) 80% of reasonable expenses (provider can balance-bill insured), or (2) 80% of a Medicare-based fee schedule (balance billing prohibited except for coinsurance or policy limits). The parties’ insurer had elected the fee-schedule method.
- AMC moved for summary judgment, arguing the Airline Deregulation Act (ADA) preempts Bailey’s claims because they effectively regulate the prices of an air carrier; the district court granted summary judgment for AMC. Bailey appealed, arguing ADA preemption is displaced by the McCarran–Ferguson Act (MFA).
- The Eleventh Circuit held the ADA preempts Bailey’s claims because the balance-billing provision substantially affects air-carrier prices, and the MFA did not save the state law because the balance-billing rule does not regulate the insurer–insured relationship and thus is not a regulation of the “business of insurance.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ADA preempts Bailey’s state-law challenge to AMC’s balance billing | The PIP statute does not regulate air-carrier prices; it limits provider collection under state insurance law | The PIP balance-billing provision functionally restricts the rates an air carrier may charge and is therefore preempted by the ADA | ADA preempts Bailey’s action: the balance-billing provision has the forbidden significant effect on air-carrier prices |
| Whether AMC’s lack of notice or consent to an insured’s fee-schedule election matters | Bailey: providers cannot be bound to fee limits they didn’t know about; statute nonetheless limits provider billing | AMC: emergency providers often lack notice and cannot refuse care; state-imposed limits still operate to constrain provider prices | Irrelevant to preemption: even without notice/consent, state law imposes a price restriction and is preempted as to air carriers |
| Whether the MFA prevents ADA preemption by treating the PIP statute as regulating the business of insurance | Bailey: MFA reverses federal preemption because the PIP statute regulates insurance and thus state law should govern | AMC: The balance-billing rule governs provider–patient billing, not the insurer–insured relationship; it does not regulate the business of insurance | MFA does not apply: balance-billing does not fall within the “business of insurance” under the Pireno factors, so ADA preemption stands |
| Whether state-law causes of action (FDUTPA, FCCPA, unjust enrichment) survive when they rely on the balance-billing provision | Bailey: statutory and common-law claims enforce the PIP balance-billing limits against providers | AMC: those claims seek to police air-carrier rates and therefore are preempted by ADA | Claims fail: because they rest on a preempted state price restriction, the federal court affirmed summary judgment for AMC |
Key Cases Cited
- Morales v. Trans World Airlines, 504 U.S. 374 (1992) (ADA’s preemption reaches state actions having a connection with airline rates, routes, or services)
- American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995) (states may not use laws to regulate carrier pricing, but voluntary contractual obligations remain enforceable)
- Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (1982) (three-part test for whether a state law regulates the “business of insurance”)
- SEC v. National Securities, Inc., 393 U.S. 453 (1969) (background on federal regulation of insurance and basis for McCarran–Ferguson)
- Turbeville v. Financial Industry Regulatory Authority, 874 F.3d 1268 (11th Cir. 2017) (discussing preemption principles and applying preemption frameworks)