Eaglemed LLC v. Cox

• Decision Date: 22 August 2017
• Docket Number: No. 16-8064,16-8064
• Parties: EAGLEMED LLC, a Delaware limited liability company; Med–Trans Corporation, a North Dakota corporation; Air Methods Corporation, a Delaware corporation; Rocky Mountain Holdings LLC, a Delaware limited liability company, Plaintiffs–Appellees, v. John COX, in his official capacity as Director of Wyoming Department of Workforce Services; John Ysebaert, in his official capacity as Administrator of the Wyoming Department of Workforce Services, Office of Standards and Compliance; Pete Simpson, in his official capacity as Senior Management Consultant and Deputy Administrator, Provider Services of the Wyoming Department of Workforce Services, Workers' Compensation Division, Defendants–Appellants. Texas Mutual Insurance Company, Amicus Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

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EAGLEMED LLC, a Delaware limited liability company; Med–Trans Corporation, a North Dakota corporation; Air Methods Corporation, a Delaware corporation; Rocky Mountain Holdings LLC, a Delaware limited liability company, Plaintiffs–Appellees,
v.
John COX, in his official capacity as Director of Wyoming Department of Workforce Services; John Ysebaert, in his official capacity as Administrator of the Wyoming Department of Workforce Services, Office of Standards and Compliance; Pete Simpson, in his official capacity as Senior Management Consultant and Deputy Administrator, Provider Services of the Wyoming Department of Workforce Services, Workers' Compensation Division, Defendants–Appellants.

Texas Mutual Insurance Company, Amicus Curiae.

No. 16-8064

United States Court of Appeals, Tenth Circuit.

FILED August 22, 2017

Timothy W. Miller, Senior Assistant Attorney General (Peter K. Michael, Attorney General; Daniel E. White, Deputy Attorney General; and Charlotte M. Powers, Assistant Attorney General, with him on the briefs), Cheyenne, Wyoming, for Defendants–Appellants.

George W. Hicks, Jr., of Kirkland & Ellis, LLP, Washington, DC (Christina F. Gomez, Matthew J. Smith, and Jessica J. Smith of Holland & Hart LLP, Denver Colorado ; Michael P. Manning of Holland & Hart LLP, Billings, Montana; and Richard A. Mincer and Khale J. Lenhart of Hirst Applegate LLP, Cheyenne, Wyoming, on the brief) for Plaintiffs–Appellees.

Matthew Baumgartner and P.M. Schenkkan of Graves, Doughtery, Hearon & Moody, P.C., Austin, Texas, filed an amicus curiae brief for Texas Mutual Insurance Company.

Before LUCERO, McKAY, and BACHARACH, Circuit Judges.

McKAY, Circuit Judge.

Defendants—various officials at the Wyoming Department of Workforce Services—appeal the district court's entry of a permanent injunction related to the Department's payment for air-ambulance services rendered to ill or injured individuals covered by the Wyoming Worker's Compensation Act.¹ In its initial judgment, the district court held that the Department's setting of a rate schedule for its payment for such services was preempted by the Airline Deregulation Act, and the court enjoined Defendants from enforcing both the rate schedule and the state statute which requires the Department to pay for ambulance services at a reasonable rate

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not to exceed the maximum rates set forth in the schedule. After Defendants took the position that preemption of the statute removed any statutory basis for the Department to pay air ambulances from the state workers' compensation² fund at all, the district court entered an amended judgment permanently requiring Defendants to pay the full amount charged for all air-ambulance services, whatever that amount might be, in the future. On appeal, Defendants challenge both the district court's legal holding on the preemption question and the scope of the injunctive relief ordered in the amended judgment.

I.

The Wyoming Worker's Compensation Act is "the legislative embodiment of a compromise between employers and employees who recognized the need for a new system to compensate employees for employment-related injuries without the employee having to rely upon tort concepts." Baker v. Wendy's of Mont., Inc. , 687 P.2d 885, 887 (Wyo. 1984). The Act provides mandatory coverage for all workers employed in several sectors of employment which are deemed to be extrahazardous in nature, and it also covers other employees whose employers elect to participate in the Act. Employers of covered workers must contribute to the state workers' compensation account, and in return they are provided with immunity from the tort claims that could otherwise have been brought against them. As for covered employees, "[i]n return[ ] for relinquishing their right to common-law actions against the employers when there was cause therefor in event of work-related injuries, the employees receive[ ] speedy relief for such injuries, regardless of lack of fault on the part of the employer and without cost and delay attendant to legal action." Meyer v. Kendig , 641 P.2d 1235, 1238 (Wyo. 1982). As the Wyoming Supreme Court has described it, the Act "establish[ed] an industrial-accident fund—financed by industry and underwritten by the State—from which the families of deceased employees and employees injured while engaged in extrahazardous employment would be compensated according to amounts previously determined by the legislature." Hamlin v. Transcon Lines , 697 P.2d 606, 615 (Wyo. 1985). Employers' contributions to the workers' compensation fund are "accumulated, paid into the state treasury and maintained in such manner as may be provided by law." Wyo. Const. art. 10, § 4.

The Wyoming Department of Workforce Services, and specifically the Workers' Compensation Division of the Department, is charged with managing the workers' compensation fund and paying covered compensation from the fund. The program is required to be "neither more nor less than self-supporting," Wyo. Stat. Ann. § 27–14–201(a), and the Division is tasked with ensuring both that the employers' contributions are fixed "at the lowest rate consistent with the maintenance of an actuarially sound worker's compensation account," id. § 27–14–201(c), and that the amounts paid for workers' medical and related costs are reasonable, id. § 27–14–401. Indeed, the statute provides that "[n]o fee for medical or hospital care under this section shall be allowed by the division without first reviewing the fee for appropriateness

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and reasonableness in accordance with its adopted fee schedules." Id. § 27–14–401(b).

The Act contains a single provision that pertains to the payment of costs associated with ambulance services. Section 27–14–401(e) provides: "If transportation by ambulance is necessary, the division shall allow a reasonable charge for the ambulance service at a rate not in excess of the rate schedule established by the director under the procedure set forth for payment of medical and hospital care." In accordance with this statute, the Division has established a rate schedule for both ground- and air-ambulance services. This rate schedule provides, for instance, that the maximum reimbursement for transportation in a rotary-wing air ambulance is $3,900.66 plus $27.47 per statute mile. See Rules, Regulations & Fee Schedules of the Wyo. Workers' Safety & Comp. Div. Ch. 9. The "procedure set forth for payment of medical and hospital care," incorporated by reference in Section 27–14–401(e), is established in Section 27–14–501(a). This section provides in part: "Within thirty (30) days after accepting the case of an injured employee and within thirty (30) days after each examination or treatment, a health care provider or a hospital shall file without charge a written medical report with the division.... Fees or portions of fees for injury related services or products rendered shall not be billed to or collected from the injured employee."

Plaintiffs are several companies which provide air-ambulance services in Wyoming. In this lawsuit, Plaintiffs sought declaratory and injunctive relief against Defendants, arguing that the federal Airline Deregulation Act, 49 U.S.C. §§ 1371 et seq. , preempts Section 27–14–401(e) and the associated rate schedule because they impermissibly regulate the price of air-ambulance services. On cross-motions for summary judgment, the district court agreed "that the Airline Deregulation Act preempts Wyoming Statute section 27–14–401(e) and Chapter 9, Section 8 of the Rules, Regulations and Fee Schedules of the Wyoming Workers' Compensation Division to the extent the statute and regulation set compensation that air ambulances may receive for their services." (Appellants' App. at 416.) The court accordingly entered an injunction against Defendants which "permanently enjoined [them] from enforcing Wyoming Statute Section 27–14–401(e) and Chapter 9, Section 8 of the Rules, Regulations and Fee Schedules of the Wyoming Workers' Compensation Division against air ambulance services." (Id. at 418.)

Defendants then filed a motion for a stay pending appeal in which they took the position that this injunction, by prohibiting them from enforcing the statute which provided for the reimbursement of air ambulances, prevented them from paying air-ambulance workers' compensation claims at all. Plaintiffs argued in response that the state statute should be preempted only in part, with the statute being read to strike both the word "reasonable" from the description of the allowed claims and the limitation on reimbursement to "a rate not in excess of the rate schedule established by the director under the procedure set forth for payment of medical and hospital care." Thus, Plaintiffs argued that the statute should be interpreted to require the Division to pay all charges, at whatever rate and however unreasonable, that would thereafter be submitted to the Division for air-ambulance claims. The district court agreed, entering an amended judgment which ordered "the named state officials and their employees and agents ... to compensate air ambulance entities the full amount charged for air ambulance services." (Id. at 478.) Defendants appeal this

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decision as well as the district court's underlying preemption...