Air Evac EMS, Inc. v. Sullivan

• Decision Date: 04 August 2021
• Docket Number: No. 18-50722,18-50722
• Parties: AIR EVAC EMS, INCORPORATED, Plaintiff—Appellee, v. Kent SULLIVAN, in his Official Capacity as Texas Commissioner of Insurance; Cassie Brown, in her Official Capacity as Texas Commissioner of Workers’ Compensation, Defendants—Appellants, v. Texas Mutual Insurance Company ; Liberty Mutual Insurance Company; Zenith Insurance Company; Hartford Underwriters Insurance Company ; Twin City Fire Insurance Company; Transportation Insurance Company; Valley Forge Insurance Company; Truck Insurance Exchange, Intervenors—Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

8 F.4th 346

AIR EVAC EMS, INCORPORATED, Plaintiff—Appellee,

v.Kent SULLIVAN, in his Official Capacity as Texas Commissioner of Insurance; Cassie Brown, in her Official Capacity as Texas Commissioner of Workers’ Compensation, Defendants—Appellants,

v.Texas Mutual Insurance Company ; Liberty Mutual Insurance Company; Zenith Insurance Company; Hartford Underwriters Insurance Company ; Twin City Fire Insurance Company; Transportation Insurance Company; Valley Forge Insurance Company; Truck Insurance Exchange, Intervenors—Appellants.

No. 18-50722

United States Court of Appeals, Fifth Circuit.

Filed August 4, 2021

Joshua Lee Fuchs, Jones Day, Houston, TX, Benjamin J. Cassady, Charlotte Taylor, Esq., Jones Day, Washington, DC, Roger James George, Jr., Trial Attorney, George Brothers Kincaid & Horton, L.L.P., for Plaintiff-Appellee.

Lisa Bennett, Assistant Solicitor General, Office of the Attorney General for the State of Texas, Jennifer Settle Jackson, Assistant Attorney General, Office of the Attorney General, Financial Litigation & Charitable Trusts Division, for Defendants-Appellants Kent Sullivan, Texas Commissioner of Insurance, Cassie Brown, Texas Commissioner of Workers' Compensation.

Matthew Birk Baumgartner, Armbrust & Brown, P.L.L.C., Austin, TX, Paul W. Schlaud, Texas Mutual Insurance Company, Office of the General Counsel Division, Austin, TX, for Intervenor-Appellant Texas Mutual Insurance Company.

Robert F. Josey, Hanna & Plaut, L.L.P., Austin, TX , for Intervenor-Appellant Liberty Mutual Insurance Company.

James Michael Loughlin, Stone Loughlin & Swanson, L.L.P., Austin, TX, for Intervenors-Appellants Zenith Insurance Company, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Transportation Insurance Company.

Before Stewart, Clement, and Ho, Circuit Judges.

James C. Ho, Circuit Judge:

Air Evac EMS, Inc., is an air ambulance provider that offers medical transport services to a wide variety of patients. That includes patients who are injured at their workplace. The price that Air Evac may charge for such transportation is accordingly subject to conflicting regulatory regimes.

The Texas Workers’ Compensation Act ("TWCA"), Tex. Lab. Code §§ 401.007– 419.007, regulates the prices that insurers must pay to providers for various medical services utilized by their beneficiaries. That includes air transport services. But those price restrictions conflict with the federal Airline Deregulation Act ("ADA"), which makes clear that the states "may not enact or enforce a law, regulation, or other provision ... related to a price, route, or service of an air carrier that may provide air transportation under this subpart." 49 U.S.C. § 41713(b)(1).

The price restrictions are not saved by the McCarran–Ferguson Act. That act makes clear that "[n]o Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance." 15 U.S.C. § 1012(b). But the price regulations at issue here do not govern "the business of insurance." The McCarran–Ferguson Act concerns state efforts to regulate the relationship between insurers and insureds—not between insurers and providers.

We accordingly affirm. In doing so, we agree with our sister courts of appeals, which have unanimously held that the ADA preempts state price caps on air ambulance reimbursements, and that those state price caps are not saved by the McCarran–Ferguson Act. And we disagree with the Texas Supreme Court, which has reached contrary conclusions by a divided vote.

I.

Under the TWCA, employees in Texas receive guaranteed medical care paid for by employer-funded insurance policies, in exchange for relinquishing their common-law workplace injury claims. As part of this regulatory scheme, the TWCA strictly regulates the prices that private insurers must pay health care providers for treating workers injured on the job. See TEX. LAB. CODE § 413.011 ; 28 TEX. ADMIN. CODE §§ 134.1, 134.203. The TWCA also prohibits providers from engaging in "balance-billing"—that is, they cannot collect any remaining balance from either the employer or employee after an insurer has reimbursed the provider less than the full amount for the services rendered. See Tex. Lab. Code § 413.042(a).

Air Evac contends that these price caps are preempted by the ADA. So it sued various Texas state officials, seeking a declaration that the ADA preempts the TWCA and its regulations, and an injunction barring enforcement of the price caps. Alternatively, Air Evac requested an injunction barring enforcement of the TWCA's balance-billing prohibition.

Eight insurance companies joined the Texas officials as intervenors to defend Texas law. Together they moved to dismiss the case on various jurisdictional grounds. The district court granted the motion, but we subsequently reversed. See Air Evac EMS, Inc. v. Tex., Dep't of Ins., Div. of Workers’ Comp. , 851 F.3d 507, 510 (5th Cir. 2017).

On remand, the district court granted Air Evac's motion for summary judgment on its claim that the Texas price caps were preempted by the ADA and not saved by the McCarran–Ferguson Act. See Air Evac EMS, Inc. v. Sullivan , 331 F. Supp. 3d 650, 667 (W.D. Tex. 2018). Consequently, it did not address Air Evac's alternative balance-billing claim. Id. at 656 n.4. The district court enjoined enforcement of Texas Labor Code § 413.011 and Texas Administrative Code §§ 134.1 and 134.203 as applied to Air Evac. Id. at 664.

Both the State and the eight insurance companies appealed. Following oral argument in this case, the Supreme Court of Texas decided a similar case addressing the same issues. See Tex. Mut. Ins. Co. v. PHI Air Med., LLC , 610 S.W.3d 839 (Tex. 2020), cert. denied , ––– U.S. ––––, ––– S.Ct. ––––, ––– L.Ed.2d ––––, 2021 WL 1602647 (Apr. 26, 2021) (mem.). Contrary to the district court here and our sister courts of appeals that have examined these issues, the Texas Supreme Court held that the TWCA price caps on air ambulance providers are not preempted by federal law. But it did so over a thorough dissent supported by two members of the court. Id. at 865 (Green, J., joined by Hecht, C.J.). Seven members sided with the majority, but for differing reasons—six concluded that the ADA does not preempt the TWCA price caps, id. at 843, while four concluded that the TWCA price caps are saved by the McCarran–Ferguson Act, id. at 856.

We review summary judgment rulings de novo. IberiaBank v. Broussard , 907 F.3d 826, 842 (5th Cir. 2018).

II.

Congress enacted the ADA in 1978, introducing free-market principles to a heavily regulated and stagnating aviation industry. To streamline regulations, avoid a patchwork of state protocols, and "ensure that the States would not undo federal deregulation with regulation of their own," Congress included an express preemption provision. Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 378, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992).

Under the express preemption provision, "[a] State[ ] ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart." 49 U.S.C. § 41713(b)(1). The Supreme Court has made clear that this express preemption provision "has a ‘broad scope’ " and "an ‘expansive sweep,’ " and that the "ordinary meaning of these words ... express a broad pre-emptive purpose." Morales , 504 U.S. at 383–84, 112 S.Ct. 2031 (citations omitted).

Two of our sister circuits have unanimously held that the ADA preempts price controls on air ambulance services set by state workers’ compensation regulations. See Air Evac EMS, Inc. v. Cheatham , 910 F.3d 751 (4th Cir. 2018) ; EagleMed LLC v. Cox , 868 F.3d 893 (10th Cir. 2017). We agree.

As a threshold matter, Texas and the insurers urge that we adopt a presumption against preemption when it comes to issues of traditional state law such as workers’ compensation. We need not address that contention here, however, because we do not regard this as a close call—the text of the ADA plainly governs this case. See , e.g. , Cheatham , 910 F.3d at 762 n.1 ("[W]e need not enter the great preemption presumption wars here because the text of the preemption provision ... governs the disposition of this case.").

Under the ADA, a state may not enforce any law or regulation that is (1) "related to a price" of (2) an "air carrier" that (3) may provide air transportation "under this subpart." 49 U.S.C. § 41713(b)(1). Each of those elements is satisfied here. We address each in turn.

A.

The TWCA regulations in question plainly involve the "price" of air transport services. The ADA defines "price" as "a rate, fare, or charge." 49 U.S.C. § 40102(a)(39). We see no reason to depart from the ordinary meaning of these terms. The term "price" simply means the "sum of money ... asked or given for something" in return. AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 1038 (1979). See also id. at 1082 (defining "rate" as "a charge or payment calculated in relation to any particular sum or quantity"); id. at 476 (defining "fare" as a "transportation charge"); id. at 226 (defining "charge" as "to set or ask (a given amount) as a price").

The TWCA regulations plainly govern "price"—namely, the price that Air Evac is allowed to charge Texas workers’ compensation insurers for air ambulance services.

For their part, Texas and the insurers contend that the term "price" applies only to competitive markets—and that "air ambulances do not operate in a market that would dictate the price or rate charged in the absence of government interference." Under that view, any amount that is determined by a regulator for a particular good or service would not constitute a "price." That would make terms like "price controls" an oxymoron. Yet the term...