Air Evac EMS, Inc. v. Sullivan

Citation331 F.Supp.3d 650
Decision Date02 August 2018
Docket NumberCase No. A-16-CA-060-SS
Parties AIR EVAC EMS, INC., Plaintiff, v. Kent SULLIVAN, in his official capacity as Texas Commissioner of Insurance, and Ryan Brannan, in his official capacity as Texas Commissioner of Workers' Compensation, Defendants, and 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, and Truck Insurance Exchange, Intervenor Defendants.
CourtUnited States District Courts. 5th Circuit. Western District of Texas

Charlotte H. Taylor, Jones Day, Washington, DC, N. Scott Fletcher, Nicole Marie Perry, Joshua L. Fuchs, Jones Day, Houston, TX, R. James George, Jr., George, Brothers, Kincaid & Horton, LLP, Austin, TX, for Plaintiff.

Adrienne Rene Butcher, Jennifer Settle Jackson, Office of the Attorney General of Texas, Austin, TX, for Defendants.

Boyce Cabaniss, Matthew B. Baumgartner, Matthew C. Powers, Graves Dougherty Hearon & Moody PC, David Lawrence Plaut, Robert F. Josey, Hanna & Plaut LLP, James M. Loughlin, Stone Loughlin & Swanson LLP, Austin, TX, for Intervenor Defendants.

ORDER

SAM SPARKS, SENIOR UNITED STATES DISTRICT JUDGE

BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Plaintiff Air Evac EMS, Inc. (Air Evac)'s Second Amended Motion for Summary Judgment [# 86], State Defendants'1 Motion for Summary Judgment and Response [# 87], the Intervenor Defendants' Motion for Summary Judgment and Response [# 88], Air Evac's Reply [# 97], the State Defendants' Reply [# 100], and the Intervenor Defendants'2 Reply [# 104] as well as Air Evac's Motion to Strike Summary Judgment Evidence [# 94], the State Defendant's Response [# 101] in opposition, the Intervenor Defendants' Response [# 106] in opposition, and Air Evac's Reply [# 108] in support.3 Having considered the documents, the governing law, and the file as a whole, the Court now enters the following opinion and orders.

Background
I. The Parties

Air Evac is a nationwide provider of air ambulance services, supplying air transportation in response to medical emergencies. Air Evac operates more than twenty air bases in Texas and holds a variety of licenses. Relevant here, the Federal Aviation Administration (FAA), a division of the Department of Transportation (DOT), issued Air Evac a Part 135 air carrier operating certificate. Pl.'s Mot. Summ. J. [# 86-1] Ex. C (Air Carrier Certificate). In doing so, the FAA expressly certified Air Evac "has met the requirements of the Federal Aviation Act ... and is hereby authorized to operate as an air carrier and conduct common carriage operations ...." Id. Additionally, the DOT approved Air Evac's registration as an "air taxi operator," which is "a classification of air carriers ... directly engage[d] in air transportation of persons or property ...." Id. [# 86-1] Ex. E (Air Taxi Operator Registrations); 14 C.F.R. § 298.3(a).

When Air Evac transports a patient who was injured at work and whose medical expenses are covered by a workers' compensation policy, the Texas Workers' Compensation Act (TWCA), Texas Labor Code §§ 401.001 - 401.026, governs payment for Air Evac's services.

In filing this declaratory judgment action against the State Defendants as officials administering the TWCA, Air Evac challenges the TWCA provisions restricting the amount Air Evac can charge and the method through which Air Evac can bill for its services. Air Evac contends application of the TWCA and its related regulations to air ambulance providers is preempted by the Airline Deregulation Act (ADA), 49 U.S.C. § 41713(b)(1).

II. The TWCA

The Texas Legislature enacted the TWCA in 1913 "in response to the needs of workers, who, despite escalating industrial accidents, were increasingly being denied recovery." SeaBright Ins. Co. v. Lopez , 465 S.W.3d 637, 642 (Tex. 2015) (quoting Kroger Co. v. Keng , 23 S.W.3d 347, 349 (Tex. 2000) ). Through the TWCA, the Texas Legislature created "a mechanism by which workers could recover from subscribing employers without regard to the workers' own negligence while limiting the employers' exposure to uncertain, possibly high damage awards permitted under the common law." In re Poly-Am., L.P. , 262 S.W.3d 337, 349-50 (Tex. 2008) (internal citations omitted). Such a mechanism "ensure[s] compensation for injured employees while protecting employers from the costs of litigation ...." Id.

Relevant here, the TWCA requires health care providers, such as air ambulance providers, to charge workers' compensation insurers for services provided to patients covered by the TWCA. See TEX. LAB. CODE § 408.027(a). The workers' compensation insurer then reimburses the health care provider according to rate guidelines created by the Texas Workers' Compensation Commission (the Commission). Id. §§ 408.027(a), 413.011(a).

Generally corresponding with Medicare rates, the Commission's guidelines set the maximum allowable reimbursement a workers' compensation insurer may pay a health care provider for services rendered. 28 TEX. ADMIN. CODE § 134.1(a) ; see also TEX. LAB. CODE § 413.011(a). An insurer is prohibited from paying more than the maximum allowable rate. See TEX. LAB. CODE § 413.011 (d). If the Commission has not established a rate for a particular medical service-as is the case for air ambulance services-the Division of Workers' Compensation (DWC) determines a "fair and reasonable" amount to be paid to the service provider. Id. In 2002, the DWC adopted a rule setting a general reimbursement rate of 125% of the Medicare rate. See 28 TEX. ADMIN. CODE § 134.203(d).

Furthermore, the TWCA prohibits a health care provider from billing the patient for any portion of a bill in excess of the Commission's rate, a practice known as "balance billing." TEX. LAB. CODE § 413.042. If a workers' compensation insurer pays less than a service provider's billed charges, the service provider may file a medical fee dispute with the DWC. Id. § 413.031 (a)(1). The DWC then examines the TWCA and its regulations to determine whether a service provider is owed further payment and, if so, how much. Id.

Air Evac alleges it provided air ambulance services to "several dozen" workers' compensation patients during 2015 but, "because of the TWCA's reimbursement scheme, ... has been paid only a small fraction of its billed charges." Compl. [# 1] ¶ 31.

II. Procedural History

Air Evac filed this suit against the State Defendants in January 2016. See id. Seeking a declaratory judgment and permanent injunctive relief, Air Evac argues the ADA preempts Texas Labor Code § 314.011 and 28 Texas Administrative Code § 134.1 and § 134.203 as applied to air ambulance providers. Id. ¶¶ 36-39. Air Evac claims these TWCA provisions establish the price or rate Air Evac may charge for its transportation services, which is impermissible under the ADA.4 Id.

Prior to the discovery conference, Air Evac moved for summary judgment and the State Defendants and the Intervenor Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(1). The Court granted the Defendants' motions to dismiss on sovereign immunity grounds. Air Evac EMS, Inc. v. Texas , No. A-16-CA-060-SS, 2016 WL 4259552 (W.D. Tex. Aug. 11, 2016). The Fifth Circuit vacated and remanded the case. Air Evac EMS, Inc. v. Texas, Dep't of Ins., Div. of Workers' Comp. , 851 F.3d 507 (5th Cir. 2017).

Following remand, Air Evac filed an amended motion for summary judgment. The Court dismissed Air Evac's amended summary judgment motion without prejudice to refiling and authorized a limited discovery period to create a full record of the parties' factual contentions. Order of June 1, 2017 [# 66]; Order of June 30, 2017 [# 70].5 After discovery, Air Evac, the State Defendants, and the Intervenor Defendants filed cross motions for summary judgment. Air Evac also filed a motion to strike evidence submitted by the State Defendants and the Intervenor Defendants in support of their motions for summary judgment. These pending motions are ripe for review.

Analysis
I. Motion to Strike

Air Evac moves to strike the opinions of Dr. Ronald T. Luke and Mr. Daniel Akins, offered as experts by Defendants in support of their motions for summary judgment and in opposition to Air Evac's motion for summary judgment. Air Evac argues Dr. Luke and Mr. Akins offer inadmissible expert testimony and their opinions are unreliable. Air Evac also moves to strike portions of the declarations of Mr. Steven Math and Ms. Phoebe Murphy-two Texas Mutual Insurance Company employees-because their statements exceed the bounds of permissible lay opinion and stray into expert testimony.

The Court dismisses Air Evac's motion to strike. There is no jury demand in this case, and thus the Court is the trier of fact. Air Evac's objections to Defendants' evidence ask the Court to exercise its role as a "gatekeeper" and apply the admissibility standards articulated in Federal Rules of Evidence 701 and 702 as well as those expressed in Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) and extended by Kumho Tire Co. v. Carmichael , 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). But the gatekeeper role is intended to prevent the introduction of confusing and unreliable testimony to the jury. See Daubert , 509 U.S. at 595-97, 113 S.Ct. 2786. Safeguards such as those provided for in Rules 701 and 702 and discussed in Daubert are largely irrelevant in the context of a bench trial. See Williams v. Illinois , 567 U.S. 50, 69, 132 S.Ct. 2221, 183 L.Ed.2d 89 (2012) ("When the judge sits as the trier of fact, it is presumed that the judge will understand the limited reason for the disclosure of the underlying inadmissible information and will not rely on that information for any improper purpose."); Gibbs v. Gibbs , 210 F.3d 491, 500 (5th Cir. 2000) (finding the standards announced in Daube...

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    ...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 c......
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