Air Evac EMS, Inc. v. Cheatham
| Decision Date | 15 May 2017 |
| Docket Number | CIVIL ACTION NO. 2:16–cv–05224 |
| Citation | 260 F.Supp.3d 628 |
| Parties | AIR EVAC EMS, INC., Plaintiff, v. Ted CHEATHAM, et al., Defendants. |
| Court | U.S. District Court — Southern District of West Virginia |
Benjamin B. Ware, Goodwin & Goodwin, Carte P. Goodwin, Frost Brown Todd, Charleston, WV, Charlotte Taylor, Pro Hac Vice, Meghan E. Greenfield, Pro Hac Vice, Jones Day, Washington, DC, Joshua L. Fuchs, Pro Hac Vice, Jones Day, Houston, TX, for Plaintiff.
Katherine A. Schultz, Sean Michael Whelan, Office of the Attorney General, Mary M. Downey, Charleston, WV, for Defendants.
Pending before the Court is Defendants' Motion to Dismiss the Amended Complaint. (ECF No. 36.) For the reasons discussed below, the motion is DENIED .
Plaintiff Air Evac EMS, Inc. is a federally regulated air carrier providing air ambulance services in the State of West Virginia. Its air ambulances depart from a number of air bases throughout the State when requested by third-party medical professionals or first responders. Because air ambulance services are often provided in emergencies, Air Evac must accept patients without regard to insurance coverage or ability to pay. This includes patients covered by the Public Employees Insurance Agency ("PEIA") insurance and West Virginia workers' compensation insurance. This lawsuit concerns Air Evac's ability to collect payment for services rendered to these patients.
On June 10, 2016, West Virginia House Bill 4315 went into effect. See W. Va. Code § 5–16–8a. Entitled "Air-ambulance fees," the statute contains two subsections. The first applies to all air ambulance providers that do not contract with PEIA, including Air Evac. Id. § 5–16–8a(a). It caps the amount Air Evac can recover from PEIA for transporting patients covered by PEIA insurance, limiting Air Evac's maximum reimbursement amount to the equivalent amount paid under the federal Medicare program. Id. Second, the statute eliminates Air Evac's ability to recover any payment from PEIA when it transports PEIA insurance plan participants who also participate in Air Evac's subscription program. Id. § 5–16–8a(b).
A description of the subscription program is in order. Under the terms of Air Evac's subscription program, a subscriber pays a fixed annual membership fee in exchange for the guarantee that if he or she requires air ambulance services during the year, and if Air Evac or its affiliates provide the requested transportation services, all air ambulance charges otherwise borne by the subscriber will be considered prepaid. (Am. Compl. ¶¶ 17–18.) Subscribers cannot call on Air Evac directly when services are needed, and there is no assurance of service. As in all cases, Air Evac has no way of knowing whether a patient is a participant in its subscription program prior to providing service. Thus, under the recently enacted statute, Air Evac must accept the membership fee as full payment when it provides emergency transportation services to a member covered by PEIA insurance. W. Va. Code § 5–16–8a(b). Air Evac cannot seek reimbursement of any kind from PEIA in this scenario. The annual membership fee under Air Evac's program is less than $100. (Am. Compl. ¶ 17.)
Aside from § 5–16–8a, the PEIA Finance Board has also capped the amount PEIA reimburses Air Evac for providing services to PEIA participants. See W. Va. R. tit. 151, Series 1, Attachment A. In the absence of the statute, the fee schedule would govern. (Am. Compl. ¶ 49.) Similarly, the Office of the Insurance Commissioner ("OIC") has limited the amount it will reimburse for services rendered relating to injuries covered by West Virginia's workers' compensation scheme. The OIC is tasked with establishing and enforcing maximum reimbursement amounts to be paid to health care providers for service provided to workers' compensation claimants. (Id. ¶ 4.) Under the OIC's formula, Air Evac can recover only 135% of the reimbursement rate established by the federal Centers for Medicare and Medicaid Services. (Id. ¶ 58); W. Va. Code St. R. § 85–20–9.Air Evac has no contract with the workers' compensation program.
The PEIA and OIC fee schedules have prevented Air Evac from recouping its full fees. Air Evac alleges that in 2015, it provided air ambulance services to PEIA insurance plan participants as well as to patients whose injuries were covered by workers' compensation. Air Evac was paid a fraction of its billed charges for these transports. (Am. Compl. ¶¶ 53, 60.)
This litigation relates to another West Virginia statutory provision, West Virginia Code § 16–29D–4. The law prevents health care providers, including Air Evac, from recovering an unpaid balance from PEIA members—a practice known as "balance billing." (Id. ¶ 47.) The statute reads:
W. Va. Code § 16–29D–4. Though the statute provides an exception for emergency medical services, Air Evac alleges that the State of West Virginia does not consider emergency transportation services to fall within the scope of that exception. Under the State's interpretation, Air Evac may not "balance bill" PEIA patients, whether it rendered services in an emergency or not. Section 16–29D–4, like § 5–16–8a and the laws applicable to reimbursement under the workers' compensation scheme, carries civil and criminal sanctions for violations of its terms. See W. Va. Code § 16–29D–8 ().
On June 9, 2016, the day before § 5–16–8a took effect, Air Evac filed suit against Ted Cheatham, the Director of the PEIA; Mary Jake Pickens, Joshua Sword, James W. Dailey II, Troy Giatras, Elaine A. Harris, William Ihlenfeld, Brian Donat, William Milam, and Michael Smith, members of the PEIA's Finance Board; and Michael D. Riley, West Virginia's Insurance Commissioner. Air Evac later amended the Complaint to add Karen L. Bowling, then the Secretary for the West Virginia Department of Health and Human Resources ("DHHR"), as a defendant. (Am. Compl. ¶ 5.)
The Amended Complaint contains six claims for relief. Counts One and Two seek a declaration that the two subsections of § 5–16–8a are each preempted by the Airline Deregulation Act of 1978 ("ADA") because they establish and limit the price of Air Evac's services. The claims request injunctive relief against Defendants Cheatham and Riley. The third claim alleges that the regulation of Air Evac's subscription agreements violates the Contracts Clause of the United States Constitution and seeks declaratory and injunctive relief. The fourth and fifth claims for relief similarly seek a declaration that the PEIA and OIC fee schedules are preempted by the ADA. The claims seek injunctive relief against the PEIA Finance Board (Count Four), and Defendant Riley (Count Five). The sixth claim for relief is pled in the alternative. In the event the Court does not invalidate § 5–16–8 and the fee schedules, Air Evac asks the Court to invalidate the prohibition on balancing billing as preempted by the ADA.
Defendants moved to dismiss the original Complaint on August 12, 2016.1 Air Evac filed an Amended Complaint on August 25, 2016, which Defendants answered with an Amended Motion to Dismiss on September 15, 2016. That motion has been fully briefed. On March 23, 2017, Air Evac filed a Notice of Supplemental Authority, to which Defendants responded on April 6, 2017.
The Amended Motion to Dismiss implicates different standards of review. A motion to dismiss based on lack of subject matter jurisdiction falls under Federal Rule of Civil Procedure 12(b)(1), while a motion to dismiss for failure to state a claim is governed by Federal Rule of Civil Procedure 12(b)(6).
It is axiomatic that a court must find it has jurisdiction before determining the validity of any claims brought before it. Evans v. B.F. Perkins Co. , 166 F.3d 642, 647 (4th Cir. 1999). A motion to dismiss an action under Rule 12(b)(1) raises the question of the federal court's subject matter jurisdiction over the action. "Challenges to jurisdiction under Rule 12(b)(1) may be raised in two distinct ways: ‘facial attacks’ and ‘factual attacks.’ " Adkins v. United States , 923 F.Supp.2d 853, 856 (S.D. W. Va. 2013) (citing Thigpen v. United States , 800 F.2d 393, 401 n. 15 (4th Cir. 1986) ). A "facial attack" questions whether "the allegations of the complaint are facially [ ]sufficient to sustain the court's jurisdiction."
Thigpen , 800 F.2d at 401 n. 15. In such a case, the court must accept the allegations as true and proceed to consider the motion as it would a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Id. Defendants' ripeness and sovereign...
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