Bailey v. Rocky Mountain Holdings, LLC

• Decision Date: 08 May 2018
• Docket Number: No. 15-14415,15-14415
• Citation: 889 F.3d 1259
• Parties: Lenworth BAILEY, as the Personal Representative of the Estate of Lemar Bailey, individually and on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. ROCKY MOUNTAIN HOLDINGS, LLC, Air Methods Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

889 F.3d 1259

Lenworth BAILEY, as the Personal Representative of the Estate of Lemar Bailey, individually and on behalf of himself and all others similarly situated, Plaintiff-Appellant,

v.ROCKY MOUNTAIN HOLDINGS, LLC, Air Methods Corporation, Defendants-Appellees.

No. 15-14415

United States Court of Appeals, Eleventh Circuit.

May 8, 2018

William John Cornwell, Seth Adam Kolton, David K. Friedman, Sylvia L. Wenger, Weiss Handler & Cornwell, PA, Boca Raton, FL, Bruce Franklin Silver, Silver & Silver, PA, Boca Raton, FL, for Plaintiff–Appellant.

Philip E. Rothschild, Holland & Knight, LLP, Fort Lauderdale, FL, Judith R. Nemsick, Holland & Knight, LLP, New York, NY, for Defendants–Appellees.

Before TJOFLAT, JULIE CARNES, and MELLOY,^* Circuit Judges.

TJOFLAT, Circuit Judge:

The Airline Deregulation Act ("ADA") provides that "a State, political subdivision of a State, or political authority of at least 2 States 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." 49 U.S.C. § 41713(b)(1). This language expresses a broad preemptive intent that encompasses state enforcement actions "having a connection with or reference to airline ‘rates, routes, or services.’ " Morales v. Trans World Airlines, Inc. , 504 U.S. 374, 384, 112 S.Ct. 2031, 2037, 119 L.Ed.2d 157 (1992). Whenever a state law has "the forbidden significant effect" on the prices of an air carrier, the ADA preempts that law. Id. at 388, 112 S.Ct. at 2039 ; see also Branche v. Airtran Airways, Inc. , 342 F.3d 1248, 1255 (11th Cir. 2003).

This case concerns whether the ADA preempts a cause of action against an air ambulance provider based on a provision of the Florida Motor Vehicle No–Fault Law, Florida Statutes §§ 627.730 – 627.7405. The provision is part of the No–Fault Law's requirement that automobile insurance policies provide personal injury protection ("PIP") for persons injured in automobile accidents. This protection extends to "medically necessary" services, including emergency transport, "to a limit of $10,000." Fla. Stat. § 627.736(1)(a).

The PIP statute, Florida Statutes § 627.736, permits an insured to choose one of two methods for calculating the reimbursement of medical claims under his automobile insurance policy. See Allstate Ins. Co. v. Orthopedic Specialists , 212 So.3d 973, 976 (Fla. 2017). The first method requires the auto insurer to reimburse "[e]ighty percent of all reasonable expenses for medically necessary ... services." Fla. Stat. § 627.736(1)(a). To determine a reasonable amount, any "relevant" information may be considered. Id. § 627.736(5)(a). Under this first method, a medical provider can bill the insured for the reasonable fee that remains after his auto insurance has paid its portion.

The second method permits an insured and insurer to "limit reimbursement to 80 percent" of a schedule of charges that mostly¹ tracks Medicare rates. Id. § 627.736(5)(a) 1. For example, an insurer may limit reimbursement for "emergency transport and treatment" to "200 percent of Medicare." Id. § 627.736(5)(a) 1.a. But once the parties have opted to limit payment under the schedule, a provision, which we shall call the "balance billing provision," prohibits the medical provider from billing or attempting to bill the insured for "any amount in excess of such limits, except for amounts that are not covered by the insured's personal injury protection coverage due to the coinsurance amount or maximum policy limits." Id. § 627.736(5)(a) 4. Under this second method, a medical provider may bill the insured only for the scheduled fee, regardless of the reasonableness of that fee.

In this case, an air ambulance provider, which was registered as an air carrier under federal law, transported a child injured in an automobile accident to a hospital by helicopter. The PIP coverage of the automobile owner's insurance policy covered the transportation. Seeking reimbursement for the transportation, the air ambulance provider submitted a reasonable bill for medical services to the owner's auto insurer. The owner's insurance policy limited reimbursement of the services under the fee schedule of the second method. The auto insurer therefore paid the bill pursuant to the fee schedule, which called for a payment that was less than the reasonable amount the provider charged for its services. The provider then charged the insured for the unpaid portion of its reasonable bill.

In an effort to avoid paying the balance of the bill, the insured brought a class action against the air ambulance provider seeking a declaration that the balance billing provision limited its reimbursement to the amount fixed in the fee schedule. In response, the provider moved to dismiss the action on the ground that the ADA preempted the enforcement of the balance billing provision. The insured contended in turn that the McCarran–Ferguson Act ("MFA")—which provides that federal laws cannot preempt "any law enacted by any State for the purpose of regulating the business of insurance"—precluded the ADA's preemption of his action. 15 U.S.C. § 1012(b).

The District Court agreed with the air ambulance provider and held that the ADA preempted the insured's action because it related to the prices of the air carrier. The MFA, it determined, prevents only inadvertent intrusion from federal legislation, not express preemption such as that of the ADA.

The insured appeals the District Court's decision. Because his action seeks to restrict the prices of an air carrier, we hold that the ADA preempts it. The MFA does not interfere with this preemption because the balance billing provision, on which the action rests, has nothing to do with the relationship between an insurer and an insured and therefore does not regulate the business of insurance. We therefore affirm the District Court's decision.

I.

On March 17, 2013, Lemar Bailey—the young son of the owner of the automobile insurance policy, Lenworth Bailey—suffered life-threatening injuries in an automobile accident that occurred while Deon Hyde, his stepmother, was driving.² Because he required immediate medical attention, Air Methods Corporation ("AMC")³ was called upon to transport him thirty-seven miles by air ambulance from the scene of the accident to a hospital in West Palm Beach, Florida. In all, AMC operated the air ambulance between 2:30 PM and 4:04 PM, a total of one hour and thirty-four minutes. Lemar Bailey died at the hospital soon after arrival.

In exchange for its services, AMC presented a bill of $27,975.90. AMC first submitted this bill to State Farm Mutual Automobile Insurance Company, Bailey's automobile insurance provider. Pursuant to the fee schedule, State Farm paid $6,911.54 of the bill.⁴ AMC billed the balance of $21,064.36 to Bailey as Lemar's father. Bailey submitted this bill to Aetna Life Insurance Company, his health insurer. Aetna paid $3,681.60 of the claim.⁵ Thus, from State Farm and Aetna, AMC received $10,593.14. Bailey did not pay the remaining balance of $17,382.76.

Bailey brought this action in the Circuit Court of Broward County, Florida, on behalf of himself and a class of individuals who received air ambulance services from AMC, alleging that AMC was attempting "to collect amounts from persons transported by air ambulance that [it was] statutorily prohibited from collecting." In his complaint, Bailey alleges that the balance billing provision forbids a medical provider from charging a PIP insured in excess of the fee schedule, when the automobile insurance agreement limited coverage to the schedule.

Bailey used two Florida statutes as vehicles for asserting his argument that the balance billing provision limits the amount AMC could charge for its services.⁶ Counts II and III allege that AMC's attempt to collect the balance of the bill violated the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Florida Statutes § 501.204.⁷ Count IV alleges that AMC violated the Florida Consumer Collections Practices Act ("FCCPA"), Florida Statutes § 559.72(9),⁸ by seeking to collect an amount in excess of the fee schedule. The balance billing provision is the gravamen of each count. If the ADA preempts the balance billing provision, the counts fail.

AMC removed the case to the United States District Court for the Southern District of Florida under the Class Action Fairness Act,⁹ 28 U.S.C. § 1332(d)(2). Soon after removal, AMC moved to dismiss the complaint for failure to state a claim on two theories. First, AMC argued that the balance billing provision does not preclude medical providers from billing PIP-insured patients for medical expenditures that are reasonably necessary under the circumstances and from collecting from the patients the portion of the bill that remains unpaid. Second, AMC argued that the ADA preempts Bailey's action because it related to the prices of an air carrier. 49 U.S.C. § 41713(b)(1). Bailey, in response, contended that the MFA prevents preemption of his action because the PIP statute "regulate[s] the business of insurance." 15 U.S.C. § 1012(b).

The District Court denied AMC's motion to dismiss without explanation. AMC then answered Bailey's complaint, raising as an affirmative defense the same preemption theory it asserted in its motion to dismiss, and moved the District Court for summary judgment. Following limited discovery, Bailey moved the District Court for class certification. The District Court denied his motion.¹⁰ Shortly thereafter, the District Court granted summary judgment for AMC, holding that the ADA preempted Bailey's action,¹¹ and entered judgment against Bailey.

Bailey appeals the dismissal of his action. ¹²

He argues that the ADA does not preempt his action because the "PIP statute does not regulate the amount that Providers can charge for aeromedical transportation." In the alternative, Bailey contends that the MFA prevents the ADA from preempting his action because the PIP statute...