Eaglemed, LLC v. Wyoming ex rel. Dep't of Workforce Servs., Workers' Comp. Div.

Citation227 F.Supp.3d 1255
Decision Date13 May 2016
Docket NumberCase No. 15–CV–26–ABJ
Parties EAGLEMED, LLC, a Delaware limited liability company, Med–Trans Corporation, a North Dakota corporation, Air–Methods Corporation, a Delaware corporation, and Rocky Mountain Holdings, LLC, a Delaware limited liability company, Plaintiffs, v. State of WYOMING, EX REL., DEPARTMENT OF WORKFORCE SERVICES, WORKERS' COMPENSATION DIVISION, Joan K. Evans, in her official capacity as Director of the 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, and 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.
CourtU.S. District Court — District of Wyoming

Richard A. Mincer, Hirst Applegate LLP, Bradley T. Cave, Joanna R. Vilos, Holland & Hart, Cheyenne, WY, Matthew J. Smith, pro hac vice, Holland & Hart, Denver, CO, for Plaintiffs.

Charlotte M. Powers, Wyoming Attorney General's Office, Michael J. Finn, Wyoming Attorney General, Cheyenne, WY, Timothy W. Miller, Wyoming Attorney General's Office, Casper, WY, for Defendants.

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

ALAN B. JOHNSON, UNITED STATES DISTRICT JUDGE

The plaintiffs' Motion for Summary Judgment (Doc. No. 29) and defendants' Motion for Dismissal, or in the Alternative, Summary Judgment (Doc. No. 31) are before the Court. After reviewing the parties' submissions, the record on summary judgment, the applicable law, and being fully advised, the Court finds that the plaintiffs' Motion for Summary Judgment (Doc. No. 29) should be GRANTED and the defendants' Motion for Dismissal, or in the Alternative, Summary Judgment (Doc. No. 31) should be DENIED for the reasons stated below.

This case concerns whether the Airline Deregulation Act of 1978 ("ADA") preempts the Wyoming Department of Workforce Services, Workers' Compensation Division's rate schedule for compensating air ambulance entities. First, the Court will give a factual background, discussing the relationship between the plaintiffs, air ambulance entities, and the defendants, the State of Wyoming, the Division, and the named state officials. Next, the Court will present the standard of review, followed by an analysis of the law and facts as to the cross motions for summary judgment. Finally, the Court will conclude by discussing the disposition of this case.

BACKGROUND

The plaintiffs provide air ambulance services in the State of Wyoming as well as throughout the United States. (Doc. No. 30–2, p. 3; Doc. No. 30–3, p. 3). They deliver emergency air transportation for critically ill or severely injured patients to the closest appropriate hospital when requested by first responders or third–party medical professionals. Id. The plaintiffs employ paramedics and nurses to treat patients during transportation. Id.

The plaintiffs fit into various regulation schemes. They hold operating certificates issued by the Federal Aviation Administration ("FAA") under Parts 119, 135, and 298 of the agency's regulations. Id. In addition to federal regulation, the State of Wyoming licenses the plaintiffs as air ambulance operators. Id. Although the plaintiffs have no current issue with the State of Wyoming's licensing scheme, they do take issue with Wyoming's Workers' Compensation Act and the regulations promulgated by the Division thereunder with regard to air ambulance compensation. (Doc. No. 23).

The Airline Deregulation Act was enacted in 1978, focusing on "efficiency, innovation, and low prices" for the airline industry.

In 1978, however, Congress enacted the ADA, which sought to promote "efficiency, innovation, and low prices" in the airline industry through "maximum reliance on competitive market forces and on actual and potential competition." 49 U.S.C. §§ 40101(a)(6), (12)(A). While the ADA did not repeal the predecessor law's saving provision, it included a pre-emption provision in order to "ensure that the States would not undo federal deregulation with regulation of their own." Morales supra , at 378, 112 S.Ct. 2031. In its current form, this provision states 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 that may provide air transportation under this subpart." § 41713(b)(1).

Northwest, Inc. v. Ginsberg , ––– U.S. ––––, 134 S.Ct. 1422, 1428, 188 L.Ed.2d 538 (2014). Under the Airline Deregulation Act, states cannot enact or enforce laws related to the price, route, or service of an air carrier. Id.

Under Wyoming Statute Section 27–14–401(e), "[i]f transportation by ambulance is necessary, the [D]ivision 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." Pursuant to the statute, the Division adopted a fee schedule that lists reimbursement rates to medical providers, including air ambulances. The fee schedule concerning air ambulances is located in Chapter 9 of the Rules, Regulations and Fee Schedules of the Wyoming Workers' Compensation Division. Section 8 of that Chapter lists the maximum allowable rates for air ambulances.

• Code A0430–Air, Fixed Wing: $3,350.00;
• Code A0431–Air, Rotary Wing: $3,900.66;
• Code A0435–Mileage, Air, Fixed Wing: $10.30 per statute mile; and
• Code A0436–Mileage, Air, Rotary Wing: $27.47 per statute mile.

Wyo. Admin. Code WSD WCD Ch. 9, § 8 (2015).

The plaintiffs have been submitting bills for payment to the Division and its officials since September of 2012. (Doc. Nos. 30–2, 30–3). The submitted bills have been for a much higher amount than the regulatory rate. Id. The Division responds to these bills by paying only the regulatory rate. Id.

The Division denied payments to EagleMed and Med–Trans in the total of $209,329.01 as of May of 2014.

• $21,822.17 for service provided on December 7, 2012;
• $29,202.70 for service provided on May 19, 2013;
• $28,189.08 for service provided on June 19, 2013;
• $27,540.50 for service provided on July 30, 2013;
• $30,256.37 for service provided on July 31, 2013;
• $44,629.25 for service provided on September 6, 2013; and
• $27,688.94 for service provided on April 23, 2014.

(Doc. No. 30–2, p. 4). The Division denied Air–Methods Corporation ("AMC") and Rocky Mountain Holdings ("RMH") compensation totaling more than $1,500,000.00 as of August 7, 2015. (Doc. No. 30–3, p. 4). The Division indicated to the plaintiffs that it would continue to deny any requests for compensation above the regulatory rates. (Doc. Nos. 30–2, 30–3).

On February 18, 2015, the plaintiffs filed their Complaint for Declaratory Judgment (Doc. No. 1) requesting that this Court declare the above statute and regulations preempted by federal law, entitling the plaintiffs to full compensation for the air ambulance services from the Division. On June 18, 2015, the plaintiffs filed their Amended Complaint for Declaratory Judgment and Injunctive Relief (Doc. No. 23) adding state officials and a claim for injunctive relief that would prevent the defendants from enforcing the statutes and regulations at issue in the future. The plaintiffs request declaratory relief, asking the Court to declare that the Division's statutes and regulations enforcing air carrier rates are preempted, the Division cannot regulate the air ambulances, and the Division cannot prevent the air ambulances from billing patients directly. (Doc. No. 23, pp. 10–11). The plaintiffs request injunctive relief barring the Division from enforcing the current statutes and regulations at issue and promulgating any future regulations related to air carrier rates. Id.

On June 29, 2015, the defendants filed their Answer and Counterclaim for Declaratory Judgment (Doc. No. 27) responding to the plaintiffs' allegations and counterclaiming for declaratory judgment in their favor. The defendants asserted that the plaintiffs are barred from bringing any declaratory judgment or injunctive action against them in federal court under the principles of state sovereign immunity. (Doc. No. 27, p. 8). Further, the defendants counterclaimed for declaratory relief in their favor, arguing that neither express nor implied preemption invalidates the pertinent portions of the statutes and regulations, among other things. Id. at 9–11. The claim for declaratory relief included a request that this Court declare that the defendants can prohibit the plaintiffs from billing patients covered by workers' compensation for any overages. Id. at 11.

On August 7, 2015, the plaintiffs filed their Motion for Summary Judgment (Doc. No. 29) and brief in support thereof (Doc. No. 30), arguing that the Court has jurisdiction to decide this case, the statute and regulation are preempted as they relate to air carrier rates, and the defendants' defenses are not applicable. On August 28, 2015, the defendants filed their Motion for Dismissal, or in the Alternative, Summary Judgment (Doc. No. 31) and brief in support thereof (Doc. No. 32), arguing that the Court does not have subject matter jurisdiction for five alternative reasons and the statute and regulations are not preempted.1 On September 11, 2015, the plaintiffs filed their response to the defendants' motion, contesting every argument made therein. (Doc. No. 33). On September 18, 2015, the defendants provided supplemental authority from the District of Colorado. (Doc. No. 34). On September 30, 2015, the plaintiffs provided supplemental authority from the Southern District of Florida. (Doc. No. 37). On November 3, 2015, the defendants...

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