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Air Evac Ems, Inc. v. Cheatham

United States District Court, S.D. West Virginia, Charleston Division

October 20, 2017

AIR EVAC EMS, INC., Plaintiff,
v.
TED CHEATHAM, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          THOMAS E. JOHNSTON UNITED STATES DISTRICT JUDGE

         Before the Court are the parties' cross-Motions for Summary Judgment. (ECF Nos. 88, 90.) For the reasons that follow, Plaintiff's Motion for Summary is GRANTED IN PART and DENIED IN PART. Defendants' Motion for Summary Judgment is DENIED. The Court enters declaratory and injunctive relief in the manner set forth below.

         I. BACKGROUND

         The Court had occasion to discuss the factual and procedural history of this matter in its Memorandum Opinion and Order dated May 15, 2017. There, the Court denied Defendants' Motion to Dismiss the Amended Complaint. The issues now presented by way of the parties' cross-motions for summary judgment overlap substantially with those addressed in the earlier Memorandum Opinion. Some repetition will be necessary to reach a final resolution of the claims and defenses presented.

         Plaintiff Air Evac EMS, Inc. (“Air Evac”) provides air ambulance services in West Virginia and other states when requested by third-party medical professionals. Notably, West Virginia law forbids Air Evac from refusing service to any patient, regardless of insured status. W.Va. Code R. § 64-48-4.15. In fact, because Air Evac is most often called upon to provide transportation in medical emergencies, the air ambulance provider does not know a patient's insured status until after the emergency transport has concluded. (Meyers Decl. at ¶ 5, Pl.'s Mot. Sum. J. Ex. C, ECF No. 90-2.)

         At root, this litigation raises a federal preemption challenge to West Virginia's statutory and regulatory caps on payments to air ambulance providers for transporting patients covered under West Virginia's Public Employees Insurance Agency (“PEIA”) and workers' compensation insurance programs. One of the statutes at issue-designated prior to codification as West Virginia House Bill 4315-was enacted in 2016 and represents the culmination of the State's attempts to reign in the expense of air ambulance services reimbursed by state-sponsored insurance programs. HB 4315 has two parts. The first caps the amount that the Public Employees Insurance Agency (“PEIA”) will reimburse Air Evac for transporting PEIA insureds to the equivalent rate paid by Medicare. W.Va. Code § 5-16-8a(a). The second eliminates Air Evac's ability to recover any additional payment when it transports a PEIA member who is also a member of Air Evac's subscription program. § 5-16-8a(b). Air Evac seeks to invalidate this statute.

         PEIA and the Office of the Insurance Commissioner (“OIC”), which is responsible for establishing and overseeing payments for healthcare services provided on behalf of workers' compensation claimants, have also established fee schedules that limit the amount Air Evac can collect for transports covered by PEIA and workers' compensation insurance. Air Evac challenges the legitimacy of the fee schedules as well. Lastly, this case concerns 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.”

         The Amended Complaint contains six claims for relief. Counts I and II 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, the Director of the PEIA, and Riley, the West Virginia Insurance Commissioner. 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 IV), and Defendant Riley (Count V). The sixth claim for relief is pled in the alternative. In the event the Court does not invalidate § 5-16-8a 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 operative Amended Complaint on September 15, 2016. As stated, the Court denied that motion. The parties filed cross-Motions for Summary Judgment on May 22, 2017. Both motions have been fully briefed. On September 1, 2017, Air Evac filed a Notice of Supplemental Authority alerting the Court to the Tenth Circuit's recent decision in EagleMed LLC v. Cox, 868 F.3d 893 (10th Cir. 2017). Defendants filed a response on September 15, 2017. The motions for summary judgment are now ripe for consideration.

         II. LEGAL STANDARD

         Summary judgment is warranted when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine dispute of material fact exists if, in viewing the record and all reasonable inferences drawn therefrom in a light most favorable to the non-moving party, a reasonable fact-finder could return a verdict for the non-movant. See Fed. R. Civ. P. 56(e). “[W]hen a case presents a pure question of law as to federal preemption, the case should be resolved at the summary judgment stage.” Dominion Transmission, Inc. v. Town of Myersville Town Council, 982 F.Supp.2d 570, 576 (D. Md. 2013) (citing Nat'l City Bank of Indiana v. Turnbaugh, 367 F.Supp.2d 805, 811 (D. Md. 2005)); see also Lescs v. William R. Hughes, Inc., 168 F.3d 482, 1999 WL 12913, at *3 (4th Cir. 1999) (table decision) (“Because this appeal of summary judgment hinges on determining whether federal law preempts state law claims, an issue of material fact appropriate for trial can arise only if the claim presented is not legally preempted.”).

         III. DISCUSSION

         Cross-motions for summary judgment are reviewed separately if material facts are in dispute. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003). Here, however, the facts underlying Air Evac's claims are undisputed-the parties merely dispute the legal significance of those facts. For brevity's sake, the parties' various arguments are woven together in a single discussion. The Court begins with consideration of Defendants' standing defense. The Court then turns to the central question of ADA preemption, followed by an evaluation of Defendants' Tenth Amendment challenge. A review of the alleged Contracts Clause violation concludes the discussion.

         A. Standing

         Defendants challenge Air Evac's standing to sue the OIC with regard to the implementation of the fee schedule. In their response to Air Evac's motion, Defendants also question standing with respect to those claims brought against the Secretary of the DHHR, the administrator charged with enforcing the balance-billing prohibition set forth in § 16-29D-4(a)(2). Their arguments are similar to the ripeness challenge originally raised in Defendants' Motion to Dismiss.

         “Federal standing has three well-known requirements: (1) injury-in-fact; (2) fairly traceable causation; and (3) redressability.” Air Evac EMS, Inc. v. Texas, 851 F.3d 507, 513 (5th Cir. 2017) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). Defendants do not dispute that the balance-billing prohibition constitutes an injury sufficient to establish standing. Defendants also concede that Air Evac presents an injury-in-fact under the workers' compensation fee schedule limiting Air Evac's recovery to 135% of the Medicare rate. Defendants' argument relates to the latter two requirements of the three-part test; specifically, whether Air Evac can establish causation and redressability. The Court will address standing as to the Secretary of the DHHR before considering Air Evac's standing to sue the OIC.

In beginning this discussion, the Court is guided by Lujan's counsel.
When the suit is one challenging the legality of government action or inaction, the nature and extent of facts that must be averred (at the summary judgment stage) or proved (at the trial stage) in order to establish standing depends considerably upon whether the plaintiff is himself an object of the action (or forgone action) at issue. If he is, there is ordinarily little question that the action or inaction has caused him injury, and that a judgment preventing or requiring the action will redress it.

504 U.S. at 561-62. There is no question that air ambulances like Air Evac are the direct target of the state laws and regulations challenged in this proceeding. Accordingly, Defendants face an uphill battle in arguing that causation is lacking, particularly with respect to Air Evac's suit against the Secretary of the DHHR.

         In the standing context, causation requires a link “between the injury and the conduct complained of-the injury has to be ‘fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court.'” Lujan, 504 U.S. at 560 (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 41-42 (1976)). Traceability typically involves an inquiry into whether the challenged conduct was caused by the defendant as opposed to some third party not before the court. See Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 204 F.3d 149, 154 (4th Cir. 2000) (citing Lujan, 504 U.S. at 560). Clearly, Air Evac's inability to recover its full billed charged is an injury inflicted by the State. Still, “[w]hen a plaintiff brings a pre-enforcement challenge to the constitutionality of a particular statutory provision, the causation element of standing requires the named defendants to possess authority to enforce the complained-of provision.” Bronson v. Swensen, 500 F.3d 1099, 1110-11 (10th Cir. 2007); see also Socialist Workers Party v. Leahy, 145 F.3d 1240, 1248 (11th ...


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