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The Air Ambulance Conundrum – Federal Court Disagrees with Texas Supreme Court and finds Texas Workers’ Compensation Fee Guidelines Preempted

Generally, workers’ compensation insurance carriers reimburse air ambulance companies in accordance with the rules and guidelines provided for under the Texas Workers’ Compensation Act (TWCA) and Division of Workers’ Compensation Rules.  This reimbursement is significantly less than the fees charged by some air ambulance companies.  As of January of 2019, almost $50 million in Texas air ambulance charges were in dispute.  Some air ambulance companies have asserted that the federal Airline Deregulation Act (ADA) preempts state workers’ compensation laws and insurance carriers must pay the companies’ billed charges, regardless of any state rules or guidelines.  Not just limited to Texas, litigation regarding this issue has taken place across the United States, with many courts finding in favor of the air ambulance companies.

In June of 2020, the Texas Supreme Court, in Tex. Mut. Ins. Co. v. PHI Air Medical, LLC, 610 S.W.3d 839 (Tex. 2020), concluded the ADA did not preempt the fair and reasonable reimbursement standard under the TWCA.  The Court distinguished its holding from other courts’ findings the ADA preempted state fee guidelines, noting that, in those cases, the fee guideline limited the provider to a maximum fee that was less than a reasonable fee.  The Court explained the TWCA provides a “fact-driven standard,” which requires carriers to pay 100% of “fair and reasonable charges” and did not limit reimbursement to a less than reasonable fee.  The case was appealed to the U.S. Supreme Court, which declined to review the case.

On August 4, 2021, in a separate case, the U.S. Court of Appeals for the Fifth Circuit, in Air Evac EMS, Inc. v. Sullivan, No 18-50722, disagreed with the Texas Supreme Court.  Acknowledging the Texas Court’s decision, the Fifth Circuit Court found that the TWCA regulations concerning the reimbursement of air ambulance providers are preempted by the ADA.  The Court affirmed a lower federal court’s holding that that included an injunction prohibiting the Division of Workers’ Compensation from enforcing the fee guidelines in air ambulance cases.  If you are interested in reading the Court of Appeals’ decision, it may be found at:

https://www.ca5.uscourts.gov/opinions/pub/18/18-50722-CV0.pdf .

The Fifth Circuit’s decision may be appealed to the U.S. Supreme Court.  In the meantime, we are left with conflicting decisions by the Texas Supreme Court and the U.S. Court of Appeals for the Fifth Circuit.

As always, if we can answer any questions, please feel free to contact us.