Thursday, July 09, 2020

Texas Supreme Court Rejects Air Ambulance Claims for Higher Payments from Workers’ Compensation Insurers

By Chris Littell


The Texas Supreme Court recently delivered its opinion regarding Workers’ Compensation Insurance Payments to PHI Air Medical, LLC in a 5-2 decision.  In Texas Mutual Insurance Company, et al v. PHI Air Medical, LLC, the Court held that federal aviation regulations do not pre-empt Texas law on reimbursement standards, and that Texas was not required to mandate that air ambulance services be reimbursed at more than “fair and reasonable amounts.”

Texas had been paying PHI, an emergency air ambulance provider, at 125% of Medicare rates for workers compensation services. However, beginning in 2012, PHI and other air ambulance services begin disputing the fees and seeking the full reimbursement for the amount of their billed charges, almost always many times higher than the current rates. PHI and others argued that the federal Airline Deregulation Act pre-empted the Texas Workers’ Compensation Act and its fee schedule. Administrative courts, trial courts, and appellate courts gave conflicting rulings on whether to raise the amount of reimbursement, and by how much to raise the level of reimbursement.

In its opinion, the Court rejected PHI’s arguments, finding that PHI was seeking to “have it both ways” by trying to rely on the state law that required reimbursement, but at the same time arguing that federal law pre-empted the same law.  The Court noted that two federal circuit courts have held that the ADA does not guarantee any payment for air ambulance services, nor does it require payment of whatever amount an air carrier demands.  PHI has no transactional relationship with the third-party insurers and the injured customer had not agreed to pay the exorbitant bills.

The Court dismissed PHI’s arguments asking for an order requiring insurers to reimburse for the full amount of the bills, holding that even if the ADA pre-empted state law, PHI would not be automatically entitled to any reimbursement.  Doing so would violate the state’s rights provisions conferred by the 10th Amendment.

Because the opinion is tied to the Texas Workers’ Compensation Act, it is unlikely to have far reaching implications in other disputes over the reasonableness of air ambulance bills. However, even the tacit finding that the full amount of air ambulance bills are not “fair and reasonable” may become ammunition for other fights down the road.


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