Insurers Score a Win in Texas Air Ambulance Fee Dispute

In the suit, PHI, like other air ambulance services across the country, had argued the federal Airline Deregulation Act (ADA), which contains no reimbursement requirement, preempts state law and therefore insurance carriers were required to pay the full amount of bills charged by air ambulance companies. The ADA, enacted in 1978, deregulated the airline industry, allowing to commercial airlines set competitive rates.

Insurers typically have reimbursed an amount equal to 125% of Medicare reimbursement amount for air ambulance services, according to an analysis of the case written by Robert R. Graves, an Austin-based partner in the law firm Burns Anderson Jury & Brenner L.L.P. The amounts often charged by air ambulance providers are often far above the reimbursement amount allowed under the TWCA, however.

Several other insurance companies had joined Texas Mutual in its lawsuit against PHI. In a statement, Texas Mutual said the Texas Supreme Court in its opinion released on June 26, “decided in favor of insurers and state regulators in a dispute that was sparked when privately-owned air ambulances began demanding that workers’ compensation insurers pay their full billed charges, unrestricted by the law that says payments must be ‘fair and reasonable’ or by any other constraint.”

In the Court’s majority opinion, Justice Brett Busby, wrote that the case is “about federalism.” He said the court looked at whether a federal law deregulating aviation services may override a state’s authority to “require that private insurance companies reimburse the fair and reasonable medical expenses of injured workers” and “require Texas to mandate reimbursement of more than a fair and reasonable amount for air ambulance services.”

In both instances, the Court said “no.”

Under the ADA, states are not required “to provide for payment of air ambulance charges,” Busby wrote. But, he said, “PHI is trying to use the ADA’s preemption clause to have it both ways under state law: PHI relies on Texas law requiring that private insurers reimburse it for air ambulance services to injured workers, yet it argues that the Texas standards governing the amount of that reimbursement are preempted.”

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