The U.S. District Court for the Southern District of Florida recently issued a significant preemption decision in Bailey v. Rocky Mountain Holdings, LLC,1 a putative class action lawsuit in which the plaintiff sought declaratory and injunctive relief and damages based on allegations that air ambulance service providers' billing and collection practices violate various Florida laws. The preemption ruling signals a complete victory for the defendants, coming on the heels of the court's decision denying the plaintiff's motion for class certification.2
The plaintiff contended that the defendants' invoices for air ambulance services violated Florida's Personal Injury Protection (PIP) Statute,3 Deceptive and Unfair Trade Practices Act (FDUPTA),4 and Consumer Collection Practices Act (FCCPA)5 on the basis that defendants were statutorily prohibited from seeking to collect amounts in excess of those permitted by statute from the individuals transported by air ambulance.
Florida's PIP Statute requires motor vehicle insurance policies to include personal injury protection (PIP coverage) of at least $10,000 to cover medical bills arising from injuries sustained by a driver or passenger in a motor vehicle accident.6 Under the PIP statute, an emergency care provider "may charge the insurer and injured party only a reasonable amount," which, for emergency air transport, is limited to 200 percent of Medicare rates.7 The insurer may further limit coverage to 80 percent of this amount. The statute further states that the provider "may not bill or attempt to collect from the insured any amount in excess of such limits, except for amounts that are not covered by the insured's personal injury protection coverage due to the … maximum policy limits."8 The parties disputed the interpretation of this exception and whether it permits the provider to bill the insured for amounts not covered by PIP coverage.
In the instant case, the charges for the defendants' helicopter transport and emergency care services had exceeded the standard PIP policy limits of $10,000. The defendants had invoiced the plaintiff and his motor vehicle and health insurers for the total amount of its emergency transport services. The motor vehicle insurer paid according to the PIP statute and the health insurer paid a lesser amount. The efendants thereafter billed the patient for the outstanding balance, which the plaintiff contended was prohibited by the PIP statute.
In moving for summary judgment, the defendants argued that the plaintiff's claims (and that of the purported class) were completely preempted by the Airline Deregulation Act, which prohibits states from enforcing any law or regulation relating to an air carrier's price, route or service.9 The district court agreed, recognizing the "broad nature" of the ADA's express preemption clause. The court determined that "each of Plaintiff's state and common law claims can only be fairly characterized as directly challenging Defendants' rates for its air ambulance services." Such claims would "naturally affect" defendants' provision of air services in addition to the prices of and payment for these services.
In deciding that the plaintiff's lawsuit "is essentially a state enforcement action" with a very strong connection to the price, route or service of an air carrier, the court concluded that the plaintiff's state and common law challenges are "expressly disallowed by the ADA's express preemption provision, which intentionally leaves the price of such services to the competitive market."10
Importantly, the court rejected the plaintiff's argument that the McCarran-Ferguson Act (MFA) reverse preempts the ADA. Under the MFA, state insurance regulations are insulated from implied preemption by federal legislation, i.e., from federal laws that are construed to "invalidate, impair or supersede" state laws enacted for the purpose of regulating the business of insurance.11 The court held that the MFA does not apply to cases where Congress has "made plain its intent to altogether preempt state laws." As explained by the court, "[t]he MFA was intended only to protect state insurance regulation from inadvertent intrusion by the federal government, and not to insulate the same from every federal law." Where the intended effect of a federal statute like the ADA is to displace state regulation, the court must enforce this intent, regardless of whether insurance is involved.12