Eleventh Circuit Affirms ADA Preemption Of Class Action Claims That Restrict Air Ambulance Operator's Prices

Judith R Nemsick is a litigation attorney in Holland & Knight's New York office

HIGHLIGHTS:

Airline Deregulation Act (ADA) preempts class action claims seeking to enforce Florida statute that limits an air ambulance operator's prices by prohibiting balance billing of unpaid invoices. McCarran-Ferguson Act does not reverse preempt the ADA because the Florida statute does not regulate the "business of insurance" - the statute affects the billing and pricing practices of medical providers only with respect to insureds, and has nothing to do with the policy relationship between an insurer and an insured. In a significant decision for the air ambulance industry, the U.S. Court of Appeals for the Eleventh Circuit held that the Airline Deregulation Act (ADA) preempts enforcement of a Florida law limiting an air ambulance operator's ability to collect unpaid amounts on its invoices. The decision, Bailey v. Rocky Mountain Holdings LLC,2 affirms the district court's dismissal of a proposed class action against the operator.

The ADA, which applies to air ambulance operators, prohibits states from enacting or enforcing laws "related to a price, route or service of an air carrier."3 The Eleventh Circuit panel agreed with the district court that Florida's Personal Injury Protection (PIP) statute4 improperly restricted an air ambulance operator's prices by first limiting the reimbursement for such services to a schedule of charges based on Medicare rates and then prohibiting the operator from billing the insured for the balance of the unpaid invoices.

District Court's Summary Judgment Holding

The action centered on air ambulance services provided to transport plaintiff's son to a hospital following an automobile accident. Seeking reimbursement, the operator billed the plaintiff's automobile insurer for the air ambulance services. The insurer reimbursed the operator pursuant to the PIP statute, which permitted reimbursement at 80 percent of the statutory fee for air ambulance services up to the policy's limits. The operator sought the unpaid balance from plaintiff, as the insured.

Plaintiff commenced a class action contending that the PIP statute's "balance billing provision" prohibited the operator from attempting to bill for "any amount in excess of such limits, except for amounts not covered by the insured personal injury coverage due the coinsurance amount or maximum policy limits."5 The court disposed of the claim by granting summary judgment to the...