Austin, TX – The Supreme Court of Texas has ruled that an air ambulance company must adhere to workers’ compensation payment guidelines in the Texas Mutual Insurance Company et al. vs PHI Air Medical case. The Court 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.
Across the nation, air ambulances have claimed that states cannot regulate their rates and must therefore award them whatever payments they demand. Consumers and regulators have become increasingly alarmed at the growing size of these bills.
Air ambulance companies have argued that the federal Airline Deregulation Act (ADA) requires payment at any amount they choose. But the Court said that the ADA does not eliminate the state’s “fair and reasonable” requirement for the insurance payments that air ambulances demand. A concurring opinion concluded that the federal McCarran Ferguson Act, which exempts the business of insurance from most federal regulation, saves the “fair and reasonable” guideline from being preempted by federal law.
The Court also emphasized that “PHI would be substantially worse off if it succeeded on its preemption claim, as insurers would no longer have any obligation to reimburse at all.” It concluded that “…PHI has not shown that Texas’s fair and reasonable reimbursement standard for air ambulance services has a significant effect on its prices, and therefore the ADA does not preempt that standard. And even if ADA preemption applied, it would displace the very reimbursement requirement on which PHI relies.”
“The Supreme Court of Texas has ruled carefully and fairly in this case,” said Mary Nichols, senior vice president and general counsel for Texas Mutual. “Without regulation, air ambulances would drain tens of millions of dollars from the system and ultimately from Texas employers and injured workers. The Supreme Court has affirmed the role of the states to regulate their own workers’ compensation systems, as a matter of federalism and regulatory policy.”
The air ambulance companies have also threatened to challenge other state laws that protect injured workers from being billed for excess amounts after workers’ compensation insurers have made fair and reasonable payments for the transports. Under current law, the state regulator can fine air ambulance companies up to $25,000 per day for such conduct.
“Texas Mutual strongly supports the prohibition on balance billing injured workers and will continue to pay fair and reasonable amounts on behalf of those workers.” said Ms. Nichols. “We’re pleased the Court has agreed that the fair and reasonable payment standard is the law.”
Source: Texas Mutual