Sunday, December 30, 2018

First Draft of Wyoming’s Workers’ Comp Air Ambulance Bill: Preempted and Unconstitutional?

That didn’t take long! Back on November 27, I predicted that, in light of the Wyoming Supreme Court’s opinion in the Air Methods/Rocky Mountain Holdings case, see the recap here, states would begin taking the position that they would simply not fully cover air ambulance expense. Just about a month later, Wyoming legislators have now introduced a bill that “controls all payments for air ambulance services.”  I argue in this post that the bill is (a) probably preempted on its face under the Airline Deregulation Act and (b) violates the Wyoming Constitution. It also, in my opinion, represents the dangerous precedent of a state simply refusing to pay for necessary medical first aid in a way that fundamentally breaches the workers’ compensation quid pro quo. (This is not a close question).

According to the bill:

Payments under this section will be according to a schedule established by the director taking into account the miles traveled and the type of aircraft used. The director shall attempt to approximate twice what Medicare would pay for air ambulance services in determining the payment schedule.

The bill would also require an air ambulance provider to take the double-Medicare rate or leave it:

Any provider of air ambulance services may voluntarily submit a claim for payment to the division within forty‑five (45) days of providing the services. If a provider submits a claim for payment to the division, the division shall review the claim, and if the services are determined compensable, the division shall offer to pay the claim in accordance with [the limitations set out previously]. Payment shall be conditioned on the provider's timely voluntary agreement to accept this payment in full and final satisfaction for all services provided and that the provider will not bill the injured worker. Failure of any provider to accept the division's conditional offer of payment within thirty (30) days may, in the division's discretion, be considered a rejection of the payment offer . . .

If the requirements for payment of services under [the preceding] paragraph . . .  are not met, the division shall make no payment to the provider of air ambulance services.

Under the bill, in the event the air ambulance carrier won’t accept the double-Medicare rate that the director of the agency “will attempt” to pay, the injured worker can apply to the administrative agency for direct payment of that same amount and “may, but is not required to, use any payment received under this section for payment of air ambulance services.” And, just so everyone knows where they stand, none of the administrative determinations as to the (non) compensability of air ambulance services would be subject to further review of any kind:

The division's decision as to whether to make payment under [the applicable provisions] shall not be subject to further administrative or judicial review, and the division's payment under [the provisions] shall fully satisfy any payment obligation of the division in regard to air ambulance services.

Finally, the air ambulance companies are expressly authorized under the bill to sue injured workers directly for the “balance” – the difference between the workers’ compensation regulatory scheduled maximum and the full charge for the air ambulance service:

The limitation in [an earlier portion of the section] requiring that fees or portions of fees for injury related services or products will not be billed to or collected from the injured employee shall not apply to fees for air ambulance services controlled by the federal Airline Deregulation Act of 1978.

There are several reasons I think the bill is immediately objectionable and, frankly, I don’t have the space to explore all of them here. I note that statutory preclusion of judicial review of the type represented in the previous paragraph is often thought to present a serious constitutional question to the extent it denies a forum for constitutional claims arising from operation of an administrative benefit system. See Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 681 n.12 (1986). I would think this to be even more true in a state possessing unusually strong constitutional protections for injury remedies. I doubt the Wyoming Supreme Court would agree that denial by the State of rights that were originally obtained by workers through an exchange for their fundamental rights (under the Wyoming constitution) was not subject to judicial review.


And an especially strong case can be made for viewing denial of ambulance service as a breach of the original workers’ compensation for tort quid pro quo. While few (if any) of the early workers’ compensation statutes in the 1910s provided ongoing work injury medical care (following the first two iterations of the English Acts in 1897 and 1906) all original workers’ compensation statutes provided for “first aid” and early treatment of injuries. U.S. Dept. of Labor, Bureau of Labor Statistics, Workmen’s Compensation Statutes of the United States and Foreign Countries, Bulletin No. 203 (1917). Not to do so, accordingly, is a clear violation of all original understandings of the quid pro quo. The bill also, on its face, treats injured workers requiring air transportation differently from those requiring ground transportation, a classification that may have difficulty surviving state equal protection analysis.

As I say, I am limited by space and want to leave room to report what I see as the most obvious problem with the Wyoming bill: it is most likely preempted on its face under the Airline Deregulation Act. ADA preemption is modeled on older, more muscular ERISA preemption, see e.g., Shaw v. Delta Airlines, 463 U.S. 85 (1983), and the Supreme Court borrows almost word-for-word the Shaw formulation when analyzing whether state regulation “relates to rates, routes or services.” (That is, relates to the ADA). In short, state regulation “relates to” these subjects if it “ha[s] a connection with, or reference to, airline ‘rates, routes, or services.’” Northwest v. Ginsberg, 572 U.S. 273 (2014) quoting Morales v. TransWorld Airlines, 504 U.S. 374, 384 (1992).

Those of you with some ERISA background may recall this telling passage from Justice Thomas in the Supreme Court case District of Columbia v. Greater Washington Board of Trade, 506 U.S. 125, 130 (1992): “Section 2(c)(2) of the District's Equity Amendment Act specifically refers to welfare benefit plans regulated by ERISA and on that basis alone is pre-empted.” In other words, the older form of ERISA preemption—which the recent federal ADA cases appear to embrace without qualification—would preempt all state regulation even referencing the federal regulatory subject (employee benefits in the case of ERISA; airline rates, routes or services in the case of the ADA). Wyoming’s bill unabashedly refers to “payments for air ambulance services,” and aggressively regulates payment for those services. If the bill sees the light of day as legislation, the argument for its facial preemption seems pretty straightforward.

Moreover, in the absence of a workers’ compensation remedy for air ambulance services, the Wyoming Constitution would appear to require that an injured worker’s tort claims for categorically excluded work-related injury expense be revived. Article 10 §4(a) of the Wyoming constitution states: “No law shall be enacted limiting the amount of damages to be recovered for causing the injury or death of any person.” The provision has historically been thought so clear that it was deemed necessary to amend the constitution, in subsequent §4(c), to allow for the establishment of workers’ compensation, which is, after all, a limitation of damages.  Zancanelli v. Central Coal & Coke Co., 173 P. 981, 991 (Wyo. 1918).

It is not difficult to anticipate the grisly possibility of a worker adamantly refusing air ambulance services, because of a realization that he or she will be stuck with thousands of dollars of expense, and dying during lengthy ground transport. I also imagine that counsel for air ambulance companies will be factoring in added expense occasioned by pursuit of destitute injured workers in Chapter 7 bankruptcy proceedings. If injured workers submit such claims to their employers’ general health insurance carriers, those carriers are perfectly free under ERISA to amend plans to exclude coverage of such expenses. Perhaps air ambulance companies will respond by simply refusing to transport injured workers. It all sounds very 19th century. One thing seems clear: the State of Wyoming is having difficulty understanding the distinction between “balance billing” as it arises in the workers’ compensation context and balance billing in purely private contexts.

Michael C. Duff

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