Saturday, January 5, 2019

Additional Commentary on the Wyoming Air Ambulance Workers' Compensation Bill

Sometimes lost in Wyoming air ambulance discussion is the realization that Wyoming possesses a monopolistic workers’ compensation system. Accordingly, when an air ambulance company may charge what it likes, given distorted market conditions, that “economic rent” is extracted directly from the state treasury. Compare this situation to a state with a private insurance market in which losses are ultimately passed on to consumers (admittedly subject to some form of state regulation) rather than directly to taxpayers. It is no wonder that Wyoming (which has no state income tax) sometimes seems to become confused about what workers’ compensation benefits really are – an historical substitute for tort damages. The state “experiences” payment of workers’ compensation benefits as it would payment of discretionary “welfare” benefits.

And in Wyoming’s defense, and in the defense of other states trying to ward off the “empty preemption” of the Airline Deregulation Act (“empty” in the sense that the ADA occupies a regulatory field without providing any substantive regulatory exchange from the federal scheme), the preemption determinations being made in the Airline Deregulation Act/ERISA context (the federal courts have drawn the ERISA analogy, not I) are hardly consistent. So, in EagleMed, for example, the 10th Circuit said:

when a statute contains an express preemption clause, “we do not invoke any presumption against pre-emption but instead focus on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.”

But compare this statement with the Supreme Court’s ERISA opinion in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., probably the lead case pushing back against the aggressive express preemption outlined in Shaw v. Delta Airlines (an ERISA case routinely invoked by the ADA preemption cases). In Travelers, Justice Souter stated, in considering preemption language identical to the ADA preemption language:

 . . . we have never assumed lightly that Congress has derogated state regulation, but instead have addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law . . . Indeed, in cases like this one, where federal law is said to bar state action in fields of traditional state regulation . . . we have worked on the “assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.”

Discerning Congressional intent is seldom a simple matter; but one can understand in this context an argument that Congress did not clearly and manifestly express a purpose in the ADA to bar state action in workers’ compensation, surely an area of traditional state regulation. It is worth repeating that the Supreme Court’s opinion in Morales v. Trans World Airlines, Inc., upon which every subsequent Supreme Court ADA preemption case has relied, was decided in 1992, while Travelers was decided in 1995. I sense that the same “pushback” analytical considerations at play in Travelers will need to be brought to bear by the Supreme Court to adequately address the scope of ADA preemption as applied to state workers’ compensation systems. Of course, a federal Congressional fix would be desirable, but you will excuse me if I doubt its emergence. In the meantime states will probably have to consider reinsurance structures to contend with the problem if they want to avoid the Wyoming gambit of attempting to reopen the quid pro quo.

Michael C. Duff

https://lawprofessors.typepad.com/workerscomplaw/2019/01/additional-commentary-on-the-wyoming-air-ambulance-workers-compensation-bill.html

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