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EagleMed, LLC v. Travelers Insurance

Court of Appeals of Kansas

June 15, 2018

EagleMed, LLC, Appellee,
v.
Travelers Insurance, Appellant.

         SYLLABUS BY THE COURT

         1. The Supremacy Clause of Article VI of the United States Constitution establishes the doctrine of federal preemption. It invalidates state laws and actions that interfere with or are contrary to federal law.

         2. Federal preemption is ultimately a question of congressional intent. In determining whether federal preemption applies in a given case, courts must first look to the language of the federal preemption statute to determine the intent of Congress. Because federal preemption involves an interpretation of law, judicial review is unlimited.

         3. Express preemption applies when Congress makes its intent known through explicit statutory language.

         4. The United States Congress enacted the Airline Deregulation Act in 1978 to deregulate the airline industry and encourage efficiency, innovation, and low prices through competitive market forces. The Airline Deregulation Act expressly preempts state regulation related to a price, route, or service of an air carrier.

         5. The preemption provision of the Airline Deregulation Act is to be interpreted broadly to include enforcement actions taken by states that have a connection with or reference to prices, routes, or services of an air carrier. An air ambulance is an air carrier covered by the provisions of the Airline Deregulation Act.

         6. Once the intent of Congress to preempt state law is established, courts must next look to the scope of the federal preemption.

         7. The Kansas Workers Compensation Act mandates that providers of services and materials are bound by the fee schedule approved by the Director of the Division of Workers Compensation.

         8. The Director of the Division of Workers Compensation generally has the authority under K.S.A. 2017 Supp. 44-510j to resolve disputes between a provider and a self-insured employer or an employer's insurance carrier over a bill for services rendered for the care and treatment of an employee.

         9. Regarding air ambulance services, the 2012 fee schedule provided that fees "will be limited to usual and customary charges as per 49 U.S.C., Section 41713(b) of the Federal Aviation Act." However, 49 U.S.C. § 41713(b) (2012) offers no guidance in determining the "usual and customary" amount to be charged for air ambulance services. A determination of the "usual and customary" amount to be charged for the services provided in the air ambulance industry falls within the type of matters related to the price of air carriers that Congress intended to expressly preempt.

         10. Given the express preemption provision in the Airline Deregulation Act, whether the Medicare fee schedule applicable to air ambulance transport services should be applied to non-Medicare patients receiving services from an air ambulance provider is not a question to be answered by a state agency or state courts.

         11. The Director of the Division of Workers Compensation has no authority under the express preemption provision of the Airline Deregulation Act to determine the "usual and customary" charges air ambulance providers charge for their services or to otherwise make decisions related to the reasonableness of the price charged by an air ambulance provider.

          Appeal from Workers Compensation Board.

          William L. Townsley, Lyndon W. Vix, and Nathaniel T. Martens, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of Wichita, for appellant.

          J. Phillip Gragson, of Henson, Hutton, Mudrick, Gragson and Vogelsberg, LLP, of Topeka, and Joshua L. Fuchs, of Jones Day, of Houston, Texas, for appellee.

          Before Bruns, P.J., Hill, J., and Walker, S.J.

          BRUNS, J.

         This is a consolidated appeal of four workers compensation cases arising out of a fee dispute between EagleMed, LLC (EagleMed)-an air ambulance service provider-and Travelers Insurance (Travelers)-a workers compensation insurance carrier. Although Travelers admits that it provides coverage, it contends that the amounts charged by EagleMed for transporting the four injured workers by air ambulance are unreasonable. On appeal, both parties agree the federal Airline Deregulation Act of 1978 expressly preempts actions taken by states that have a connection to the prices charged by air carriers-including air ambulances. However, they disagree on the scope of the federal preemption as well as its application in these workers compensation cases.

         We find that preemption under the Airline Deregulation Act is express, broad, and sweeping. We also find that Congress intended for market forces-not state agencies-to determine the prices charged by air carriers. Because an air ambulance provider is an air carrier under the Act, we conclude that federal preemption prevents the Division of Workers Compensation from making any decisions relating to the prices charged by such providers. Thus, we affirm in part, reverse ...


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