On August 4, 2021, the federal Court of Appeals for the Fifth Circuit ruled, in Air Evac Ems, Inc. v. Sullivan, that the federal Airline Deregulation Act (ADA) expressly preempts the Texas Workers Compensation Act (TWCA) regulating of price restrictions as applied to the reimbursement of air ambulance providers.
In its decision, the court reasoned that the TWCA (Tex. Lab. Code. 413.011; 413.042(a); 28 Tex. Admin. Code. 134.1, 134.203) regulates prices that insurers must pay to providers for medical services—including air transport services—and that those restrictions conflict with the provisions of the ADA that states may not regulate the price or service of an air carrier. The court also held that the TWCA reimbursement provisions do not govern “the business of insurance” and are thus not reverse-preempted by the federal McCarran-Ferguson Act.
With this decision, the court affirmed a lower court ruling that found the TWCA air ambulance reimbursement price caps were preempted by the ADA and not reverse-preempted by McCarran-Ferguson. In doing so, the court disagreed with a decision by the Texas Supreme Court, which found that the TWCA “fair and reasonable reimbursement” standard was not preempted by the ADA.
NCCI will monitor for further developments.
For more information on other cases monitored by NCCI’s Legal Division, visit previous Court Case Updates and
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