Workers' Compensation: Federal Preemption of State Medical Billing Schedules

Medical benefits are a significant factor in the overall costs of of most state workers compensation programs. The ability to contain those costs is at the very heart of the viability of most workers’ compensation systems. Federal preemption of state medical fee schedules and regulations are a prevailing challenge to the patchwork of non-uniform state benefit programs.

EagleMed, LLC v. Travelers Insurance, decided June 15, 2018 involves the fact that federal Airline Deregulation Act (ADA) expressly preempts state laws and actions regulating air ambulance billing. At the hearing level the Kansas Compensation Board ruled that the air ambulance company was entitled to payment for its full bill. The Kansas Appellate Court reversed due to federal ADA preemption and held that the Kansas Division of Workers Compensation [KWCA] cannot determine the reasonableness of air ambulance charges and the state lacks the authority to adjudicate fee disputes between a workers compensation insurer and an air ambulance provider.

The air ambulance company, EagleMed, LLC, filed a supplemental brief on October 30, 2020, in support of full billing, asserted:

1. The Airline Deregulation Act Preempts State Laws
That Impose State Policy Rules on Air Carrier Prices,
Routes, and Services, 49 U.S.C.§ 41713(b)(1); and

2. The ADA Does Not Preempt the 2012 Fee Schedule

A. The 2012 Fee Schedule Requires Full Payment of
Air-Ambulance Providers' Billed Charges and Is Not
Preempted

B. The 2012 Fee Schedule Requires Reimbursement
of an Air Ambulance Provider's Own “Usual and
Customary” Charges

3.The KWCA Reduces Air Ambulance Rates Below
Billed Charges

4. The KWCA's Reimbursement Caps Are Preempted
by the ADA

A. A “Fair, Reasonable, and Necessary” Limit on Air-
Ambulance Reimbursements “Relate[s] to” EagleMed's
“Price[s]”

B. The Other Requirements for ADA Preemption Are
Also Met

C. Contrary to Travelers' Arguments, ADA Preemption
Does Not Mean That EagleMed Must Accept a KWCA
Cap on Its Rates

D. If This Court Finds Preemption, the Next Step Is
Severability Analysis

The Kansas Supreme Court has scheduled oral argument. On Friday, December 18. 2020 at 1:30 pm on the issue. Oral argument in the matter of Eaglemed, LLC v. Travelers Insurance will be live streamed on the Kansas Supreme Court You-Tube channel.

See also: Texas Mutual Insurance Company v. PHI Air Medical, LLC, 63 Tex. Sup. Ct. J. 1462, 2020 WL 3477002 (Tex. 2020) (Westlaw)

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