The Texas Supreme Court dismissed an air ambulance companies' argument that the state had no authority to regulate its fees because its power was reserved by federal law.
In PHI Air Medical LLC v. Texas Mutual Insurance Co. ., The Lone Star State Supreme Court ruled in a 5-2 decision Friday that federal law does not require Texas to reimburse insurance companies of air ambulance more than what is "a fair and reasonable amount."
Texas had reimbursed Phoenix-based PHI Air Medical LLC, an ambulance service provider, for workers' compensation for air ambulance services to 125% of Medicare. In 2012, however, PHI and other air ambulance suppliers began filing tax disputes in the state to receive reimbursement for the full amount of their invoiced fees for transporting injured workers. The medical carriers argued that the federal Arline deregulation law prevented the Texas Workers Compensation Act's fee schedule.
An administrative law judge rejected PHI's argument but raised the reimbursement rate to 1
A trial court that was in favor of Texas Mutual, but an appeals court reversed, holding that the state's reimbursement provisions were prevented by federal law.
The Texas Supreme Court agreed to hear the case, and oral arguments began Feb. 25. The court overturned the appeal decision, rejecting PHI's argument that ADA "explicitly prevents" Texas law from requiring insurance companies to reimburse air ambulance services for a "reasonable and reasonable amount" and is therefore entitled to full compensation.
The Court found that two federal circuit courts have found that ADA does not guarantee "any payment of any air ambulance claim, or payment of" what an air carrier requires. "PHI has no transaction relationships with third insurance companies – which simply receive a bill for services that was provided to a covered injured worker – and the injured customer did not agree to pay it, the court said.
The court also noted that PHI did not question the state's ban on balancing customer billing, only insurance companies, and concluded that the air ambulance company failed to show that the "fair and reasonable standard of third-party compensation" under Texas law had any "significant effect" on its prices for transporting injured workers by air.
The Supreme Court also rejected PHI's argument that it is justified a decision that requires the insurers to repay their invoices charges entirely under state law, and considers that if the ADA presumption were applied, neither state nor federal law provides for any reimbursement at all, as it would conflict with state rights provisions granted by the 10th Amendment.
"PHI cannot have it both ways: it cannot rely on state law requiring air carrier reimbursement while claiming that a certain state standard for measuring this reimbursement is prepared," wrote Justice J. Brett Busby.
Justice Paul Green wrote in his dissertation that he believes that the ADA is hindering Texas' reimbursement system, concluding that neither "TWCA nor its compensation system" has been adopted. . . to regulate insurance operations. "