Category Archives: preemption

A quarter-step forward but two steps back on fee scheduling air ambulance charges in workers compensation

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Congress may have implemented a partial legislative fix in response to a growing number of state and federal court decisions, the most recent out of the 4th Circuit Court of Appeals, holding federal law regulating aviation preempts workers’ compensation fee scheduling of air ambulance bills.

The FAA Reauthorization Act authorized the Secretary of Transportation to appoint an advisory committee to suggest rules about charges for air ambulance services. But this “fix” may actually give air ambulance companies more power to avoid having their charges “fee scheduled” under state workers’ compensation laws.

The main controversy about air ambulance charges is that users, including injured workers, can be stuck with paying the difference between what insurance paid and what is billed. In workers’ compensation, when a provider accepts the “fee schedule” then an employee can not be billed further by the medical provider.

But since many courts hold that a state cannot regulation air ambulance charges, state fee schedules do not apply to air ambulances in that situation. This is because when a state law conflicts with a federal law, the federal law preempts the state law.  Charges for air ambulances are often in the tens of thousands of dollars because of the cost of helicopter flight.

On a negative note for workers, the fact that the Department of Transportation is issuing rules regarding air ambulance charges could strengthen the case that the regulation of air ambulance expenses preempt state workers’ compensation fee schedules.

In another downside for workers, the air ambulance industry will get three members of the advisory board that will be helping to draft the rules, while there will be one “consumer representative” as well as two other representatives generally representing the health insurance industry. There is a chance that consumer interests could get short-shifted by the Department of Transportation.

One upside for workers is that the legislation indicates that it should breakdown air ambulances expenses between transportation and non-transportation expenses. Non-transportation expenses could be more likely to be subjected to fee schedules which would reduce the cost of air ambulance services.

Recent case law would indicate there was an emerging majority view that the fee scheduling of air ambulance charges under state workers’ compensation laws would be preempted by federal law. The 4th Circuit Court of Appeals upheld a federal court in West Virginia that held that state regulation air ambulance charges would be preempted by federal law. The 4th Circuit joined the 10th Circuit, 11th Circuit and courts in Florida, Kansas, Kentucky, North Dakota, Texas  and West Virginia in holding that workers compensation fee scheduling of air ambulance services are preempted by federal law.

Three things disturbed me when I read over the recent 4th Circuit decision and the West Virginia federal decision it upheld. The first thing that bothered me was any lack of discussion by the court about how fee schedules fit into the beneficent purpose of workers’ compensation laws. Legal analysis oftentimes requires balancing of different interests, but there was no more than cursory balancing of interests in the latest air ambulance case.

Fee schedules were generically described as a “regulation” in the most recent air ambulance case. The deregulation of air service was described by the District Court as an unvarnished good. Recent press coverage has demonstrated how business interests have worked to influence the federal judiciary. The recent air ambulance cases show a strong anti-regulatory bent and how that influence may manifest in court decisions.

Finally, the District court upheld a contracts clause challenge to state workers’ compensation fee schedules. I don’t know if the contracts clause argument would have succeeded without the pre-emption argument, but the contracts clause has historically been used to strike down workplace safety and workplace rights laws. As a plaintiff’s attorney, I don’t like seeing the contracts clause being used to weaken workers’ compensation laws. Again, this could show how business interests are influencing the federal judiciary.

But if Congress has legislated on air ambulance fees and the DOT will be regulating the area, there is some possibility that Congress or the DOT could change those rules and regulations in a way that would help workers, by say, ruling that air ambulances have to accept workers’ compensation fee schedules if one is in place. Ideally air ambulances would be excluded by Congress from the definition of common carrier as argued by proponents of the West Virginia fee schedule for air ambulances.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Compstitutional Law 101: Part 1: Air ambulance cases call into question federal role in workers’ compensation

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Air ambulances are crucial to seriously injured people in rural areas

WILG is hosting A Constitutional Challenges Summit on April 18th in Washington D.C. I won’t be able to travel to the event, but this post and my next post are my contribution to this important disucssion.

Two seemingly obscure court decisions (sorry for the cliché) involving payment of air ambulance bills in workers compensation cases raise big questions about the role of federal law in traditionally state-based workers compensation laws.

Thomas Robinson, editor of the leading treatise on workers’ compensation laws, summarized Texas state court and 10th Circuit Court of Appeals decisions  invalidating Texas and Wyoming laws that held that air ambulance bills for workers hurt on the job should be paid under workers’ compensation fee schedules. Both courts held that since air taxis are regulated by the Federal Aviation Act, that federal law would preempt state workers’ compensation acts.

Many lawyers who specialize in workers’ compensation are skeptical of federal intervention in workers compensation. In the world of workers’ compensation so-called “federalization” is often viewed negatively. Robinson worried that the “wall” against federal intervention in the workers’ compensation system was not strong enough and wondered if there were any barriers to federal intervention in state-based workers’ compensation laws.

Anybody who reads this blog on a regular basis knows that I am a skeptic of those are who skeptical of federal intervention in the workers’ compensation system. My fundamental gripe with the “state’s rights” crowd is that workers compensation laws were enacted in the 1910s when a very pro-business Supreme Court used a narrow definition of interstate commerce to limit the power of the federal government to regulate the workplace. Workers’ compensation laws had to be enacted under state law through their 10th Amendment police powers.  But the power of Congress to regulate interstate commerce was expanded by the Supreme Court in the New Deal era which allowed the federal government to mandate matters such as wages and workplace safety.

So when Robinson asked if there were any barriers to federal intervention in state workers’ compensation laws, my first reaction was to say no. But the more I looked at the issue, the more I question that reaction.

Robinson described the wall against federal intervention in state workers’ compensation laws as the McCarran-Ferguson Act.  McCarran-Ferguson, passed in 1945, gives the states to regulate “the business of insurance” “without interference with from federal law unless federal law specifically provides otherwise. Since workers’ compensation is at heart an insurance scheme, McCarran-Ferguson provides a barrier against federalization of workers’ compensation.

McCarran-Ferguson was enacted primarily in response to Untied States v. South-Eastern Underwriters a 1944 decision which held that insurance contracts were interstate commerce. Southeastern Underwriters overturned roughly 80 years of precedent that insurance contracts were not interstate commerce because insurance contracts, even if involving interstate parties, were not actually commerce.

The issue of what constitutes commerce figured prominently in NFIB v. Sebelius, the 2012 case upholding the individual mandate in the Affordable Care Act. In that case, the individual mandate was upheld as constitutional based on the federal power to tax rather than the power to regulate interstate commerce. Much of the same reasoning found in the dissenting opinion in Southeastern Underwriters about what constitutes commerce was found in Chief Justice Roberts’ analysis of the commerce clause in NFIB v. Sebelius. According to Roberts, requiring a person to buy health insurance or any product did not constitute commerce, so Congress cannot enact such a requirement under its power to regulate interstate commerce.  Justice Roberts expressly rejected a cost-shifting argument made in support of the individual mandate being constitutional under the commerce clause.  Supporters of federal minimum standards for state workers’ compensation laws, like me, argue that deficient state laws shift the costs of work injures onto the taxpayers and/or the worker themselves

But under the reasoning in NFIB v. Sebelius, a cost-shifting argument in favor federal standards in workers compensation could run into tough questioning from the Roberts court if power to enact those standards is based on the commerce clause. In view of NFIB v. Sebelius, I believe the air ambulance cases are narrow exceptions to the federal deference to state law in matters of workers compensation.

But I believe state laws regarding workers compensation are subject to indirect federalization through constitutionally-favored tax legislation. In the recently passed tax bill, workers were given incentives to declare themselves independent contractors. As evidenced by NFIB v. Sebelius, the Roberts court seems more inclined to find laws constitutional under taxing authority than the interstate commerce clause. 

Gig economy companies and their lobbyists are pushing for legislation like the NEW GIG Ac t (10) which allows companies to use the tax code to classify workers as contractors without running into legal trouble. For the foreseeable future, I believe the so-called federalization of workers’ compensation will take place in fights about tax law.  The sad fact for employee advocates is that laws enacted under the taxing authority of the federal government are likely to be upheld as constitutional. Unfortunately, any worker-friendly reforms made at a federal level would face a skeptical audience with the Roberts court if they were enacted through the interstate commerce clause.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

This entry was posted in Constitutional law, preemption, Workers Compensation and tagged , .