State News : Texas

Air Ambulance Update

Last week SLS attended the National Workers’ Compensation Defense Network (NWCDN) meeting in Denver as the Texas member.  The group is comprised of one vetted law firm member from each state.  We were invited to be the Texas member 17 years ago and continue to work with the group in support of Texas employers and insurance carriers who insure them.  Jane Stone gave a short presentation about these disputes to the employers and decision-makers present at the meeting.  

There are over 3,000 air ambulance fee disputes currently pending in the Texas workers’ compensation system.  The average amount in dispute in each case is over $50,000 for a total at stake of at least one hundred fifty million dollars plus interest. These disputes have gathering at the Division of Workers’ Compensation since 2012 while the parties continue to litigate the threshold issue of whether the federal Airline Deregulation Act of 1978 preempts the Texas Workers’ Compensation Act’s reimbursement standards for medical care.

The ADA prohibits states from regulating the price, route or service of an “air carrier.” The air ambulance companies argue that the ADA preempts Texas’ workers’ compensation laws that govern the amount of reimbursement owed to health care providers and therefore, they are entitled to their full billed charges for transporting injured workers. The air ambulance companies’ billed charges are significantly more than the amount paid by the insurance carriers which in most cases is 125% of the Medicare rate. 

The air ambulance companies’ billed charges are generally 600% to 1,200% of the Medicare rate.  For the sake of comparison, the Division’s fee guideline payment adjustment factors range from 125% of the Medicare rate for the Medical Fee Guideline to 235% of the Medicare rate for the Ambulatory Surgical Center Fee Guideline.  In 2015, an ALJ at the State Office of Administrative Hearings issued a decision finding that 149% of the Medicare rate was fair and reasonable reimbursement for the air ambulance services at issue but on appeal that amount was determined to be too high.
   
The Division of Workers’ Compensation has abated all of the pending individual fee disputes while the preemption issue is litigated. However, the Division recently issued decisions in the Air Evac fee disputes. The Division awarded $0.00 additional reimbursement on the grounds that it cannot determine the proper payment amount because of the federal injunction Air Evac obtained that enjoins the Division from applying its “fair and reasonable” reimbursement standards against Air Evac.

This preemption issue has been litigated in other states but none more than Texas. The litigation in Texas over the preemption question has been going on for over ten years. The issue has been litigated to the Texas Supreme Court and Fifth Circuit Court of Appeals which reached different conclusions.  The Fifth Circuit held there is preemption while the Texas Supreme Court held there is not. 

Case law holds that Texas courts  are not bound by the Fifth Circuit but only higher Texas courts and the U.S. Supreme Court. Therefore, the ALJ  overseeing the air ambulance disputes currently pending at the State Office of Administrative Hearings recently issued a ruling that he would follow the Texas Supreme Court’s decision and apply Texas’ “fair and reasonable” reimbursement standards for workers’ compensation to determine the amount of reimbursement to which the air ambulance providers are entitled.

The ALJ has now set two groups of cases for hearings on the merits in April and May 2025.  The air ambulance providers are expected to appeal the ALJ’s final decision when issued so the air ambulance litigation in Texas is far from over.

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