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PHI Air Medical, the global helicopter transport company at the heart of the dispute over whether air ambulance firms can be bound by workers’ compensation fee schedules, filed for Chapter 11 bankruptcy protection this month. The move came as no surprise following the company’s widely reported financial struggles in recent months. PHI’s bankruptcy filing has put the air ambulance litigation at the Texas Supreme Court on hold. On March 22, 2019, the Texas Supreme Court abated the case until further order of the Court. The Court has asked the parties to file a status report no later than May 21, 2019.
PHI’s bankruptcy is the third among major helicopter service companies in recent years, including CHC Helicopters and Erickson in 2016. Jeff Frazier, a partner with Sentinel Air Medical Alliance, indicated that PHI’s bankruptcy could signal the beginning of a shakeout that could lead to lower fees. He indicated that PHI's, and other air ambulance companies, bankruptcy may lead to a restructuring of the industry, including a move to more hospital-based air services, which could lead to more reasonable rates.
Whatever the effect of PHI’s bankruptcy, it is clear that the current business model is not working. Air ambulance services borrow heavy to buy more helicopters, and then charge exorbitant prices to help pay the debt. Some air ambulance services have loads of debt and reported profits have dropped sharply in recent years. Air Evan EMS wrote in a court brief that it “faces market pressure in Texas” and, from 2012 through 2017, “suffered net losses in three years and posted minimum profits in the others.” Evidently, billing patients for the balance did not really help air ambulance companies’ bottom line . . . .