Air Evac EMS, Inc. v. Dodrill

523 F.Supp.3d 859

AIR EVAC EMS, INC., Plaintiff,

v.James A. DODRILL, Defendant.

Civil Action No. 2:21-cv-00105

United States District Court, S.D. West Virginia, Charleston Division.

Signed March 1, 2021

Alex J. Zurbuch, Carte P. Goodwin, Frost Brown Todd, Charleston, WV, Charlotte Taylor, Pro Hac Vice, Jones Day, Washington, DC, Joshua L. Fuchs, Pro Hac Vice, Nicole Marie Perry, Pro Hac Vice, Jones Day, Houston, TX, for Plaintiff.

Katherine A. Schultz, Cassandra Lynn Means, Thomas T. Lampman, Office of the Attorney General, Charleston, WV, for Defendant.

MEMORANDUM OPINION AND ORDER

IRENE C. BERGER, UNITED STATES DISTRICT JUDGE

The Court has reviewed the Plaintiff's Complaint for Declaratory, Injunctive, and Emergency Relief (Document 1), the Plaintiff's Motion for Temporary Restraining Order and Order to Show Cause Regarding a Preliminary Injunction (Document 3), the Memorandum in Support of Plaintiff's Motion for a Temporary Restraining Order and Motion for a Preliminary Injunction (Document 4), Defendant West Virginia Insurance Commissioner's Memorandum in Response to Plaintiff's Motion for Temporary Restraining Order and Order to Show Cause Regarding a Preliminary Injunction (Document 17), and the Plaintiff's Reply in Support of Motion for Temporary Restraining Order and Order to Show Cause Regarding a Preliminary Injunction (Document 18), as well as all exhibits.

In addition, the Court has reviewed Defendant West Virginia Insurance Commissioner's Motion for Leave to File Surreply Memorandum (Document 19), the attached Defendant's Surreply Memorandum in Opposition to Plaintiff's Motion for Temporary Restraining Order and Order to Show Cause Regarding a Preliminary Injunction (Document 19-1), and the Plaintiff's Opposition to Motion for Leave to File Surreply (Document 20). Because the Defendant's response brief raised the issues of standing, ripeness, and abstention, and the Plaintiff's reply contained new arguments regarding those issues, the Court finds that the sur-reply should be permitted to provide full opportunity for both parties to advance their arguments.¹

FACTUAL BACKGROUND²

The Plaintiff, Air Evac EMS, Inc. (Air Evac), is an emergency air ambulance provider operating throughout the United States, including in West Virginia. It is a federally regulated air carrier. The Defendant, James A. Dodrill, is West Virginia's Insurance Commissioner.

In accordance with federal and state law, Air Evac responds and provides transport when dispatched by first responders, hospitals, or physicians and provides its services without regard to a patient's ability to pay or insurance status. Air ambulance services are quite expensive, and insurance does not always reimburse for the full cost. Air Evac "offers a prepaid, discounted Membership Program to both individual West Virginia residents and to West Virginia businesses and municipalities." (Compl. at ¶ 3.) Participation in the Membership Program costs less than $100 for an individual, covering all members of the household. Businesses, municipalities, and counties also participate in the Membership Program on behalf of employees or residents. Air Evac cancels any portion of a bill that is not covered by insurance for anyone covered by a membership who is transported by Air Evac. The membership fees are held by a parent company, which expends funds for general operations, including fuel, payroll, and maintenance. Anyone enrolled in the Membership Program is covered as to Air Evac and its sister companies, which operate in other states. When a member is transported, the company providing the transport cancels any bill in excess of insurance coverage. No funds are transferred between the companies following a member transport. The Membership Program provides no coverage for transport by unaffiliated air ambulance providers, and members who require transport have no ability to control which company provides the service. Air Evac describes the program as a partial prepayment, or a debt cancellation agreement.

The Offices of the Insurance Commissioner (OIC) held an investigative hearing on February 6, 2020, during which Air Evac cooperated but presented its position that the Airline Deregulation Act of 1978 (ADA) preempts any state law applicable to the Membership Program. Air Evac continued to object while complying with discovery requests. On December 29, 2020, the OIC "filed an administrative complaint against Air Evac seeking penalties and a cease-and-desist order" to prevent Air Evac from offering the Membership Program. (Compl. at ¶5.) The OIC alleges violations of the Unauthorized Insurers Act based on its characterization of the Membership Agreements as insurance policies. (See Administrative Complaint, Doc. 1-2.) Air Evac is not licensed to provide insurance in West Virginia. The OIC has scheduled a hearing on its efforts to apply insurance regulations to Air Evac's Membership Program for March 2, 2021, to be presided over by Mr. Dodrill. Application of insurance regulations to Air Evac would subject it to fines and penalties, as well as require the termination of the Membership Program unless and until Air Evac could meet the regulatory requirements applicable to insurers in West Virginia.

The OIC's regulatory efforts follow previous state attempts to regulate Air Evac and its Membership Program. State officials, including Mr. Dodrill, have expressed concerns regarding the pricing and balance billing of air ambulance services. A previous effort to impose limits on the reimbursement rates through the PEIA (the West Virginia Public Employees Insurance Agency) resulted in an injunction. The OIC communicated with HealthNet, a not-for-profit air ambulance network in competition with Air Evac, regarding potential avenues for regulation, including its current consideration of the application of insurance regulations to the Membership Program. Mr. Dodrill indicates that the investigation was initiated following a complaint by HealthNet.

Air Evac seeks declaratory and injunctive relief based on ADA preemption.

STANDARD OF REVIEW

Rule 65(b)(1) of the Federal Rules of Civil Procedure provides that a temporary restraining order may be issued without notice

only if (A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and (B) the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.

Fed. R. Civ. P. 65(b)(1). A preliminary injunction may be issued "only on notice to the adverse party." Fed. R. Civ. P. 65(a)(1). The Defendant has appeared and responded in this matter.

"A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Winter v. Nat. Res. Def. Council, Inc. , 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). Plaintiffs must satisfy all four requirements. JAK Prods., Inc. v. Bayer , 616 F. App'x 94, 95 (4th Cir. 2015) (unpublished, per curiam opinion); Real Truth About Obama, Inc. v. Fed. Election Comm'n , 575 F.3d 342, 346 (4th Cir. 2009), cert. granted, judgment vacated , 559 U.S. 1089, 130 S. Ct. 2371, 176 L. Ed. 2d 764 (2010), and adhered to in part sub nom. The Real Truth About Obama, Inc. v. F.E.C. , 607 F.3d 355 (4th Cir. 2010). The standard requires the plaintiff "to make a clear showing of likelihood of success on the merits." Dewhurst v. Century Aluminum Co. , 649 F.3d 287, 292 (4th Cir. 2011) (quotation marks omitted). The final two factors, "assessing the harm to the opposing party and weighing the public interest ... merge when the Government is the opposing party." Nken v. Holder , 556 U.S. 418, 435, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009).

DISCUSSION

Air Evac seeks injunctive relief to prevent the Defendant from subjecting it to regulatory action related to operation of the Membership Program. It contends that the ADA preempts state regulation of its pricing, routes, and services. It argues that the Membership Program is not properly classified as insurance for purposes of federal law, and even if it were, the ADA's broad preemption provision would apply. Air Evac therefore contends that it is likely to succeed on the merits. It further argues that it would be irreparably harmed by being improperly subjected to state regulation. Should the Defendant take enforcement action, Air Evac states that it would be forced to cease offering its Membership Program, losing an important source of revenue as well as relationships with customers that may be difficult to regain should it ultimately prevail. Air Evac contends that the state would suffer no harm by being precluded from enforcing the insurance regulations pending resolution of the preemption issue. Finally, Air Evac argues that the public interest favors upholding Congress's intent in preempting state regulation of air carriers, as well as preserving public access to affordable air ambulance services and the Membership Program.

The Defendant argues that Air Evac's claim should be dismissed pursuant to Younger abstention because it will have the opportunity to present its arguments during the state administrative proceedings. He further argues that Air Evac lacks standing because the Commissioner has not yet determined whether the Membership Program is insurance subject to regulatory enforcement. For the same reason, he argues that the dispute is not ripe. Should the Court reach the merits, the Defendant contends that Air Evac is not likely to succeed on the merits because federal law reserves insurance regulation to the states except where federal law specifically relates to insurance. The Defendant asserts that the applicable question is whether the Membership Program is...