Cunningham v. Air Evac EMS, Inc.

1

Brian Cunningham, in his capacity as Director of the Public Employees Insurance Agency and Mark D. Scott, Geoff S. Christian, Amanda D. Meadows, Jared Robertson, Damita Johnson, Jason Myers, Michael Cook, William Milam, and Michael T. Smith, in their capacities as Members of the Public Employees Insurance Agency Finance Board v. Air Evac EMS, Inc., Air Evac EMS, Inc., v. Brian Cunningham, in his capacity as Directorof the Public Employees Insurance Agency and Mark D. Scott, Geoff S. Christian, Amanda D. Meadows, Jared Robertson, Damita Johnson, Jason Myers, Michael Cook, William Milam, and Michael T. Smith, in their capacities as Members of the Public Employees Insurance Agency Finance Board

Nos. 23-ICA-127, 23-ICA-135

West Virginia Intermediate Court of Appeals

July 3, 2024

SCARR C.J., dissenting:

I respectfully dissent from the majority's decision to reverse the circuit court's December 16, 2022, Final Order Granting, in Part and Denying, in Part Air Evac EMS Inc.'s Petition for Appeal. This case stems from the aftereffects of extensive federal litigation, in which the Fourth Circuit Court of Appeals held that the federal Airline Deregulation Act ("ADA") preempted state statutes which capped the Public Employees Insurance Agency ("PEIA")'s reimbursement rates for air ambulance providers to either the Medicare Rural Rate or the annual cost of an air ambulance provider's membership program, while making "balance-billing" (wherein a provider bills the insured for the remaining balance after being partially reimbursed by an insurer) a criminal offense. See Air Evac EMS, Inc. v. Cheatham (Cheatham I), 260 F.Supp.3d 628, 633 (S.D. W.Va. 2017); Air Evac EMS, Inc. v. Cheatham (Cheatham II), No 2:16-cv-05224, 2017 WL 4765966, at *1 (S.D. W.Va. Oct. 20 2017) aff'd, 910 F.3d 751 (4th Cir. 2018); Air Evac EMS, Inc. v. Cheatham (Cheatham III), 910 F.3d 751, 759 (4th Cir. 2018).

Air Evac EMS, Inc. ("Air Evac") is an air ambulance provider who operates in West Virginia, and was the party who sought the injunction of the rate-capping statutes in the Cheatham litigation. PEIA is an insurance company created by the State of West Virginia for its employees as an alternative to using a private insurance company. By virtue of operating in West Virginia, Air Evac was legally required to do business with PEIA by providing its services to PEIA's insureds. See W.Va. Code R. § 64-48-4.15 (2022). As was noted by the district court, "Air Evac must accept patients without regard to insurance coverage or ability to pay." Cheatham I, 260 F.Supp.3d at 633. Indeed, "West Virginia law forbids Air Evac from refusing service to any patient, regardless of insured status. In fact, because Air Evac is most often called upon to provide transportation in medical emergencies, the air ambulance provider does not know a patient's insured status until after the emergency transport has concluded." Cheatham II, 2017 WL 4765966, at *1 (citations omitted). After the federal district court enjoined enforcement of the rate-capping statutes on October 20, 2017, PEIA continued to pay Air Evac the Medicare Rural Rate, which is the same amount as it had paid under the enjoined statutes.

After Cheatham III, Air Evac sought additional reimbursement beyond the Medicare Rural Rate for the services it provided during the Cheatham litigation, which it had accepted as partial payment. Specifically, Air Evac sought the remaining balance of $4,018,046 for the 115 transports it had provided to PEIA members between June 9, 2016, the initiation of the Cheatham litigation, and the June 4, 2019, amending of West Virginia Code § 5-16-8a to allow air ambulance service providers to balance bill insureds. PEIA has consistently refused to pay Air Evac anything more than what it owed under the enjoined rate-capping statutes. As a result, Air Evac has only received $754,988.00 of the $4,773,034.00 "full billed" charges. PEIA even refuses Air Evac's demand to hold a hearing regarding the disputed charges, contending that the matter is not a "contested case." This refusal to hold a hearing caused Air Evac to file its December 13, 2019, Petition for Appeal in the circuit court, seeking a court order compelling PEIA to hold an administrative hearing pursuant to their own Rules of Procedure for Contested Case Hearings and Declaratory Rulings ("contested case rules"). See W.Va. Code R. § 151-3-4 (1987). With constitutional rights hanging in the balance, the majority now orders the dismissal of Air Evac's claim, on the grounds that PEIA, an insurance company created to ensure compensation of healthcare services provided to our state employees, has sovereign immunity against the claims of health care providers who were forced to provide services for its insureds. Although the purpose of sovereign immunity is to protect the public purse, the desire to protect the government goes too far here. The majority fails to properly appreciate and adequately consider the unique circumstances at play. By allowing this overly broad construction of our sovereign immunity doctrine, the majority has enabled PEIA to essentially nullify the result of the Cheatham cases. In doing so, the majority improperly places the state's sovereign right to immunity from suit above our people's fundamental due process rights.

The basis of our sovereign immunity is found within Article VI, § 35 of the West Virginia Constitution, which provides that: "The state of West Virginia shall never be made defendant in any court of law or equity . . . ." W.Va. Const. art. VI, § 35. As correctly noted by the majority, sovereign immunity confers a great deal of protection from suit upon the state and its agencies. Mellon-Stuart Co. v. Hall, 178 W.Va. 291, 296, 359 S.E.2d 124, 129 (1987) ("This constitutional grant of immunity is absolute and, as we have consistently held, cannot be waived by the legislature or any other instrumentality of the State."). The primary purpose of sovereign immunity is to prevent the diversion of state monies from legislatively appropriated purposes. Thus, our rule is that generally, when monetary relief is sought against the state treasury for which a proper legislative appropriation has not been made, sovereign immunity raises a bar to suit. Id.

However, our courts have a long history of wisely tempering the harsh language of Article VI, § 35 so that the State of West Virginia's right to be free from suit does not displace the fundamental rights of its citizens. See Tompkins v. Kanawha Bd., 19 W.Va. 257, 264 (1881) ("There is no creature of the State above the law and irresponsible. If this were so, the corporation might deny to certain individuals all benefits to be conferred by the corporation, and yet it being sovereign or representing sovereignty it could not be sued."). Less than two decades after West Virginia's formation, the Tompkins Court noted the inherent problems that an overly rigid application of sovereign immunity would create when it held that the doctrine was inapplicable to a state-owned corporation, stating that to hold otherwise would create "a legalized despot trespassing upon the rights of the citizens, who would be powerless to protect themselves." Id. at 263.

"The concept that '[t]here is no creature of the State above the law and irresponsible' expressed in Tompkins finds its foundation in article III of the West Virginia Constitution, commonly known as our 'Bill of Rights.'" Pittsburgh Elevator Co. v. W. Virginia Bd. of Regents, 172 W.Va. 743, 750, 310 S.E.2d 675, 682 (1983). There are several due process rights enumerated in the West Virginia Constitution's Bill of Rights ("WVCBR") that are at odds with a broad construction of our sovereign immunity doctrine. See id. Indeed, "[t]he philosophical basis of our pluralistic society is crippled when the government's power is found to be so absolute that it cannot be made to answer for the wrongs committed in its name." G.M. McCrossin, Inc. v. W. Virginia Bd. of Regents, 177 W.Va. 539, 541, 355 S.E.2d 32, 34 (1987). Section 9 of article III of the West Virginia Constitution provides that:

Private property shall not be taken or damaged for public use, without just compensation ... and when private property shall be taken, or damaged for public use ... the compensation to the owner shall be ascertained in such manner, as may be prescribed by general law; Provided, That when required by either of the parties, such compensation shall be ascertained by an impartial jury of twelve freeholders.

Section 10 of article III provides that: "No person shall be deprived of life, liberty, or property, without due process of law, and the judgment of his peers[;]" and § 17 of article III provides: "The courts of this state shall be open, and every person, for an injury done to him, in his person, property or reputation, shall have remedy by due course of law; and justice shall be administered without sale, denial or delay." Id. art. III, §§ 10, 17. These state due process rights explicitly guaranteeing the right to compensation, including a right to have such compensation ascertained by a jury in matters involving a public taking, plainly conflict with a doctrine that provides unwavering immunity to the state. Our state constitution clearly contemplates that every person who suffers damages shall have recourse through the courts to seek redress, and "[t]he fact that the wrongdoer is an instrumentality of state government should not eviscerate these constitutional rights, inasmuch as the Bill of Rights contained in article III is designed to protect people from government." Pittsburgh Elevator Co., 172 W.Va. at 754, 310 S.E.2d at 686. In addition to conflicting with our state constitution's due process rights, a broad view of our sovereign immunity...