Schneberger v. Air Evac Ems, Inc., 17-6154

SUSAN SCHNEBERGER; LACY STIDMAN; JOHNNY TRENT,individually and as class representatives, Plaintiffs - Appellants, v. AIR EVAC EMS, INC., d/b/a Air Evac Lifeteam; EAGLEMED, LLC, Defendants - Appellees.

No. 17-6154

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

August 31, 2018

(D.C. No. 5:16-CV-00843-R)

(W.D. Okla.)

ORDER AND JUDGMENT^*

Before HOLMES, MATHESON, and MORITZ, Circuit Judges.

Susan Schneberger, Lacy Stidman, and Johnny Trent brought claims on behalf of themselves and a putative class of similarly situated individuals against air-ambulance operators in Oklahoma, alleging that the defendants charged exorbitant rates for air-ambulance services. They claimed breach of implied contract because the parties did not agree on a particular price before serviceswere provided; therefore, the plaintiffs argued, the defendants agreed to transport the plaintiffs and their family members for a reasonable price. They also brought claims, inter alia, for unjust enrichment and money had and received. The district court dismissed these claims as preempted by the Airline Deregulation Act ("ADA"), 49 U.S.C. § 41713. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

I¹

A

Defendants EagleMed, LLC ("EagleMed") and Air Evac EMS, Inc. ("Air Evac") operate air-ambulance services in several states, including Oklahoma. They do not dispatch their own services, but instead respond to third-party dispatch requests and requests from medical professionals or first responders.

The plaintiffs claim that they or their family members were transported by the defendants "without entering into written agreements specifying a price prior to transport." Aplts.' Opening Br. at 3. No price or schedule of prices was disclosed at the time of service. The plaintiffs claim that the defendants "do not negotiate rates with patients" or "publish their pricing model in any available platform." Aplts.' App. at 27 (Pet., dated July 26, 2016). The plaintiffs furtherargue that the emergency conditions under which the transportation here took place precluded any "meaningful opportunity to consent" to the terms of service. Aplts.' Opening Br. at 4.²

Ms. Schneberger's husband was transported 416 miles by EagleMed from Norman Regional Hospital in Norman, Oklahoma, to MD Anderson Hospital in Houston, Texas. Mr. Schneberger was insured by Blue Cross Blue Shield Association ("BCBS"), but BCBS refused to pay for EagleMed's service because it concluded that his transportation was not medically necessary. EagleMed reduced Mr. Schneberger's bill from $63,564.71 to $53,133.83. Ms. Stidman wastransported sixty-seven miles by EagleMed from Pittsburg County, Oklahoma, to St. John Medical Center in Tulsa, Oklahoma. Ms. Stidman's insurance paid $15,180.53 of EagleMed's charges, leaving her with a bill for $19,516.26. Mr. Trent was transported 106 miles by Air Evac from Elk City, Oklahoma, to Oklahoma City after an oilfield accident. Air Evac charged Mr. Trent $45,101.94.

The plaintiffs argue that they were charged for transportation "in an amount that vastly exceeded both the cost to provide the transport and the fair market value of the transport." Aplts.' Opening Br. at 4. The plaintiffs proffered statements by "[a]n executive of the largest air ambulance company in the industry admitt[ing] that the fair charge for an average transport would be $12,000" and claimed that they were charged between four and eight times that amount. Id. (emphasis added) (citing Aplts.' App. at 131 (Pls.' Joint Resp. to Defs.' Mot. to Dismiss, dated Dec. 20, 2016)). When the plaintiffs were unable to pay, the defendants began collection efforts that exposed the plaintiffs to "adverse judgments and damage to their credit ratings." Id. at 5. The defendants do not contest that the written agreements between the parties lacked an agreed-upon price. The defendants argue, however, that they are required by law to transport patients who require services regardless of their insurance coverage or ability to pay. Providing these services is expensive—requiring the defendants to maintain customized aircraft and twenty-four-hour crews—and payments received fromuninsured patients or patients covered by Medicaid or Medicare are, in general, "substantially below air ambulance providers' per-transport costs." Aplees.' Resp. Br. at 9. "Such underpayments contribute to escalating prices for emergency air ambulance transportation." Id. And in order "[t]o continue to provide air ambulance service for everyone regardless of insurance status . . . [the defendants] must receive their billed charges for a sufficient portion of their flights to offset the losses they incur when they transport uninsured or underinsured patients." Id. at 10.

B

The plaintiffs filed claims in the state District Court for Oklahoma County, Oklahoma, seeking damages and injunctive relief prohibiting the defendants from charging or attempting to collect "unreasonable rates" for their services. Aplts.' App. at 48-51. The plaintiffs presented several claims under Oklahoma law, including claims for breach of an implied contract (including breach of the implied covenant of good faith and fair dealing), unjust enrichment, and money had and received.³ The plaintiffs argued that, due to the lack of a specified price term, the parties entered into implied contracts for services to be provided at areasonable price, and the defendants breached those contracts. In the alternative, the plaintiffs sought a declaratory judgment that the contracts between the parties were "unenforceable . . . because of the lack of mutuality." Aplts.' App. at 50. The defendants removed the case to the U.S. District Court for the Western District of Oklahoma.

The defendants then moved to dismiss the complaint, arguing that all of the plaintiffs' state-law claims were preempted by the ADA. The statutory preemption provision says the following:

Except as provided in this subsection, a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.

49 U.S.C. § 41713(b)(1). The defendants argued that, under the ADA, the Department of Transportation's ("DOT") regulatory mechanism provides the exclusive remedy against abusive pricing practices by airlines. The plaintiffs responded that DOT regulations provide some remedy against misleading advertising of prices, but that they offered no relief here because the defendants did not disclose their prices at all. Reflecting the substance of their district court argument, the plaintiffs put it this way on appeal: "If the District Court lacks authority to address Defendants' outrageous, after-the-fact pricing regime, then there is no remedy for Plaintiffs. Defendants can charge whatever they want, and no judicial or agency review constrains their unfettered discretion." Aplts.'

Opening Br. at 6. The plaintiffs further argued that the defendants were estopped from claiming ADA preemption because they had sought to recover their fees in state-court actions.

Finally, the plaintiffs argued that the policy choice underlying the ADA—that is, to limit regulation in order to maximize the effects of market forces on prices in the airline services industry—was not applicable to the air-ambulance market because patients "have no way to shop for air ambulance services." Id. No "market" exists, the plaintiffs argued, because there is no "opportunity for a consumer to compare competing providers based on price or other variables." Id.

The district court rejected the plaintiffs' arguments and granted the defendants' motion to dismiss. At the outset of considering the defendants' preemption argument, the court concluded that it was "settled" that the defendants were "air carriers" within the meaning of the ADA, 49 U.S.C. § 41713(b)(1), and thus within the ambit of that statute's preemption protections.⁴ Aplts.' App. at263 (Order, dated Mar. 15, 2017). The court then found that all of the plaintiffs' claims were preempted by the ADA.

The court reasoned that the plaintiffs' claim for breach of an implied contract, including a covenant of good faith and fair dealing, "at bottom" evinced the plaintiffs' contention that "Defendants' prices are unreasonably high under Oklahoma law." Aplts.' App. at 266. Furthermore, the court said, "it is immaterial whether Plaintiffs package their claim as one for charging unreasonable rates or one for failing to deal in good faith; Plaintiffs are still alleging that Defendants breached the 'state-imposed obligation[]' to chargereasonable rates." Id. at 267 (alteration in original) (quoting Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 228 (1995)). And claims relying on such state-law obligations, said the court, are preempted by the ADA. Specifically, it stated: "If Plaintiffs were simply attempting to enforce a specific term of the contract, their claims could proceed . . . . Because they are not, preemption applies." Id. at 268 (citation omitted).⁵

In rejecting the plaintiffs' other claims, the court opined further:

Because Plaintiffs' remaining claims all stem from the belief that these rates were excessive, they too must be dismissed. Their claim for money had and received relies on the failed argument that Defendants' rates were unreasonable . . . . Plaintiffs' request for injunctive and declaratory relief all hinge on the Court finding that Oklahoma law bars Defendants from charging these rates. The ADA therefore preempts these claims as well.

Id. at 271 (citation omitted). The court ruled that the plaintiffs could "always lodge their complaints with the [DOT]" and that the "adequacy of this remedy is for Congress, not the courts, to decide." Id. at 270.

The court was sympathetic to the plaintiffs' policy arguments but nevertheless found them irrelevant in light of the clear statutory language and caselaw interpreting it:

[P]erhaps the statute is particularly

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