Air Evac EMS, Inc. v. Dodrill
Filing
73
MEMORANDUM OPINION AND ORDER denying Defendant's 62 MOTION for Summary Judgment; granting Plaintiff's 64 MOTION for Summary Judgment; directing that Defendant be ENJOINED from enforcing the AAPPA, codified at West Virginia Code 167;§ 33-11B-1, 33-3-1, and 33-44-1 et seq., and the Licensing Laws, West Virginia Code §§ 33-1-1, 33-44-3(f), 33-3-1, and 33-4-1 et seq., against Plaintiff Air Evac EMS, Inc. Signed by Judge Thomas E. Johnston on 3/26/2024. (cc: counsel of record; any unrepresented party) (lca)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
AIR EVAC EMS, INC.,
Plaintiff,
v.
CIVIL ACTION NO. 2:21-cv-00105
ALLAN L. MCVEY,
Consolidated With:
CIVIL ACTION NO. 2:21-cv-00310
Defendant.
MEMORANDUM OPINION AND ORDER
The Court awakens in Punxsutawney, Pennsylvania, circa 1993. Much like Phil Connors,
who repeats the same day over and over, the Court must consider the same issue it has considered
multiple times already: whether the State of West Virginia can regulate Plaintiff Air Evac EMS
Inc. as “insurance” under state law. Unlike “Groundhog Day,” though, Bill Murray is nowhere
to be found, and the Court is not entertained. For the reasons discussed below, Defendant’s
Motion for Summary Judgment, (ECF No. 62), is DENIED, and Plaintiff’s Motion for Summary
Judgment, (ECF No. 64), is GRANTED.
I.
BACKGROUND
Plaintiff Air Evac EMS, Inc. (“Plaintiff” or “Air Evac”) and the State of West Virginia
have a turbulent history, which has been documented in various cases before this Court. Prior to
this current action, Air Evac has filed multiple lawsuits in this district against the acting West
Virginia Insurance Commissioner seeking to either limit or enjoin the enforcement of certain
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legislation or regulations. Each time, Plaintiff has prevailed, at least in part. See Air Evac EMS,
Inc. v. Cheatham, 2017 WL 4765966 (S.D. W. Va. Oct. 20, 2017) (“Cheatham”), aff’d, 910 F.3d
751 (4th Cir. 2018) (“Cheatham Appeal”); Air Evac EMS, Inc. v. Dodrill, 523 F. Supp. 3d 859
(S.D. W. Va. 2021), aff’d sub nom. Air Evac EMS, Inc. v. McVey, 37 F.4th 89 (4th Cir. 2022)
(“Dodrill I”); Air Evac EMS, Inc. v. Dodrill, 548 F. Supp. 3d 580 (S.D. W. Va. 2021) (“Dodrill
II”). A detailed recitation of the extensive facts of these actions can be found in the Court’s
previous Memorandum Opinion and Order, and, therefore, need not be repeated here. See Dodrill
II, 548 F. Supp. 3d 580. The Court will provide a discussion of any relevant facts as necessary
throughout this opinion.
On August 2, 2022, Dodrill I and Dodrill II were consolidated based on a finding that the
actions involve common questions of law and fact. (ECF No. 39.) On December 15, 2022, the
parties filed cross motions for summary judgment. (ECF Nos. 48, 49.) After initial briefing on
both motions, the Court held a telephonic status conference to address a critical issue in the case:
reverse preemption through the McCarren-Ferguson Act (“MFA”). (See ECF Nos. 59, 60.)
Thereafter, the Court denied both motions for summary judgment as moot and ordered the parties
to refile any motions for summary judgment. (ECF No. 61.)
On July 31, 2023, Defendant filed a Motion for Summary Judgment, (ECF No. 62), and
Plaintiff filed an Amended Motion for Summary Judgment, (ECF No. 64). The parties filed
respective responses, (ECF Nos. 67, 68), and replies, (ECF Nos. 70, 71). As such, these motions
are fully briefed and ripe for adjudication.
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II.
LEGAL STANDARD
Rule 56 of the Federal Rules of Civil Procedure governs summary judgment. It states, in
pertinent part, that a court should grant summary judgment if “there is no genuine issue as to any
material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
“Facts are ‘material’ when they might affect the outcome of the case, and a ‘genuine issue’ exists
when the evidence would allow a reasonable jury to return a verdict for the nonmoving party.”
News & Observer Publ. Co. v. Raleigh–Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010).
Summary judgment should not be granted if there are factual issues that reasonably may be
resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
“Thus, at the summary judgment phase, the pertinent inquiry is whether there are any genuine
factual issues that properly can be resolved only by a finder of fact because they may reasonably
be resolved in favor of either party.” Variety Stores, Inc. v. Wal-Mart Stores, Inc., 888 F.3d 651,
659 (4th Cir. 2018) (alteration and internal quotation marks omitted).
Typically, the burden is on the nonmoving party to show that there is a genuine issue of
material fact for trial. Anderson, 477 U.S. at 248. “The nonmoving party must do so by offering
‘sufficient proof in the form of admissible evidence’ rather than relying solely on the allegations
of her pleadings.” Guessous v. Fairview Prop. Invs., LLC, 828 F.3d 208, 216 (4th Cir. 2016)
(quoting Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993)).
When faced with cross-motions for summary judgment, the Court must consider “each
motion separately on its own merits to determine whether either of the parties deserves judgment
as a matter of law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (internal quotation
marks omitted). “Applying that standard, the facts and all reasonable inferences drawn therefrom
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must be viewed in the light most favorable to the nonmoving party.” Aleman v. City of Charlotte,
80 F.4th 264, 283–84 (4th Cir. 2023). “The court . . . cannot weigh the evidence or make
credibility determinations.” Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 569 (4th
Cir. 2015); see also Lee v. Town of Seaboard, 863 F.3d 323, 327 (4th Cir. 2017). Consequently,
a court “may not credit [the movant’s contrary] evidence, weigh the evidence, or resolve factual
disputes in the [movant’s] favor,” even if “a jury could well believe the evidence forecast by the
[movant].” Aleman, 80 F.4th at 284 (4th Cir. 2023) (alterations in original) (quoting Hensley ex
rel. North Carolina v. Price, 876 F.3d 573, 579 (4th Cir. 2017)).
III.
DISCUSSION
The West Virginia Legislature recently passed the Air Ambulance Protection Act
(“AAPPA”), codified at West Virginia Code §§ 33-11B-1, 33-3-1, and 33-44-1 et seq. The
AAPPA designates air ambulance service providers and certain affiliated entities as being “in the
business of insurance” to the extent that those providers or affiliates “contract[], promise[],
guarantee[], or in any way portend[] to pay, reimburse, or indemnify the copayments, deductibles,
or other cost-sharing amounts of a patient[’s]” “air ambulance transport.” W. Va. Code § 3311B-1(a); (ECF No. 1-1 at Ex. B.) In application, this designation would give the West Virginia
Offices of the Insurance Commissioner (“OIC”) the power to regulate Air Evac’s Membership
Program 1 under the State’s insurance Licensing Laws, West Virginia Code §§ 33-1-1, 33-44-3(f),
33-3-1, and 33-4-1 et seq. The AAPPA appears to apply to no other entity than Air Evac. See
Air Evac offers prepaid, discount memberships to individuals, business, and municipalities in West Virginia.
Dodrill II, 548 F. Supp. 3d at 583. After enrolling in the Membership Program, which costs less than $100 for
individuals and their household, any member transported by Air Evac is not responsible for any portion of their bill
not paid by insurance. Id. In other words, the “Membership Program ensures that a member does not face any outof-pocket costs if transported by Air Evac or one of its affiliated providers.” Id.
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Air Evac EMS, Inc. v. McVey, No. 2:21-cv-00310, (ECF No. 4–5 at 29). Notably, the parties do
not dispute the material facts of this case. Instead, they disagree on the legal significance of those
facts.
In this action, Air Evac seeks a declaration that the Airline Deregulation Act (“ADA”)
preempts the AAPPA and the Licensing Laws 2 accompanied by a permanent injunction barring
the OIC from enforcing the same. (ECF No. 1 at 29–30.) The parties’ cross-motions for
summary judgment present mirror arguments. The parties dispute (1) whether the ADA shields
the Membership Program from state regulation; (2) whether the MFA protects Defendant’s efforts
to regulate the Membership Program; (3) whether Air Evac is entitled to preliminary or declaratory
relief; and (4) whether the Court’s prior preliminary injunctions should be vacated. Each issue is
addressed in turn below.
A. Airline Deregulation Act of 1978
The ADA expressly preempts state efforts to regulate the prices, routes, and services of
certain air carriers. See 49 U.S.C. § 41713(b)(1). Prior to the ADA, two layers of regulation and
oversight controlled the airline industry. “The law at [that] time contemplated dual regulatory
regimes and collaboration between federal and state governments.” Cheatham Appeal, 910 F.3d
at 755 (citing Federal Aviation Act of 1958, Pub. L. No. 85-726, § 302(k); H.R. Rep. No. 85-2360,
at 14 (1958)). Then, in 1978, Congress enacted the ADA as an effort to encourage a reliance on
free market forces, remove entry barriers, and allow prices to respond to consumer demand. See
Cheatham Appeal, 910 F.3d at 755. A cornerstone of this deregulatory backdrop of the ADA is
Both parties agree that the AAPPA expressly triggers the State’s Licensing Laws, the latter of which only apply to
insurers. Therefore, the Court will confine the majority of its analysis to the AAPPA, because resolving whether Air
Evac can be regulated as insurance under the AAPPA will likewise determine whether it can be regulated through the
State’s Licensing Laws.
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that, after its enactment, air travel was no longer subject to two layers of regulation. Id. Rather,
the ADA makes clear that any efforts by a state to regulate the prices, routes, or services of air
travel are preempted by federal regulation and oversight: “[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); see Cheatham Appeal, 910 F.3d at 755 (citing 49 U.S.C. §§ 40101(a), 40109(a)–(b),
41102, 44103 (2012)).
Courts construe the “relating to” language in the ADA preemption clause broadly. See
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992). More specifically, the Supreme
Court defines “relating to” as “having a connection with, or reference to, airline ‘rates, routes, or
services.’” See, e.g., American Airlines, Inc. v. Wolens, 513 U.S. 219, 223 (1995) (quoting
Morales, 504 U.S. at 384). A regulation relates to an airline’s prices if it “has a ‘forbidden
significant effect’ on prices, even without referencing them directly.” Cheatham Appeal, 910
F.3d at 767 (quoting Northwest, Inc. v. Ginsberg, 572 U.S. 273, 284 (2014)). In fact, a law can
“relate” to an air carrier’s rates or services within the meaning of the ADA “even if the law is not
specifically designed to affect [them], or the effect is only indirect.” Morales, 504 U.S. at 388.
Still, some state laws may affect an air carrier “in too tenuous, remote, or peripheral a manner to
have pre-emptive effect.” Id. at 390 (internal quotations omitted).
Here, this Court has already determined that Air Evac is an air ambulance carrier under the
ADA. Cheatham, 2017 WL 4765966 at *5–6. And the AAPPA undoubtedly has the “force and
effect of law.” Ginsberg, 572 U.S. at 282 (noting that common-law rules, statutes, and regulations
all have the force and effect of law under this ADA preemption provision). Consequently, the
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parties only dispute whether the AAPPA relates to the rates, services, or routes of Air Evac.
Specifically, Defendant argues that “the AAPPA affects Air Evac’s prices and services in ‘too
tenuous, remote or peripheral a manner’ to suffer preemption.” (ECF No. 63 at 23 (citing
Morales, 504 U.S. at 390). Both Air Evac’s prices and services are addressed in turn.
1. Prices
First, Defendant asserts that the AAPPA does not affect Air Evac’s prices because it “does
not establish the maximum amount the state and its insured will pay to providers,” “cap the amount
Air Evac can charge for flights or its memberships,” “prohibit the sale of these memberships,”
“limit Air Evac from collecting this source of revenue,” or require Air Evac “to change the price
of its flights or its memberships.” (Id. at 23 (internal quotation marks and citations omitted).)
Defendant concedes that “any additional layer of regulation could increase Air Evac’s overall
costs” but urges the Court to reject “[s]uch an unlimited and ‘indeterminate’ reading of ADA
preemption.” (Id. at 24 (citing Maracich v. Spears, 570 U.S. 48, 59 (2013) (analyzing the Driver’s
Privacy Protection Act).) Conversely, Air Evac contends that the Membership Program is a way
of paying for air ambulance services and, thus, the regulation thereof relates to its pricing and
services. (ECF No. 68 at 24.)
Ultimately, the Court agrees with Air Evac. The fees for the Membership Program help
fund operating costs for Air Evac.
Dodrill I, 523 F. Supp. 3d at 871.
Additionally, the
Membership Program’s fee eliminates or reduces the cost of a flight because it cancels the portion
of the bill not covered by the patient’s insurance that would otherwise be the patient’s out-ofpocket responsibility. Cf. Ginsberg, 572 U.S. at 284 (finding that an airline program that awarded
mileage credits that “either eliminated or reduced” the cost of a ticket necessarily related to the
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airline’s rates); Wolens, 513 U.S. at 226 (same). Thus, as this Court previously recognized,
“[l]imiting the program would both limit a source of revenue that contributes to the cost of
providing flights and would impact the charges levied on consumers.” Dodrill I, 523 F. Supp. 3d
at 871.
Likewise, the AAPPA limits the Membership Program by prohibiting Air Evac from
seeking payment from a member’s commercial insurer unless Air Evac obtains an insurance
license from Defendant and complies with the dictates of the West Virginia Insurance Code. See
W. Va. Code § 33-11B-1(c). Put another way, the AAPPA would regulate the billing relationship
between Air Evac and its potential passengers.
Further, by treating Air Evac as an insurer, the AAPPA would require Air Evac to maintain
unencumbered capital and surplus of at least $2,000,000 at all times, W. Va. Code § 33-3-5b(a)(b), and pay mandatory licensing and filing fees, W. Va. Code § 33-3-13(a), or otherwise face
penalties, W. Va. Code § 33-3-11(b). As such, the AAPPA would require Air Evac to either: (1)
comply with costly regulatory requirements to obtain and maintain an insurance license in order
to seek payment from a member’s insurer, or (2) face exposure to civil and criminal penalties and
other enforcement action for operating as an unauthorized insurer. Based on this Hobson’s
choice, Defendant’s argument that the AAPPA’s effect on Air Evac’s rates would be too tenuous,
remote, or peripheral to have pre-emptive effect simply does not fly.
Therefore, Defendant’s “effort to regulate Air Evac’s Membership Program clearly relates
to a price of an air carrier providing air transportation.” See Dodrill I, 523 F. Supp. 3d at 871.
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2. Services
Even though Defendant recognizes that the ADA does not define what constitutes a
“service” of an air carrier, he next claims that the term “service” is limited to “access to flights and
class-of-service upgrades,” “boarding procedures,” and “other contractual features appurtenant
and necessarily included with the contract of carriage between the passenger and the airline such
as the ticketing, boarding procedures, provision of food and drink, and baggage handling.” (ECF
No. 63 at 24 (internal quotation marks and citations omitted).) Thus, because the Membership
Program does not offer these types of services, Defendant argues that the AAPPA does not relate
to services at all. (Id.) On the other hand, Air Evac contends that ADA preemption is not limited
to state laws affecting aspects of commercial air travel such as “boarding procedures,” “ticketing,”
or “provision of food and drink.” (ECF No. 68 at 25.)
Again, the Court agrees with Plaintiff. To start, the Supreme Court has found state laws
that limit programs which eliminate or reduce the cost of a flight or class-of-service upgrade relate
to rates and “services.” See Ginsberg, 572 U.S. at 284; Wolens, 513 U.S. at 226; (but see ECF
No. 63 at 24 (arguing that Wolens suggests that “service” is categorically limited to “access to
flights and class-of-service upgrades”).) Further, Defendant relies, in part, upon Hodges v. Delta
Airlines, Inc., 44 F.3d 334 (5th Cir. 1995) (en banc), to elucidate what it believes are the types of
activities that should define the scope of “services.” In Hodges, however, the Fifth Circuit held
that the ADA did not preempt a “state law tort claim for physical injury based on alleged negligent
operation of [an] aircraft.” 44 F.3d at 335 (emphasis added). In reaching this conclusion, the
Fifth Circuit distinguished between claims premised on “the operation and maintenance of
aircraft,” which fall outside the definition of “services,” and “contractual features of air
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transportation,” which do not. Id. at 336. Notably, the Fifth Circuit did not limit the definition
of “services” to “ticketing, boarding procedures, provision of food and drink, and baggage
handling,” and, instead, only listed those types of services as examples relevant in that case. As
such, Defendant’s attempt to limit the scope of “services” to these activities is unconvincing.
Here, Air Evac’s Membership Program allows members to pay a fee, and, in exchange, Air
Evac cancels all costs not covered by their insurance, which would otherwise be the member’s
out-of-pocket responsibility. As clear as the sky is blue, this is a contractual feature of its air
transportation service because it is “a bargained-for or anticipated provision of labor from” Air
Evac to its members and has nothing to do with “the operation and maintenance of aircraft.” Id.
at 336–37. Thus, the AAPPA relates to a service of an air carrier providing air transportation.
Accordingly, there is no genuine dispute of material fact, and because the AAPPA relates
to the services and rates of an air carrier providing air transportation, it is preempted by the ADA.
B. The McCarran-Ferguson Act
Nevertheless, as in prior stages of this litigation, Defendant argues that the ADA must yield
to the AAPPA under the reverse preemption provision of the MFA, which provides that “[t]he
business of insurance, and every person engaged therein, shall be subject to the laws of the several
States . . . .” 15 U.S.C. § 1012(a). In countering that the MFA does not save the AAPPA, Air
Evac asserts that the Court does not need to conduct an MFA analysis at all because (1) the ADA
expressly repeals the MFA, (ECF Nos. 65 at 20–21, 68 at 22–23), and (2) the MFA is inapplicable
where the practice regulated is not the business of insurance, (ECF Nos. 65 at 23, 68 at 13–18).
Alternatively, Air Evac contends that the Membership Program is not the “business of insurance”
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under the MFA. (ECF Nos. 65 at 24–28, 68 at 18–22). Each of these arguments is addressed
below.
1. Has the MFA been “displaced” by the ADA?
There is “no doubt” that Congress can suspend or repeal a federal statute. United States
v. Dickerson, 310 U.S. 554, 555 (1940). Congress has the power to amend, suspend or repeal a
statute by an appropriations bill, as long as it does so clearly. Robertson v. Seattle Audubon Soc.,
503 U.S. 429, 440 (1992).
“The whole question depends on the intention of Congress as
expressed in the statutes.” United States v. Mitchell, 109 U.S. 146, 150 (1883).
“An express repeal requires that Congress overtly state with specificity that the subsequent
statute repeals a portion of the earlier statute.” Patten v. United States, 116 F.3d 1029, 1033 (4th
Cir. 1997) (quoting Gallenstein v. United States, 975 F.2d 286, 288–89 (6th Cir.1992)). This
occurs when the subsequent statute specifically refers to an earlier statute. See id. (“Because the
text of the 1981 Amendment does not mention the effective date of the 1976 Amendment, there
has been no express repeal.”); see also Moyle v. Dir., Off. of Workers’ Comp. Programs, 147 F.3d
1116, 1119 n.4 (9th Cir. 1998) (“This case does not concern an express repeal because neither
statute specifically refers to the other.”) (citation omitted)).
The repeal by implication doctrine, by contrast, “applies when two laws are in direct
conflict and Congress has not ‘overtly state[d]’ which should prevail.” United States v. Frank,
8 F.4th 320, 330 (4th Cir. 2021) (quoting Patten, 116 F.3d at 1033–34). To that end, the Fourth
Circuit has instructed that the circumstances in which an implied repeal or amendment will be
found are limited to “where there is [1] an ‘irreconcilable conflict’ between statutes and [2] also a
‘clear and manifest’ congressional intent to repeal.” Id. (citing Patten, 116 F.3d at 1034). The
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Supreme Court has made clear that implied repeals and amendments to statutes are disfavored.
Nat’l Ass’n of Home Builders v. Defs. of Wildlife, 551 U.S. 644, 664 & n.8 (2007). In fact,
“because an implied repeal is disfavored, there is a ‘strong presumption’ against finding such a
repeal.” Patten, 116 F.3d at 1034 (citing Blevins v. United States, 769 F.2d 175, 181 (4th Cir.
1985)).
Air Evac claims the ADA expressly repeals the MFA. (See ECF Nos. 65 at 20–21, 68 at
22–23.) For support, Air Evac points to the plain language of the ADA, which states that
“[e]xcept as provided in this subsection, a State . . . may not enact or enforce a law . . . related to
a price, route, or service of an air carrier,” 49 U.S.C. § 41713(b)(1), and notes that the ADA
contains no exceptions for insurance-related state laws, (ECF No. 65 at 21). Consequently, Air
Evac argues that “[t]he MFA does not apply . . . because it has been displaced by the later-enacted
ADA.” (ECF No. 65 at 21.) Although creative, this argument fails to land.
To start, this argument conflates express and implied repeal. The plain text of the ADA—
which Air Evac cites—never mentions the MFA. 3 See Patten, 116 F.3d at 1033. In fact, while
the ADA limits states’ ability to enact laws that relate to air carrier’s prices, routes, and services,
Air Evac argues that “Congress is not required to use an ‘express reference or other magical password’” to abrogate
its prior enactments. (ECF No. 68 at 22 (quoting Dorsey v. United States, 567 U.S. 260, 274 (2012).) Specifically,
Air Evac claims that an express repeal can exist when a later statute declares itself the “sole and exclusive” authority
on an area of law or other broad claims of authority. (Id. at 22–23 (citing Marcello v. Bonds, 349 U.S. 302, 310
(1955); Lockhart v. United States, 546 U.S. 142 (2005).) However, the cases Air Evac cites discussed whether a later
statute could amend a previously enacted statute that requires any later statute to “expressly provide” that it was
repealing or amending it. See Dorsey, 567 U.S. at 272 (discussing the general federal saving statute, which provides
that a new criminal statute that “repeal[s]” an older criminal statute shall not change the penalties “incurred” under
the older statute “unless the repealing Act shall so expressly provide”); Marcello, 349 U.S. at 310 (discussing the
Administrative Procedure Act, which provides that “[n]o subsequent legislation shall be held to supersede or modify
the provisions of this Act except to the extent that such legislation shall do so expressly”); Lockhart, 546 U.S. 142
(discussing the Social Security Act, which provides that “[n]o other provision of law . . . may be construed to . . .
modify . . . this section except to the extent that it does so by express reference”). This is diametrically different than
what constitutes an express repeal and does not affect the Court’s analysis. Instead, as the Fourth Circuit has clearly
stated, “[a] repeal that must be inferred is, by definition, an implied repeal.” Patten, 116 F.3d at 1033.
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it does not limit any other federal laws. 49 U.S.C. § 41713(b)(1). Thus, the ADA did not
expressly repeal the MFA.
Further, Air Evac’s argument fails even under an implied repeal analysis because, as
Defendant notes, (see ECF No. 70 at 20), it fails to show an “irreconcilable conflict.” To that
point, the circumstance in which both the ADA and MFA would be applicable are remote.
Admittedly, air ambulance services approach the boundary of ADA and MFA intersection, but
even so most courts have found that the MFA does not apply in a manner that conflicts with the
ADA. See, e.g., Bailey v. Rocky Mountain Holdings, LLC, 889 F.3d 1259 (11th Cir. 2018)
(holding that the MFA did not reverse ADA’s preemptive effect on an insured’s claim); Guardian
Flight LLC v. Godfread, 991 F.3d 916 (8th Cir. 2021) (holding that the MFA did not supersede
preemptive effect of multiple ADA provisions). As such, any potential conflict between the MFA
and ADA remains purely theoretical, and theoretical conflicts are not enough to overcome the
strong presumption against implied preemption.
Therefore, the ADA does not “displace” the MFA.
2. Are prepaid medical services plans and debt-cancellation agreements the
“business of insurance” under the MFA?
Air Evac notes that the Supreme Court, multiple federal courts of appeal, and this Court,
have held that prepaid medical services plans and debt-cancellation agreements are not the
“business of insurance” under the MFA because they involve no promise to indemnify subscribers
and therefore implicate none of the insurance-related concerns that motivated Congress to enact
the MFA. (ECF No. 65 at 25 (collecting cases).) Thus, Air Evac argues that, because the
Membership Program is a prepayment arrangement involving no indemnity, the MFA does not
apply as a matter of law. (Id.) Defendant counters that (1) the Membership Program is not a
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prepaid medical services or debt-cancellation plan under West Virginia law, (ECF Nos. 67 at 20–
21, 70 at 18), and (2) Air Evac’s argument relies on distinguishable federal authority, (ECF No.
70 at 18.)
Ultimately, the Court need not decide whether Air Evac’s Membership Program is a
prepaid medical services or debt-cancellation plan to resolve this issue because none of the cases
Air Evac cites held that, as a matter of law, prepaid medical services plans and debt-cancellation
agreements are categorically not the “business of insurance” under the MFA. See generally Grp.
Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (1979); Guardian Flight, 991 F.3d at 923;
Anglin v. Blue Shield of Virginia, 693 F.2d 315, 320 (4th Cir. 1982). Instead, the Supreme Court
has made clear that “the particular relationship being questioned [must] be examined in each case.”
Anglin, 693 F.2d at 317 (discussing Royal Drug, 440 U.S. 205).
Therefore, the Court must now analyze the particular facts at issue in this case to determine
whether MFA reverse preemption is applicable.
3. Does the MFA save the AAPPA?
Defendant argues that the AAPPA satisfies an MFA analysis, while Air Evac claims that
the AAPPA cannot be saved by the MFA. (ECF Nos. 63 at 12–13, 65 at 20.) These arguments
echo those already made and addressed in Dodrill II, where this Court found that the AAPPA was
likely preempted by the ADA and could not be saved through MFA reverse-preemption. See 548
F. Supp. 3d 580. The undisputed facts in the record at this juncture do not lead to a different
conclusion.
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In this case, the operative provision of the MFA can be found in the first clause of 15 U.S.C.
§ 1012(b), 4 and states, in relevant part, that:
No Act of Congress shall be construed to invalidate, impair, or supersede any law
enacted by any State for the purpose of regulating the business of insurance, or
which imposes a fee or tax upon such business, unless such Act specifically relates
to the business of insurance . . . .
15 U.S.C. § 1012(b) (emphasis added).
This clause allows certain state laws to supersede
conflicting federal laws through reverse preemption.
In United States Department of Treasury v. Fabe, the Supreme Court articulated a threepart test to determine whether a federal statute must yield to a state statute pursuant to the MFA.
508 U.S. 491 (1993). First, the state statute must have been “enacted . . . for the purpose of
regulating the business of insurance. See Fabe, 508 U.S. at 501; Humana Inc. v. Forsyth, 525
U.S. 299, 307 (1999); Gross v. Weingarten, 217 F.3d 208, 222 (4th Cir. 2000) (quoting Humana).
That is, the law must have the “end, intention, or aim of adjusting, managing or controlling the
business of insurance.”
Fabe, 508 U.S. at 505.
Second, the federal statute must not
“specifically relate[] to the business of insurance.” Id. Third, the application of the federal
statute must “invalidate, impair, or supersede” the state statute. Id.
Here, both parties agree that the ADA does not specifically relate to the business of
insurance and, if applicable, ADA preemption would invalidate the AAPPA. So, the only issue
4
The second clause of § 1012(b) states:
[A]fter June 30, 1948, . . . the Sherman Act, . . . the Clayton Act, and . . . the Federal Trade
Commission Act, as amended, shall be applicable to the business of insurance to the extent that such
business is not regulated by State law.
15 U.S.C. § 1012(b). This clause exempts the insurers from the federal antitrust laws for activities regulated by state
law which qualify as the business of insurance.
15
before the Court is whether the state law in question—the AAPPA—has “end, intention, or aim of
adjusting, managing or controlling the business of insurance” pursuant to Fabe.
As the parties note, inconsistency has arisen regarding how courts apply this prong of the
Fabe test. (ECF Nos. 63 at 15, 71 at 10–11.) Some circuits have found the test set forth in Union
Labor Life Ins. Co. v. Pireno, 458 U.S. 119 (1982), 5 to be inapplicable beyond the antitrust
context. See Autry v. N.W. Premium Servs., Inc., 144 F.3d 1037 (7th Cir. 1998) (Pireno test
limited to antitrust cases under the second clause of § 1012(b)); Doe v. Norwest Bank Minn., 107
F.3d 1297 (8th Cir. 1997) (same); Colonial Life & Accident Ins. Co. v. Am. Family Life Assurance
Co. of Columbus, 846 F. Supp. 454 (D.S.C. 1994) (same). Other courts have employed the Pireno
test to varying degrees when determining what is the “business of insurance” in the first clause.
See e.g., United States v. Dep’t of Ins., 66 F.4th 114, 124 (3rd Cir. 2023); Guardian Flight, 991
F.3d at 922; Sabo v. Metro. Life Ins. Co., 137 F.3d 185 (3rd Cir. 1998); Merch. Home Delivery
Serv. Inc. v. Frank B. Hall & Co., Inc., 50 F.3d 1486, 1490 (9th Cir. 1995); Blackfeet Nat’l Bank
v. Nelson, 171 F.3d 1237, 1246-48 (11th Cir. 1994).
The Fourth Circuit has never expressly addressed this issue, leaving it unclear to what
extent it is appropriate to use the Pireno test under the first clause of § 1012(b). While at least
one district court in this circuit has indicated in dicta that the Pireno test may be “relevant . . . for
the limited purpose of defining the business of insurance,” it did not actually conduct a Pireno
analysis. See Ambrose v. Blue Cross & Blue Shield of Virginia, Inc., 891 F. Supp. 1153, 1160
In Pireno, the Supreme Court outlined three factors to determine if a practice falls within the “business of insurance”
under the second clause of § 1012(b): “first, whether the practice has the effect of transferring or spreading a
policyholder’s risk; second, whether the practice is an integral part of the policy relationship between the insurer and
the insured; and third, whether the practice is limited to entities within the insurance industry.” 458 U.S. at 129
(emphasis in original).
5
16
(E.D. Va. 1995), aff’d, 95 F.3d 41 (4th Cir. 1996) (per curiam); accord. Ambrose v. Blue Cross &
Blue Shield of Virginia, Inc., 95 F.3d 41 (4th Cir. 1996) (agreeing “with the district court’s
reasoning and conclusion” without addressing the district court’s discussion of the Pireno test).
In the Court’s view, Pireno’s applicability depends on the factual circumstances of the
statute and the practice it regulates. As Fabe established, laws “enacted . . . for the purpose of
regulating the business of insurance” is a more expansive category than practices constituting “the
business of insurance.” 508 U.S. at 505. At the focal point of this broad category are “‘[s]tatutes
aimed at protecting or regulating th[e] relationship [between insurer and insured], directly or
indirectly.’” See id. at 501 (third alteration in original) (quoting SEC v. National Securities, Inc.,
393 U.S. 453, 460). Logically, a state law exclusively regulating a practice that is unquestionably
the “business of insurance” is a direct regulation of this relationship, thereby satisfying Fabe.
Where, as here, a state law narrowly aims to regulate a single practice that may or may not be
insurance, the Pireno test helps inform a court’s determination of whether the aim of the statute is
the regulation of “business of insurance”. Cf. Ambrose, 891 F. Supp. At 1160 (finding the Pireno
test relevant to define the “business of insurance” under the first clause of § 1012(b)). In other
words, if a practice that is the sole target of a state law falls within Pireno’s definition of “the
business of insurance,” then, axiomatically, the state law directly regulates both an insurer and an
insured, as well as the relationship between the two. Consequently, the MFA would save such a
state law from federal preemption. On the other hand, if the state law does not directly regulate
the “business of insurance,” the MFA only saves it if the law otherwise affects the relationship
between the policyholder and the insured, i.e. indirectly regulates the business of insurance. See
Fabe, 508 U.S. at 501.
17
Here, the AAPPA effectively regulates only one practice: Air Evac’s Membership
Program. At previous stages of this litigation, the Court has already found that the Membership
Program likely does not constitute the business of insurance under the Pireno test. See Dodrill I,
523 F. Supp. 3d at 872–73 (Berger, J.) (finding, after reviewing all evidence in the record, that
“Air Evac is likely to prevail in demonstrating that its Membership Program is not
insurance . . . .”); Dodrill II, 548 F. Supp. 3d at 592 (Johnston, C.J.) (finding that, under Pireno
“Air Evac is likely to prevail in demonstrating that neither it nor its Membership Program is
insurance.”). Since those determinations, Defendant has offered no evidence that would lead to
a different conclusion. Thus, the Court need not put the same facts through the machinery of
Pireno only to repeat the analyses from its previous decisions. Simply put, if the Pireno test is
applicable here, the Membership Program is not the business of insurance. In turn, Air Evac is
not an insurer and members of its Membership Program are not policyholders or insureds. And
because the AAPPA is narrowly tailored to only regulate the Membership Program, it does not
have a direct effect on an insurance company and its policyholders.
All that remains is an examination whether the AAPPA was enacted to indirectly regulate
the relationship between insurances companies and policyholders. However, beyond Defendant
labeling the Membership Program as “insurance,” nothing in the record shows that the AAPPA
“possesses the end, intention, or aim of adjusting, managing, or controlling the business of
insurance.” Fabe, 508 U.S. 491 (internal quotations omitted). Likewise, the record contains no
evidence of any effect on the relationship between insurers, insureds, or any other entity
tangentially related to the business of insurance. Indeed, because the Membership Program
applies only to members’ costs that are not covered by insurance, its benefit is only realized after
18
the insurance claim process has been completed. Therefore, the relationship between a member’s
insurance company and the member is unaffected in any way, either directly or indirectly.
Nevertheless, Defendant claims that the AAPPA was enacted for the purposes of regulating
insurance because it would apply to any air ambulance prepaid memberships that stray into the
field of insurance.—i.e., where the OIC determines that the provider “contracts, promises,
guarantees, or in any way portends to pay, reimburse, or indemnify the copayments, deductibles,
or other cost-sharing amounts of a patient[‘s]” “air ambulance transport.” (ECF No. 63 at 8
(quoting W. Va. Code § 33-11B-1(a)).) This linguistic gamesmanship is nothing more than a
transparent attempt to circumvent this Court’s finding that Air Evac and the Membership program
are not insurance. After Defendant’s previous attempt to regulate Air Evac as insurance was not
cleared to land in Cheatham, the State drafted the AAPPA to categorically define Air Evac’s
Membership Program as insurance. Then, after the Court enjoined the OIC from enforcing the
Licensing Laws against Air Evac in Dodrill I, the legislature attempted one final go-around to
regulate Air Evac as insurance. Using a perceived “roadmap” to “avoid preemption” laid out by
the Eight Circuit in Guardian Flight, (see ECF Nos. 63 at 9, 62-2 at 17), the State amended the
AAPPA to include the limiting language referenced above. In the Defendant’s view, the AAPPA
would therefore leave Air Evac’s business unregulated in only those instances where “it did [not]
seek reimbursement for [it’s] costs from the insurer or Medicare,” thereby regulating only the
Membership Program itself as insurance. (ECF No. 62-2 at 19.) Unfortunately for the State, the
addition of buzz words drawn from the language of insurance does not change the “end, intention,
or aim” of the AAPPA, which is to legislatively define Air Evac’s Membership Program as the
“business of insurance” and regulate it as such.
19
At bottom, the State’s insertion of insurance terminology into the AAPPA does not
transmute it into a statute that was enacted for the purpose of regulating the business of insurance.
Accordingly, the MFA does not save the AAPPA through reverse preemption.
C. Standing
Defendant next argues that if it is true that the Membership Program does not promise “to
indemnify or pay specific amounts to their members” or pay “third party providers under any
circumstances,” then Air Evac lacks standing to challenge the AAPPA. Essentially, Defendant
asks this court to find that if Air Evac prevails on its arguments above, this pyrrhic victory
necessarily means that it never had standing to challenge the AAPPA in the first place. The Court
does not agree.
Article III standing has three elements. The plaintiff must have “suffered an injury in fact
that is concrete, particularized, and actual or imminent.” Thole v. U.S. Bank N.A., 140 S. Ct. 1615,
1618, (2020). The plaintiff’s injury must have been “caused by the defendant,” and it must be
“likely” the plaintiff’s injury will “be redressed by the requested judicial relief.” Id.
However, for Article III purposes, “[a]n allegation of future injury may suffice if the
threatened injury is ‘certainly impending,’ or there is a ‘substantial risk that the harm will occur.’”
Bryant v. Woodall, 1 F.4th 280, 285 (4th Cir. 2021) (quoting Babbitt v. United Farm Workers Nat’l
Union, 442 U.S. 289, 298 (1979) and Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158
(2014)). Critically, an unlawful attempt at regulation is itself a cognizable injury when plaintiff
avers facts establishing that “plaintiff is [itself] an object of the action . . . at issue.” Lujan v. Defs.
of Wildlife, 504 U.S. 555, 562 (1992). In such cases, “there is ordinarily little question” that
plaintiff has standing to challenge the proposed regulatory action. See id. at 561–62.
20
The long and troubled history of this case leaves little doubt that Air Evac is itself the object
of the State’s attempted regulatory schemes. See Cheatham, Cheatham Appeal, Dodrill I, Dodrill
II. This is especially true considering that Air Evac is the only air-ambulance provider in the state
selling memberships. Defendant’s own statements promising to “shut down” the Membership
Program and his “troubling” cooperation with Air Evac’s in-state competitor, are more than
sufficient to show that Air Evac is the object of the AAPPA. See Dodrill I, 523 F. Supp. 3d at
869. Also noteworthy is the fact that the Legislature reworded HB 2776 in an attempt to “moot”
Dodrill I and Guardian Flight and avoid ADA preemption, (see Air Evac EMS, Inc. v. McVey,
2:21-cv-00310, ECF No. 4-5 at 27–28), as the Fourth Circuit has made clear that the legislature’s
“recent revisions to its statutory scheme” “suggest . . . a renewed interest in regulating” the
Membership Program. See Bryant, 1 F.4th at 287. Further, the now operative AAPPA, with its
attempts to vector the Membership Program into the realm of “insurance,” buttresses the
conclusion that if no permanent injunction is granted, there is a substantial risk that Air Evac will
be “shut down” by the Defendant. Even if a shut down or interruption in its business is temporary,
Air Evac will likely suffer a “loss of revenue and damage its relationship with customers, lay off
employees, and the added difficulty of regaining customers lost as a result of the shut down.” See
Dodrill I, 523 F. Supp. 3d at 873–74. As such, there is no doubt that Air Evac has suffered an
injury in the form of an imminent attempt to shutter its business pursuant to authority granted in
the AAPPA.
The second and third standing requirements—i.e., causation and redressability—are also
clearly satisfied. The OIC is responsible for enforcing insurance laws in West Virginia. Its own
statements and actions demonstrate an ongoing campaign to enforce insurance regulations against
21
Air Evac. Similarly, this Court may redress the injury in the form of a declaratory judgment that
the Membership Program is not insurance and a permanent injunction prohibiting the State from
enforcing insurance regulations against Air Evac.
At bottom, all of the facts show that the legislature and commissioner have been attempting
to regulate the Membership Program as insurance for nearly a decade. To suggest that Air Evac
lacks standing in the face of such attempts would defy reason.
Accordingly, Air Evac clearly has standing to challenge the AAPPA.
D. Injunctive Relief
Air Evac also seeks a permanent injunction barring enforcement of the AAPPA and the
Licensing Laws against it. Plaintiffs seeking a permanent injunction must first demonstrate
“actual success” on the merits. Once shown, plaintiffs must next demonstrate that (1) it has
suffered “an irreparable injury”; (2) “remedies available at law, such as monetary damages, are
inadequate to compensate for that injury”; (3) “considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted”; and (4) “the public interest would not be
disserved by a permanent injunction.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391
(2006). In effect, this standard is “the same as for a preliminary injunction with the exception that
the plaintiff must establish success on the merits and that the focus on irreparable harm includes
the question whether the plaintiff has an adequate remedy at law.” Nat’l City Bank of Indiana v.
Turnbaugh, 367 F. Supp. 2d 805, 821 (D. Md. 2005), aff’d sub nom. Nat’l City Bank of IN v.
Turnbaugh, 463 F.3d 325 (4th Cir. 2006) (collecting cases).
Here, all elements of a permanent injunction are satisfied as to the AAPPA and Licensing
Laws. To start, because the Court determined that the ADA preempts the AAPPA and that Air
22
Evac and its Membership Program are not insurance, Air Evac has prevailed on the merits. Air
Evac has also satisfied the four remaining elements.
First, the impending unconstitutional enforcement of the AAPPA and Licensing Laws
“supplies the necessary irreparable injury.” Air Evac EMS, Inc. v. McVey, 37 F.4th 89, 103 (4th
Cir. 2022) (quoting Morales 504 U.S. at 381–82). Second, without the injunction Air Evac will
have no adequate remedy at law because it will continue to face the Commissioner’s ongoing
attempts “to shut down the Membership Program which would result in the loss of customers and
employees, damages that could not be remedied by money.” Id. Third, the balance of hardships
weighs in favor of an injunction because the state cannot point to any hardship it would suffer as
a result, much less a hardship that would outweigh Air Evac’s loss of customers, employees, and
other damages or the injustice of being subjected to an invalid law.
Fourth, a permanent
injunction here serves the public interest by preserving a federal statute and preventing
enforcement of invalid state law. Legend Night Club v. Miller, 637 F.3d 291, 302–03 (4th Cir.
2011); United States v. Alabama, 691 F.3d 1269, 1301 (11th Cir. 2012) (finding that “[f]rustration
of federal statutes [such as the ADA]” is decidedly “not in the public interest”).
Accordingly, Air Evac has satisfied all the elements necessary for permanently enjoining
the State from enforcing the AAPPA and Licensing Laws against it.
IV.
CONCLUSION
In “Groundhog Day,” Phil Connors was forced to relive the same day over and over until
he finally chose to change his ways. Let this comedy convey an important message to Defendant:
continuously trying to declare Air Evac’s Membership Program as insurance will result in the same
outcome because “simply calling something insurance does not make it [so],” Dodrill II, 548 F.
23
Supp. 3d at 592, any more than calling a spatula a Stradivarius enables the spatula to produce the
exquisite notes of Vivaldi’s “Spring” from The Four Seasons.
Reliving the same day over may not be a sanction within the grasp of this Court, but others
are available. At this point, further litigation of these matters may cross the frontier between
peculiarly persistent and frankly frivolous. That frontier is on the horizon at twelve o’clock.
For the reasons discussed above, Defendant’s Motion for Summary Judgment, (ECF No.
62), is DENIED, and Plaintiff’s Motion for Summary Judgment, (ECF No. 64), is GRANTED.
Accordingly, the Court ORDERS that Defendant be ENJOINED from enforcing the AAPPA,
codified at West Virginia Code §§ 33-11B-1, 33-3-1, and 33-44-1 et seq., and the Licensing Laws,
West Virginia Code §§ 33-1-1, 33-44-3(f), 33-3-1, and 33-4-1 et seq., against Plaintiff Air Evac
EMS, Inc.
IT IS SO ORDERED.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:
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March 26, 2024
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