We're Halfway There
Jul 1, 2020


The Texas Supreme Court analyzed the Airline Deregulation Act (ADA), the McCarran-Ferguson Act, and a host of federalism issues in a case involving the state’s authority to regulate insurance payments to air ambulances.  We examine this holding and other state and federal matters making headlines this week.



The Texas Supreme Court dismissed an air ambulance company’s claim that Texas had no authority to regulate its fees.  A majority of justices in Austin held that federal law does not require Texas to compel workers’ compensation carriers to reimburse air ambulance providers at a rate higher than “fair and reasonable.”  Texas courts have allowed for air ambulance reimbursement at 125% of Medicare rates.  However, medical transport companies argued that the federal Airline Deregulation Act preempted the Texas workers’ compensation fee schedule, and sought patient reimbursement for their billed charges, an argument that succeeded before the appellate court.



Reversing the appellate decision, the high court held that the ADA does not expressly preempt Texas law, and air ambulance providers were not permitted to claim reimbursement at their billed rate.  The court further noted that the air ambulance providers failed to challenge the state’s prohibition on balance billing of customers.  As such, the majority ruled that air ambulance providers could not rely on state law to require insurance companies to reimburse air carriers, but at the same time, argue that the state’s standard for measuring that reimbursement was preempted.



Researchers at Georgia State and Wake Forest law schools, the Brookings Institution, and the University of Southern California tracked the national plight of patients using air ambulance services and released an adverse study on air ambulance firms’ billing practices.  The report found more than 75% of patients transported by air ambulance with commercial insurance did not have coverage for the transport, and nearly forty percent faced a balance bill nearing $20,000.  The study cites a patchwork of state legislative and judicial authority on these practices, but recommended the federal intervention.  In related news, during oral arguments on another air ambulance case before the Kansas Supreme Court, a justice told the insurance carrier’s counsel, “it seems like your fight is with Congress.”



To this point, and armed with a U.S. General Accountability Office report on air ambulance costs, state insurance regulators have asked Congress to help protect consumers against surprise medical bills.  A National Association of Insurance Commissioners (NAIC) task force wrote to Congressional leaders to seek legislation to protect patients from what state regulators say are runaway charges. We’re closely following this issue at the state and federal levels.


California Regulatory Activity 


The California Air Resources Board (CARB) unanimously approved a first-of-its-kind policy to move the trucking sector off diesel fuel by requiring manufacturers to sell an increasing number of zero-emission vehicles (ZEV).  Beginning in 2024, the mandate initially requires the sale of 5%-9% zero emission vehicles (ZEV) based on class, rising to 30%-50% by 2030.  The mandate will put an estimated 300,000 zero-emission trucks on the road by 2035, and “where feasible,” all vehicles should be ZEVs by 2045 by separate zero emission regulations.  The regulation would apply to pickup trucks weighing 8,500 pounds or more, but not to light-duty trucks, which are covered by regulations expected in 2021. The Environmental Protection Agency (EPA) previously asserted that California’s light-duty ZEV mandate was preempted by federal law, which prompted 23 U.S. to litigate the regulation.  We will see what steps the EPA takes next.



Today marks the first day of enforcement of the California Consumer Privacy Act (CCPA).  Just as the California Attorney General released regulations governing CCPA enforcement, the California Secretary of State announced the “California Privacy Rights Act” (CPRA), an initiative that would replace and expand the CCPA, qualified for the November 2020 ballot. If passed by California voters later this year, the CPRA would further strengthen the CCPA by: (1) creating and adding restrictions around a new category of personal information known as “sensitive personal information” (which would include geolocation data); (2) introducing a right to correct; (3) requiring new opt-in measures; (4) tripling fines for certain violations; and (5) creating a new administrative enforcement agency called the California Privacy Protection Agency.  We’ll be tracking these initiatives throughout the year.


Making Our Way Around the Country


Staying in California, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) expanded its Special Inspection Report program to allow agents and brokers to request a physical inspection of their clients’ California business operations to affirm employee job classifications.  Previously, only the insurer of record could request a WCIRB Special Inspection. The fee for conducting a Special Inspection is $200 per location, and WCRIB established a   dedicated email request line to facilitate the anticipated surge in requests.



The Motor Carrier Safety Advisory Committee (MCSAC) of the Federal Motor Carrier Safety Administration (FMCSA) will hold public meetings to discuss legalization of hemp, safety oversight of delivery vehicles, and minimum driver age later this month.  Comprised of 25 stakeholders in safety advocacy, safety enforcement, motor carrier safety departments, and industry, the MCSAC advises the FMCSA on rulemaking initiatives.  The two-day public session will take place on July 13th and 14th.  Interested parties may submit an electronic registration to attend the meetings.



Today, the Virginia Workers’ Compensation Commission will begin enforcing a new law that will affect how Virginia employers and their workers’ compensation carriers respond to initial claims for benefits. Under the rule, employers have 30 days following the receipt of an order from the Virginia Workers’ Compensation Commission to respond to the initial filing, with copy to the injured worker, and state whether it (1) intends to accept the claim; (2) intends to deny the claim; or (3) is unable to determine whether it intends to accept or deny the claim because the employer lacks sufficient information to make such determination. Failure to file a timely response may result in civil penalties, which could reach $5,000 if the failure is deemed willful.



Returning to Texas, the state supreme court held that an injured worker can pursue civil damages if the employer purposefully causes injury, or when the employer believes that its actions are substantially certain to result in a particular injury to a particular employee.  The court ruled this standard does not equate to a “high likelihood” of increased risks to employees in the workplace.  A dissenting justice determined that the employer knew, through a record of excessive hours of service, that the driver was risking injury from exhaustion, and suggested the State Legislature clarify this standard The Texas legislature meets in odd numbered years, so we’ll keep watch in 2021.



Back to our main story this week, today’s edition of The Way marks our halfway point in 2020, a year of unforgettable news stories, which now includes the largest Saharan dust storm to hit the U.S. in over 50 years.  Public health officials warn that increase particulate matter could exacerbate the respiratory distress symptoms of COVID-19 in at-risk southeastern states and Texas.  Please stay safe, stay well, and stay connected.   


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