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Air Evac EMS, Inc. v. Usable Mutual Insurance Co.

Supreme Court of Arkansas

December 14, 2017



          Steel, Wright, Gray & Hutchinson, PLLC, by: Nate Steel, Scott Poynter (of counsel), Jeremy Hutchinson, and Alex T. Gray; and Whatley Kallas, LLP, by: Henry C. Quillen, pro hac vice, for appellant.

          Wright, Lindsey & Jennings LLP, by: Gordon S. Rather, Jr.; Chet Roberts, Arkansas Blue Cross Blue Shield; and Miller & Chevalier Chartered, by: Anthony F. Shelley, pro hac vice, for appellee.

          Leslie Rutledge, Att'y Gen., by: Shawn J. Johnson, Sr. Ass't Att'y Gen., for appellee, amicus curiae brief in support of appellant.

          ROBIN F. WYNNE, Associate Justice

         Pursuant to Arkansas Supreme Court Rule 6-8, we accepted two certified questions of law from the United States District Court for the Eastern District of Arkansas, Western Division. Petitioner Air Evac EMS, Inc. (Air Evac), has filed suit against respondent USAble Mutual Insurance Company d/b/a Arkansas Blue Cross Blue Shield (Blue Cross) alleging, among other things, violations of the Arkansas Deceptive Trade Practices Act (ADTPA). Blue Cross has filed a motion to dismiss, alleging that it should receive the benefit of the so-called safe-harbor provision of the ADTPA. Because this court has never expressly interpreted the safe-harbor provision of the ADTPA, we are now presented with the following questions of law:

1. Are the rulings in DePriest v. AstraZeneca Pharmaceuticals, L.P., 2009 Ark. 547, 351 S.W.3d 168, and Arloe Designs, LLC v. Arkansas Capital Corp., 2014 Ark. 21, 431 S.W.3d 277, in conflict with one another, and if so, how should that conflict be resolved?
2. Does the safe harbor provision of the Arkansas Deceptive Trade Practices Act, which exempts "[a]ctions or transactions permitted under laws administered by" state and federal regulators, Ark. Code Ann. § 4-88-101(3), apply to actions or transactions prohibited under laws administered by state and federal regulators?

         At issue in both certified questions is the proper interpretation of the safe-harbor provision of the ADTPA, and we exercise our discretion to reformulate the questions and answer the following: Should the ADTPA's safe-harbor provision, Ark. Code Ann. § 4-88-101(3), be applied according to the specific-conduct rule or the general-activity rule? As explained in this opinion, we hold that Arkansas follows the specific-conduct rule.[1]

         The ADTPA prohibits a variety of listed practices, including "[k]nowingly making a false representation as to the characteristics . . . [or] benefits . . . of goods or services, " "[k]nowingly taking advantage of a consumer who is reasonably unable to protect his or her interest because of . . . [i]nability to understand the language of the agreement, " and a catchall provision prohibiting "any other unconscionable, false, or deceptive act or practice in business, commerce, or trade." Ark. Code Ann. § 4-88-107(a)(1), (a)(8), (a)(10) (Repl. 2011). Here, the federal district court's order outlines Air Evac's ADTPA claims as follows:

Air Evac alleges Blue Cross has unlawful business practices in violation of the ADTPA in two ways. First, Blue Cross's refusal to contract with ambulance providers violates Arkansas insurance regulations requiring out-of-network costs to have no greater cost than in-network costs when in-network provider list is inadequate. Second, Blue Cross is misleading its customers by informing them they could incur substantial out-of-pocket expenses by using out-of-network providers, except in circumstances involving "Emergency or Imperative Services" provided by out-of-network providers, which in those cases, the out-of-network services would be subject to in-network benefits. Air Evac alleges this creates the false impression that plan members would not suffer the significant expenses associated with out-of-network care in emergency situations because Blue Cross does not disclose that there is no in-network benefit for emergency ambulance service, and the extent of its advertised benefit for that service is subject to a potentially illegally low cap. Consequently, insureds never realize the benefit of the emergency exception and when they receive a bill for the out-of-network air transport service that potentially saved their life, Blue Cross's only contribution is an unlawfully capped reimbursement.

         The parties agree that, at the relevant time, the safe-harbor provision provided that the ADTPA does not apply to

[a]ctions or transactions permitted under laws administered by the Insurance Commissioner, the Securities Commissioner, the State Highway Commission, the Bank Commissioner, or other regulatory body or officer acting under statutory authority of this state or the United States, unless a director of these divisions ...

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