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Air Evac EMS Inc v. USAble Mutual Insurance Co.

United States District Court, E.D. Arkansas, Western Division

May 29, 2018

AIR EVAC EMS INC. PLAINTIFF
v.
USABLE MUTUAL INSURANCE CO., d/b/a Arkansas Blue Cross and Blue Shield DEFENDANT

          ORDER

         Defendant USAble Mutual Insurance Company's (“Blue Cross”) motion to dismiss the amended complaint [Doc. No. 26] is granted, and the case is dismissed with prejudice.

         I. BACKGROUND

         Plaintiff Air Evac EMS, Inc. (“Air Evac”) alleges that Blue Cross is violating federal and state law by limiting the reimbursements it pays to Air Evac for the services Air Evac provides to patients insured by Blue Cross. In support of its position, Air Evac pleads as follows:

         Air Evac provides emergency air ambulance services in Arkansas. Am. Compl. ¶¶ 2, 8, 19, Doc. No. 18. These services are very expensive due to the costs Air Evac incurs in providing them. In addition to the millions of dollars spent in purchasing each aircraft, Air Evac incurs costs for aircraft maintenance, fuel, employees, regulatory compliance, and medical supplies. Id. ¶¶ 12-16. In 2014, it charged $19, 250 for a single transport, exclusive of mileage charges. Id. ¶ 17.

         Consistent with federal law, Air Evac provides its services without regard to the patient's ability to pay and without consideration of the patient's choice of insurance provider. Id. ¶ 19. Air Evac incurs debt when it transports patients who cannot afford the service, such as uninsured patients and Medicare and Medicaid patients, because those programs do not reimburse the full cost of the service. Id. Air Evac also incurs debt in cases such as this, when it transports patients who have private insurance that reimburse Air Evac for only a fraction of the cost of the service.

         Private insurance companies such as Blue Cross typically provide different insurance benefits for “in-network”and “out-of-network” care. By contracting with providers to create an in-network system, Blue Cross negotiates costs for services with the provider, whereby the provider agrees to accept the negotiated cost. Id. ¶ 21. By accepting this negotiated cost, the provider often agrees to forgo billing the patient for the difference between the provider's usual charge and the negotiated cost billed to the insurer. This results in a lower bill for the insurance company and for the patient, who incurs no additional charge for the service.

         An out-of-network provider has no pre-negotiated arrangement with the insurance company, so a patient using the provider could incur a much higher bill-the provider's usual charge-for the services rendered. Moreover, insurance companies typically reimburse patients at a lower rate for use of out-of-network providers. The result is a much larger bill passed on to patients, which means that patients have a financial incentive to choose in-network providers.

         Although Blue Cross pays for air ambulance services, it “does not offer participating contracts to ambulance service providers.” Id. ¶¶ 20, 22. Consequently, air ambulance providers can only be out-of-network providers. Many of Blue Cross's policies have, at most, a maximum allowable reimbursement for air ambulance services of $5, 000, leaving the patient to pay the remainder of the bill. Id. ¶ 24. Using the 2014 base rate, a reimbursement of $5, 000 leaves the patient being billed approximately $14, 250, which Air Evac often has little success in collecting. The limits on Blue Cross's reimbursement for ambulance services remained in place even as federal law banned annual limits for services and regulated minimum payment for emergency services. Id. ¶¶ 44-46.

         Air Evac obtains assignments from its patients for the right to appeal coverage decisions, collect compensation, and in some cases, enforce certain rights related to benefit claims or payments due. See Id. ¶¶ 34-41. Air Evac asserts that Blue Cross's plans do not prohibit these assignments, and at most, merely “purport” to prohibit assignment of benefits. Id. ¶ 41. After Blue Cross reimbursed Air Evac pursuant to its subscribers' policy limits, Air Evac often appealed the reimbursement limits without success. Recently, Air Evac has refrained from appealing reimbursement decisions because Blue Cross began “clawing back” reimbursements as the review process unfolded. Id. ¶ 43.

         Air Evac is challenging Blue Cross's reimbursement practices for services provided after 2010, following the enactment of the Patient Protection and Affordable Care Act (“ACA”), Pub. L. No. 111-148, 124 Stat. 119 (2010). The ACA prohibits annual limits on “essential health benefits, ” requires minimum payments for certain emergency services, and demands adequate participating-provider networks for plans offered through state and federal healthcare exchanges. See Am. Compl. ¶¶ 30-31, 47-52. Air Evac's amended complaint asserts that Blue Cross's insurance products violate these requirements. Air Evac also asserts that Blue Cross's conduct violates the Employee Income Retirement Security Act (“ERISA”), multiple federal and state insurance regulations, the Arkansas Deceptive Trade Practices Act (“ADTPA”), and Arkansas common law. Blue Cross moves to dismiss.

         II. LEGAL STANDARD

         Rule 12(b)(6) permits dismissal when the plaintiff fails to state a claim upon which relief may be granted. To meet the 12(b)(6) standard, a complaint must allege sufficient facts to entitle the plaintiff to the relief sought. See Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009); Bell Atl. Corp. v. Twombly, 55 U.S. 544 (2007). Although detailed factual allegations are not required, threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, are insufficient. Iqbal, 556 U.S. at 663. In ruling on a motion to dismiss, all well plead allegations in the complaint must be accepted as true and construed in the light most favorable to the plaintiff. Id.

         III. DISCUSSION

         Blue Cross makes two broad categories of dismissal arguments. First, it argues that each of Air Evac's 11 counts fails to state a claim upon which relief can be granted and that Air Evac lacks standing to bring suit under Count V. Second, it argues that the “filed rate doctrine” independently requires dismissal of all of Air Evac's claims, insofar as they apply to services provided to subscribers in insured plans. The filed rate doctrine is considered only in its application to claims brought under the ADTPA.

         Blue Cross's motion to dismiss is granted in its entirety. Counts I and II are considered as part of Count V based on the parties' arguments, and Count V is dismissed because Air Evac lacks standing to sue for equitable relief under ERISA. Similarly, Counts III and IV are considered as part of Counts VI and VII, and Counts VI and VII are dismissed because Blue Cross's conduct falls within the ADTPA's safe harbor provision. Counts VIII and IX are dismissed because Air Evac has not alleged the existence of an implied contract between the parties. Count X is dismissed because Blue Cross has not received anything of value from Air Evac and, therefore, was not unjustly enriched. Count X is dismissed because all of the foregoing counts have been dismissed.

         A. Counts I, II, and V

         1. Counts I and II

         Based on the parties' arguments, Counts I and II are considered as part of Count V, and any attempt to enforce the ACA independently of ERISA has been abandoned. Morever, the motion to dismiss Count V is granted because Air Evac lacks standing to sue under ERISA.

         Counts I and II seek declaratory judgment pursuant to the Declaratory Judgment Act, 28 U.S.C. section 2201. Specifically, Count I asserts that Blue Cross violated the ACA by imposing an annual limit for “essential health benefits.” Am. Compl. ¶¶ 58-60; 42 U.S.C. § 300gg-11(a)(1) (“A group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish . . . annual limits on the dollar value of benefits for any participant or beneficiary.”); 45 C.F.R. § 147.126. Count II asserts that Blue Cross violated the ACA by imposing an annual benefit limit for emergency services. Am. Compl. ¶¶ 61-63; 45 C.F.R. § 147.138; 26 C.F.R. § 54.9815-2719A; 29 C.F.R. § 2590.715-2719A. The motion to dismiss Counts I and II is granted because the Declaratory Judgment Act does not create a private cause of action to enforce the applicable provisions of the ACA, and Air Evac has abandoned these claims by using ERISA to enforce these provisions.

         The Declaratory Judgment Act provides no separate cause of action to enforce federal statutes. It provides for an alternative mode of relief when a particular law creates a cause of action. See, e.g., Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950) (noting that the Declaratory Judgment Act is procedural in nature); Mylan Pharm., Inc. v. Thompson, 268 F.3d 1323, 1330-32 (Fed. Cir. 2001). “[T]he Declaratory Judgment Act does not authorize actions to decide whether federal statutes have been or will be violated when no private right of action to enforce the statutes has been created by Congress.” Jones v. Hobbs, 745 F.Supp.2d 886, 893 (E.D. Ark. 2010). Therefore, unless the ACA and its regulations create a private cause of action, declaratory relief is unavailable to Air Evac, and Counts I and II must be dismissed.

         Neither the applicable ACA provisions nor its regulations create an explicit private cause of action. While Air Evac does not argue that the ACA or its regulations create an implied cause of action, it argues that sections 502(a)(3) and 715 of ERISA, which form the basis of Count V, contain an explicit cause of action to enforce the ACA through ...


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