United States District Court, D. North Dakota
ORDER ON MOTIONS
L. HOVLAND, CHIEF JUDGE
the Court is the Plaintiff's Motion for Judgment on the
Pleadings filed on March 2, 2018. See Doc. No. 10.
The Defendants filed a brief in opposition to the motion and
a cross-motion for judgment on the pleading or alternatively
for summary judgment on March 23, 2018. See Doc. No.
14. On April 6, 2018, the Plaintiff filed a reply brief.
See Doc. No. 19. The Plaintiffs also filed three
notices of supplemental authority to which the Defendants
filed one response. See Doc. Nos. 20, 24, 26, and
27. For the reasons set forth below, both motions are granted
in part and denied in part.
Plaintiff Guardian Flight LLC (“Guardian Flight”)
provides air ambulance services in North Dakota and many
other states around the country. It is organized under the
laws of Delaware and has its headquarters and principal place
of business in Salt Lake City, Utah. Guardian Flight is the
successor in interest to Valley Med Flight, Inc.
(“Valley Med Flight”). On July 19, 2017, Valley
Med Flight and several affiliated air ambulance companies
were purchased by Air Medical Group Holdings, Inc.
(“AMGH”). As of November 22, 2017, Valley Med
Flight's North Dakota emergency air ambulance operations
were transferred to Guardian Flight, and as of December 29,
2017, all related FAA Part 135 air ambulance operations were
transferred to Guardian Flight. Guardian Flight is registered
with the North Dakota Secretary of State to do business as
Valley Med Flight.
Jon Godfread is the North Dakota Insurance Commissioner.
North Dakota law empowers the Insurance Commissioner to issue
cease and desist orders respecting violations of Title 26.1,
and to bring an action in state court to enjoin any acts or
practices which are prohibited by Title 26.l. See
N.D.C.C. §§ 26.1-01-03.1 and 26.1-01-03.2. The
Insurance Commissioner may also seek administrative penalties
for violations of Title 26.1. N.D.C.C. § 26.1-01-03.3.
Wayne Stenehjem is the North Dakota Attorney General. He
investigates and prosecutes any violations of state law, and
is authorized by law ‘to institute and prosecute all
cases in which the state is a party, whenever in their
judgment it would be for the best interests of the state so
to do.” N.D.C.C.. § 54-12-02.
GUARDIAN FLIGHT AIR AMBULANCE SERVICES
Flight is a federally regulated air carrier which provides
air ambulance services in North Dakota and around the
country. It maintains a fleet of air ambulances ready to
promptly respond to medical emergencies, often in rural or
remote locations that lack sophisticated medical services.
Guardian Flight's air ambulances transport patients
facing serious or life-threatening emergencies, while
providing medical care during the flight.
emergent care provider, Guardian Flight may be dispatched by
first responders, the emergency department of a hospital, or
by an attending physician. Guardian Flight does not
self-dispatch. Where a covered hospital or attending
physician orders a transport, the regulations and procedures
set out by the Emergency Medical Treatment and Active Labor
Act (“EMTALA”), 42 U.S.C. § 1395dd,
generally apply. North Dakota regulations require air
ambulances to provide adequate care when called in emergency
situations. See N.D. Admin. Code§
33-36-01-05(8), (12), (16). Under state law, air ambulance
providers may only refuse care in specified non-emergent
situations. See N.D.C.C. § 23-27-04.
keeping with federal and state law, Guardian Flight
transports patients regardless of their insurance status or
ability to pay. Air ambulance services are extremely
expensive. The median price charged by air ambulance service
providers nearly doubled between 2010 and 2014. The amount
Guardian Flight is reimbursed for its services depends in
part on the patient's insurance coverage and whether
Guardian Flight is an in-network or out-of-network provider
with a particular insurance company. Due to the nature of the
need for an air ambulance, patients have little or no control
over which air ambulance service provider is used. Medicaid
and Medicare reimbursement rates are limited and
substantially below Guardian Flight's billed charges.
Similarly, Guardian Flight generally recovers very little
from patients who are uninsured. The cost of undercompensated
care is shifted to and borne by other payors such as
commercial insurers and patients. The portion of the billed
charges which are not covered by insurance, which can run
into the tens of thousands of dollars, is ultimately the
responsibility of the patient.
large and unexpected bills lead many patients to complain to
the North Dakota Insurance Department. North Dakota has twice
passed legislation in an attempt to remedy the problem. The
first attempt was found to be preempted by the Airline
Deregulation Act (“ADA”). See Valley Med
Flight, Inc. v. Dwelle, 171 F.Supp.3d 930 (D.N.D. 2016).
It is the second attempt, SB 2231, which is the subject of
this declaratory judgment action.
GUARDIAN FLIGHT SUBSCRIPTION MEMBERSHIP
states in which it operates, Guardian Flight offers a
subscription membership program. In exchange for a membership
fee of less than $100 per year, Guardian Flight considers any
air ambulance charges beyond the amount paid by a
member's insurance or other third parties to be prepaid
by the member. Guardian Flight offers this membership program
as part of an alliance of air ambulance providers affiliated
under the name “AirMedCare Network.” The same
parent company, AMGH, owns each of the AirMedCare Network
companies. Persons who purchase an AirMedCare Network
subscription are automatically enrolled in the membership
program for each of the air ambulance companies in the
program allows members to partially prepay Guardian Flight
for the services it provides. The membership program does not
guarantee service. Members cannot contact Guardian Flight or
any other AirMedCare Network provider to provide transport
when services are needed, and Guardian Flight is not required
to indemnify or pay any specified amount to members or to
third-party providers if the member is ultimately transported
by an air ambulance service that is not part of the
AirMedCare Network. If the patient is a member, the portion
of the billing which is the responsibility of the patient is
considered prepaid by the membership fee.
the passage of SB 2231 in 2017, Guardian Flight's
predecessor (Valley Med Flight) offered this membership
program in North Dakota and had hundreds of members. SB 2231
prohibits subscription agreements. Guardian Flight would like
to offer a subscription membership program in North Dakota
but is prohibited from doing so by SB 2231.
2015, in an attempt to protect patients from enormous bills
for air ambulance services, the North Dakota Legislature
passed HB 1255 which created air ambulance call lists,
required air ambulance providers to provide fee schedules
upon request, and created a fee schedule for workers'
compensation cases. Dwelle, 171 F.Supp.3d at 934.
The Court determined that HB 1255 was preempted by the ADA
and the McCarran-Ferguson Act did not provide reverse
preemption protection because the law did not regulate the
business of insurance. Id. at 942-45. The State did
2017, the North Dakota Legislature again tried to remedy the
situation by passing SB 2231. SB 2231 is codified at N.D.C.C.
§§ 26.1-47-08 and 26.1-47-09. Section 26.1-47-09(3)
provides a payment by an insurer to a provider for air
ambulance services to be a full and final payment with no
option for the provider to seek the balance form the patient.
Section 26.1-47-08 prohibits air ambulance subscription
agreements. The two provisions provide as follows:
An air ambulance provider, or an agent of an air ambulance
provider, may not sell, solicit, or negotiate a subscription
agreement or contract relating to services or the billing of
services provided by an air ambulance provider. An air
ambulance provider, or agent of an air ambulance provider,
which violates this section is subject to a civil fine in an
amount not to exceed ten thousand dollars for each violation.
The fine may be collected and recovered in an action brought
in the name of the state.
N.D.C.C. § 26.1-47-08.
health benefit plan may not be issued in this state unless
the plan provides the reimbursement rate for out-of-network
air ambulance provider services is equal to the average of
the insurer's in-network rates for air ambulance
providers in the state.
insurer may not use the average of an insurer's
in-network rates for air ambulance providers in the state in
order to decrease current or future contractual rates between
an insurer and an air ambulance provider.
For purposes of settling a claim made by the insured for air
ambulance services, a payment made by an insurer under the
plan in compliance with this section is deemed to be the same
as an in-network payment and is considered a full and final
payment by the insured for out-of-network air ambulance
services billed to the insured.
section does not apply to a policy or certificate of
insurance, whether written on a group or individual basis,
which provides coverage limited to:
a. A specified disease, a specified accident, or