Imagine the following (a simplification of Air Methods/Rocky Mountain Holdings v. Workers’ Compensation Division):

Michael C. Duff

A worker is injured in a remote Wyoming location (that is, in almost any Wyoming location). The only way for the worker to reach a hospital in a reasonable amount of time is through use of aircraft — an “air ambulance.”

The lift to the hospital is expensive, $30,000 or so. Wyoming has a workers’ compensation schedule (don’t worry about the details) that would result in payment of only half that amount, or less (let’s keep the math simple, too).

So Wyoming grants the air ambulance companies’ claims to that reduced extent. The air ambulance companies are not pleased and, says a federal district court, the state cannot limit the amount that air ambulance companies can charge injured workers for a post-injury lift because that (regulation of air transportation) is exclusively a matter of federal law, a sphere into which Wyoming may not enter.

Fine, says Wyoming, then we won’t pay anything at all to the air ambulance companies for their past-due bills, if federal law says we have to pay the whole $30,000 per ride.

Wrong, says the same federal district court (a bit later): We order you, Wyoming, to pay the whole $30,000.

Hold on, says the federal circuit court on appeal — you were right, federal district court, about Wyoming not being authorized to limit air ambulance companies to state-truncated fees. But federal courts can’t go ordering states like Wyoming to pay bills in these kinds of situations. Wyoming and the air ambulance companies will have to figure out how to resolve this.

OK, says air ambulance companies, we’ll just renew our claims at the Wyoming state workers’ compensation administrative level.

When Wyoming administrative adjudication officials “severed” the part of the “ambulance regulation,” the federal courts said that was “bad.” They were left with a provision that said, with respect to air ambulance services, “if transportation by ambulance is necessary, the division [another portion of the Wyoming workers’ compensation agency] shall allow a ... charge for the ambulance service.”

The Wyoming Supreme Court upheld the administration determination on severance, which led to the conclusion that the air ambulance folks must be paid in full.

This essential narrative must play out everywhere air ambulance pre-emption has been upheld. I’ve already argued that the federal circuit court opinions will be tough to square with Employee Retirement Income Security Act pre-emption law upon which Airline Deregulation Act pre-emption was originally modeled. I won’t repeat those arguments here. Eventually, the U.S. Supreme Court will get that case.

The practical question at the moment is how states will react now that they have effectively been required to write blank checks for air ambulance services. The Wyoming attorney general attempted to argue that air ambulance carriers could be required under state law to bill injured workers directly for the difference between reasonable ground ambulance charges and air ambulance charges.

Because the state had not made the argument at the administrative level, the Wyoming Supreme Court, under principles of waiver, refused to rule on it. But this tells us what will come next: States — one way or the other — may take the position that they are simply not going to cover air ambulance expense.

I would argue that in those circumstances an employee must have a right to sue in tort for uncovered expense. But the larger issue is the precedent of a state refusing to cover necessary medical service when the cost becomes too high. Perhaps an insurance market will emerge to service this gap. 

Regardless, a “limited” quid pro quo is always a slippery slope. But I suppose building states in mountain ranges has slippery-slope consequences. I wonder what the Swiss do.

Michael C. Duff is associate dean for student programs and external relations, and professor of law, at the University of Wyoming College of Law. This entry is republished from the Workers' Compensation Law Professors blog, with permission.