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Air Methods/Rocky Mountain Holdings, LLC v. State ex rel. Department of Workforce Services

Supreme Court of Wyoming

November 27, 2018

AIR METHODS/ROCKY MOUNTAIN HOLDINGS, LLC, Appellant (Appellee/Petitioner),
v.
STATE OF WYOMING ex rel. DEPARTMENT OF WORKFORCE SERVICES, WORKERS' COMPENSATION DIVISION, Appellee (Appellant/Respondent). STATE OF WYOMING ex rel. DEPARTMENT OF WORKFORCE SERVICES, WORKERS' COMPENSATION DIVISION, Appellant (Appellant/Petitioner),
v.
AIR METHODS/ROCKY MOUNTAIN HOLDINGS, LLC.; EAGLEMED; and MED-TRANS CORP., Appellees (Appellees/Respondents).

          W.R.A.P. 12.09(b) Certification from the District Court of Laramie County The Honorable Catherine R. Rogers, Judge.

          Representing Air Methods/Rocky Mountain Holdings, LLC: Bradley T. Cave, P.C. of Holland & Hart LLP, Cheyenne, Wyoming; Matthew J. Smith, Christina F. Gomez, and Jessica J. Smith of Holland & Hart LLP, Denver, Colorado. Argument by Ms. Gomez.

          Representing State of Wyoming ex rel. Department of Workforce Services, Workers' Compensation Division: Peter K. Michael, Wyoming Attorney General; Daniel E. White, Deputy Attorney General; Kelly D. Mullen, Assistant Attorney General. Argument by Mr. White and Ms. Mullen.

          Representing EagleMed and Med-Trans Corp.: Richard A. Mincer and Khale J. Lenhart of Hirst Applegate, LLP, Cheyenne, Wyoming. Argument by Mr. Mincer.

          Before DAVIS, C.J., and BURKE [*] , FOX, KAUTZ, and BOOMGAARDEN, JJ.

          DAVIS, CHIEF JUSTICE.

         [¶1] Air Methods/Rocky Mountain Holdings, LLC ("Air Methods"), EagleMed, LLC, and Med-Trans Corp. (collectively "Claimants") operate air ambulance services in Wyoming, and each separately filed claims with the Wyoming Workers' Compensation Division ("Division") for services they provided to injured workers. The Division approved the claims, but it paid only the amounts permitted by its fee schedule, which were significantly less than the amounts billed. Claimants separately appealed the Division's final determinations to the Office of Administrative Hearings ("OAH"), and the claims were consolidated for hearing.

         [¶2] Following cross-motions for summary judgment, the OAH entered two orders. In its first order, the OAH granted summary judgment to Claimants and ruled that, in keeping with a federal ruling that the Airline Deregulation Act of 1978 ("ADA") preempted the Division's air ambulance fee schedule, the Division was required to pay the full amount billed by Claimants. In its second order, the OAH denied a motion by Air Methods for pre- and post-judgment interest on its claims. Both the Division and Air Methods appealed the respective adverse rulings, and the district court consolidated the appeals. We accepted certification of the consolidated appeals and now affirm both OAH orders.

         ISSUES

         [¶3] In challenging the OAH order on summary judgment, the Division presents four issues, which we condense and restate as:

1. Did the United States District Court for the District of Wyoming and the Tenth Circuit Court of Appeals err in ruling that the Division's fee schedule was preempted by the Airline Deregulation Act of 1978 due to a misunderstanding of state law governing reimbursement?
2. Did the OAH err in ruling that the federally preempted portions of Wyo. Stat. Ann. § 27-14-401(e) could be severed from the statute and that the severed statute remained enforceable and required the Division to pay Claimants' air ambulance charges in full?
3. In submitting their workers' compensation claims, were Claimants required to comply with both the workers' compensation claims procedure and the claims procedure established by Wyo. Stat. Ann. § 9-1-404 (requiring that "persons having claims against the state shall document the claim and submit it to the state auditor within one (1) year after the claim accrues, to be audited, settled and acted upon.")?

         [¶4] In challenging the OAH order denying its motion for pre- and post-judgment interest, Air Methods presents two issues which we restate as:

1. Did the OAH err in ruling that it lacked jurisdiction to rule on Air Methods' interest motion because the motion was filed after the Division filed its petition for judicial review of the summary judgment ruling?
2. Did the OAH err in ruling that even if it had jurisdiction to rule on the interest motion, it lacked authority to award interest on Air Methods' claims?

         FACTS

         [¶5] This appeal stems from the Division's payment of charges for air ambulance services in accordance with Wyo. Stat. Ann. § 27-14-401(e), which provides that "[i]f transportation by ambulance is necessary, the division shall allow a reasonable charge for the ambulance service at a rate not in excess of the rate schedule established by the director." The material facts are not in dispute.

         [¶6] Between 2012 and 2016, Claimants provided air ambulance services to numerous injured Wyoming workers covered under the Wyoming Worker's Compensation Act. Claimants submitted claims to the Division for those services, and the Division paid those claims. The Division's payments were made, however, in accordance with its statutorily-directed fee schedule and resulted in payments that were significantly less than the amounts billed. As a result, Air Methods billed a total of just under $3 million for seventy claims during the period 2013-2016, and received payments totaling about $423, 000. EagleMed billed close to $527, 000 for thirteen claims during the period 2013-2015, and received payments totaling about $85, 000. Med-Trans billed close to $432, 000 for twelve claims during the period 2012-2015, and received payments totaling about $109, 000.

         [¶7] Claimants submitted objections to the underpayments, with each objection requesting a hearing and asserting that the Airline Deregulation Act ("ADA") barred application of the Division fee schedule to air ambulance billings. Around the time Claimants filed a complaint in federal court challenging the Division's fee schedule under the ADA, the Division referred the objections to the OAH for hearing. As a result of the federal action, the OAH stayed its proceedings "pending an anticipated judicial adjudication of whether the Airline Deregulation Act preempts the [Division's] fee schedule."[1]

         [¶8] On May 16, 2016, the District Court for the District of Wyoming issued a summary judgment ruling in favor of Claimants' preemption claim. EagleMed, LLC v. Wyoming ex rel. Dep't of Workforce Serv., Workers' Comp. Div., 227 F.Supp.3d 1255, 1281 (D. Wyo. 2016). The federal district court ruled:

[T]he Court concludes that the Airline Deregulation Act preempts Wyoming Statute section 27-14-401(e) and Chapter 9, Section 8 of the Rules, Regulations and Fee Schedules of the Wyoming Workers' Compensation Division to the extent the statute and regulation set compensation that air ambulances may receive for their services. The state officials are permanently enjoined from enforcing the statute and regulation against air ambulance services.

EagleMed, 227 F.Supp.3d at 1281.

         [¶9] The Division appealed the district court's decision to the United States Tenth Circuit Court of Appeals, and in the interim took the position that since it was enjoined from paying air ambulance providers according to its fee schedule, it was enjoined from paying them at all for their services. On August 16, 2016, the district court responded with an order directing "that the named state officials and their employees and agents are required to compensate air ambulance entities the full amount charged for air ambulance services." The court explained (record cites omitted):

The defendants mischaracterize the effect of this Court's Order Granting Plaintiffs' Motion for Summary Judgment and Order Denying Defendants' Motion for Summary Judgment and Judgment. The defendants claim that this Court has enjoined them from paying the air ambulances any sum of money for services rendered. Such a result would reward the defendants for illegally enforcing its [sic] fee schedule for years. After rereading the Order and Judgment, it is readily apparent that the Court enjoined enforcement of the statute and regulation because the defendants were illegally regulating air ambulance rates. In fact, by violating this Court's Order and Judgment and not paying air ambulances for any services, the defendants are again regulating air ambulance rates, only more severely this time around. The defendants cannot set air ambulance rates. Because the defendants cannot do so, they must pay the air ambulance services whatever they charge.

         [¶10] On October 7, 2016, Air Methods filed a motion with the OAH to lift the stay of the contested case proceeding. Air Methods renewed its motion on October 20, and on December 19, 2016, the OAH entered an order lifting the stay. The parties thereafter filed cross-motions for summary judgment, and on August 10, 2016, the OAH ruled in favor of Claimants. The OAH found that § 401(e) was severable, and that, as severed, it authorized payment outside the Division's fee schedule:

[S]everability is the general rule and statutes should be found severable if the valid portions are sufficient in themselves to accomplish the purpose of the statute. [citations omitted] The general purpose of Wyoming Statute § 27-14-401(e) (LexisNexis) is to allow for the payment of ambulance services provided to injured Wyoming workers under the WC Act. The remaining valid portions of Wyoming Statute § 27-14-401(e) (LexisNexis) - "If transportation by ambulance is necessary, the division shall allow a . . . charge for the ambulance service" - are sufficient to accomplish the goal of paying for ambulance services provided to injured Wyoming workers covered by the WC Act. In other words, Wyoming Statute § 27-14-401(e) (LexisNexis) as preempted by the U.S. District Court, allows for: (a) the payment of air ambulance charges for necessary transportation of workers' compensation claimants; and (b) the payment of reasonable ground ambulance charges for the necessary transportation of workers' compensation claimants in accordance with the Division's duly adopted fee schedule.

         [¶11] Based on the federal preemption ruling and its finding of severability, the OAH ordered that "[t]he Air Ambulance Companies are entitled to reimbursement of the full amount of the air ambulance service charges submitted and billed to the Division in all of the consolidated claims before this Office." On September 1, 2017, the Division filed a petition for judicial review of the OAH ruling.

         [¶12] On September 11, 2017, Air Methods filed a motion for pre- and post-judgment interest on its claims with the OAH. The Division opposed Air Methods' interest motion, contending that the OAH no longer had jurisdiction over the matter, and that the Worker's Compensation Act does not authorize payment of interest on claims. On October 20, 2017, the OAH entered an order denying the interest motion on grounds that the OAH lacked both jurisdiction and statutory authority to award interest on Air Methods' claims.

         [¶13] On October 31, 2017, Air Methods filed a petition for judicial review of the OAH order denying its interest motion. On November 29, 2017, the district court entered an order consolidating the Division and Air Methods appeals, and on February 23, 2018, the court entered an order certifying the consolidated appeals to this Court. On March 27, 2018, this Court issued an order accepting the consolidated and certified appeals.

         STANDARD OF REVIEW

         [¶14] This appeal presents only questions of law. We review an agency's conclusions of law de novo and will affirm only if those conclusions are in accordance with law. Coggins v. State ex rel. Wyo. Dep't of Workforce Serv., Workers' Comp. Div., 2018 WY 77, ¶ 11, 421 P.3d 555, 559 (Wyo. 2018) (quoting Morris v. State ex rel. Dep't of Workforce Servs., Workers' Comp. Div., 2017 WY 119, ¶ 25, 403 P.3d 980, 987 (Wyo. 2017)).

         DISCUSSION

         [¶15] We will first address the Division's appeal of the OAH summary judgment ruling (Appeal No. S-18-0074), following which we will address Air Methods' appeal of the OAH order denying its motion for pre- and post-judgment interest (No. S-18-0068).

         I. Appeal No. S-18-0074

         [¶16] In appealing the OAH summary judgment ruling, the Division presents what we treat broadly as three arguments: A) the federal courts erred in their preemption analysis due to an error as to state law; B) the OAH erred in finding Wyo. Stat. Ann. § 27-14-401(e) severable; and C) the OAH order directing payment to Claimants in full requires the Division to make a payment without an appropriation in violation of the Wyoming Constitution. We will address each in turn.

         A. Federal Courts' Preemption Analysis

         [¶17] The Division's first argument on appeal is a challenge to the preemption ruling made by the federal district court and upheld by the Tenth Circuit. The Division contends that the preemption ruling was based on an incorrect interpretation of state law and that this Court should correct that alleged misstep by the federal courts. Claimants respond that this is a new argument on appeal that this Court should not consider, and because the argument represents a collateral attack on the federal rulings, it is also barred by the doctrines of collateral estoppel, res judicata, and judicial estoppel. We agree that the argument is one raised for the first time on appeal, and we therefore decline to consider it.[2]

         [¶18] In support of its preemption argument, the Division points to Wyo. Stat. Ann. § 27-14-501(a), which defines the procedure for filing claims under the Act and prohibits a medical provider from billing an injured employee for any amount not covered by workers' compensation benefits-also known as balance billing. It argues that the error in the federal analysis was an assumption that the balance billing prohibition applies to air ambulance providers. According to the Division, the prohibition does not apply to air ambulance providers, so those providers may simply bill injured workers for the balance of any charge the Division only partially pays. Thus, the argument goes, since § 401(e) limits what the Division may pay, but not what the air ambulance may collect, the Act does not impermissibly regulate air ambulance rates.

         [¶19] It is apparent from a reading of the federal decisions that this was not an argument that the Division presented to either the federal district court or the Tenth Circuit. In fact, it is clear that the Division's argument before the Tenth Circuit was that § 27-14-501(a) does prohibit Claimants from balance billing injured workers.

Defendants contend that air-ambulance companies are free to either submit a bill to the Division for reimbursement at the rates established in the rate schedule, agreeing in return not to bill any remaining unpaid amounts to the injured worker, or to submit the entire bill to the injured worker for payment. * * * Defendants contend that an air-ambulance provider does not "accept[] the case of an injured employee" until the provider chooses to present a claim to the Division, and it is only then, Defendants contend, that the remainder of the statute kicks in and prohibits the provider from billing the injured employee for the expenses incurred.

EagleMed, LLC v. Cox, 868 F.3d 893, 900 (10th Cir. 2017) (emphasis added).

         [¶20] More importantly for our purposes, the Division did not raise this question in the OAH proceeding. At no point in the administrative proceedings did the Division question the federal preemption ruling or suggest to the OAH that it could avoid preemption of the fee schedule by ruling that § 501(a) permits Claimants to bill the balance of their charges to injured employees. In fact, the opposite is again true. In its summary judgment reply brief, the Division stated unequivocally, "The preemption ruling is not at issue in this proceeding." It repeated this position in its oral argument before the OAH, stating in reference to its fee schedule, "[T]hose limitations have been preempted[.] . . . Those are gone. We all agree that those are preempted[.]"

         [¶21] We have repeatedly held that in an appeal from an administrative ruling, we will not consider arguments not raised below.

Wyoming Rule of Appellate Procedure 12.09(a) limits an appellate court's review of administrative action to "issues set forth in the petition and raised before the agency." Accordingly, we have routinely held that, with the exception of jurisdictional or certain fundamental issues, issues raised for the first time on appeal from an administrative decision will not be considered. State ex rel. Dep't of Family Servs. v. Kisling, 2013 WY 91, ¶ 14, 305 P.3d 1157, 1162 (Wyo. 2013); BP Am. Prod. Co. v. Dep't of Revenue, 2006 WY 27, ¶ 18, 130 P.3d 438, 462 (Wyo. 2006).

Crofts v. State ex rel. Dep't of Game and Fish, 2016 WY 4, ¶ 15, 367 P.3d 619, 623 (Wyo. 2016).

         [¶22] The correctness of the federal preemption ruling was not the question before the OAH, and we therefore find no basis to view the Division's question concerning the federal interpretation of Wyo. Stat. Ann. § 27-14-501(a) as a fundamental issue demanding this Court's attention. We instead view the Division's argument as simply a shift in its theory on the preemption question, and we therefore decline to address the argument. See Crofts, ¶ 19, 367 P.3d at 624 ("This court has taken a dim view of a litigant trying a case on one theory and appealing it on another. . . . Parties are bound by the theories they advanced below.").

         B. Severability of Wyo. Stat. Ann. § 27-14-401(e)

         [¶23] The crux of the Division's appeal is the severability of § 401(e), which provides:

If transportation by ambulance is necessary, the division shall allow a reasonable charge for the ambulance service at a rate not in excess of the rate schedule established by the director under the procedure set ...

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