FARGO -- The state of North Dakota finds itself back in court defending a law intended to protect consumers from astronomical air ambulance bills by carriers who are not participating providers in insurance networks.
Guardian Flight, which formerly operated in North Dakota as Valley Med Flight, is suing to block a new law that sets reimbursement caps on out-of-network air ambulance services -- a practice that stuck consumers with bills that averaged $60,000, according to state figures.
Between 2010 and 2014, when complaints about excessive air ambulance bills received by the North Dakota Insurance Department began to spike, the median price charged by air ambulance providers approximately doubled, according to state officials.
The new law, passed in 2017, was passed after a federal judge struck down an earlier North Dakota law, passed in 2015, to restrict air ambulance services.
The 2015 law established a primary air ambulance carrier list. In order to get on the list, air ambulance services effectively had to agree to become participating providers with Blue Cross Blue Shield of North Dakota, meaning they would have to accept the insurer's reimbursement as full payment for a flight.
A federal judge rejected the law in 2016, ruling that the state overstepped its authority.
In a lawsuit filed in U.S. District Court in Bismarck, Guardian Flight contends that, even though the new North Dakota law regulates insurance coverage for air ambulance flights, it “relates” to air ambulance rates and services -- areas falling exclusively under federal jurisdiction through the Airline Deregulation Act.
The new law requires air ambulance services to accept a state-set rate as payment in full. The amount the air ambulance providers must accept is equal to an average of an insurer’s in-network rates for air ambulance services.
Also, the new law prohibits subscription agreements between air ambulance carriers and consumers. Valley Med Flight sold memberships -- ranging from $65-a-year for a household to $1,125 for 25 years for a household -- to hundreds of consumers.
The subscriptions, Guardian Flight said in its lawsuit, are intended as prepayments to defray out-of-pocket expenses in the form of copayments or deductibles. Guardian Flight does not seek to collect any amounts beyond what is paid by the member’s insurance, so-called balance billings, according to court documents.
The new law prohibits balance billing for out-of-network air ambulance services -- bills that North Dakota insurance regulators say have forced some families into bankruptcy, damaged their credit ratings and, in one case, resulted in a lien being placed on a patient’s home.
In answering the lawsuit, the state of North Dakota said the North Dakota Insurance Department has received about 40 complaints from consumers involving the “large, unexpected bills” for air ambulance services.
A compilation of the complaints, attached to the state’s answer to the lawsuit, a compilation of 36 bills had total charges of more than $2.1 million, leaving consumers potentially owing more than $1.6 million.
North Dakota argues that the Airline Deregulation Act of 1978, which Guardian Flight’s lawsuit relies upon, “does not specifically relate to the business of insurance.” Regulation of insurance is left to the states.
The state’s answer to the lawsuit also notes that Guardian Flight’s owner, Air Medical Group Holdings Inc., is held by a private equity firm and was purchased in 2015 for about $2 billion.
“The presence of private equity in the air ambulance industry indicates that investors see profit opportunities in the industry,” the state’s answer said.