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A Tremor in the Force

Posted 7 years 40 days ago ago by Randy Mains

On December 22, 2016 a State District Court judge in Austin upheld a ruling, giving the State of Texas the right to regulate fees paid to air ambulances for transporting patients covered by Workers' Compensation Insurance.  On the surface it doesn’t look like that ruling affects the American HAA (Helicopter Air Ambulance) industry, but it could prove to change the fabric of the industry.  The ruling has the potential to create a negative ripple effect in our industry, if successfully argued and used as a precedent in other State class-action lawsuits currently filed against for-profit HAA providers.  

Air medical companies have legally operated under the umbrella of the 1978 Airline Deregulation Act. This Act was originally crafted to remove government control of airfares as a way to promote healthy competition. This gave the consumer a choice of which airline they patronize based on a price they would be willing to pay. Air ambulance patients do not have a choice -- and are not told what the air ambulance company will charge until after the transport, which is the core of the legal argument.

In July 2015, over a dozen clients in Oklahoma City were billed thousands of dollars for an air ambulance transport. The clients asked a judge to certify a lawsuit as a class action, naming several air ambulance companies in that suit. The claim: “They’re making profit margins [of] in excess of 750%, huge profit margins they’re trying to get from the average public.”

One client, former OSU basketball coach Tommy Wade, was flown by medical helicopter when he had a heart attack.  He noted, “$38,000 for a 20 minute air flight from Stillwater to Oklahoma City? I told them I can’t pay the bill. I can’t afford it.” 
When a pilot friend from Germany heard about what a typical for-profit HAA flight costs he said, “Sounds like schaden profit to me.” (That’s German for profiting from another person's misfortune.)  

Law Professor and commercial helicopter pilot, Henry Perrett Jr. doesn’t agree.  In a recent article he wrote for the Journal of Law, Technology & Policy, Fall 2016, Vol. 2016 Issue 2 entitled, An Arm and a Leg: Paying for Helicopter Air Ambulances, he writes. “It is easy to attack the high list prices for self-payers as a form of price gouging, suggesting some kind of moral failure in the leadership of HAA operators. But, it is not a moral failing; it is simply the market and microeconomics at work. Fixed costs are what they are; variable costs are what they are; the frequency of the need for HAA services is determined by the fortuity of accidents and acute illnesses.”

In Professor Perrett’s 89-page article he observes, “One interpretation of the data suggests that there is simply an oversupply of HAA operators and that the best policy is to keep reimbursement rates where they are to starve the weakest operators out of the market.”    
But the general public doesn’t see it that way, which for many for-profit operators, has become a public relations nightmare.  For example, a class action lawsuit in Colorado claims, “The average bill from one air medical provider tripled from $13,198 in 2007 to $40,766 in 2014.  In 2016 it is not uncommon to receive a bill from that same provider of over $50,000.”

Responding to a 2015 article in the New York Times entitled “Air ambulances offer a lifeline, then a sky-high bill.”  A former HAA pilot in Marin County wrote in to say: “For nearly 29 years, I was pilot on both hospital and community-based Emergency Medical Helicopters, for profit and nonprofit providers. I saw the industry grow from a few dozen helicopters to well over 1000. I witnessed billing go from a few thousand dollars to several tens of thousands of dollars per transport. Most importantly, the severity of the patients we transported, on average, decreased and the time from injury to arrival in the appropriate facility increased. There are more helicopters chasing fewer acutely injured patients. The majority of patients do not need to go by air especially if a risk analysis is done. Helicopter EMS flying is exceedingly risky as is borne out in the statistics. I would be hard pressed to put my own family member on one of these helicopters unless I did the risk assessment to determine if their condition was critical enough to warrant the high risk of flying.  I loved my job and we did make a difference but it is way out of proportion as the business side has taken over.”

Mary Rayme from West Virginia commenting on the NYT article writing in to say, “After a devastating car accident a (HAA) helicopter flew me to a trauma one hospital. When I was released from the hospital they started calling me right away, pressuring me to pay almost $35,000, more than I make in over two years of work. They harassed me. I had to provide endless amounts of paperwork to prove I had no assets and no means to pay. This whole event added such pain and insult to my already extreme injuries and I had no one to advocate for me. I eventually got my bill forgiven after six months of wrangling with them. I wrote to my Senators and to the local newspaper and no one was interested in my story. Thank you, New York Times, for addressing this very serious situation.”

Stories like these are on the rise.  An ABC special in March 2016 entitled, Sky-Rage: Bills, Debt, Lawsuits Follow Helicopter Medevac Trips, their research found hundreds of lawsuits filed by one helicopter company against individuals over the last five years, seeking salary garnishment or other forms of debt collection.

According to that special ABC report, In South Carolina alone, there were 104 debt collection lawsuits filed by that helicopter ambulance company whose profit in 2015 amounted to nearly half a billion dollars. 

There is a definite tremor in the force causing uncertainty as to how our HAA industry will fare.  Let’s hope it is only a small blip that will sort itself out amicably in the months -- and years ahead.

About Randy: Randy Mains is an author, public speaker, and a CRM/AMRM consultant who works in the helicopter industry after a long career of aviation adventure. He currently serves as chief CRM/AMRM instructor for Oregon Aero. He may be contacted at [email protected].