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Brian Cunningham, in his capacity as Director of the Public Employees Insurance Agency, and Mark D. Scott, Geoff S. Christian, Amanda D. Meadows, Jared Robertson, Damita Johnson, Jason Myers, Michael Cook, William Milam, and Michael T. Smith, in their capacities as Members of the Public Employees Insurance Agency Finance Board v. Air Evac EMS, Inc. (Chief Judge Scarr, dissenting)
No. 23-ICA-127 – Brian Cunningham, in his capacity as Director of the Public Employees Insurance Agency and Mark D. Scott, Geoff S. Christian, Amanda D. Meadows, Jared Robertson, Damita Johnson, Jason Myers, Michael Cook, William Milam, and Michael T. Smith, in their capacities as Members of the Public Employees Insurance Agency Finance Board v. Air Evac EMS, Inc.,
FILED
July 3, 2024 and released at 3:00 p.m.
ASHLEY N. DEEM, CHIEF DEPUTY CLERK
INTERMEDIATE COURT OF APPEALS
OF WEST VIRGINIA
No. 23-ICA-135 – Air Evac EMS, Inc., v. Brian Cunningham, in his capacity as Director of the Public Employees Insurance Agency and Mark D. Scott, Geoff S. Christian, Amanda D. Meadows, Jared Robertson, Damita Johnson, Jason Myers, Michael Cook, William Milam, and Michael T. Smith, in their capacities as Members of the Public Employees Insurance Agency Finance Board
SCARR, C.J., dissenting:
I respectfully dissent from the majority’s decision to reverse the circuit
court’s December 16, 2022, Final Order Granting, in Part and Denying, in Part Air Evac
EMS, Inc.’s Petition for Appeal. This case stems from the aftereffects of extensive federal
litigation, in which the Fourth Circuit Court of Appeals held that the federal Airline
Deregulation Act (“ADA”) preempted state statutes which capped the Public Employees
Insurance Agency (“PEIA”)’s reimbursement rates for air ambulance providers to either
the Medicare Rural Rate or the annual cost of an air ambulance provider’s membership
program, while making “balance-billing” (wherein a provider bills the insured for the
remaining balance after being partially reimbursed by an insurer) a criminal offense. See
Air Evac EMS, Inc. v. Cheatham (Cheatham I), 260 F. Supp. 3d 628, 633 (S.D.W. Va.
2017); Air Evac EMS, Inc. v. Cheatham (Cheatham II), No. 2:16-cv-05224, 2017 WL 1
4765966, at *1 (S.D.W. Va. Oct. 20, 2017), aff'd, 910 F.3d 751 (4th Cir. 2018); Air Evac
EMS, Inc. v. Cheatham (Cheatham III), 910 F.3d 751, 759 (4th Cir. 2018).
Air Evac EMS, Inc. (“Air Evac”) is an air ambulance provider who operates
in West Virginia, and was the party who sought the injunction of the rate-capping statutes
in the Cheatham litigation. PEIA is an insurance company created by the State of West
Virginia for its employees as an alternative to using a private insurance company. By virtue
of operating in West Virginia, Air Evac was legally required to do business with PEIA by
providing its services to PEIA’s insureds. See W. Va. Code R. § 64-48-4.15 (2022). As
was noted by the district court, “Air Evac must accept patients without regard to insurance
coverage or ability to pay.” Cheatham I, 260 F. Supp. 3d at 633 . Indeed, “West Virginia
law forbids Air Evac from refusing service to any patient, regardless of insured status. In
fact, because Air Evac is most often called upon to provide transportation in medical
emergencies, the air ambulance provider does not know a patient's insured status until after
the emergency transport has concluded.” Cheatham II, 2017 WL 4765966 , at *1 (citations
omitted). After the federal district court enjoined enforcement of the rate-capping statutes
on October 20, 2017, PEIA continued to pay Air Evac the Medicare Rural Rate, which is
the same amount as it had paid under the enjoined statutes.
After Cheatham III, Air Evac sought additional reimbursement beyond the
Medicare Rural Rate for the services it provided during the Cheatham litigation, which it
had accepted as partial payment. Specifically, Air Evac sought the remaining balance of
[2] $4,018,046 for the 115 transports it had provided to PEIA members between June 9, 2016,
the initiation of the Cheatham litigation, and the June 4, 2019, amending of West Virginia
Code § 5-16-8a to allow air ambulance service providers to balance bill insureds. PEIA has
consistently refused to pay Air Evac anything more than what it owed under the enjoined
rate-capping statutes. As a result, Air Evac has only received $754,988.00 of the
$4,773,034.00 “full billed” charges. PEIA even refuses Air Evac’s demand to hold a
hearing regarding the disputed charges, contending that the matter is not a “contested case.”
This refusal to hold a hearing caused Air Evac to file its December 13, 2019, Petition for
Appeal in the circuit court, seeking a court order compelling PEIA to hold an administrative
hearing pursuant to their own Rules of Procedure for Contested Case Hearings and
Declaratory Rulings (“contested case rules”). See W. Va. Code R. § 151-3-4 (1987). With
constitutional rights hanging in the balance, the majority now orders the dismissal of Air
Evac’s claim, on the grounds that PEIA, an insurance company created to ensure
compensation of healthcare services provided to our state employees, has sovereign
immunity against the claims of health care providers who were forced to provide services
for its insureds. Although the purpose of sovereign immunity is to protect the public purse,
the desire to protect the government goes too far here. The majority fails to properly
appreciate and adequately consider the unique circumstances at play. By allowing this
overly broad construction of our sovereign immunity doctrine, the majority has enabled
PEIA to essentially nullify the result of the Cheatham cases. In doing so, the majority
improperly places the state’s sovereign right to immunity from suit above our people’s
fundamental due process rights.
[3] The basis of our sovereign immunity is found within Article VI, § 35 of the
West Virginia Constitution, which provides that: “The state of West Virginia shall never
be made defendant in any court of law or equity . . . .” W. VA. CONST. art. VI, § 35. As
correctly noted by the majority, sovereign immunity confers a great deal of protection from
suit upon the state and its agencies. Mellon-Stuart Co. v. Hall, 178 W. Va. 291, 296 , 359 S.E.2d 124, 129 (1987) (“This constitutional grant of immunity is absolute and, as we have
consistently held, cannot be waived by the legislature or any other instrumentality of the
State.”). The primary purpose of sovereign immunity is to prevent the diversion of state
monies from legislatively appropriated purposes. Thus, our rule is that generally, when
monetary relief is sought against the state treasury for which a proper legislative
appropriation has not been made, sovereign immunity raises a bar to suit. Id.
However, our courts have a long history of wisely tempering the harsh
language of Article VI, § 35 so that the State of West Virginia’s right to be free from suit
does not displace the fundamental rights of its citizens. See Tompkins v. Kanawha Bd., 19 W. Va. 257, 264 (1881) (“There is no creature of the State above the law and irresponsible.
If this were so, the corporation might deny to certain individuals all benefits to be conferred
by the corporation, and yet it being sovereign or representing sovereignty it could not be
sued.”). Less than two decades after West Virginia’s formation, the Tompkins Court noted
the inherent problems that an overly rigid application of sovereign immunity would create
when it held that the doctrine was inapplicable to a state-owned corporation, stating that to
[4] hold otherwise would create “a legalized despot trespassing upon the rights of the citizens,
who would be powerless to protect themselves.” Id. at 263 .
“The concept that ‘[t]here is no creature of the State above the law and
irresponsible’ expressed in Tompkins finds its foundation in article III of the West Virginia
Constitution, commonly known as our ‘Bill of Rights.’” Pittsburgh Elevator Co. v. W.
Virginia Bd. of Regents, 172 W. Va. 743, 750 , 310 S.E.2d 675, 682 (1983). There are
several due process rights enumerated in the West Virginia Constitution’s Bill of Rights
(“WVCBR”) that are at odds with a broad construction of our sovereign immunity doctrine.
See id. Indeed, “[t]he philosophical basis of our pluralistic society is crippled when the
government's power is found to be so absolute that it cannot be made to answer for the
wrongs committed in its name.” G.M. McCrossin, Inc. v. W. Virginia Bd. of Regents, 177 W. Va. 539, 541 , 355 S.E.2d 32, 34 (1987). Section 9 of article III of the West Virginia
Constitution provides that:
Private property shall not be taken or damaged for public use, without just compensation ... and when private property shall be taken, or damaged for public use ... the compensation to the owner shall be ascertained in such manner, as may be prescribed by general law; Provided, That when required by either of the parties, such compensation shall be ascertained by an impartial jury of twelve freeholders.
Section 10 of article III provides that: “No person shall be deprived of life, liberty, or
property, without due process of law, and the judgment of his peers[;]” and § 17 of article
III provides: “The courts of this state shall be open, and every person, for an injury done to
him, in his person, property or reputation, shall have remedy by due course of law; and
[5] justice shall be administered without sale, denial or delay.” Id. art. III, §§ 10, 17. These
state due process rights explicitly guaranteeing the right to compensation, including a right
to have such compensation ascertained by a jury in matters involving a public taking,
plainly conflict with a doctrine that provides unwavering immunity to the state. Our state
constitution clearly contemplates that every person who suffers damages shall have
recourse through the courts to seek redress, and “[t]he fact that the wrongdoer is an
instrumentality of state government should not eviscerate these constitutional rights,
inasmuch as the Bill of Rights contained in article III is designed to protect people from
government.” Pittsburgh Elevator Co., 172 W. Va. at 754 , 310 S.E.2d at 686 . In addition
to conflicting with our state constitution’s due process rights, a broad view of our sovereign
immunity doctrine also sits uneasily with the federal constitution’s due process rights, that
no person shall be deprived of their property without due process of law, and that no
property shall be taken for public use without just compensation. See G.M. McCrossin,
Inc., 177 W. Va. at 542 , 355 S.E.2d at 35 ; U.S. CONST. amend. XIV, § 1. The people’s due
process rights are most fundamental to our very conception of government, see Rodney L.
Mott, Due Process of Law 589 (2d. ed. 1973), and plainly conflict with a doctrine holding
that no recovery can be had against the state nor its agents for any potential wrongdoing.
“Whenever possible, apparently conflicting portions of a constitution will be
read so as to reconcile and harmonize them. We have, however, recognized that, if it is
necessary to maintain the rights of a citizen under article III, those rights will be treated as
an exception to the inhibition on suing the state government.” G.M. McCrossin, Inc., 177
[6] W. Va. at 542, 355 S.E.2d at 35 (citations omitted). Accordingly, our courts have wisely
tempered Article VI, § 35’s apparent bar by carving out several exceptions to the otherwise
harsh sovereign immunity doctrine. See id. at 542-43, 355 S.E.2d at 35-36 . For example,
constitutional concerns motivated the allowance of an aggrieved person to achieve, through
a writ of mandamus, a similar result to a suit for damages against the state. See State ex rel.
Henson v. W. Virginia Dep't of Transp., Div. of Highways, 203 W. Va. 229, 232 , 506 S.E.2d 825, 828 (1998); State ex rel. Rhodes v. W. Virginia Dep't of Highways, 155 W. Va. 735, 738 , 187 S.E.2d 218 , 220 (1972); Syl. Pts. 1-2, State ex rel. Phoenix Ins. Co. v. Ritchie,
154 W. Va. 306 , 175 S.E.2d 428 (1970).1 In addition to such equitable causes of action,
our precedent also allows suits for damages when the state is acting as a proprietor, Ward
v. Cnty. Ct. of Raleigh Cnty., 141 W. Va. 730, 739-40 , 93 S.E.2d 44, 49 (1956); when an
agency is acting as a quasi-public corporation, Hope Nat. Gas Co. v. W. Va. Tpk. Comm'n,
143 W. Va. 913, 930 , 105 S.E.2d 630, 639-40 (1958); and when the state has a “moral
obligation” to pay damages. Syl., State ex rel. Davis Tr. Co. v. Sims, 130 W. Va. 623 , 46 S.E.2d 90 (1947). It is noteworthy that when analyzing whether a governmental entity can
be sued as a quasi-public corporation, the court pays significant attention to the source of
funds when determining whether the suit for damages is truly against the public purse. See
Hope Nat. Gas Co., 143 W. Va. at 929-30 , 105 S.E.2d at 639-40 . Another sovereign
immunity exception that makes manifestly clear the importance of the public purse is the
[1] Sovereign immunity does not typically bar equitable actions against state officers or agents, as they are not against the state itself, and as such suits do not directly seek monetary damages, they do not typically implicate the public purse. See Pittsburgh Elevator Co., 172 W. Va. at 753-54 , 310 S.E.2d at 685-86 .
[7] allowance of suits for damages against the state up to the limit of any liability insurance
coverage it may have. Syl. Pt. 2, Pittsburgh Elevator Co., 172 W. Va. 743 , 310 S.E.2d 675 .
A survey of those numerous exceptions to our sovereign immunity doctrine reveals two
major throughlines: whether the suit would result in a recovery of damages from the public
purse, and the danger of sovereign immunity obviating the people’s constitutional due
process rights.
Applying these principles to the case at hand, it is evident that there are
unique circumstances at play here that attenuate the dangers to the public purse and
accentuate the danger of obviating Air Evac’s due process rights by applying sovereign
immunity’s bar to its claims. Before this litigation, Air Evac had prevailed in the federal
Cheatham litigation and was attempting to negotiate with PEIA for the remaining balance
of the partial payments made at the rate-capped reimbursement rate for services provided
to PEIA members from June 9, 2016, to June 4, 2019. Although the federal district court
enjoined enforcement of the rate-capping statutes on October 20, 2017, PEIA continued to
only pay the same Medicare Rural Rate as prescribed by the rate-capping statutes. As Air
Evac was legally required to continue to provide its services to PEIA insureds both during
and after the Cheatham litigation, it had no choice but to accept the PEIA’s partial
payments. See W. Va. Code R. § 64-48-4.15 . Then, as Air Evac attempted to exercise its
due process rights to an administrative hearing, it was met with a rigid refusal to even hold
a hearing regarding whether PEIA owed any additional payment. These actions caused Air
Evac to file its Petition for Appeal in the circuit court, seeking an order mandating that
[8] PEIA hold a hearing regarding the matter pursuant to PEIA’s contested case rules. See W. Va. Code R. § 151-3-4 .
Regarding the danger that Air Evac’s claims may pose to the public purse,
there are attenuating factors that mitigate any such danger. It must be noted that Air Evac
is only seeking full reimbursement for a period of limited duration, so there is no risk of an
indeterminate amount of future payments depleting the state’s coffers. In addition, the
nature of the funds at issue and for what they would be awarded must be considered. PEIA
is an insurance company created by the State of West Virginia to serve as an insurance
provider for its employees. See W. Va. Code § 5-16-1 (2024). In this capacity, PEIA
receives premiums from its insureds, and these premiums make up the great majority of its
revenue; state appropriations have been well under ten percent of PEIA’s yearly revenue
since 2014.2
[2] See Ernst & Young LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY: FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND
OTHER SUPPLEMENTARY INFORMATION YEARS ENDED JUNE 30, 2023 AND 2022 WITH
REPORT OF INDEPENDENT AUDITORS 17 (2023), https://peia.wv.gov/FormsDownloads/Documents/financial_reports/independent%20auditors%20reports/peia/PEIA _Basic_Financial_Statements_Required%20Supplementary_Information_Other_Financia l_Information_Fiscal_Years_2022-2023.pdf; Ernst & Young LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY: FINANCIAL STATEMENTS, REQUIRED
SUPPLEMENTARY INFORMATION, AND OTHER SUPPLEMENTARY INFORMATION YEARS
ENDED JUNE 30, 2022 AND 2021 WITH REPORT OF INDEPENDENT AUDITORS 15 (2022),
https://peia.wv.gov/financial_reports/Documents/22084088006_West%20Virginia%20Public%20Employees%20Insurance%20Agency_2221_FINAL.pdf; Ernst & Young LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY: FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND
OTHER SUPPLEMENTARY INFORMATION YEARS ENDED JUNE 30, 2021 AND 2020 WITH
REPORT OF INDEPENDENT AUDITORS 12 (2021),
[9] Considering the small percentage of PEIA revenue coming from the state, it
must be noted that such funds are appropriated for the purpose of paying for PEIA’s
expenses. Predictably enough, PEIA’s revenue is mostly spent on paying for the claims of
its insureds, and this type of expenditure is exactly what was intended by the legislature.
Indeed, the entire raison d’etre of an insurance provider is to use the pooled premiums to
https://peia.wv.gov/financial_reports/Documents/WVPEIA%20FS%2021-20_Final.pdf; Dixon Hughes Goodman LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY:
FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND OTHER
SUPPLEMENTARY INFORMATION YEARS ENDED JUNE 30, 2020 AND 2019 11 (2020),
https://peia.wv.gov/financial_reports/Documents/PEIA%20Financial%20Statements%20 6.30.20.pdf; Dixon Hughes Goodman LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY: FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY
INFORMATION, AND OTHER SUPPLEMENTARY INFORMATION YEARS ENDED JUNE 30, 2019
AND 2018 11 (2019),
https://peia.wv.gov/financial_reports/Documents/PEIA%20Financial%20Statements%20 6.30.19.pdf; Dixon Hughes Goodman LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY: FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY
INFORMATION, AND OTHER SUPPLEMENTARY INFORMATION YEARS ENDED JUNE 30, 2018
AND 2017 11 (2018),
https://peia.wv.gov/financial_reports/Documents/PEIA%20FS%206.30.18-final.pdf; Dixon Hughes Goodman LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY:
FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND OTHER
SUPPLEMENTARY INFORMATION YEARS ENDED JUNE 30, 2017AND 2016 11 (2017),
https://peia.wv.gov/FormsDownloads/Documents/financial_reports/PEIA%20FS%206.30.17.pdf; Dixon Hughes Goodman LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY: FINANCIAL
STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND OTHER SUPPLEMENTARY
INFORMATION YEARS ENDED JUNE 30, 2016 AND 2015 11 (2016),
https://peia.wv.gov/financial_reports/Documents/PEIA%20FS%206.30.16.pdf; Dixon Hughes Goodman LLP, WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE AGENCY:
FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND OTHER
SUPPLEMENTARY INFORMATION YEARS ENDED JUNE 30, 2015 AND 2014 11 (2015),
https://peia.wv.gov/FormsDownloads/Documents/financial_reports/independent%20auditors%20reports/peia/Finan cial-Statements-Fiscal-Years-2014-2015.pdf.
[10] pay those covered expenses too great for any one of its insureds to bear. The majority’s
usage of sovereign immunity is misapplied here; that doctrine is meant to protect state
monies from being diverted from their legislatively appropriated purposes, not to prevent
the spending of any state monies whatsoever. See Mellon-Stuart Co., 178 W. Va. at 296 ,
359 S.E.2d at 129 .
Our law explicitly recognizes the uniquely attenuated implications of state
monies spent on insurance. See Syl. Pt. 2, Pittsburgh Elevator Co., 172 W. Va. 743 , 310 S.E.2d 675 . Even if the majority wishes to turn a blind eye to Pittsburgh Elevator Co., it is
currently our law and binding precedent. For my part, when considering the integrity of the
public purse, I see the state monies spent on a liability insurance policy as analogous to
PEIA revenue —mostly raised from state employee premiums— spent paying claims of an
insured’s health insurance policy. Thus, I believe that our precedent in Pittsburgh Elevator
Co. and the unique circumstances at play here nullify any traditional dangers to the public
purse that might be presented by litigation against state agencies.
PEIA’s continued obstinance has trammeled upon Air Evac’s due process
rights. By paying Air Evac as if the statutory rate caps had not been enjoined, and then by
refusing to follow the Fourth Circuit’s instructions to negotiate for the reimbursement rates
it desires to pay Air Evac as a normal market participant would, PEIA is essentially acting
as if the Cheatham litigation had not occurred. See Cheatham III, 910 F.3d 751, 769 (4th
Cir. 2018). Crucially, Air Evac was literally compelled by law to provide these services to
[11] PEIA insureds, and practically forced to accept a fractional payment rate that was
preempted by federal law. All the while, Air Evac was forbidden to make up the difference
by balance-billing. Outside of the Legislative Claims Commission (“LCC”), our state
courts are the sole forum wherein Air Evac can seek recovery of the approximately
$4,000,000 balance left over from PEIA’s enjoined reimbursement rate. Although relief
can be sought in the LCC, the actual payment of an award from the LCC is at the discretion
of the Legislature, requiring an actual budgetary appropriation of funds. Because of the
discretionary nature of an LCC award payment, our state courts are the only forum which
can afford a binding recovery, or at a minimum, compel PEIA to hold a hearing regarding
the disputed payments. The majority’s overly broad view of sovereign immunity has
stripped that forum of its jurisdiction.
Our precedent barring similar claims on sovereign immunity grounds were
predicated upon the claimant being a knowledgeable and willing market participant who
voluntarily chose to contract with a state agency, knowing that any disputes would go
before the LCC. See Syl. Pt. 2, G.M. McCrossin, Inc., 177 W. Va. 539 , 355 S.E.2d 32 ;
Mellon-Stuart Co., 178 W. Va. at 296-97 , 359 S.E.2d at 129-30 . However, Air Evac’s
provision of services to PEIA insureds were not the result of a voluntary business decision
to do business with the state, and to accept the associated risks. Air Evac’s inability to
choose is the crux of the issue here, as it goes directly against the eponymous purpose of
the ADA, deregulation. When Congress passed the ADA, it included the preemption clause
[12] specifically to ensure that the states did not merely replace federal aviation regulations with
their own. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378-79 (1992). Congress
clearly desired to replace the previously highly regulated American aviation sector with
one maximally reliant on competitive market forces that would foster efficiency,
innovation, and low prices. Id. at 378 . Here, the mandatory compulsion to do business with
PEIA while fixing reimbursement and prohibiting balance-billing eliminated any hope of
free-market negotiation and competition. In direct contradiction of the ADA, Air Evac was
essentially made “an offer they couldn’t refuse.” The Fourth Circuit’s command that PEIA
negotiate and act as a market participant sought to realize the goals of the ADA, as anything
less contravenes the ADA’s broad sweep. See Cheatham III, 910 F.3d at 762 .3
Air Evac’s legal compulsion to provide its services to PEIA insureds, and
thus do business with the agency, makes its situation more akin to a taking, implicating its
due process rights under both the federal and state constitutions. See U.S. CONST. amend.
XIV, § 1; W. VA. CONST. art. III, §§ 9, 10, 17. Air Evac has a due process property interest
in reimbursement for the services at issue. Although this Court’s precedent has in the past
found that a medical service provider did not have a due process property interest in
[3] Given the wide-reaching preemption of states acting with the force of law in a way that has a “significant effect” upon an air ambulance company’s prices, it is probable that PEIA’s post-Cheatham refusal to negotiate with Air Evac itself violated the ADA. See Cheatham III, 910 F.3d at 767 . This is because the four-million-dollar shortfall caused by PEIA’s recalcitrance likely had a prohibited “significant effect” upon Air Evac’s bottom line, and thus its prices.
[13] reimbursement for services provided, that decision was made because the payments were
the subject of a health care fraud investigation. Burgess v. W. Virginia Dep't of Hum. Servs.,
No. 23-ICA-11, 2024 WL 2952975 , at *11 (W. Va. Ct. App. June 12, 2024). Outside of
that unique context, federal courts have long recognized a medical services provider’s due
process property interest in reimbursement for already-provided services, akin to the
payments at issue here. See Pressley Ridge Sch., Inc. v. Stottlemyer, 947 F. Supp. 929, 940
(S.D.W. Va. 1996). Thus, the majority’s decision that our state courts do not have
jurisdiction to hear this case based on sovereign immunity is violative of Air Evac’s state
and federal due process rights.4
In earlier cases when faced with the apparent irreconcilability of Article VI
sovereign immunity with other constitutional provisions, our courts have found ways to
ensure that those wronged by the state government had a remedy. See G.M. McCrossin,
Inc., 177 W. Va. at 542 , 355 S.E.2d at 35 . Air Evac’s case is precisely the type of case that
should be construed as a mandamus action to satisfy its due process rights by ensuring that
they have some remedy for the alleged state wrongdoing. As described above, the remedy
Air Evac seeks is an order compelling PEIA to follow the procedures laid out by its own
statutory contested case rules:
Any party who demands a hearing to have determined any constitutional rights, legal rights, duties interests or privileges
[4] Although the majority would likely still allow Air Evac to have the LCC as an avenue to seek recovery for the disputed payments, fundamentally because of the discretionary nature of the payment of an LCC award, I do not believe that such a forum satisfies Air Evac’s due process rights.
[14] of specific parties as required by law shall specify in writing the grounds relied upon as a basis for the relief requested….When the executive secretary is presented with a demand for a hearing, the executive secretary shall conduct a hearing or cause a hearing to be conducted within forty-five (45) days of receipt of such written demand, unless postponed to a later date pursuant to these rules.
W. Va. Code R. §§ 151-3-4.1 , 151-3-4.2. Our precedent has held that sovereign immunity
is no bar to mandamus actions to compel a state officer, who has acted arbitrarily,
capriciously, or outside the law, to perform his lawful duties. Syl. Pt. 1, State ex rel. Ritchie
v. Triplett, 160 W. Va. 599 , 236 S.E.2d 474 (1977). Here, Air Evac is attempting to compel
the state officers who administer PEIA to perform their lawfully required duty to hold a
contested case hearing pursuant to West Virginia Code of Regulations §§ 151-3-4.1, 151-
3-4.2, neatly echoing the kind of mandamus actions not barred by our sovereign immunity
doctrine.
“Mandamus will lie against a State official to adjust prospectively his or her
conduct to bring it into compliance with any statutory or constitutional standard.” Syl. Pt.
2, Gribben v. Kirk, 195 W. Va. 488 , 466 S.E.2d 147 (1995). Sovereign immunity bars
retroactive monetary relief but does not bar an award which is prospective in nature. Skaff
v. Pridemore, 200 W. Va. 700, 706 , 490 S.E.2d 787, 793 (1997). Concerning whether Air
Evac’s claims should be considered retroactive or prospective, were they to be considered
a mandamus action, I believe the majority to be incorrect in concluding that October 19,
2019, the date Air Evac initiated its request for a contested hearing, draws the line for
prospective relief. The majority correctly notes our rule that “[t]he crucial date for drawing
[15] a line between prospective and retroactive relief should be the initiation of the relevant
mandamus action and not the date of judgment.” Syl. Pt. 3, Gribben, 195 W. Va. 488 , 466 S.E.2d 147 . However, drawing the line demarcating prospective from retrospective relief
is a practical, equity-focused exercise, tied to the particulars of each case. See Black v. State
Consol. Pub. Ret. Bd., 202 W. Va. 511, 522 , 505 S.E.2d 430, 441 (1998) (noting that the
prospective relief demarcation line was drawn at the initiation of the mandamus action
simply to avoid limiting relief based on an indeterminate litigation timeline). In Black, the
court set the prospective relief demarcation line at the appellant’s first request for an
administrative appeal hearing on the equitable basis that “administrative agencies cannot
with impunity contravene their own policies and rules … without the availability of a
remedy to, as much as possible, make the innocent party whole.” Id. at 522 , 505 S.E.2d at 441 . Similarly, I believe that administrative agencies should not with impunity contravene
a federal injunction without the availability of a remedy.
In demarcating prospective relief at the onset of this litigation, the majority
fails to consider the practical effects of the bifurcated nature of this litigation. Air Evac
could not have possibly initiated any type of relevant action to demarcate its relief as
prospective until the federal courts had already held the rate capping statutory scheme to
be preempted by the ADA. Before the federal preemption in the Cheatham litigation, what
would Air Evac’s cause of action be? Such an action would most likely have been soundly
trounced at the pleading stage. See W. Va. R. Civ. P. 12(b)(6). In such a case, filing the
federal action to have the rate caps enjoined should be considered the “relevant mandamus
[16] action.” This result would better accord with the equitable purposes underpinning Black’s
reasoning, that a remedy should be available when an administrative agency blatantly
contravenes a federal injunction.
Since the Cheatham litigation, Air Evac has troublingly become something
of a white whale to the State of West Virginia’s Ahab, as the state has made repeated efforts
to regulate Air Evac despite the ADA’s broad preemption.5 Mere months after the
Cheatham litigation ended, the West Virginia Offices of the Insurance Commissioner
(“OIC”) sought to bring Air Evac under its regulatory control by considering its
membership program an unauthorized insurance plan. Air Evac EMS, Inc. v. Dodrill, 523 F. Supp. 3d 859 , 863-64, 870 (S.D.W. Va. 2021), aff'd sub nom. Air Evac EMS, Inc. v.
[5] PEIA’s efforts have been an attempt to use sovereign power to place its serious financial concerns onto the back of Air Evac instead of addressing them like a normal market participant. Healthcare’s recently skyrocketing costs are no secret, and PEIA is no exception to this issue. See Sean O’Leary, What is the Plan for the $376 Million PEIA Shortfall?, W. VA. CTR. BUDGET & POL’Y. (Dec. 21, 2022), https://wvpolicy.org/what-isthe-plan-for-the-376-million-peia-shortfall/. Like any insurance company facing financial hardship, PEIA has cut costs; its premiums and state appropriations have increased as coverage has decreased. See Steven Allen Adams, West Virginia PEIA board approves plan changes due to legislation, WVNEWS (Mar. 30, 2023), https://www.wvnews.com/news/wvnews/west-virginia-peia-board-approves-planchanges-due-to-legislation/article_637ca72c-cf42-11ed-aef2a3e40da15360.html#:~:text=The%20Public%20Employees%20Insurance%20Agency%2 0Finance%20Board%20met,for%20out-of-state%20medical%20care%20for%20noncontiguous%20out-of-state%20counties; Phil Kabler, PEIA: Benefit cuts of $40 million needed next year, CHARLESTON-GAZETTE MAIL (Oct. 27, 2017), https://www.wvgazettemail.com/news/politics/peia-benefit-cuts-of-40-million-needednext-year/article_9f9a3162-a773-57b5-b08a-8ce732f75a00.html. One can view PEIA’s efforts to regulate Air Evac and as one among its many cost-cutting measures, but one only available to an insurance company wielding the state’s coercive power.
[17] McVey, 37 F.4th 89 (4th Cir. 2022) (“Dodrill I”). After the OIC’s regulatory effort was
enjoined, the Legislature statutorily designated Air Evac as an insurance provider. Air Evac
EMS., Inc. v. Dodrill, 548 F. Supp. 3d 580 , 585-87 (S.D.W. Va. 2021) (“Dodrill II”).
Unsurprisingly, the district court found the Dodrill II legislation to be preempted by the
ADA. Id. at 595. Apparently undeterred by the result of Dodrill II, the Legislature enacted
another law attempting to regulate Air Evac as an insurance company. Air Evac EMS, Inc.
v. McVey, No. 2:21-cv-00105, 2024 WL 1287634 , at *2 (S.D.W. Va. Mar. 26, 2024). The
state’s efforts are concerningly targeted at Air Evac, as Dodrill I reveals that the OIC told
one of Air Evac’s competitors that he was looking for ways he could “shut down” Air
Evac’s membership program, and the legislation in McVey would have solely affected Air
Evac. See Id.; Dodrill I, 523 F. Supp. 3d at 869. The state’s attempts to regulate Air Evac
show a disregard for the ADA and free market principles, as it seems that the state has
committed its coercive power and resources to pushing Air Evac out of the air ambulance
market.
From Air Evac’s perspective, PEIA has essentially nullified the results of the
Cheatham litigation. PEIA ignored the federal injunction against its rate caps when it
refused to pay anything more, foisting a preempted lower reimbursement rate upon a health
care provider who was forced to do business with the agency. Even after the Cheatham
litigation, PEIA ignored the Fourth Circuit’s instructions to act as a normal market
participant by refusing to entertain any negotiations with Air Evac regarding the disputed
payments. Now, by ruling that Air Evac’s claims are barred by Article VI, § 35’s sovereign
[18] immunity, the majority would place PEIA outside of any meaningful possibility of review,
giving this Court’s blessing to PEIA’s efforts to pretend that the Cheatham litigation had
never occurred. In doing so, the majority has ignored the crucial facts that make this case
uniquely threatening to Air Evac’s due process rights and benign to the public purse, and
failed to follow our wise history of allowing for relief to be found in such unique situations.
For the foregoing reasons, I believe that this Court should affirm and remand
the circuit court’s December 16, 2022, Final Order Granting, in Part and Denying, in Part
Air Evac EMS, Inc.’s Petition for Appeal to the circuit court for further proceedings
consistent with this opinion. Accordingly, I respectfully dissent.
