from the United States District Court for the Western
District of Texas
JONES, BARKSDALE, and COSTA, Circuit Judges.
HAWKINS BARKSDALE, Circuit Judge
at issue is whether an air-ambulance company, claiming
federal preemption of Texas' workers'-compensation
scheme, satisfies the equitable exception to the Eleventh
Amendment, as provided in Ex parte Young, 209 U.S.
123, 155-56 (1908). It does. For this and other reasons,
federal jurisdiction exists. Moreover, we decline to abstain
under Colorado River Water Conservation District v.
United States, 424 U.S. 800 (1976). VACATED and
Evac EMS, Incorporated, filed this action against, inter
alia, the Texas Commissioner of Insurance and the Texas
Commissioner of Workers' Compensation (state defendants),
claiming that, as applied to air-ambulance entities,
Texas' workers'-compensation system is federally
preempted. Because the Airline Deregulation Act (ADA)
expressly preempts all state laws "related to a price,
route, or service of an air carrier", Air Evac maintains
Texas may not use state laws to regulate air-ambulance
services. 49 U.S.C. § 41713(b)(1).
Evac's air ambulances depart from more than 20 sites in
Texas. And, Air Evac holds an assortment of licenses from
federal and state regulators, including the United States
Department of Transportation, Federal Aviation
Administration, and Texas. Being an emergency-transportation
service, Air Evac must accept patients regardless of either
their ability to pay or the source of their payment. As a
result, Air Evac often seeks payment for its services through
the Texas Workers' Compensation Act (TWCA).
established a state-regulated insurance market, in which
Texas licenses private insurers to sell
workers'-compensation policies to employers. See
Tex. Labor Code §§ 401.001-419.007. Two critical
features of this framework are relevant to the action at
hand: a maximum-reimbursement system; and, a prohibition on
"balance billing". Id. §§
413.011 (reimbursement guidelines), 413.042 ("A health
care provider may not pursue a private claim against a
workers' compensation claimant").
the reimbursement program, TWCA authorizes health-care
providers to seek payment directly from
workers'-compensation insurers for services provided
patients covered by TWCA. Id. § 408.027(a). The
insurer then reimburses the health-care provider according to
rate guidelines promulgated by the Texas Workers'
Compensation Commission (commission). See id. These
rates are generally based on corresponding Medicare rates. An
insurer is not allowed to pay more than the
maximum-reimbursement rate, regardless of whether the rate
satisfies the health-care provider's billed amount.
Id. § 413.011(d).
under this system, the initial bill goes to the insurer
rather than the patient. Furthermore, the balance-billing
prohibition prevents a health-care provider from billing the
patient for any portion of the bill in excess of the
commission's rate. Id. § 413.042. If a
health-care provider violates this prohibition, TWCA
authorizes fines up to "$25, 000 per day per
occurrence". Id. § 415.021(a).
health-care provider believes it was underpaid, or the
commission has not yet set a specific rate, it may dispute
the fee with the Texas Department of Insurance, Division of
Workers' Compensation (DWC). See id. §
413.031(a), (c). (Air Evac does not appeal the dismissal of
DWC from this action.)
serves as a first-level administrative adjudicator, with the
healthcare provider and insurer participating as interested
parties. See id. DWC's decisions are appealable
to the State Office of Administrative Hearings (SOAH);
SOAH's decisions, to the Travis County, Texas, district
court. See id. § 413.031(k-1); Tex. Gov. Code
Ann. § 2001.176. And, an appeal may be taken from a
decision by that court. Tex. Gov. Code Ann. § 2001.901.
commission has not promulgated a reimbursement rate for a
given service, DWC must determine a "fair and
reasonable" rate through administrative proceedings.
See 28 Tex. Admin. Code § 134.1(e)-(f). In
2002, DWC adopted a rule setting a general reimbursement rate
of 125% of the Medicare rate. See id. §
adhering to this rule for ten years, numerous air-ambulance
companies―including Air Evac―challenged the 125%
rate in the state-administrative-dispute system, urging ADA
preemption. Initially, DWC stated it believed Texas'
reimbursement guidelines were preempted. In September 2015,
however, following an extensive series of administrative
hearings, an administrative law judge (ALJ) ruled TWCA's
scheme was not preempted, and found the proper reimbursement
rate to be 149% of the Medicare rate.
lead entity in the administrative proceeding, PHI Air
Medical, LLC, appealed the ALJ's ruling to the Travis
County district court. See Tex. Mut. Ins. Co., et al. v.
PHI Air Medical, LLC, No. D-1-GN-15-004940 (Tex. 53d
Jud. Dist. 15 Dec. 2016). In mid-December 2016, that court
ruled: TWCA is not preempted; and, a reimbursement rate of
125% of the Medicare rate is adequate under TWCA.
Id. On 31 January 2017, PHI appealed to the court of
appeals. In the meantime, hundreds of air-ambulance fee
disputes have been held at the SOAH level, pending the
outcome of PHI's judicial proceeding.
a year earlier, in January 2016, with the state proceeding
ongoing, Air Evac filed this action, seeking: a declaratory
judgment that ADA preempts TWCA with respect to air-ambulance
companies; injunctive relief against enforcement of the
maximum-reimbursement-rate system; or, in the alternative,
declaratory and injunctive relief against the balance-billing
prohibition. The district court granted a joint motion to
intervene on behalf of numerous workers'-compensation
insurers (insurers). Prior to the discovery conference, Air
Evac moved for summary judgment and each defendant moved to
court granted defendants' Federal Rule of Civil Procedure
12(b)(1) motions to dismiss. Air Evac EMS, Inc. v.
Texas, No. 1:16-CV-00060-SS, 2016 WL 4259552, at *9
(W.D. Tex. 11 Aug. 2016). In doing so, it first ruled
subject-matter jurisdiction existed, based on Shaw v.
Delta Air Lines, Inc., 463 U.S. 85, 96 n.14 (1983)
(ruling preemption claims present a federal question because
they rely on interpretation of federal statutes and the
Supremacy Clause). Air Evac EMS, 2016 WL 4259552, at
*5. The court continued to explain that, although
Shaw confers federal-question jurisdiction under 28
U.S.C. 1331, the Supremacy Clause, ADA, and Declaratory
Judgment Act do not provide a "private right of
action". Id. at *5-6.
in the light of the Eleventh Amendment, the court concluded:
in order for this action to proceed, Air Evac must rely on a
federal court's equitable jurisdiction to enjoin state
officials under Ex parte Young. Id. at *6.
Looking to Ex parte Young's basic requirements,
the court first acknowledged Air Evac: seeks prospective
injunctive relief; and claims an ongoing violation of federal
law. Id. at *6-7.
court next considered Okpalobi v. Foster, 244 F.3d
405 (5th Cir. 2001) (en banc), in which the lead,
plurality opinion would have required defendants in an Ex
parte Young action to, inter alia, "be
specially charged with the duty to enforce the statute",
as well as to "be threatening to exercise that
duty". Air Evac EMS, 2016 WL 4259552, at *7
(quoting Okpalobi, 244 F.3d at 414-15).
Relying on the duty-to-enforce requirement, the court noted
TWCA's maximum-reimbursement scheme cannot be enforced
against Air Evac because it constrains the amount insurers
can pay, rather than the amount air-ambulance
companies can charge. Id. at *8. Without
direct enforcement against the health-care providers, the
court concluded, the maximum-reimbursement system does not
qualify as the basis for the Ex parte Young
to Air Evac's alternative challenge to the
balance-billing prohibition, the court recognized state
defendants are charged with enforcing the provision against
entities which violate the rule. Id. The court,
however, held: "Air Evac's claims fail under
Young, as Air Evac has failed to show an enforcement
proceeding concerning the balance-billing prohibition is
imminent, threatened, or even intended". Id. In
doing so, the court specifically rejected Air Evac's
assertion that it need not "expose itself" to
liability by violating the balance-billing prohibition in
order to test the law's constitutionality under the
Supremacy Clause. Id.
the court held: despite claiming an ongoing violation of
federal law and seeking only prospective relief, Air Evac
could not avail itself of the Ex parte Young
exception because the maximum-reimbursement system is not
directly enforced against Air Evac, and state defendants have
not threatened to enforce the balance-billing prohibition.
Id. at *9.
this appeal, our court granted expedited briefing and oral
argument. The parties raise four distinct threshold issues:
whether Air Evac has Article III standing; whether
federal-question jurisdiction exists for this action under 28
U.S.C. § 1331; whether Ex parte Young's
exception applies; and whether, in the light of the
above-referenced ongoing state proceedings, we should abstain
from exercising otherwise-proper jurisdiction.
motion to dismiss' being granted is reviewed de
novo, applying the same standard as the district court.
E.g., Bennett-Nelson v. La. Bd. of Regents,
431 F.3d 448, 450 n.2 (5th Cir. 2005). And, of course, a
federal court must always determine its own jurisdiction; if
it decides it is lacking, it may proceed no further.
E.g., Steel Co. v. Citizens for a Better
Env't, 523 U.S. 83, 94 (1998). Consistent with our
above-described standard of review, "whether state
defendants are entitled to sovereign immunity is likewise