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Air Trek, Inc. v. Capital Steel & Wire, Inc.

United States District Court, W.D. Michigan, Southern Division

October 2, 2019

AIR TREK, INC., Plaintiff,
CAPITAL STEEL & WIRE, INC., et al., Defendants.




         This could be a case study in the market disconnect between patients, health providers and the parties that actually pay for health care services. Air Trek provided air ambulance services to patient Dustin Preston after he seriously hurt himself on vacation in Florida. Mr. Preston ultimately died as a result of his injuries, and neither he nor his heirs are parties in the case. Neither is the Florida hospital that solicited and received the original quote from Air Trek for what appeared on its face to be a price of $18, 406, an amount Mr. Preston's employer-sponsored ERISA plan paid in full.

         The parties Air Trek brought into this case are the ERISA plan itself, the employer sponsor of the plan, the insurance carrier for the plan and intermediaries the insurance company uses to review and negotiate disputed claims. And Air Trek's claim is not for any portion of the $18, 406 on the original quote delivered to the Florida hospital-an amount the carrier has paid in full. Instead, Air Trek claims the $18, 406 was just a deposit against the true cost of $241, 905.00, for which it billed the Defendants. Air Trek ultimately seeks recovery here of $217, 714.50, which it says a negotiating agent of the insurance carrier agreed to pay in a settlement agreement. Air Trek candidly admits that it would not be seeking these additional amounts if the only available target defendants were Mr. Preston or his heirs.

         Defendants all move for summary judgment on the basis that the state law claims are without merit and, furthermore, are preempted under ERISA. They further contend that Air Trek lacks standing to bring its ERISA claim. The Court heard argument on the motions in open court on August 28, 2019, and thereafter took the matter under advisement. (ECF No. 106). After careful review of the entire record, the Court concludes there is no genuine issue as to any material fact on the theories of the case as pleaded by Air Trek and that Defendants are entitled to judgment as a matter of law. For the reasons that follow, then, the Court grants the Defendants' motions and dismisses this case.


         1. Pre-Flight Matters

         Non-party Dustin Preston was the insured in this case. He had an ERISA Welfare Benefit Plan through Defendant Capital Steel & Wire, Inc. (“CS&W”), the sponsor and plan administrator. (See CS&W Welfare Benefit Plan, ECF No. 76-9, PageID.720). In February 2015 Mr. Preston fell down some steps in the Sarasota, Florida area and lost consciousness. He was taken to Sarasota Memorial Hospital where he was put on life support. Doctors at the hospital told Mr. Preston's spouse, Kelly Preston, that her husband would never regain consciousness. (Preston Aff. ¶¶ 2-3, ECF No. 71-3, PageID.437). Ms. Preston asked that her husband be flown back home to Lansing, Michigan-both for a second opinion and, in the event he would not regain consciousness, for an opportunity for his family in Michigan to say goodbye. (Id. at ¶ 4).

         On February 12, 2015, Sarasota Memorial Hospital contacted Air Trek to arrange a flight for Mr. Preston. Air Trek responded by sending a quote detailing its charges for the flight to Ms. Erin Moretti, a case manager in the hospital. (Moretti Dep. 9-10, ECF No. 71-12, PageID.469-470). The quote (ECF No. 71-1, PageID.431) appears on Air Trek letterhead and was addressed to Ms. Moretti from Ms. Roxanne J. Stanley, an Air Ambulance Coordinator. Following the introductory paragraphs, the quote stated: “Rate schedule is determined from published base rate of $14, 500 and $195 Domestic/$215 International per patient loaded mile[.]” (ECF No. 71-1, PageID.431). The document further provided that “[p]rices below are discounted for prompt payment at time of service, hardship discount or deposit amount insurance for invoicing.” (Id.). The next line contained the following information:

         (Image Omitted)


         After receiving the quote from Air Trek, Ms. Moretti contacted Defendant PHP Insurance, the plan administrator of CS&W s Welfare Benefit Plan, to obtain authorization for Air Trek's out of network services. Kellie Banko of PHP Insurance then reached out to Air Trek to verify the quote. Air Trek contends that during this conversation it was made clear that there would be additional charges beyond the charge listed. This included payment for mileage, the exact amount of which could not yet be determined. (ECF No. 91-8, PageID.1243-1244). Defendants disagree with this characterization. There is no additional pre-flight paperwork beyond the $18, 406 quote. The factual dispute on this pre-flight conversation is legally immaterial on the ERISA claim, as discussed later in this Opinion. And Air Trek's state law claims rely on alleged post-flight promises and agreements not this pre-flight conversation, again as discussed later in this Opinion.

         The parties agree that Ms. Banko provided authorization to fly Mr. Preston to Lansing on a written “Medical Resources Management Department Utilization Review Form.” (ECF No. 71-14, PageID.550). They further agree that after PHP Insurance provided its authorization, the flight took place the next day on February 13, 2015 without incident. (See ECF No. 71-2, PageID.433). Unfortunately, after arriving in Lansing, Mr. Preston never regained consciousness and he later died.

         2. Post-Flight Matters

         A. Air Trek Invoices GlobalCare for $241, 905.00

         On February 17, 2015, Ms. Theresa Crosland, an Air Trek Director of Claims, sent a claim submission for Mr. Preston's flight to Defendant GlobalCare.[1] The packet included a health insurance claim form, a cover letter, a copy of PHP Insurance's authorization form, a copy of a services agreement completed by Ms. Preston, and a copy of the notes from the flight. (ECF No. 75-8). The claim form listed a total charge of $241, 905.00 and noted that the flight had flown 1079 miles. (ECF No. 75-8, PageID.623). The cover letter addressed to GlobalCare noted that “this was a preauthorized claim” and Air Trek requested payment “per ERISA Law” within 15 days. (ECF No. 75-8, PageID.624).

         B. GlobalCare refers the Out of Network Claim to Consilium and Consilium Negotiates with Air Ambulance Billing

         According to the deposition of Carol Lockwood, a GlobalCare Vice President of Operations, GlobalCare had an agreement with an entity doing business as Consilium that acted as a negotiation company for GlobalCare on out of network claims. (Lockwood Dep. 9, ECF No. 75-11, PageID.643). So, after receiving this packet, GlobalCare referred Air Trek's claim for services to Consilium.

         1. Round One

         On March 4, 2015, Consilium and Air Trek negotiated over a settlement amount. On that day Ms. Amelia Kahiu with Consilium sent a fax to Ms. Crosland requesting settlement of the claim in exchange for “prompt payment, within 15 business days.” Ms. Kahiu requested Air Trek “fax the executed contracts” to her attention “to begin the payment process.” (ECF No. 92-1, PageID.1279).

         The message attached a one page “Provider Claim Settlement Agreement & Release” (“release” or “settlement release”). (ECF No. 92-1, PageID.1272). The release listed the client as “Globalcare-Preneg Claims” and contained several terms, including:

• Compensation would be $120, 952.50 as payment in full for Air Trek's claim (50% of the billed amount).
• Air Trek would agree not to charge the patient (the Prestons) for the difference between the billed charges and the settlement amount.
• The client would “pay, generally within fifteen (15) days but not later than thirty (30) days” the settlement amount “reduced only by any deductibles, coinsurances and/or non-covered charges as defined by” the ERISA plan.
• The provider (Air Trek) understood and acknowledged “that the Provider's claim may not have been adjudicated by the Client or the Plan and may be disallowed in whole or in part.”

(ECF No. 92-1, PageID.1272).

         These terms were then followed by two boxes. The first box had a caption stating: “Agreed to & Accepted.” Within the space there was a blank provided for the name of the provider, with Air Trek's name filled in, and then empty spaces for the provider's mailing address, and the name, title, email address, signature and signature date of the employee acting on Air Trek's behalf. (Id.). The second box had a caption stating: “for Consilium use only” and had similar blanks providing for the name and signature of the individual signing for Consilium. The second box also had space for Consilium to fill out the effective date of the release. (Id.). Consilium did not sign the document before sending it.

         2. ...

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