The West Virginia Supreme Court recently ruled in favor of Air Evac EMS, Inc., allowing the air ambulance company to pursue its claims against the Public Employees Insurance Agency (PEIA) regarding reimbursement for services rendered. The court's decision, filed on November 10, 2026, overturns a previous ruling that had dismissed Air Evac's claims based on the doctrine of sovereign immunity.

This ruling is significant for Air Evac and other providers who may face similar reimbursement disputes with state agencies. It emphasizes the right of service providers to contest decisions made by public insurance agencies, potentially impacting how such disputes are resolved in the future.

Background

Air Evac EMS, Inc. is a federally regulated air ambulance service that operates in West Virginia. The company is required by state law to provide air ambulance services to residents. The PEIA, on the other hand, is responsible for providing medical insurance coverage to eligible state employees and their dependents.

The dispute began when PEIA changed its reimbursement policies in 2011, capping payments to air ambulance providers at the federal Medicare Rural Rate. This change was further solidified by a 2016 law that limited air ambulance charges and prohibited balance billing, which is when providers bill patients for the difference between their charge and what the insurance pays.

Air Evac filed a complaint in federal court, arguing that these changes were preempted by the Airline Deregulation Act of 1978. The federal court ruled in favor of Air Evac, stating that the state laws had the force and effect of law and were preempted. This decision was upheld by the Fourth Circuit Court of Appeals in 2018.

The Ruling

In the recent ruling, the West Virginia Supreme Court determined that the doctrine of sovereign immunity did not apply in this case. The court stated, "the doctrine of sovereign immunity is inapplicable, and we reverse the ICA’s decision and remand this case for entry of an order requiring PEIA to hold a contested case hearing on the claims asserted by Air Evac." The judges emphasized that Air Evac had a right to a hearing regarding its reimbursement claims.

The court clarified that Air Evac's request for a hearing was not merely an appeal of a contested case but rather a request for extraordinary relief. This distinction was crucial as it allowed the court to bypass sovereign immunity, which typically protects state agencies from lawsuits. The judges noted that the refusal of PEIA to grant a hearing triggered the need for judicial intervention.

Impact

This ruling has significant implications for Air Evac and other healthcare providers in West Virginia. It establishes that state agencies must adhere to their own rules regarding contested case hearings, even in the face of sovereign immunity claims. The court's decision reinforces the importance of due process for providers seeking reimbursement from state insurance agencies.

Furthermore, this ruling could set a precedent for similar cases in the future, allowing other providers to challenge state agency decisions more effectively. It underscores the need for transparency and accountability in the reimbursement processes of public insurance agencies.

What's Next

The case will now return to the circuit court, where PEIA will be required to hold a contested case hearing regarding Air Evac's claims. There is no indication that this ruling will be appealed further, but the outcome of the hearing could still lead to additional legal disputes depending on the findings.