Opinion
No. 2:03CV93DAK
February 10, 2003
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER
This matter is before the court on Plaintiff Eagle Air Med Corporation's ("Eagle") Motion for a Temporary Restraining Order and Preliminary Injunction. Eagle moves for a temporary restraining order and preliminary injunction seeking to require Defendant Commission on Accreditation of Medical Transport Systems ("CAMTS") to reinstate Eagle's accreditation. A hearing on the motion was held on February 7, 2003. At the hearing, Eagle was represented by Gary G. Sackett and Ross I. Romero, and CAMTS was represented by Robert S. Young. Before the hearing, the court considered carefully the memoranda and other materials submitted by the parties. Since taking the matter under advisement, the court has further considered the memoranda, exhibits, and affidavits submitted by the parties, and the law and facts relevant to the motion. Now being fully advised, the court renders the following Findings of Fact, Conclusions of Law, and Order.
I. FINDINGS OF FACT
Eagle is a Utah corporation that provides air ambulance services in the Four Corners Area of Utah, Arizona, New Mexico, and Colorado. Eagle is the only air ambulance service operating — out of Kayenta and Chinle, Arizona. CAMTS is a non-profit accrediting body for air medical and ground inter-facility transport services. CAMTS evaluates compliance with industry-wide accreditation standards. CAMTS accreditation represents the two highest priorities of air medical or ground inter-facility transport service: (1) high quality patient care and (2) safety in the transport environment.
Eagle claims that its CAMTS accreditation is vital to its existence because approximately 99% of its air-ambulance services are provided to contractors that require CAMTS accreditation or give a major preference to services who have CAMTS accreditation. Several jurisdictions, health plans, and medical facilities, including, but not limited to the Indian Health Service ("IHS") and the States of Arizona and Utah, as applicable here, require that air medical programs be CAMTS certified.
There are different types of accreditation decisions that can be made at different stages of accreditation. At issue here is Eagle's request for CAMTS to withdraw its suspension of Eagle accreditation, which was effective December 11, 2002, and place Eagle on "probation" status so that it can continue to advertise its CAMTS accreditation and keep its contracts with entities that require CAMTS accreditation. The parties dispute whether Eagle is entitled to probationary status.
The history of Eagle's accreditation process with CAMTS is lengthy. Eagle originally applied for accreditation on March 11, 1996, as Blanding Air Ambulance. From 1996 to date, CAMTS has provided Eagle with accreditation manuals, guidelines, site surveys, and other assistance to help Eagle achieve compliance with CAMTS standards. Despite multiple site visits and accreditations meetings, Eagle did not achieve substantial compliance with CAMTS accreditation standards until November 19, 2001.
At every request for accreditation, CAMTS has notified Eagle of deficiencies, mainly with transport safety and patient care. Eagle appealed the negative accreditation decisions at each stage and requested further review. In October of 2000, Eagle made a third application for CAMTS accreditation and submitted a Program Information Form ("PIF") requesting review for a fixed-wing operation only. Eagle also indicated that there had been only one incident or accident in the past five years. CAMTS conducted a site visit and was never informed that Eagle was operating an AStar 350B helicopter. Following the site visit and prior to the CAMTS Board meeting to decide accreditation, CAMTS received communication from Dr. Flaherty, the Emergency Medical Services director for the Navajo Nation, conveying his concern about certain business practices of Eagle and its use of a helicopter for patient transport. Helicopter accreditation differs from fixed-wing accreditation and requires that additional standards be met. CAMTS deferred Eagle's accreditation pending an investigation and response by Eagle. CAMTS' investigation confirmed Eagle's use of a helicopter in its patient care transport service. CAMTS discovered that Eagle was publicly advertising its helicopter service. CAMTS believes that Eagle purposefully withheld the use of a helicopter from the site surveyor in order to gain accreditation.
CAMTS requested that Eagle submit an amended PIF to include the helicopter. On July 30, 2001, Eagle's counsel suggested that Eagle was willing to separate the personnel for the two operations, the fixed-wing and the helicopter. This resolution, however, raised concerns for CAMTS. Eagle then represented that it was going to stop using the helicopter and another site visit took place on October 12, 2001, for the fixed-wing service only. CAMTS granted full accreditation for fixed-wing services on November 19, 2001.
On October 30, 2002, CAMTS received an email from a former Eagle employee who related concerns about Eagle's safety and its operations. The concerns related to the veracity of information provided to CAMTS surveyors about scheduling, education and aircraft incidents/accidents. Also on or about October 30, 2002, Eagle informed CAMTS that certain employees and former employees had started a competing air-ambulance service and expressed their intentions to damage Eagle's business. Eagle informed CAMTS about these threats so that CAMTS would be aware of what had occurred and would review complaints and other submissions concerning Eagle's services in light of this background.
Over the following weeks, additional complaints and concerns, accompanied by photographs of damaged aircraft indicating unsafe flight operations, were forwarded to CAMTS. Based on this information, CAMTS suspended Eagle's accreditation and notified Joseph Hunt, Eagle's President, Program Manager, and owner, of the suspension by telephone and mail on December 11, 2002. CAMTS informed Hunt that the accreditation would be suspended for as long as further investigation was pending and could extend for as long as six months. Hunt claims that CAMTS refused to give any explanation for the suspension, except for non-specific references to "allegations," and refused to allow Eagle to respond to any allegations at that time.
On December 12, 2002, Eagle learned that Jim Flaherty, MD, at the Tuba City Indian Medical Center, distributed an email to various Navajo Nation medical directors informing them that Eagle's accreditation was suspended and urging them to use Eagle's services only in limited circumstances. On December 14, 2002, James L. Hunt, Eagle's vice president, sent an email to those who received Dr. Flaherty's December 12, 2002 email and attempted to clarify Eagle's understanding of CAMTS' action. On December 16, 2002, Eagle received a letter from the Navajo Area Indian Health Service stating that its Basic Ordering Agreement with Eagle would be terminated effective January 17, 2003 unless its suspended accreditation was rectified.
On December 27, 2002, CAMTS sent a letter to Eagle requesting information as to a series of alleged accidents or incidents and information regarding other operational details by January 27, 2003. CAMTS stated that because of the information it received from several different sources, the burden of proof was on Eagle. Eagle responded on January 10, 2002. Eagle also wrote to CAMTS' attorney expressing its dissatisfaction with the process and alleging that CAMTS had failed to follow its own policies and procedures.
Following a review of Eagle's response, CAMTS' Executive Board recommended that Eagle's accreditation be withdrawn effective January 27, 2003. CAMTS, however, allowed Eagle to remain on suspension during its appeal and further investigation. CAMTS sent notice to Eagle to this effect.
After Eagle's suspension on December 11, 2002, Eagle's air ambulance flights decreased significantly. Eagle states that its reasonable expectation for flights prior to the suspension would be 225 flights during a thirty day period. However, after the suspension on December 11, 2002, Eagle provided only 147 flights during the thirty days following December 11, 2002. The reduction of 78 flights produced a loss of net revenues of nearly $350,000, which represents a net operating loss. Eagle contends that this reduction is directly attributable to CAMTS' suspension of Eagle's accreditation and withdrawal of Eagle's name on CAMTS' website. Hunt has spoken with medical personnel at the hospitals Eagle services and believes that its relationships are strained because Eagle cannot explain the reasons for CAMTS' suspension of Eagle's accreditation.
Hunt testified that if Eagle's operations are suffering and that if it continues to suffer the damages it is currently faced with, Eagle will go out of business within three to six months.
II. CONCLUSIONS OF LAW
I. Standard
In order to obtain temporary injunctive relief, the moving party must establish:
(1) substantial likelihood that the movant will eventually prevail on the merits; (2) a showing that the movant will suffer irreparable injury unless the injunction issues; (3) proof that the threatened injury to the movant outweighs whatever damage the proposed injunction may cause the opposing party; and (4) a showing that the injunction, if issued, would not be adverse to the public interest.SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098 (10th Cir. 1991). Because a temporary restraining order is an extraordinary remedy, the "right to relief must be clear and unequivocal." Id. The parties dispute the applicable standard to apply in this case. CAMTS contends that Eagle seeks a disfavored injunction and should be held to a higher standard. Whereas, Eagle contends that it is not a disfavored injunction and it is in fact entitled to a lower standard because it can meet the last three elements.
The Tenth Circuit has adopted a heightened standard when the moving party seeks injunctive relief that: (1) disturbs the status quo; (2) is mandatory as opposed to prohibitory; or (3) affords the movant substantially all of the relief it may recover at the conclusion of a full trial on the merits. Visa, 936 F.2d at 1098. In Visa, the Tenth Circuit stated that such injunctions are disfavored and, consequently, the movant must "satisfy an even heavier burden of showing that the four factors listed above weigh heavily and compellingly in movant's favor before such an injunction may be issued." Id. at 1098-99.
CAMTS argues that providing Eagle injunctive relief would alter the status quo. The status quo is defined as "the last uncontested status between the parties which preceded the controversy." Visa, 936 F.2d at 1100 n. 8 (internal quotations omitted). Here, Eagle asserts that last uncontested status between the parties was when Eagle was fully accredited and was listed as an accredited flight program on CAMTS' website. CAMTS asserts that courts look to the reality of the existing status and relationship between the parties and not the parties' legal rights. Dominion Video Satellite Inc. v. Echostar Satellite Corp., 269 F.3d 1149 (10th Cir. 2001); Visa, 936 F.2d at 1098. CAMTS contends that a preliminary injunction reinstating Eagle's accreditation would undermine CAMTS' power to ensure public safety in emergency response providers and that a finding that the last uncontested status was when Eagle was fully accredited is an overly simplistic approach to the issue because Eagle is actually asking this court to step into the shoes of an accrediting body and make a judgment on the merits of the suspension. The court finds that the last uncontested status was before December 11, 2002, when Eagle had full accreditation. The parties have disputed CAMTS' decision to suspend and the withdraw Eagle's accreditation. To find that the last uncontested status was anything other than full accreditation would unfairly advantage CAMTS' in this dispute.
As to whether injunctive relief is mandatory or prohibitory, CAMTS argues that the relief would compel it to reinstate accreditation contrary to its previous finding that accreditation is not currently warranted. Mandatory injunctions are more burdensome than prohibitory injunctions because they require the opposing party to act in a particular way. See Salt Lake Tribune Publishing v. ATT Corp., 2001 WL 670928, at *3 (D. Utah). However, in light of this court's view that the status quo is Eagle having full accreditation, the granting of injunctive relief to Eagle does not require CAMTS to do something, it merely prohibits CAMTS from suspending or withdrawing Eagle's accreditation until a trial on the merits.
CAMTS further argues that reinstating Eagle's full accreditation would provide Eagle with substantially all of the relief to which it might be entitled after a full trial on the merits. However, Eagle seeks substantial damages in addition to reinstatement of its accreditation. Therefore, CAMTS' position is without merit.
In applying the traditional "clear and unequivocal" standard to the four-part test, the court must recognize that "there is one slight wrinkle to th[e] four-factor test." Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234, 1246 (10th Cir. 2001). "If the party seeking the preliminary injunction can establish the last three factors listed above, then the first factor becomes less strict — i.e., instead of showing a substantial likelihood of success, the party need only prove that there are `questions going to the merits . . . so serious, substantial, difficult, and doubtful as to make the issue ripe for litigation and deserving of more deliberate investigation.'" Id. at 1246-47 (quoting Federal Lands Legal Consortium v. United States, 195 F.3d 1190, 1194 (10th Cir. 1999)). Therefore, the court will first examine the last three elements for injunctive relief to determine whether Eagle is entitled to the lesser standard with respect to the likelihood of success on the merits element.
II. Elements for Injunctive Relief
1. Irreparable Harm
Eagle argues that it has been harmed through the loss of its reputation and goodwill. Under Utah law, goodwill is defined as "`nothing more than the probability that the old customers will resort to the old place' . . . or the advantage or benefit, which is acquired by an establishment . . , in consequence of the general public patronage and encouragement which it received from constant or habitual customers on account of its local position, or common celebrity, or reputation for skill or affluence, or punctuality, or from other accidental circumstances." Southern Utah Mortuaty v. Olpin Southern Utah Mortuary, 776 P.2d 945, 948 (Utah Ct.App. 1989) (citations omitted).
"If damages can compensate a plaintiff an injunction will not lie." Holly Sugar Corp. v. Goshen Country Coop. Beet Growers' Ass'n, 725 F.2d 564, 570 (10th Cir. 1984). However, under Dominion Video Sattellite Inc. v. Echostar Satellite Corp., 269 F.3d 1149, 1157 (10th Cir. 2001), evidence of lost business is sufficient to show harm. In response to the defendant's arguments that monetary damages would adequately compensate the plaintiff, the Dominion Video court stated that "no remedy could repair the damage to [plaintiffs business] reputation and credibility." Id. Irreparable injury occurs where "damages would be inadequate or difficult to ascertain." Id. at 1156.
In this case, suspension of Eagle's accreditation not only reduces or eliminates parts of Eagle's customer base, the action directly affects Eagle's reputation as a provider of safe, reliable air ambulance service. Eagle lost its status of being a preferred or priority provider for the Navajo Area IHS solely because of its loss of CAMTS accreditation. CAMTS claims that in reviewing Eagle's questionable history with the accreditation process, Eagle is the architect of its own reputation. However, Eagle has had full CAMTS accreditation for over a year and has seen a significant increase in business. There is no indication that Eagle had any problems during its time of accreditation. Furthermore, Eagle's goodwill and reputation has certainly been affected by its loss of accreditation and damages related to such loss can have a more lasting impact than merely its current lost business. Therefore, such damages are difficult to ascertain and constitute irreparable harm.
Eagle also argues that its lost profits alone may represent irreparable harm because CAMTS is a non-profit organization that may not have the resources to pay damages. See Tri-State Generation Transmission Assoc., Inc. v. Shoshone River Power Inc., 805 F.2d 351, 355 (10th Cir. 1986) (harm is irreparable where money damages would not be collectible). However, CAMTS represented at the hearing that it carries Errors and Omissions insurance coverage. Therefore, the court does not believe irreparable harm is demonstrated on this ground.
2. Balance of Harms
Eagle's injuries as a result of the suspension of its accreditation are monetary damages in the form of lost business and irreparable harm in the form of its loss of reputation and goodwill. Harm to CAMTS includes a potential undermining of its mission and reputation to ensure the safety of the programs its accredits.
Eagle contends that it is only seeking what it was contractually entitled to — due process, a fair and proper evaluation of the information submitted, and a straightforward application of CAMTS' procedures. The court agrees with Eagle that nothing it seeks would change CAMTS' reputation and standing in the medical air transport field. The court is hesitant to substitute its judgment for CAMTS. However, at this stage of the litigation, the dispute is more about whether proper procedures were employed in reaching the decisions regarding suspension and withdrawal of accreditation rather than a decision on the merits.
Therefore, the court concludes that although both organizations face the potential of irreparable harm to its reputation, Eagle is also facing substantial monetary damages that could put it out of business. Therefore, the court concludes that the balance of harms element weighs in favor of issuing preliminary injunctive relief to Eagle.
3. Public Interest
Eagle must establish that the proposed injunctive relief is not adverse to the public interest. See Elam Construction Inc. v. Regional Transp. Dist., 129 F.3d 1343, 1347 (10th Cir. 1997), cent denied, 523 U.S. 1047 (1998). Although there is evidence that raises concern as to Eagle safety record, there is no evidence that Eagle has had any accidents during the time that it has been accredited and the accidents/incidents listed in CAMTS December 27, 2002 letter did not involve any injuries to patients or crew members.
CAMTS argues that the public interest would be injured by requiring CAMTS to accredit a program it does not believe meets adequate safety standards. CAMTS appears most concerned about potential liability it may face in the event that an accident occurs during the injunctive period. However, the court finds CAMTS concern about liability to be unwarranted given CAMTS vigorous opposition to reinstatement of accreditation and the fact that reinstatement has occurred only as a result of a court order. Moreover, to the extent that CAMTS could face liability, Eagle represented that it is willing to name CAMTS as an additional insured on its insurance policy.
The court sees no demonstrable detriment to the public if Eagle is allowed accreditation while CAMTS' fully reviews the concerns it has with Eagle's operations. The court also finds that the public interest would be adversely affected if Eagle is not allowed to continue its operations in Kayenta and Chinle Arizona, where no other transport system is based. Therefore, the public interest weighs in favor of issuing preliminary injunctive relief.
4. Likelihood of Success on the Merits
Because Eagle has met the three other elements for issuance of preliminary injunctive relief, "the first factor becomes less strict — i.e., instead of showing a substantial likelihood of success, the party need only prove that there are `questions going to the merits . . . so serious, substantial, difficult, and doubtful as to make the issue ripe for litigation and deserving of more deliberate investigation.'" Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234, 1246-47 (10th Cir. 2001) (quoting Federal Lands Legal Consortium v. United States, 195 F.3d 1190, 1194 (10th Cir. 1999)).
Eagle argues that CAMTS violated Eagle's contractual due process which was guaranteed by the Procedure Manual by not putting Eagle on probationary accreditation under section 4.01.00. Section 4.01.00 provides that "[t]he Commission shall grant probational accreditation when a program has held full accreditation, but upon review has more concerns and or deficiencies than cited during the previous tenure of accreditation or has unresolved concerns or deficiencies from the previous tenure of accreditation." Eagle also relies on Section 4.06.00, relating to actions against an accredited medical transport service that receives concerns and complaints submitted by outside sources, which provides:
If it is determined that further action is required, the Executive Director will notify the director of the medical transport service (by phone and in written correspondence) that a complaint or concern was received. Input from the program will be documented and included in a report to the Board of Directors along with the confidential report for discussion and action at the next board meeting.
Although Eagle asserts that it will succeed on its claim that CAMTS has materially breached its Procedures Manual, CAMTS relies on Section 4.01.00's provisions allowing CAMTS to withdraw accreditation when there is a falsification of application information. CAMTS contends that it investigated and determined that Eagle knowingly falsified information in its application regarding incidents and accidents. Therefore, under Section 4.01.00, CAMTS claims it could and did withdraw Eagle's accreditation.
Although CAMTS presents a strong case for its withdrawal of Eagle's accreditation, it does not adequately address a basis for suspending Eagle's accreditation on December 11, 2002, before Eagle had an opportunity to respond to the submitted allegations. Although CAMTS may have felt it was justified in suspending Eagle based on Eagle's accreditation history, it provides no support in its Procedures Manual for the December 11, 2002 suspension. CAMTS focus is only on the procedures it followed with respect to Eagle's withdrawal of accreditation. Although CAMTS' decision to withdraw Eagle's accreditation may appear to have been done according to procedure and with sufficient justification, CAMTS readiness to suspend Eagle's accreditation without an basis in its Procedures Manual raises concerns as to the process.
The court finds that there are substantial questions regarding whether a probationary status was the proper status on which to put Eagle on December 11, 2002, and whether CAMTS would or should have allowed Eagle to remain on this status on January 27, 2003, when it withdrew Eagle's accreditation but allowed it to remain on suspended status. The court concludes that there is fair ground for litigation on the issues of whether CAMTS' Procedures Manual creates a contractual right and whether those contractual rights were breached at some point in the process. Therefore, the court concludes that a preliminary injunction should issue until an accelerated discovery period and bench trial can be held on May 6, 7, and 8, 2003.
5. Security
CAMTS requests that Eagle be ordered to secure and purchase liability insurance in the amount of ten million dollars and to indemnify CAMTS in the event of a crash by Eagle, which may subject CAMTS to liability. Eagle represented at the hearing on this motion that it was willing to add CAMTS as an insured on its liability insurance. The court finds that this is adequate security and concludes that the issuance of the preliminary injunction shall go into effect as soon as Eagle demonstrates that CAMTS has been added as an additional insured on its liability insurance.
III. ORDER
Based on the foregoing Findings of Fact and Conclusions of Law, Plaintiff Eagle Air Med's Motion for a Temporary Restraining Order and Preliminary Injunction is GRANTED. The injunction shall go into effect as soon as Eagle Air Med demonstrates that CAMTS has been added as an additional insured on Eagle's liability insurance. A bench trial is set in this matter for May 6, 7, and 8, 2003.