July 31, 2006
The FAA recently publicized an action that resulted in a $1 million civil penalty against an air ambulance provider and a revocation of its contracted air carrier's Part 135 certificate. The contract between the air ambulance provider and the air carrier is generally referred to as a "piggyback" agreement because it involves a non-certificated owner/operator of fixed and/or rotary wing aircraft entering into a contractual arrangement with an FAA-certificated Part 135 air carrier to include the aircraft under the air carrier's certificate.
Other air ambulance providers have given anecdotal reports of simultaneous investigations launched by the FAA. It is generally believed that these investigations are a bellwether of similar investigations involving air ambulance "piggyback arrangements" to come in the next few weeks and months. The piggyback model is a major, if not the predominant operational model in the U.S. air ambulance industry. Given the fact that it would likely take at least 1 to 2 years for existing piggybacked air ambulance operators to obtain their own Part 135 certifications, if they started the process today, the effects of this FAA enforcement initiative on the availability of air medical services in the United States could be substantial.
Healthcare providers that operate air ambulance services using the "piggyback" model (or contract with/outsource to air ambulance providers which arrangements may include a "piggyback" element) might therefore face a challenge to the continued operations of their air ambulance. Operators of air ambulances may be well served by retaining aviation counsel to work with their transactional counsel and determine if a piggyback arrangement exists, and, if so, can an alternative arrangement be substituted in short order, to permit continued operations of the air ambulance.
The FAA's release concerning the current action may be found at: /Events and Education/Teleconferences/Pages/What_In-House_Counsel_Need_to_Know_about_the_AHLA_ADR_Service.aspx
We would like to thank Richard Korman (Saint Joseph Regional Medical Center, Mishawaka, IN) for providing this email alert.