Order 2010

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Tr ansportation

O n the Third d ay of May, 20 10

R&M Aviation , Inc.

Docket OST 20 1 0

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Violations of 49 U.S. C. §§ 41101 and 41712

, Order 83

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, and 14 CFR Part 29 8 Served May 3 , 2010

CONSENT ORDER

This consent order concerns the unlawful holding out of air transportation by R&M Aviation, Inc., (R&M) a licensed direct air carrier

, 1 as “ AeroCare Medical Transport System, Inc. ” (AeroCare), a name not listed on its Part 298 registration, in violation of 14 CFR 298.36 and

49 U.S.C. 41101. It also concerns unlawful conduct by AeroCare, which merged with R&M in 2009, at the time AeroCare was an indirect air carrier specializing in air ambulance services, 2 but held out air transportation as a direct air carrier , without the economic authority to do so, in contravention of 49 U.S.C. §§ 41101 and Order 83

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. The se violations also constituted unfair and deceptive trade practice s and unfair method s of competition in violation of 49 U.S.C. § 41712

. This c onsent order directs R&M to cease and desist from such further viola tions and

assesses R&M a compromise civil penalty of $ 6 0 ,000

.

As background, i n addition to applicable Federal Aviation Administration (FAA) requirements, in order to engage in air transportation as a direct or an indirect air carrier, citizens of the United

States 3

1 A “direct air carrier” is a person or other entity that provides air transportation and that has control over the operational functions involved in providing that transportation. must hold economic authority from the Department, either in the form of a certificate of public convenience and necessity issued pursuant to 49 U.S.C. § 41101 or as an ex emption from

section 41101. In 1983, the C ivil Aeronautics Board (C AB ) , which held jurisdiction over the

2 An “indirect air carrier” is a person or other entity that engages indirectly in air transportation operations and who
uses for such transportation the services of a direct air carrier.

3 A “citizen of the United States” includes a corporation organized in the United States that 1) meets certain specified

numerical stan dards regarding the citizenship of its president, officers and directors, and holders of its voting interest and 2) is under the actual control of citizens of the United States. 49 U.S.C. § 40102(a)(15).2 economic aspect s of aviation licensing prior to the Department, issued Order 83

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... to hold out, arrange, and coordinate the operation of air ambulance services,” provided that they me e t certain conditions. 4 While this exemption permits entities that are not duly licen sed direct air carriers to sell air transportation in their own right as indirect air

carriers

, it does not permit such entities to hold themselves out to the public in a manner that

would reasonably create the impression that they are direct a ir carriers. Such misrepresentations

violate section 41101 and Order 83

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unfair method of competition in violation of 49 U.S.C. § 41712.

In addition, 14 CFR 298.36 requires an air taxi operator or commuter air carrier to hold out to the public and conduct operations only in the name or names in which its air carrier certificate is issued and in which it is registered with the Department

. Holding out air transportation in names

other than those list ed violates this provision, as well as 49 U.S.C. § 41101, the Department’s economic licensing requirement for air carriers, and constitutes an unfair and deceptive trade practice and unfair method of competition in violation of 49 U.S.C. § 41712.

An inves tigation by the Office of Aviation Enforcement and Proceedings (Enforcement Office)

shows that AeroC are incorporated i n 1994 under the name “ AeroC are International Aeromedical Ambulance Service, Inc. ” 5 to provide air ambulance service s

. On January 1, 2009, following the statutory merger of Aero C are and R&M, the assets and liabilities of AeroCare transferred to R&M, the surviving entity

. For a period of time thereafter, R&M conduct ed air ambulance operations as Aero Care, a name not listed on its operations specifications or on its Part 298 registration as a trade or fictitious business name

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From 1994 until its merger with R&M in 2009, AeroCare held neither the economic authority from the Department nor the corresponding safety authority from the FAA required of a direct air carrier. During this period, since the company had no authority to operate any aircraft

, it used direct air carriers, including R&M, to carry out contracted air ambulance flights. An investigation of Aero C are ’s adver tising practices by the Enforcement Office , however, disclosed violations of 49 U.S.C. §§ 41101 and 41712, and Order 83

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- 36. Specifically, a number of

statements and representations appear ed on AeroCare’s website in company news articles prior to

the mer ger of AeroCare and R&M

, which imply that AeroCare exercised operational control over flights in the manner of a direct air carrier. For example, one such article announce d that “AeroCare’s new Cessna 421C went into revenue service today with it’s [sic] f irst flight. AeroCare transported a cardiac patient....” Another state d

, “At 4am Sunday Morning,

... AeroCare departed California with a ventilator

- dependent patient.....The flight was 19 hours in duration and the Lear 36 made fuel stops....prior to arrival in K amatsu Japan.” Still another

article state d , “Aerocare had it’s [sic] first revenue air ambulance flight. We flew a spinal cord

4 Air Ambulance Operators, Blanket Exemption, Order 83

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5 In 1999, the company’s articles of incorporation were amended, officially changing its name to “AeroCare Medical Transport System, Inc.”

6 After the Department contacted R&M in late October 2009, the carrier amended i ts Part 135 operations specifications as of November 4, 2009, and its Part 298 registration as of March 3, 2010, adding AeroCare Medical

Tran sport System, Inc. as a d/b/a.3 injury patient...” In addition, a statement appeared on some pages of AeroCare’s website indicating that its medical flights ar e operated by R&M and other FAA certificated air carriers. The statement was misleading, however, in that it did not disclose that R&M and AeroCare had merged, and incorrectly characterized R& M as a wholly

- owned subsidiary of AeroCare

.

On January 1, 2009, AeroCare merged with R&M

, at which time liability for the violations of 49 U.S.C. §§ 41101 and 41712 by AeroCare transferred to R&M, the continuing corporation. Although R&M was at that time and continues to be a duly register ed air taxi, it is required under

section 298.36 to hold out air transportation using only names listed on its Department

- approved registration. From January 1, 2009, until it was contacted by the Enforcement Office late that

year , R&M held out its air taxi operations under the unr egistered trade name “AeroCare

, ” in

violation of that section

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In mitigation, R&M asserts that any alleged noncompliance was unintentional and inadvertent

and it is committed to full compliance with the Department’s regulations and all applicable laws

. Furthermore, upon notification of its noncompliance, R&M cooperated fully with the Department, initiating prompt remedial action to bring the website

, advertising materials , and operations into compliance

. In addition, R&M also points out that for over 16 years it has been an exemplary corporate citizen by donating flights to hundreds of indigent patients and provid ing top notch care to critical patients throughout the world

.

The Enforcement Office has carefully considered all of the information availa ble to it, including that provided by R&M

, but continues to believe that en forcement action is warranted

. I n order to avoid litigation, the Enforcement Office and R&M have reached a settlement of this matter. Without admitting or denying the violations described above, R&M agree s to the issuance of this

order to cease and desist from future violations of 14 CFR 298.36, 49 U.S.C. § § 41101 and

41712

, and Order 83

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. R&M further agrees to the assessment of $ 6 0 ,000 in compromise of potential civil penalties otherwise assessable against it

. T his compromise assessment is appropriate in view of the nature and extent of the violations in question, serves the public

interest , and establishes a deterrent to future similar unlawful practices by R&M and other air

carriers

.

This order is issued under the authority contained in 49 CFR 1.57a and 14 CFR 385.15.

ACCORDINGLY,

1. Based on the above discussion, we approve this settlement and the provisions of the order as being in the public interest.

2. We find that during the period of time it was an indirect air carrier, AeroCare Medical Transport System Inc. violated Order 83

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7 See supra note 6.4 that l iability for these violations transferred to R&M Aviation, Inc., as AeroCare’s successor in

int erest

, following the merger of the two companies in January 2009.

3

. We find that R&M Aviation, Inc. d/b/a Aero C are violated 14 CFR 298.36 and 49 U.S.C. § 41101 , as described above, b y h olding itself out to do business in a name for which it lacked approval

.

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. We find that by engaging in the conduct described in paragraph 2 , above, Aero C are engaged in an unfair and deceptive practice and an unfair method of competition in violation of 49 U.S.C. § 41712, and that liability for these violations transferred to R&M Aviation, Inc., as AeroCare’s successor in interest, following the merger of the two companies in January 2009.

5. We find that by engaging in the conduct describe d in paragraph 3, above, R&M Aviation,

Inc. d/b/a Aero C are engaged in an unfair and deceptive practice and an unfair method of competition in violation of 49 U.S.C. § 41712.

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. We order R&M Aviation, Inc. d/b/a AeroCare and all other entities owned and controlled by or under common ownership with R&M Aviation, Inc. and its successors and assignees

, to
cease and desist from further violations of 49 U.S.C. §§ 41101 and 41712 and

Order 83

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. We assess R&M Aviation, Inc. a compromise civil penalty of $ 6 0 ,000 in lieu of civil penalties that might otherwise be assessed for the violations described in ordering paragraphs 2

, 3, 4, and 5, above , subject to the payment schedule set forth in sub paragraph s 7(a) through (c)

be low

. Fa ilure to pay the penalty as directed will subject R&M Aviation, Inc.

, to the assessment of interest, penalty, and collection charges under the Debt Collection Act and to possible

additional enforcement action for fail ure to comply with this order.

(a) $20,000 shall be due and payable within 3 0 days after the service date of this order. (b) $20,000 shall be due and payable within 60 days after the initial payment as set forth in subparagraph (a) above. (c) $20,000 shall be due and payable within 90 days after the initial payment as set forth in subparagraph (a) above.

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. P ayment s shall be made by wire transfer through the Federal Reserve Communications System, commonly known as "Fed Wire," to the account of the U.S. Treasury as described in the

attached instructions

.5 This order will become a final order of the Department 10 days after its service date unless a timely petition for review is filed or the Department takes review on its own initiative.

BY:

ROSALIND A. KNAPP Deputy General Counsel (SEAL)

An electronic version of this document is available at www.regulations.gov

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