Alohacare v. Ito, SCAP–30276.
| Decision Date | 25 January 2012 |
| Docket Number | No. SCAP–30276.,SCAP–30276. |
| Parties | ALOHACARE, Petitioner/Appellant–Appellant, v. Gordon I. ITO, Insurance Commissioner, State Of Hawai‘i Department of Commerce and Consumer Affairs, Respondent/Appellee–Appellee, and United HealthCare Insurance Company dba Evercare; WellCare Health Insurance of Arizona, Inc., dba Ohana Health Plan and affiliates; and Department of Human Services, State of Hawai‘i, Respondents/Intervenors–Appellees–Appellees. |
| Court | Hawaii Supreme Court |
Edward C. Kemper for petitioner/appellant-appellant.
James F. Nagle, Deputy Attorney General, for respondent/appellee-appellee.
John F. Molay, Deputy Attorney General, for respondent/intervenor-appellee-appellee Department of Human Services.
Dianne W. Brookins (Alston Hunt Floyd & Ing) for respondent/intervenor-appellee-appellee United HealthCare Insurance Co.
Lorraine H. Akiba (McCorriston Miller Mukai MacKinnon) for respondent/intervenor-appellee-appellee Wellcare Health Insurance of Arizona, Inc., dba Ohana Health Plan.
RECKTENWALD, C.J., DUFFY, J., Circuit Judge NISHIMURA, assigned in place of NAKAYAMA, J., Recused, and Circuit Judge LEE, assigned by reason of vacancy, with ACOBA, J., concurring and dissenting separately.
AlohaCare, a health maintenance organization, submitted a proposal to the Department of Human Services to bid for a Quest Expanded Access contract to provide healthcare services for aged, blind, or disabled participants in the State's Medicaid program. AlohaCare was not one of the successful bidders. The Department of Human Services instead awarded Quest Expanded Access contracts to United HealthCare Insurance Company, dba Evercare (United), and WellCare Health Insurance of Arizona, Inc., dba Ohana Health Plan (Ohana).
AlohaCare petitioned the Insurance Commissioner of the Department of Commerce and Consumer Affairs for declaratory relief that accident and health insurers like United and Ohana were not properly licensed to carry out the activities called for under the Quest Expanded Access contracts and that a health maintenance organization license issued pursuant to the Health Maintenance Organization Act, Hawai‘i Revised Statutes chapter 432D, quoted infra, was instead required. The Insurance Commissioner concluded that a health maintenance organization license was not required to offer the Quest Expanded Access managed care product because the services required under the contracts were not services that can be provided only by a health maintenance organization. On appeal to the circuit court, AlohaCare argued that the Insurance Commissioner's Decision was wrong, and, in effect, nullified the Health Maintenance Organization Act. The circuit court upheld the Decision of the Insurance Commissioner. On appeal, AlohaCare challenges the circuit court's judgment in favor of United, Ohana, the Department of Human Services and the Insurance Commissioner.
As set forth below, we hold that AlohaCare has standing to appeal the Insurance Commissioner's Decision. We further hold that both accident and health insurers and health maintenance organizations are authorized to offer the closed panel or limited physician group model of care required by the Quest Expanded Access contracts. We conclude that this holding does not nullify the Health Maintenance Organization Act. Accordingly, we affirm the circuit court's judgment.
The following facts are taken from the agency record on appeal, the circuit court record on appeal, including transcripts of the proceedings before the circuit court, and the Insurance Commissioner's unchallenged findings of fact.
On October 10, 2007, the Department of Human Services (DHS) issued Request for Proposals (RFP) No. RFP–MQD–2008–006 "QUEST Expanded Access (QExA) Managed Care Plans to Cover Eligible Individuals Who Are Aged, Blind, or Disabled." The RFP provided, in part:
This [RFP] solicits participation by qualified and properly licensed health plans to provide required service coordination, outreach, improved access, and enhanced quality healthcare services through a managed care system for the State's Medicaid aged, blind or disabled (ABD) members who are currently not covered through a managed care system across the continuum of care. The services shall be provided in a managed care environment with reimbursement to qualifying health plans based on fully capitated rates for each island.
(Emphasis added).
The RFP defined "managed care" as "[a] comprehensive approach to the provision of healthcare that combines clinical services and administrative procedures within an integrated, coordinated system to provide timely access to primary care and other necessary services in a cost-effective manner." The RFP further provided that "QExA is a managed care program and, as such, all acute, pharmacy and long-term care services to members shall be provided in a managed care system."
Regarding licensure, the RFP provided that:
The health plan shall be properly licensed as a health plan in the State of Hawaii (See [Hawai‘i Revised Statutes (HRS) chapters 431, and 432, and 432D] ). The health plan need not be licensed as a federally qualified HMO, but shall meet the requirements of Section 1903(m) of the Social Security Act [ ( 42 U.S.C. § 1396(m) ) ] and the requirements specified by the DHS.
(Emphasis added).
The RFP's definition of "Health Maintenance Organization (HMO)" referred to its definition of "Managed Care Organization," which stated:
The RFP required that successful bidders "develop and maintain a provider network that is sufficient to ensure that all medically necessary covered services are accessible and available" to plan members. To that end, the RFP set forth the minimum size of the plan's provider network, including the number of primary care physicians, specialists and hospitals required on each island. Under the QExA RFP, if the health plan is unable to provide medically necessary covered services to a member within its network or on the island of residence, then the health plan must provide the services out-of-network or transport the member to another island to access the services.
No party disputes that the QExA RFP contemplated the provision of a "closed panel" plan, "meaning that care must be obtained from the contracted network of providers if it is available within the network."
AlohaCare alleges, and the other parties do not dispute, that AlohaCare is licensed as a health maintenance organization under HRS chapter 432D.1 United and Ohana are licensed as accident and health insurers under HRS chapter 431:10A, quoted infra. It is undisputed that United and Ohana are not licensed as health maintenance organizations under HRS chapter 432D.
On October 30, 2007, prior to submitting its application in response to the RFP, United inquired by letter to the Insurance Division as to whether United would be able to offer the closed panel managed care product called for under the RFP pursuant to its accident and health insurer license. The Health Branch Administrator at the Insurance Division responded to United by letter on November 1, 2007, stating that the plain text of HRS § 431:10A–205(b) would not allow United to offer a "closed panel or limited physician group HMO model of care."2
United replied by letter on November 12, 2007 providing additional information and requesting a clarification of the Health Branch Administrator's letter. On November 13, 2007, after conferring with the Insurance Commissioner, the Insurance Division reversed its interpretation of HRS § 431:10A–205(b), stating that "our interpretation is that the referenced statute does not prohibit offering a closed panel HMO product for Medicaid–Quest under the accident and health license." (Emphasis in original). On November 16, 2007, the Insurance Division communicated by letter to United that its "[r]esponse in the November 13, 2007 letter is based upon the information and/or documentation provided by [United] and is informational in nature." On April 24, 2008, the Health Branch Administrator provided a similar opinion to Ohana.3
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