Alohacare v. Ito, SCAP–30276.

CourtSupreme Court of Hawai'i
Writing for the CourtOpinion of the Court by RECKTENWALD, C.J.
Citation126 Hawai'i 326,271 P.3d 621
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.
Docket NumberNo. SCAP–30276.,SCAP–30276.
Decision Date25 January 2012

126 Hawai'i 326
271 P.3d 621

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.

No. SCAP–30276.

Supreme Court of Hawai‘i.

Jan. 25, 2012.


271 P.3d 623

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.

Opinion of the Court by RECKTENWALD, C.J.

126 Hawai'i 328

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).

271 P.3d 624
126 Hawai'i 329

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.

I. BACKGROUND

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.

A. The QExA Request for Proposals

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:

An entity that has, or is seeking to qualify for, a comprehensive risk contract under the final rule of the [federal Balanced Budget Act of 1997] and that is: (1) a federally
126 Hawai'i 330
271 P.3d 625
qualified HMO that meets the requirements under Section 1310(d) of the Public Health Service Act; (2) any public or private entity that meets the advance directives requirements and meets the following conditions: (a) makes the service it provides to its Medicaid members as accessible (in terms of timeliness, amount, duration, and scope) as those services that are available to other Medicaid enrollees within the area served by the entity and (b) meets the solvency standards of 42 CFR Section 438.116 and HRS § 432D–8.

The RFP also defined the term "Participating" as

[w]hen referring to a provider, a healthcare provider who is employed by or who has entered into a contract with the health plan to provide covered services to members. When referring to a facility, a facility which is owned and operated by, or which has entered into a contract with the health plan for the provision of covered services to members.

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."

B. AlohaCare, United, and Ohana's eligibility to offer the product required by the QExA RFP

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...

To continue reading

Request your trial
28 practice notes
  • Castro v. Melchor, No. CAAP–12–0000753.
    • United States
    • Court of Appeals of Hawai'i
    • January 29, 2016
    ...arbiters of state law, the interpretations of federal courts can be persuasive. See, e.g., AlohaCare v. Ito, 126 Hawai‘i 326, 349 n. 40, 271 P.3d 621, 644 n. 40 (2012), Rana v. Bishop Ins. of Haw., Inc., 6 Haw.App. 1, 10, 713 P.2d 1363, 1369 (1985).6 See Justus v. Atchison, 19 Cal.3d 564, 1......
  • Pila‘a 400, LLC v. Bd. of Land & Natural Res., No. SCWC–28358.
    • United States
    • Supreme Court of Hawai'i
    • February 14, 2014
    ...apply the same standard of review as that applied upon primary review by the circuit court." AlohaCare v. Ito, 126 Hawai‘i 326, 341, 271 P.3d 621, 636 (2012) (quoting Kaiser Found. Health Plan, Inc. v. Dep't of Labor & Indus. Relations, 70 Haw. 72, 80, 762 P.2d 796, 800–01 (1988) )......
  • Asato v. Procurement Policy Bd., No. SCAP–12–0000789.
    • United States
    • Supreme Court of Hawai'i
    • February 14, 2014
    ...is, without restriction] ‘affected’ by or ‘involved’ " with the validity of an agency rule. AlohaCare v. Ito, 126 Hawai‘i 326, 360, 271 P.3d 621, 655 (2012) (Acoba, J., concurring and dissenting). This is consistent with the holding in Life of the Land that a plaintiff who has interest......
  • City &Cnty. of Honolulu v. Honolulu Police Comm'n, CAAP-20-0000776
    • United States
    • Court of Appeals of Hawai'i
    • March 16, 2022
    ...field and the court should not substitute its own judgment for that of the agency." AlohaCare v. Ito , 126 Hawai‘i 326, 341, 271 P.3d 621, 636 (2012) (quoting Peroutka v. Cronin , 117 Hawai‘i 323, 326, 179 P.3d 1050, 1053 (2008) ). "To be granted deference, however, the agency's d......
  • Request a trial to view additional results
28 cases
  • Castro v. Melchor, No. CAAP–12–0000753.
    • United States
    • Court of Appeals of Hawai'i
    • January 29, 2016
    ...arbiters of state law, the interpretations of federal courts can be persuasive. See, e.g., AlohaCare v. Ito, 126 Hawai‘i 326, 349 n. 40, 271 P.3d 621, 644 n. 40 (2012), Rana v. Bishop Ins. of Haw., Inc., 6 Haw.App. 1, 10, 713 P.2d 1363, 1369 (1985).6 See Justus v. Atchison, 19 Cal.3d 564, 1......
  • Pila‘a 400, LLC v. Bd. of Land & Natural Res., No. SCWC–28358.
    • United States
    • Supreme Court of Hawai'i
    • February 14, 2014
    ...apply the same standard of review as that applied upon primary review by the circuit court." AlohaCare v. Ito, 126 Hawai‘i 326, 341, 271 P.3d 621, 636 (2012) (quoting Kaiser Found. Health Plan, Inc. v. Dep't of Labor & Indus. Relations, 70 Haw. 72, 80, 762 P.2d 796, 800–01 (1988) )......
  • Asato v. Procurement Policy Bd., No. SCAP–12–0000789.
    • United States
    • Supreme Court of Hawai'i
    • February 14, 2014
    ...is, without restriction] ‘affected’ by or ‘involved’ " with the validity of an agency rule. AlohaCare v. Ito, 126 Hawai‘i 326, 360, 271 P.3d 621, 655 (2012) (Acoba, J., concurring and dissenting). This is consistent with the holding in Life of the Land that a plaintiff who has interest......
  • City &Cnty. of Honolulu v. Honolulu Police Comm'n, CAAP-20-0000776
    • United States
    • Court of Appeals of Hawai'i
    • March 16, 2022
    ...field and the court should not substitute its own judgment for that of the agency." AlohaCare v. Ito , 126 Hawai‘i 326, 341, 271 P.3d 621, 636 (2012) (quoting Peroutka v. Cronin , 117 Hawai‘i 323, 326, 179 P.3d 1050, 1053 (2008) ). "To be granted deference, however, the agency's d......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT