HAWAII MGMT. ALLIANCE v. INSURANCE COM'R
| Decision Date | 18 November 2004 |
| Docket Number | No. 24801.,24801. |
| Citation | 106 Haw. 21,100 P.3d 952 |
| Parties | HAWAII MANAGEMENT ALLIANCE ASSOCIATION, Appellant-Appellant, v. The INSURANCE COMMISSIONER and the Division of Insurance of the Department of Commerce and Consumer Affairs, State of Hawai'i; and Kevin Baldado, Appellees-Appellees. |
| Court | Hawaii Supreme Court |
Ellen Godbey Carson, Dianne Winter Brookins, and Isaac H. Moriwake (Alston Hunt Floyd & Ing), Honolulu, on the briefs, for appellant-appellant, Hawai'i Management Alliance Association.
Adina L.K. Cunningham, and Dorothy Sellers, Deputy Attorneys General, on the briefs, for appellee-appellee, The Insurance Commissioner and the Division of Insurance of the Department of Commerce and Consumer Affairs, State of Hawai'i.
Andrew S. Winer, and Thomas E. Bush (Winer Meheula Devens & Bush), Honolulu, on the briefs, for appellee-appellee Kevin Baldado.
Appellant-appellant Hawaii Management Alliance Association (HMAA) appeals from the February 4, 2002 judgment of the first circuit court, the Honorable Eden Elizabeth Hifo presiding, in which the circuit court affirmed the March 1, 2001 and March 22, 2001 orders of the Insurance Commissioner of the Insurance Division, Department of Commerce and Consumer Affairs (Commissioner). The Commissioner had ordered an award of attorneys' fees and costs totaling $12,462.99 to be paid by HMAA to the attorneys representing appellee-appellee Kevin Baldado (Baldado); the circuit court concluded that the Commissioner did not err in awarding attorneys' fees and costs to Baldado, and HMAA appealed to this court.
HMAA contends that the Commissioner and the circuit court erred in awarding Baldado attorneys' fees and costs because the Employee Retirement Income Security Act of 1974 (ERISA) preempts Hawai'i Revised Statutes (HRS) § 432E-6, Hawaii's external review statute of the Patient's Bill of Rights and Responsibilities Act (HRS chapter 432E). HMAA also argues that the Commissioner and circuit court erred by failing to award HMAA attorneys' fees because Baldado's claim for coverage was an action in assumpsit and HMAA was the prevailing party.
We agree with HMAA's contention that ERISA preempts Hawaii's external review statute. Consequently, the circuit court's conclusions that Baldado was entitled to attorneys' fees and costs and that HMAA was not entitled to attorneys' fees and costs are void. We therefore vacate the Commissioner's March 1, 2001 order, the Commissioner's March 22, 2001 order, and the circuit court's February 4, 2002 judgment.
In September 2000, Baldado was diagnosed with metastatic renal carcinoma. Baldado's treating physician, William Loui, M.D., requested authorization from HMAA to perform a nonmyeloablative stem cell transplant to treat Baldado's cancer. HMAA denied Dr. Loui's request, stating that, "[a]ccording to National guidelines, stem cell transplant[s][are] not covered for solid tumors...." HMAA informed Baldado of his appeal rights and stated that if Baldado or Dr. Loui appealed, HMAA's Utilization Management Department would review the denial. Baldado exercised his appeal rights and submitted additional information regarding stem cell transplants. In a letter dated January 23, 2001, HMAA upheld its denial, explaining that it denied the request because (1) Baldado's plan did not cover "investigational/experimental procedure[s]"; (2) the service was not a covered benefit under federal government health plans; and (3) the service was not medically necessary. In a subsequent letter, HMAA informed Baldado that its medical director had recommended that HMAA deny Baldado's request. The letter also stated that with the medical director's denial, Baldado had exhausted all of HMAA's internal complaint and appeal procedures, but that HRS § 432E-6 (Supp.2000)1 provided for an external review of HMAA's determination by the Commissioner.
On February 15, 2001, Baldado filed a request for an expedited external review of HMAA's denial pursuant to HRS § 432E-6.5 (Supp.2003).2 In a letter dated February 15, 2001, the Commissioner informed HMAA of Baldado's request for an expedited external review and instructed HMAA to provide the Commissioner with documentation (, the documents used to make HMAA's final internal determination, any documents submitted by Baldado, and a list of all individuals who provided health care to Baldado) within forty-eight hours of the date of the letter. In a letter dated February 16, 2001, HMAA timely responded to the Commissioner's request for documents and also provided a legal memorandum in response to Baldado's appeal. This legal memorandum included the argument that Hawaii's external review law, HRS § 432E-6, was unenforceable as to Baldado's ERISA-covered plan because ERISA preempted HRS § 432E-6.3 On February 20, 2001, the Commissioner issued a decision and order [hereinafter, Commissioner's coverage order] concluding that Baldado failed to prove that HMAA's denial was improper. Therefore, the Commissioner's coverage order upheld HMAA's internal determination that Baldado was not entitled to coverage. The Commissioner's coverage order also included the following conclusion of law: HMAA did not appeal the Commissioner's coverage order.
The Commissioner then notified Baldado that he may be entitled to reasonable attorneys' fees and costs under HRS § 432E-6(e). Baldado filed a request for $7,450 in attorneys' fees and $5,012.99 in costs (for the services of a medical consultant). HMAA filed a memorandum in opposition to Baldado's request in which HMAA argued that it, not Baldado, was entitled to attorneys' fees. On March 1, 2001, the Commissioner issued an order [hereinafter, Commissioner's attorneys' fees and costs order] awarding Baldado the attorneys' fees and costs he requested and directing HMAA to pay Baldado's attorney directly. HMAA filed a motion for reconsideration of the Commissioner's attorneys' fees and costs order; on March 22, 2001, the Commissioner denied the motion.
HMAA appealed to the circuit court; however, HMAA appealed only the Commissioner's attorneys' fees and costs order and the order denying HMAA's motion for reconsideration. HMAA did not appeal the Commissioner's coverage order.
In its opening brief to the circuit court, HMAA argued that: (1) HRS § 432E-6 is preempted by ERISA; (2) Baldado was not entitled to attorneys' fees and costs because he was not a prevailing party; (3) attorneys' fees and costs were incorrectly awarded against HMAA because it was the prevailing party; and (4) HMAA was entitled to attorneys' fees pursuant to HRS § 607-14 (Supp.2000). On December 5, 2001, the circuit court filed its decision and order affirming the Commissioner's attorneys' fees and costs order and the Commissioner's March 22, 2001 order denying HMAA's motion for reconsideration. The circuit court found and concluded that HRS § 432E-6 is not preempted by ERISA and that the Commissioner did not err when he awarded attorneys' fees and costs to Baldado pursuant to HRS § 432E-6(e). On February 4, 2002, the circuit court entered judgment in favor of Baldado and the Commissioner and against HMAA. On February 12, 2002, HMAA filed a timely appeal to this court.
Review of a decision made by the circuit court upon its review of an agency's decision is a secondary appeal. The standard of review is one in which this court must determine whether the circuit court was right or wrong in its decision, applying the standards set forth in HRS § 91-14(g) [(1993)] to the agency's decision.
Korean Buddhist Dae Won Sa Temple of Hawaii v. Sullivan, 87 Hawai'i 217, 229, 953 P.2d 1315, 1327 (1998) (quoting Bragg v. State Farm Mutual Auto. Ins., 81 Hawai'i 302, 304, 916 P.2d 1203, 1205 (1996)) (alteration in original). HRS § 91-14, entitled "Judicial review of contested cases," provides in relevant part:
Paul's Elec. Serv., Inc. v. Befitel, 104 Hawai'i 412, 416-17, 91 P.3d 494, 498-99 (2004).
This court has stated:
We review the circuit court's interpretation of a statute de novo. State v. Pacheco, 96 Hawai'i 83, 94, 26 P.3d 572, 583 (2001)
. Our statutory construction is guided by established rules:
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