Kaiser Found. Health Plan, Inc. v. Haw. Life Flight Corp.

• Decision Date: 27 April 2017
• Docket Number: Civ. No. 16-00073 ACK-KSC
• Parties: KAISER FOUNDATION HEALTH PLAN, INC., a foreign non-profit corporation, Plaintiff, v. HAWAII LIFE FLIGHT CORPORATION, a Hawaii corporation, and AIR MEDICAL RESOURCE GROUP, INC., a Utah Corporation, Defendants. HAWAII LIFE FLIGHT CORPORATION, a Hawaii corporation, Counterclaim Plaintiff, v. KAISER FOUNDATION HEALTH PLAN, INC., a foreign non-profit corporation, Counterclaim Defendant.
• Court: U.S. District Court — District of Hawaii

KAISER FOUNDATION HEALTH PLAN, INC.,a foreign non-profit corporation, Plaintiff, v. HAWAII LIFE FLIGHT CORPORATION, a Hawaii corporation,and AIR MEDICAL RESOURCE GROUP, INC., a Utah Corporation, Defendants.

HAWAII LIFE FLIGHT CORPORATION,a Hawaii corporation, Counterclaim Plaintiff, v. KAISER FOUNDATION HEALTH PLAN, INC.,a foreign non-profit corporation, Counterclaim Defendant.

Civ. No. 16-00073 ACK-KSC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

April 27, 2017

ORDER GRANTING IN PART AND DENYING IN PART COUNTERCLAIM DEFENDANT KAISER FOUNDATION HEALTH PLAN, INC.'S MOTION TO DISMISS COUNTERCLAIM PLAINTIFF HAWAII LIFE FLIGHT CORPORATION'S FIRST AMENDED COUNTERCLAIM

TABLE OF CONTENTS

PROCEDURAL BACKGROUND ........................................... 3

FACTUAL BACKGROUND .............................................. 7

STANDARD ....................................................... 14

DISCUSSION ..................................................... 16

I. Count I: Unfair Competition Claim ....................... 16

A. Whether a Violation of EMTALA Constitutes Unfair Conduct ............................................... 17

B. Whether HLF Has Failed to Allege Injury to Competition ........................................... 26

II. Count II: Intentional Interference with Contract Claim .. 40

A. Whether KFHP Intentionally Induced Hospitals to Breach Their FCAs ............................................ 41

B. Whether KFHP's Actions Were Not Justified ............. 47

III. Count III: ERISA Claim .................................. 50

IV. Count IV: Breach of Contract Claim ...................... 56

A. Judicial Notice of Documents .......................... 56

B. Whether HLF Has Asserted a Ripe Claim Regarding KFHP's Indemnity Promises .................................... 60

1. Interpretation of the Indemnity Offer .............. 60

2. Ripeness ........................................... 63

C. Whether HLF Validly Received an Assignment of the Indemnity Rights and Has Standing ..................... 68

D. Whether ERISA Preempts Count IV ....................... 71

CONCLUSION ..................................................... 82

For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART Plaintiff-Counter Defendant Kaiser Foundation Health Plan Inc.'s Motion to Dismiss Hawaii Life Flight Corporation's First Amended Counterclaim.

PROCDURAL BACKGROUND

This matter involves Defendant-Counter Plaintiff Hawaii Life Flight Corporation's ("HLF") efforts to recover its billed charges for the provision of air ambulance services in Hawaii. First Am. Counterclaim, ECF No. 92 ("FACC"), ¶ 1. As evidenced by the parties' briefing, this case has an extensive procedural background and presents intricate claims which require resolution of complex factual and legal questions in order to determine responsibility for the cost of providing air ambulance transport services among the Hawaiian islands. Both the parties and the Court are familiar with the history of this case, and the Court will not repeat it here in full.¹

This case is related to a lawsuit in which Toby Sidlo filed a class action complaint on July 15, 2015 against Kaiser Permanent Insurance Company ("KPIC") and Kaiser Foundation Health Plan, Inc. ("KFHP") alleging claims under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §1001 et seq. seeking to recover health care benefits and to enforce plan benefits. ECF No. 56 at 2-3; Sidlo v. Kaiser Permanent Insurance Company, CV No. 15-00269 ACK-KSC ("Sidlo"). Sidlo and HLF also entered into a Joint Litigation Agreement ("JLA") on July 15, 2015. ECF No. 56 at 22-23.

Separately, on February 18, 2016, KFHP filed a complaint in the instant case against HLF and its parent company Air Medical Resource Group, Inc. ("AMRG") alleging that HLF and AMRG had violated the anti-assignment provision in KFHP's ERISA plans in Hawaii by attempting to procure assignment of members' rights and benefits. Id. at 4-5. Specifically, KFHP alleged that the Sidlo litigation was brought by HLF and/or AMRG in Sidlo's name. Id. at 5. On April 6, 2016, this Court consolidated the Sidlo and KFHP actions as both cases "involve[d] a determination as to whether [Sidlo's] purported assignment of rights to [HLF} was valid." ECF No. 29; Sidlo, ECF No. 85.² HLF then filed a counterclaim against KFHP on April 14, 2016 alleging four claims: (1) unfair competition in violation of Hawaii Revised Statutes ("HRS") § 480-2; (2) tortious interference with contract; (3) defamation; and (4) trade libel/disparagement. Id. at 5-6.

In its October 31, 2016 Order, this Court addressed cross-motions for summary judgment filed by Sidlo and by KFHP and KPIC in the Sidlo action. ECF No. 56 at 8-9. HLF and AMRG also filed a joinder to Sidlo's motion. Id. at 9. The Court denied Sidlo's motion and granted KFHP and KPIC's motion in part and denied it in part. Id. at 77-78. In so holding, the Court concluded that Sidlo had standing, that the Inter-Facility Transport Policy applied to Sidlo's claim, and thus that Sidlo did not suffer an adverse benefit determination and could not seek review of a claim denial. See generally id. Additionally, the Court denied Sidlo's claims regarding notice of material modifications to the benefits plan arising from KFHP's offer of indemnification regarding HLF's claims, KFHP's alleged breach of fiduciary duty, and equitable estoppel for misrepresentations of rights under the contracts. See generally id. Finally, the Court dismissed Sidlo's claims regarding equitable indemnification as not ripe because HLF had not yet sued Sidlo, nor had Sidlo made any payment or discharged any legal obligation to HLF, so KFHP's alleged offer of indemnification was not yet applicable. See id. at 77. Sidlo filed a notice of appeal regarding this Order on November 29, 2016. Sidlo, ECF No. 516.

The Court issued two orders in the instant case on November 17, 2016. In the first, it determined that the anti-assignment provision in KFHP's plans did not apply to health care providers, and thus the plan members could assign their rights to HLF. See ECF No. 76. In the second, the Court addressed KFHP's motion to dismiss HLF's counterclaim. The Court held that to the extent HLF's counterclaim was based on communications with plan members, the claims were preempted, ECF No. 77 at 22; but to the extent they were based on communications with hospitals, the Court could not definitively determine whether they pertained to KFHP's ERISA plans for purposes of preemption. Id. at 23-24. The Court also dismissed without prejudice HLF's unfair competition counterclaim as it was unclear what false or misleading statements were made or what the nature of the competition injured was. Id. at 29. In sum, the Court dismissed HLF's counterclaim with prejudice to the extent it was based on communications with members but otherwise granted leave to amend the other claims. Id. at 32.³

The Court deconsolidated the cases on November 30, 2016. ECF No. 89. HLF filed its FACC in the instant case on January 4, 2017, again alleging four claims. ECF No. 92. KFHP filed the instant Motion to Dismiss on February 10, 2017. ECF No. 99 ("Motion"). HLF filed its Opposition on March 2, 2017.ECF No. 103 ("Opp."). KFHP filed its Reply on March 9, 2017. ECF No. 104 ("Reply").

This Court held a hearing on KFHP's Motion on March 23, 2017.

FACTUAL BACKGROUND

HLF provides air ambulance services throughout the State of Hawaii, transporting patients by helicopter or fixed wing aircraft to hospitals and medical centers which are equipped to handle a patient's emergency medical condition, which may include transport from neighboring islands. Compl. ¶ 12. HLF is not a self-dispatching service; its "emergency flights are only dispatched by attending physicians and hospitals" when there is a qualified emergency. Id. ¶ 14. Many hospitals have entered into contracts with HLF to provide air ambulance services. Id. ¶ 25. These contracts contain First Call Agreements ("FCAs") with HLF in exchange for HLF placing an aircraft at or near the hospital. Id. The FCAs provide that when air ambulance services are necessary, the hospital will call HLF first, provided that using HLF meets the requirements of the Emergency Medical Treatment & Active Labor Act ("EMTALA").⁴ Id.

KFHP is an insurer and administrator for various insured employee welfare benefit plans providing health insurance coverage. Id. ¶ 28. KFHP is also a fiduciary under ERISA and is responsible for determining coverage and eligibility of participants and beneficiaries for benefits under the plans. Id. ¶ 29. Until August or September 2013, KFHP and HLF had a contract governing reimbursement rates, pursuant to which "HLF accepted as payment in full an average rate from KFHP that was less than the total billed rate HLF charged for a transport." ECF No. 56 at 12; see also Sidlo, ECF No. 324-1 at 6 (KFHP asserted that HLF accepted on average $10,638 from KFHP in payment where full billed charges averaged $32,279 per transport). However, KFHP grew concerned with HLF's increasing rates and entered into a contract with American Medical Response ("AMR"), HLF's only competitor for air medical services in Hawaii.⁵ Id. at 12. HLF then appears to have terminated its contract with KFHP. Id. at 12-13.

HLF has alleged in its FACC that in connection with its health insurance services, KFHP has improperly made written and oral demands that hospitals arrange for "emergency transportation of patients through or as designated by KFHP" and has implemented procedures requiring hospitals to use air ambulance services provided by AMR.⁶ FACC ¶ 5. In the Sidlo litigation, HLF submitted to the Court with KFHP's consent correspondence that KFHP sent to Hawaii Health Systems Corporation ("HHSC") concerning the use of HLF's air ambulance services by Kona Community Hospital ("KCH"), an HHSC facility. ECF No. 77 at 9. HLF has an FCA with KCH which is set to expire on October 31, 2017....