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Sidlo v. Kaiser Permanente Insurance Co.

United States District Court, D. Hawaii

October 31, 2016

TOBY SIDLO, on behalf of himself, and all others similarly situated, Plaintiff(s),
v.
KAISER PERMANENTE INSURANCE COMPANY, a California non-profit corporation, KAISER FOUNDATION HEALTH PLAN, INC., a foreign nonprofit corporation, and DOE DEFENDANTS 1-50, Defendants. 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.

         ORDER DENYING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT, GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT, GRANTING IN PART AND DENYING IN PART DEFENDANTS' SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT, AND SUA SPONTE DISMISSING COUNT VI WITHOUT PREJUDICE

          ALAN C. KAY UNITED STATES DISTRICT JUDGE.

         For the reasons set forth below, the Court DENIES Plaintiff Toby Sidlo's Motion for Partial Summary Judgment Against Defendant Kaiser Foundation Health Plan, Inc., ECF No. 284; GRANTS Defendant Kaiser Foundation Health Plan, Inc.'s Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment, ECF No. 324; GRANTS in part and DENIES in part Defendants Kaiser Foundation Health Plan, Inc. and Kaiser Permanente Insurance Company's Supplemental Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment, ECF No. 285; and sua sponte DISMISSES Count VI without prejudice.

         PROCEDURAL BACKGROUND

         I. Complaint and First Amended Complaint

         On July 15, 2015, Plaintiff Toby Sidlo (“Plaintiff” or “Sidlo”), on behalf of himself and all others similarly situated, filed a class action complaint against Kaiser Permanente Insurance Company (“KPIC”) and Kaiser Foundation Health Plan, Inc. (“KFHP, ” and together with KPIC, “Defendants”). Pl. Toby Sidlo's Class Action Compl. (“Complaint”), ECF No. 1. Sidlo alleges claims against Defendants under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Id. ¶ 2. The Complaint raises two counts against Defendants: Count I, which arises under 29 U.S.C. § 1132(a)(1)(B), seeks to recover health care benefits, as well as an injunction “clarify[ing] and enforc[ing] [Plaintiff's and the class members'] rights to payment of those amounts still due and owing”; and Count II, arising under 29 U.S.C. § 1132(a)(3), seeks equitable relief to enjoin Defendants “from denying full coverage based on artificially lowered reimbursement rates” and other appropriate relief. Id. ¶¶ 88-107.

         On June 9, 2016, Sidlo filed a motion requesting leave to amend his Complaint. ECF No. 201. Nonparties Hawaii Life Flight Corporation (“HLF”) and Air Medical Resource Group, Inc. (“AMRG”) filed a joinder to Sidlo's motion on June 17, 2016.[1]ECF No. 216. On June 22, 2016, the Court granted Sidlo's motion to file an amended complaint, ECF No. 226, and on June 23, 2016, Sidlo filed a First Amended Class Action Complaint (“FAC”), ECF No. 227.

         In addition to Counts I and II, [2] the FAC alleges four other claims: (1) Count III, arising under 29 U.S.C. § 1022 and § 1132(a), seeks full legal and equitable relief, including injunctive relief, in connection with KFHP's alleged failure to timely issue Plaintiff and the class a summary of material modifications (“SMM”) of members' plans' coverage terms; (2) Count IV, arising under 29 U.S.C. § 1132(a), seeks full legal and equitable relief, including injunctive relief, in connection with Defendants' alleged breach of fiduciary duty; (3) Count V, arising under 29 U.S.C. § 1132(a), seeks to equitably estop Defendants “from denying that they are responsible for the copay liability and all sums owed by the Plaintiff and the class to their provider”; and (4) Count VI, arising under 29 U.S.C. § 1132(a), seeks a determination that Defendants “are liable for the full unpaid balances owed by each class member under the doctrine of equitable indemnification as well as all other indemnity requirements imposed by law.” FAC ¶¶ 127-149.

         II. The KFHP v. HLF Litigation

         On February 18, 2016, KFHP filed a complaint in Kaiser Foundation Health Plan, Inc. v. Hawaii Life Flight Corp., et al., Civ. No. 16-00073 ACK-KSC. D. Haw., Civ. No. 16-00073 ACK-KSC, ECF No. 1 (“KFHP Complaint”). In the KFHP Complaint, KFHP alleges that HLF and AMRG violated an anti-assignment provision in KFHP's ERISA plans within Hawaii. Id. ¶¶ 9, 13, 54. HLF provides medical air transportation services in Hawaii. HLF Answer ¶ 19. AMRG shares certain corporate officers with HLF and holds a FAA Part 135 Certificate, under which certain aircraft operate. Id. ¶¶ 7-8. HLF is one of at least nine medical transportation companies affiliated with AMRG. Ex. Q to KFHP's Motion at 36:5-37:22.

         KFHP alleges that HLF and/or AMRG “have repeatedly attempted to procure broad assignments of members of the Plans' rights, interest, claims for money due, benefits and/or obligations under the Plans, in violation of the anti-assignment provision.” KFHP Complaint ¶ 33. More specifically, KFHP asserts that the Sidlo litigation has been brought by HLF and/or AMRG in Sidlo's name, which constitutes a violation of the anti-assignment provision. Id. ¶ 35. On April 6, 2016, this Court consolidated the Kaiser and Sidlo cases for purposes of discovery. Order Consolidating Cases, ECF No. 85.

         On April 14, 2016, HLF and AMRG filed an answer to KFHP's Complaint (“HLF Answer”), ECF No. 102, and HLF further filed a counterclaim against KFHP (“HLF Counterclaim”), ECF No. 103. HLF alleges counts of (1) unfair competition in violation of Hawaii Revised Statutes (“HRS”) § 480-2; (2) tortious interference with contract; (3) defamation; and (4) trade libel/disparagement. HLF Counterclaim ¶¶ 23-49. HLF asserts that KFHP, “in connection with its health insurance services, has made written and oral demands that hospitals arrange for emergency transportation of patients exclusively through or as designated by KFHP, even where those hospitals have contracts with HLF and contrary to the federal law that exclusively provides that emergency patient transport is arranged by the treating physician.” Id. ¶ 24. Further, HLF contends that KFHP has sent letters to patients that received air ambulance services from HLF, which letters contain “numerous falsehoods, misrepresentations, and otherwise disparaging and defamatory statements” regarding HLF. Id. ¶ 25.

         III. Motions for Summary Judgment

         On May 16, 2016, Sidlo filed a Motion for Partial Summary Judgment Against Defendant KFHP requesting this Court to grant summary judgment to him on Count I of his original Complaint. ECF No. 151. That same day, Defendants filed their Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment, seeking summary judgment on both Counts I and II. ECF No. 149. HLF and AMRG filed a joinder to Sidlo's partial summary judgment motion on May 27, 2016. ECF No. 168.

         The Court set a hearing on the motions for June 20, 2016. However, as noted above, Sidlo filed a motion to amend his Complaint on June 9, 2016, alleging four additional counts. Because these additional counts involved issues subject to the summary judgment motions, the Court vacated the June 20, 2016 hearing and permitted the parties to file “supplemental motions for partial summary judgment as to any of the additional claims asserted in the FAC.” ECF No. 226 at 3.

         On August 11, 2016, Defendants filed a Supplemental Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment; a Memorandum in Support of Motion (“Defendants' Motion”), ECF No. 285-1; and a Concise Statement of Facts in Support of Defendants' Motion (“Defs.' CSF”), ECF No. 287. Defendants' Motion seeks summary judgment on each of the four additional counts Sidlo alleged in the FAC.

         That same day, Sidlo withdrew his previous partial summary judgment motion and filed a new Motion for Partial Summary Judgment Against Defendant KFHP; a Memorandum in Support of Motion (“Sidlo's Motion”), ECF No. 284-1; and a Concise Statement of Facts in Support of Sidlo's Motion (“Sidlo's CSF”), ECF No. 286. Sidlo's Motion seeks summary judgment as to Count I. As a result, on August 16, 2016, KFHP filed an ex parte application to strike Sidlo's Motion. ECF No. 293. KFHP argued that by re-filing his motion as to Count I, Sidlo had violated the Court's Order permitting the parties to file supplemental briefs solely as to the additional claims asserted in the FAC. Id. at 2. Among other things, KFHP argued that Sidlo's actions unduly prejudiced KFHP, which could have likewise filed a new summary judgment motion as to the original counts with the benefit of having learned Sidlo's position through prior briefing for the old motions, as well as having obtained a new expert report and additional discovery subsequent to its original summary judgment motion. Id. at 4.

         Rather than striking Sidlo's Motion, however, the Court allowed Sidlo to proceed on his new motion and granted leave to Defendants to file a new summary judgment motion as to Counts I and II, which would serve to replace their previous motion as to Counts I and II. ECF No. 302 at 2-3. Accordingly, on August 30, 2016, Defendant KFHP filed a Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment; a Memorandum in Support of Motion (“KFHP's Motion”), ECF No. 324-1; and a Concise Statement of Facts in Support of KFHP's Motion (“KFHP's CSF”), ECF No. 325. KFHP's Motion seeks summary judgment as to Counts I and II.

         In sum, the Court has before it three motions that seek summary judgment as to the counts alleged in the FAC. Sidlo's Motion, which seeks summary judgment as to Count I, argues that KFHP breached the terms of Sidlo's and other members' healthcare plans and asks this Court to order Defendants to pay Sidlo's healthcare benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). Sidlo's Motion at 1. On August 30, 2016, Defendant KFHP filed a Memorandum in Opposition to Sidlo's Motion (“KFHP's Opposition”). ECF 326. Sidlo filed a Reply Memorandum in Support of Sidlo's Motion (“Sidlo's Reply”) on September 5, 2016. ECF No. 345. Non-parties HLF and AMRG filed a joinder to Sidlo's Motion on September 9, 2016. ECF No. 363.

         KFHP's Motion argues that because Sidlo bases his arguments on an inapplicable plan term, KFHP is entitled to summary judgment on Counts I and II. KFHP's Motion at 2. KFHP also asserts that Sidlo lacks standing to bring his claim. Id. Separately, KFHP argues that the equities of this case demand that summary judgment be granted in favor of Defendants. Id. On September 5, 2016, Sidlo filed a Memorandum in Opposition to KFHP's Motion (“Sidlo's Opposition to KFHP's Motion”), ECF No. 341. KFHP filed a Reply in Support of KFHP's Motion (“KFHP's Reply”) on September 9, 2016. ECF No. 361. That same day, non-parties HLF and AMRG filed a joinder to Sidlo's Opposition to KFHP's Motion. ECF No. 365.

         Finally, Defendants KFHP and KPIC's Motion advances various arguments as to why Defendants are entitled to summary judgment on Counts III through VI, which seek relief under 29 U.S.C. § 1022 and § 1132(a). Defendants again argue that Sidlo lacks standing to bring this case and further contend that “there is nothing equitable about any cause of action that seeks to impose on KFHP and its members HLF's air transport costs that dwarf any measure of fair market value.” Defendants' Motion at 2. On August 25, 2016, Sidlo filed an Opposition to Defendants' Motion (“Sidlo's Opposition to Defendants' Motion”). ECF No. 315. Defendants filed a Reply Memorandum in Support of Defendants' Motion (“Defendants' Reply”) on September 1, 2016.[3]ECF No. 335. Non-parties HLF and AMRG filed a joinder to Sidlo's Opposition to Defendants' Motion on September 9, 2016. ECF No. 364.

         The Court held a hearing regarding the various motions on September 15, 2016.

         FACTUAL BACKGROUND

         Sidlo and the proposed class members are participants in or beneficiaries of employee welfare benefit plans governed by ERISA. FAC ¶¶ 3, 11; KFHP's Motion at 7. At all relevant times, Sidlo was enrolled in a plan provided by his employer (the “Group”) and administered in part by Defendant KFHP. KFHP's Motion at 7; KFHP's CSF ¶ 1. The plan documents consist of a Group Face Sheet, Group Medical and Hospital Service Agreement (“Service Agreement”), Kaiser Permanente Group Plan Benefit Schedule (“Benefit Schedule”), a Member Guide, and various riders and amendments. KFHP's CSF ¶ 2; Sidlo's CSF ¶ 9.

         Sidlo alleges that Defendants have violated ERISA by underpaying or under-reimbursing claims for medical air transportation services provided to plan participants or beneficiaries by HLF since 2013. FAC ¶¶ 55-56. Sidlo alleges that in his case, this has left him with a balance of $36, 377.32 due to HLF. Sidlo's Motion at 9.

         I. Medical Air Transport in Hawaii

         KFHP asserts that prior to 2010, it had contracts with Hawaii Air Ambulance and Air Med Hawaii to provide medical air transportation services to members. Decl. of Thomas Risse ¶ 2, ECF No. 287-1. Eventually, through a series of consolidations and mergers, “HLF became the sole provider of air ambulance services in Hawaii.” Id. According to KFHP, “[i]nter-facility air transportation . . . is a common form of medical transportation within Hawaii because appropriate medical services are sometimes unavailable on other islands.” KFHP's Motion at 5.

         II. KFHP's Contract with HLF

         Until around August or September 2013, KFHP and HLF “had some form of contractual relationship concerning reimbursement rates.” Sidlo's Opposition to KFHP's Motion at 4; KFHP's Motion at 6. Pursuant to that contract, HLF accepted as payment in full an average rate from KFHP that was less than the total billed rate HLF charged for a transport. KFHP's Motion at 6; see also Pl.'s Opp'n to Defs.' CSF ¶ 6 (“Admit that KFHP paid HLF under a negotiated contractual rate through September 2013.”). KFHP asserts that under the parties' contract, HLF accepted an average of $10, 638 per transport, which was roughly 158% of the applicable Medicare rate. KFHP's Motion at 6.

         However, due to its growing concerns with HLF's increasing rates, in September 2013, KFHP entered into a contract with American Medical Response (“AMR”), another medical transportation company that had moved into the Hawaii market that year. Id. at 5-6. KFHP contends that when this happened, “HLF retaliated by terminating its contract [with KFHP] and increasing its billed charges to KFHP by nearly 40% to $57, 017 per transport.” KFHP's Motion at 6. Sidlo, on the other hand, contends that it was KFHP that “calculatingly avoided . . . entering into a renewed contract with HLF, so it could assist another provider, AMR, get up and running as a competitor largely under [KFHP's] control.” Sidlo's Opposition to KFHP's Motion at 4.

         Now that KFHP and HLF no longer have a contract, KFHP pays HLF 200% of the applicable Medicare rate, which averages out to $13, 803 per transport. KFHP's Motion at 6. KFHP asserts that this figure is more than what KFHP used to pay HLF pursuant to the parties' contract, and “higher than what HLF routinely accepts from other payors for the same services.” Id. Sidlo denies that the 200% of Medicare rate is reasonable. Pl.'s Opp'n to Defs.' CSF ¶ 6.

         III. Sidlo's Medical Air Transport and Ensuing Communications with KFHP and HLF

         On July 17, 2014, Sidlo was involved in an accident on Kauai that left him with serious burn injuries over large portions of his body. Sidlo's Motion at 4-5; KFHP's Motion at 10. After driving himself to Kauai Veteran's Memorial Hospital, Sidlo was later transported by HLF to a burn center on Oahu that could properly treat his injuries. Sidlo's Motion at 5; KFHP's Motion at 10; Ex. O to Decl. of Michelle Scannell at 73:20-22, ECF No. 325-24. HLF billed KFHP $49, 320.54 for Sidlo's flight. KFHP's CSF ¶ 15.

         In October and November 2014, HLF sent notices to Sidlo informing him that HLF had forwarded a claim to KFHP on Sidlo's behalf for the medical air transportation services Sidlo had received on July 17, 2014. See Ex. S to Decl. of Michelle Scannell, ECF No. 325-28. A letter from HLF to Sidlo dated November 7, 2014 states, “You are receiving this letter because Kaiser Permanente is refusing to complete processing of your claim which leaves you with a large balance. We strongly suggest contacting Kaiser Permanente immediately to dispute their determination. We are also writing to advise we are sending your account along with several others to an attorney on the main land [sic] to help us seek proper reimbursement for our services.” Id.

         KFHP thereafter sent a letter to Sidlo on December 15, 2014, directing Sidlo not to respond to any of HLF's requests for payment and not to pay any bills from HLF. Ex. A to Decl. of Ingrid Mealer, ECF No. 325-2. The letter stated, “[KFHP is] currently in negotiations with [HLF] and recently learned that it was asking members like you to pay amounts above what we believe are reasonably . . . owed to them.” Id. KFHP indicated in its letter that it planned to pay HLF $12, 943.22 for Sidlo's flight, which it contended was twice the Medicare rate and what KFHP felt to be “reasonable and customary for this type of service.” Id. The letter further stated that KFHP would protect Sidlo against “any claim that [HLF] has made or may make against [Sidlo] for the balance of its bill.” Id.

         On December 24, 2014, KFHP issued an Explanation of Benefits (“EOB”) to Sidlo through Employers Mutual, Inc. (“EMI”), KFHP's third party claims administrator for transportation claims. Ex. 5 to Decl. of Toby Sidlo, ECF No. 286-9; see also KFHP's CSF ¶ 27. The EOB lists Sidlo's transport charges and indicates that Sidlo owed nothing. Ex. 5 to Decl. of Toby Sidlo. The upper right-hand corner of the EOB includes text that states, “GROUP NAME: KP/HAWAII COMMERCIAL 20% COPAY.” Id. A Statement of Remittance dated December 24, 2014 indicates that KFHP paid HLF $12, 943.22, plus interest. Ex. Z to Decl. of Michelle Scannell, ECF No. 325-35. Subsequent to KFHP's payment to HLF, Sidlo continued to receive statements and letters from HLF indicating an outstanding balance of $36, 377.32. See Ex. 6 to Decl. of Toby Sidlo, ECF No. 286-10; Ex. S to Decl. of Michelle Scannell.

         Later, on April 17, 2015, HLF sent a letter to EMI requesting documents related to Sidlo's claim, “[i]n order to more effectively assist in resolving this matter, and to comply with [HLF's] agreement with [Sidlo] to submit this claim/appeal.” Ex. 8 to Decl. of Toby Sidlo, ECF No. 286-12. In the letter, HLF states, “Your insured is asserting that [the] amount paid is unreasonably low, that the amount paid is contrary to the terms in the plan/policy/certificate and that the Affordable Care Act requires that rates be paid according to Usual, Customary, and Reasonable [sic] . . . as opposed to basing the allowable [sic] on the Medicare fee schedule.” Id. HLF also asserts that “air-ambulance providers are ‘air carriers' . . . and that air carrier rates are set by market forces/market conditions . . . .” Id. Sidlo characterizes this letter as an ERISA appeal, see Sidlo's CSF ¶ 26, while KFHP characterizes it as a simple document request, see KFHP's Motion at 14-15. Additionally, Sidlo states that there was no response to his letter. Sidlo's Motion at 6. KFHP contends that this was due to HLF and Sidlo's decision to “disengage from any dialogue with KFHP and instead to take legal action.” KFHP's Motion at 15.

         On May 4, 2015, KFHP sent a letter to Sidlo offering to provide him with legal representation in order to protect him from any of HLF's efforts to collect the balance of the bill for his air ambulance services. Ex. U to Decl. of Michelle Scannell, ECF No. 325-30. The letter states, “Kaiser will pay all of [the attorney's] legal fees and expenses. You should expect to receive a letter from the law firm . . . regarding its representation of you.” Id.

         On May 15, 2015, HLF wrote a letter to Sidlo stating that KFHP was required to pay 80% of the actual billed charge for Sidlo's air ambulance services, per Sidlo's health plan. Ex. T to Decl. of Michelle Scannell, ECF No. 325-29. HLF stated that KFHP was liable for an additional $26, 483.21, but that KFHP had “deemed this amount as [Sidlo's] responsibility.” Id. KFHP contends that this was a misrepresentation. KFHP's Motion at 12.

         IV. Sidlo's Complaint with the Insurance Commissioner

         In a letter dated May 22, 2015, Sidlo, through HLF, filed a complaint with the Hawaii Insurance Commissioner (“Insurance Commissioner”), requesting that the Commissioner review Sidlo's claim and require that KFHP pay the remaining $26, 483.21 Sidlo claimed KFHP owed under his health plan. Sidlo's CSF ¶ 28; Ex. 10 to Decl. of Toby Sidlo, ECF No. 286-14. KFHP failed to respond to the complaint on time, though the Insurance Commissioner allowed KFHP to file a late response. See Ex. 11 to Decl. of Toby Sidlo, ECF No. 286-15. Accordingly, KFHP responded to the Insurance Commissioner on July 30, 2015, asserting that it was “taking every step to address the situation in a manner that will serve the interests of both its Members and the larger public.” Ex. 12 to Decl. of Toby Sidlo, ECF No. 286-16. KFHP also wrote that it would “indemnify all impacted Members from HLF's baseless claims (beyond the costs of their co-pays).” Id. (emphasis in original).

         On August 6, 2015, the Insurance Commissioner wrote to Sidlo, forwarding KFHP's response and asking Sidlo to advise the Insurance Commissioner as to his position in light of the response. Ex. BB to Decl. of Michelle Scannell, ECF No. 325-37. The letter states, “In the event we do not hear from you by September 7, 2015, we will presume that this matter has been resolved to your satisfaction and this file will be closed and no further action taken.” Id. Sidlo did not respond to the Insurance Commissioner, presumably because he had filed the instant lawsuit on July 15, 2015. See Ex. AA to Decl. of Michelle Scannell at 120:10-19, ECF No. 325-36.

         V. Sidlo's Plan Documents

         As noted above, Sidlo's health plan documents consist of a Group Face Sheet, Service Agreement, Benefit Schedule, a Member Guide, and various riders and amendments. KFHP's CSF ¶ 2; Sidlo's CSF ¶ 9. The Service Agreement lists KFHP as “a fiduciary to review claims under [the] Service Agreement, ” and indicates that KFHP “has the authority to review claims and determine whether a Member is entitled to the benefits of [the] Service Agreement.” Ex. D. to Decl. of Cherie O'Connor at 4, ECF No. 325-7. The Benefit Schedule states that “[c]overage is limited to the medical services which are cost effective, ” and that KFHP “shall have no responsibility for any other service a Member seeks or receives.” Id. at 25.

         Benefit Schedule § G (the “Ambulance Services provision”), entitled “Ambulance Services, ” states:

[KFHP] will pay 80% of Applicable Charges for ground or air ambulance services received within or outside the Service Area when deemed medically necessary by a Physician. Ambulance service is medically necessary if use of any other means of transport, regardless of the availability of such other means, would result in death or serious impairment of the Member's health. Air ambulance must be for the purpose of transporting the Member to the nearest medical facility designated by [KFHP] for receipt of medically necessary acute care, and the Member's condition must require the services of an air ambulance for safe transport.

Id. at 28. “Applicable Charges” is defined in the Service Agreement in relevant part as follows:

(2) For other medical services or items, Applicable Charges mean:
(a) [W]hen Kaiser Permanente provides medical services or items to a Member, then Member Rates are used,
(b) When medical services or items are not provided by Kaiser Permanente, then Applicable Charges mean the negotiated rate, or the actual billed charge.

Id. at 4.

         Sidlo asserts that since November 2013, KFHP has refused to pay Sidlo's and other members' claims in accordance with this language. Sidlo's Motion at 8. KFHP, on the other hand, contends that medical transport is handled differently depending on whether the member is transported from the scene of an incident or between medical facilities.[4] KFHP's Motion at 8. It argues that the Ambulance Services provision applies only to the former situation. Id. With respect to the latter, KFHP applies what it calls the “Inter-Facility Transport Policy, ” whereby KFHP “reimburses non-contracted providers of inter-facility transportation services (including air transportation) at fair market value with no copayment obligation on Members.” Id. at 9. KFHP maintains that this policy is contained in the claim handbook used by EMI, which states, “Co-payments apply for all medical transports unless listed below as an exception: Inpatient transferred to another facility for treatment not provided at the inpatient facility . . . . Member receives treatment at a non-Plan hospital[, ] KPHI staff arrange transfer to a Plan or non-Plan hospital.” Ex. F to Decl. of Shari Ilalaole at 9, ECF No. 325-12.

         While the Inter-Facility Transport Policy is not specifically listed in the Benefit Schedule, KFHP states that it adopted the policy pursuant to § 10.F of the Service Agreement, which reads, “[KFHP] may adopt reasonable policies, procedures, rules and interpretations to promote orderly and efficient implementation of this Service Agreement.” KFHP's Motion at 9; Ex. D. to Decl. of Cherie O'Connor at 22. KFHP contends that it adopted the Inter-Facility Transport Policy “decades ago.” KFHP's Motion at 9; Decl. of Ellen Bassford ¶¶ 1-2, ECF No. 325-8. Pursuant to the Inter-Facility Transport Policy, KFHP currently pays 200% of Medicare's maximum allowable charges for inter-facility medical air transport by non-contracted providers in Hawaii. KFHP's Motion at 9; Decl. of Thomas Risse ¶ 2, ECF No. 325-14. According to KFHP, “[t]his rate is above the prior contracted rate with HLF and is above the Medicare and the State of Hawaii Department of Health Emergency Medical Services Branch Rotary Wing and Mileage rates.” Id.; see also Exs. G, I to Decl. of Thomas Risse, ECF Nos. 325-15, 325-17.

         Next, a Member Guide that was given to Sidlo outlines the standard appeals process for members whose claims are denied coverage. Ex. 3 to Decl. of Toby Sidlo at 33-34, ECF No. 286-6. The guide indicates that a claim denial will generally issue in the form of a written notice detailing specific reasons for such denial, and will describe the member's appeal rights and how to file an appeal. Id. at 33. A member may appoint another party to file an appeal on his behalf, but the member “must name this person in writing and state that he or she may file the appeal on [his] behalf, ” and both the member and his representative must sign the statement. Id. The guide directs members to deliver all appeals to the Regional Appeals Office located in Honolulu, Hawaii. Id. at 34. Such appeals are then prepared for internal review, which “will consider all information [the member] submit[s] (whether or not that information was submitted with [the member's] initial request for payment or coverage).” Id. The EOB that Sidlo received contains substantially similar information regarding the appeals process, including the instruction that appeals be sent to the Regional Appeals Office in Honolulu. Ex. Y to Decl. of Michelle Scannell at 2, ECF No. 325-34.

         VI. HLF's Joint Litigation Agreement with Sidlo

         On July 15, 2015, Sidlo and HLF entered into a Joint Litigation Agreement (“JLA”) with respect to the instant lawsuit. Ex. V to Decl. of Michelle Scannell, ECF No. 325-31. The JLA states that HLF has engaged counsel to represent both Sidlo and HLF in the instant litigation, and that HLF agrees to pay all attorneys' fees and costs related to the lawsuit. Id. at 1-2, 4. The JLA further provides that any recovery will go to HLF, both to repay it for its attorneys' fees and costs, as well as to satisfy any of its outstanding invoices. Id. at 4. HLF also “agrees to limit any liability by [Sidlo] to the amount recovered in Lawsuit after [Sidlo] has paid any co-pay or out-of-pocket expenses as set out in the Plan.” Id. The JLA states that ...


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