United States District Court, D. Hawaii
TOBY SIDLO, on behalf of himself, and all others similarly situated, Plaintiffs,
KAISER PERMANENTE INSURANCE COMPANY, a California non-profit corporation, KAISER FOUNDATION HEALTHPLAN, INC., a foreign nonprofit corporation, and DOE DEFENDANTS 1-50, Defendants. KAISER FOUNDATION HEALTH PLAN, INC., a foreign non-profit corporation, Plaintiff,
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,
KAISER FOUNDATION HEALTH PLAN, INC., a foreign non-profit corporation, Counterclaim Defendant.
ORDER GRANTING KAISER FOUNDATION HEALTH PLAN,
INC.'S MOTION TO DISMISS HAWAII LIFE FLIGHT
C. Kay Sr. United States District Judge.
reasons set forth below, the Court GRANTS Kaiser Foundation
Health Plan, Inc.'s Motion to Dismiss Hawaii Life Flight
Corporation's Counterclaim Against Kaiser Foundation
Health Plan, Inc. ECF No. 195.
Court and the parties are familiar with the extensive factual
and procedural history of this case, and the Court will not
repeat it here except as necessary.
February 18, 2016, Kaiser Foundation Health Plan, Inc.
(“KFHP”) filed a Complaint against Hawaii Life
Flight Corporation (“HLF”) and Air Medical
Resource Group, Inc. (“AMRG”). KFHP's Compl.
Against HLF and AMRG for Violation of 29 U.S.C. §
1132(a)(3) (“Complaint”), D. Haw., Civ. No.
16-00073 ACK-KSC, ECF No. 1. KFHP's claim arises out of
the events underlying and comprising consolidated lawsuit
Sidlo v. Kaiser Permanente Insurance Company, et
al., Civ. No. 15-00269 ACK-KSC. In its Complaint, KFHP
alleges HLF and AMRG have violated and attempted to violate
an anti-assignment provision contained in KFHP's health
plans within Hawaii, which are governed by the Employee
Retirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. § 1001 et seq. Complaint ¶¶ 49-56.
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.” Id. ¶ 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.
AMRG filed an Answer to the Complaint on April 14, 2016. ECF
No. 102. That same day, HLF filed a Counterclaim against
KFHP. HLF's Countercl. Against KFHP
(“Counterclaim”), ECF No. 103. HLF's
Counterclaim asserts four counts: 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.
¶¶ 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.
8, 2016, KFHP filed a Motion to Dismiss HLF's
Counterclaim (“Motion”). ECF No. 195. KFHP argues
that HLF's claims are preempted by ERISA; are barred by
the litigation privilege; and fail to state a claim upon
which relief can be granted. Id. at 1-2. HLF filed a
Memorandum in Opposition to KFHP's Motion on October 14,
2016 (“Opposition”), ECF No. 473; and KFHP filed
a Reply in Support of KFHP's Motion (“Reply”)
on October 24, 2016, ECF No. 481.
Court held a hearing regarding the Motion on November 7,
serves as a claim fiduciary of certain group health plans
within the State of Hawaii that are governed by ERISA.
Counterclaim ¶ 31; Complaint ¶¶ 3, 6. Included
in the health plan documents is a Hawaii Region Group Medical
and Hospital Service Agreement (“Service
Agreement”), which 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.” Service Agreement, Ex. A to
KFHP's Req. for Judicial Notice in Supp. of Mot. at KFHP
000004, ECF No. 196-2. At all relevant times, Consolidated
Plaintiff Toby Sidlo and a group of proposed class members
were participants in or beneficiaries of these
plans. FAC ¶¶ 3, 11.
provides air ambulance services throughout the State of
Hawaii, transporting patients via helicopter or fixed wing
aircraft to hospitals and medical centers throughout the
islands. Counterclaim ¶¶ 1, 12. HLF asserts that it
is not a self-dispatching service; rather, pursuant to the
Emergency Medical Treatment and Active Labor Act
(“EMTALA”), 42 U.S.C. § 1395dd, attending
physicians and hospitals dispatch HLF when an emergency
arises. Counterclaim ¶ 15. The Centers for Medicare
& Medicaid Services (“CMS”) have issued
interpretive guidelines for EMTALA, which state, “It is
the treating physician at the transferring hospital who
decides how the individual is transported to the recipient
hospital and what transport service will be used, since this
physician has assessed the individual
personally.” See CMS, State Operations
Manual, Appendix V, at 66, available at
contends that “[m]any Hawaii hospitals contract with
HLF to provide air ambulance services because they and their
physicians believe that the nature of HLF's services . .
. best serve the medical needs of, and minimize risk to,
their patients.” Counterclaim ¶ 20. As a result,
HLF asserts, these hospitals have entered into first call
agreements with HLF, which require the hospitals to first
call upon HLF to provide necessary air ambulance services in
an emergency situation. Id.
to the hearing on KFHP's Motion, HLF, with the consent of
KFHP, submitted to the Court three of the first call
agreements it has with hospitals. The first agreement is a
“Right of First Refusal” contract that HLF
entered into with Kona Community Hospital (“KCH”)
on the Big Island. See Ex. 4 to HLF's Submission
of Exs., ECF No. 505-4. The agreement provides that HLF,
“without charge to KCH, will transport, without regard
for ability to pay, medically necessary patients from KCH to
medical facilities in Hawaii, in accordance with
physician's instructions.” Id. In certain
situations, such as when a patient requires specialty care
not provided by HLF or HLF has a delayed estimated time of
arrival, KCH may request transport from another provider.
Id. The term of the agreement is five years,
beginning November 1, 2012. Id. Thus, the agreement
is still valid, expiring on October 31, 2017.
second agreement is also a “Right of First
Refusal” contract between HLF and Wilcox Memorial
Hospital (“WMH”), a facility located on Kauai.
See Ex. 5 to HLF's Submission of Exs., ECF No.
505-5. The agreement contains substantially similar
provisions as the first agreement, and has a three year term
beginning February 1, 2013. Id. This initial three
year term has expired, but the agreement provides that it
“shall automatically renew each year for one year
last agreement is entitled an “Agreement for Purchase
of Goods and Services, ” entered into by HLF and Hilo
Medical Center (“HMC”) on the Big Island.
See Ex. 6 to HLF's Submission of Exs., ECF No.
505-6. Under the contract, HLF agrees to keep a “base
of operation” at the hospital in order to quickly
transport “urgent and emergent patients.”
Id. The contract states that HLF “will serve
as the preferred air transport service provider, so long as
performance and quality indicators are met as determined by
HMC Administration and Emergency Medical Staff.”
Id. It also requires HLF to provide a plan detailing
the service it will provide, including “alternate
patient transport options for [sic] (a) while the helicopter
is in use and a second need arises, (b) when helicopter use
is not practical due to the weight of the patient or the need
for additional life support equipment during transport; or
(c) when weather conditions preclude the use of the
helicopter.” Id. The agreement has a three
year term beginning April 10, 2013, and provides that the
agreement “may be renewed for subsequent renewal terms
as agreed to by both parties through a written
amendment.” Id. The initial three-year term
has expired, and it is unclear at this point whether the
parties agreed to renew the agreement.
alleges 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. ¶ 5. HLF asserts that KFHP requires
hospitals to utilize the air ambulance services of HLF's
competitors, “who are aligned with, or otherwise have
relationships with, KFHP.” Id.
with the consent of KFHP, has also submitted to the Court two
letters counsel for KFHP sent to Hawaii Health Systems
Corporation (“HHSC”) concerning KCH's use of
HLF's air ambulance services. According to the
communications, KCH is a part of HHSC. See Ex. 2 to
HLF's Submission of Exs., ECF No. 505-2. KCH is also the
hospital with which HLF has a first call agreement set to
expire on October 31, 2017.
first communication is a cease and desist letter sent on
March 19, 2015. See id. KFHP asserts that KCH's
Dr. Richard McDowell “has not been permitting Kaiser
hospital staff to coordinate the air ambulance transportation
through Kaiser's first call air ambulance contractor,
AMR; and has been directing ER staff at [KCH] to use [HLF]
exclusively for air transport, over the requests and
objections of Kaiser's hospital staff.”
Id. The letter states that KCH, through Dr.
McDowell's actions, is in breach of a contract between
HHSC and Kaiser Foundation Hospitals, whereby HHSC is
required to notify Kaiser when one of its members presents at
a HHSC facility; cooperate with Kaiser on the transfers of
its members; and provide services in a cost effective manner.
Id. The letter also notes that Dr. McDowell's
conduct is interfering with KFHP's first call agreement
with American Medical Response (“AMR”).
letter also states that any EMTALA concerns do not apply,
since the air ambulance transports with which KFHP is
concerned involve patients who are in stable condition.
Id. The letter reads, “In such instances, we
disagree that [KCH] or HHSC should dictate the mode of
transportation, especially when Kaiser has medical and
financial responsibility for the patient's post
stabilization care.” Id.
follow-up communication sent to HHSC on July 15, 2015,
counsel for KFHP writes:
We recognize that there may be circumstances where the
immediate transfer of an unstabilized patient is necessary
and that a transfer by rotor vehicle may be medically
necessary in the opinion of the treating physician. Your
citation to EMTALA and the State Operations Manual addresses
the requirements for transporting such unstabilized patients.
Kaiser is not challenging that decision for unstabilized
patients being transported by air ambulance from the KCH
emergency department. However, the vast majority of Kaiser
members at issue . . . do not involve unstabilized patients
in an emergent condition . . . . Most of the cases in the
last year have concerned stabilized Kaiser members who are
being transferred for continuity of care of the patient at
their Kaiser hospital. In these cases EMTALA does not apply.
Ex. 3 to HLF's Submission of Exs., ECF No. 505-3.
letter reiterates that AMR is KFHP's first call provider
and that KFHP is responsible for controlling the medical
expenses of ...