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Sidlo v. Kaiser Permanente Ins. Co.

United States District Court, D. Hawaii

November 17, 2016

TOBY SIDLO, on behalf of himself, and all others similarly situated, Plaintiffs,
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 KAISER FOUNDATION HEALTH PLAN INC.'S MOTION FOR SUMMARY JUDGMENT AND GRANTING SUMMARY JUDGMENT IN FAVOR OF HAWAII LIFE FLIGHT CORPORATION AND AIR MEDICAL RESOURCE GROUP, INC. PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 56(F) AND LOCAL RULE 56.1(I)

          Alan C. Kay United States District Judge.

         For the reasons set forth below, the Court DENIES Kaiser Foundation Health Plan, Inc.'s Motion for Summary Judgment Against Hawaii Life Flight and Air Medical Resource Group. ECF No. 248.[1] Further, because the Court finds as a matter of law that members may assign their rights under the health plans to their medical providers without violating the plans' anti-assignment provision, the Court GRANTS summary judgment to that limited extent in favor of Hawaii Life Flight Corporation and Air Medical Resource Group, Inc. pursuant to Federal Rule of Civil Procedure 56(f) and Local Rule 56.1(i).

         PROCEDURAL BACKGROUND[2]

         On 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. HLF agrees that it is participating in the litigation in Sidlo's name. See Opposition at 2 (“Kaiser and HLF agree that the subject Kaiser members have assigned to HLF, and HLF has accepted, the members' right to enforce Kaiser's obligation to pay HLF for the services rendered.”).

         HLF and 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 § 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.

         On July 18, 2016, KFHP filed its Motion for Summary Judgment Against HLF and AMRG, along with a Memorandum in Support of Motion (“Motion”), ECF No. 248-1, and a Concise Statement of Facts in Support of Motion for Summary Judgment (“KFHP'S CSF”), ECF No. 249. In its Motion, KFHP requests that the Court issue an order declaring that KFHP's health plans contain an enforceable anti-assignment provision; that KFHP has not waived the anti-assignment provision; and that HLF and AMRG “cannot enforce assignments against KFHP through, among other things, the Sidlo Litigation and any other use of an assignment to stand in the shoes of Members.” Motion at 25.

         On October 17, 2016, HLF and AMRG filed an Opposition to KFHP's Motion (“Opposition”), ECF No. 474, as well as a Response to KFHP's CSF, which included a Concise Statement of Facts in Opposition to KFHP's CSF (“Defs.' CSF”), ECF No. 476. In their Opposition, HLF and AMRG request that summary judgment be granted in their favor pursuant to Local Rule 56.1(i). Id. at 1. KFHP filed a Reply in Support of Motion (“Reply”) on October 24, 2016. ECF No. 478.

         The Court held a hearing regarding KFHP's Motion on November 7, 2016. During the hearing, the Court notified KFHP that it was considering granting summary judgment on KFHP's Complaint in favor of HLF and AMRG.

         FACTUAL BACKGROUND[3]

         KFHP serves as a claim fiduciary of certain group health plans within the State of Hawaii that are governed by ERISA. KFHP's CSF ¶ 1. At all relevant times, Consolidated Plaintiff Toby Sidlo and a group of proposed class members were participants in or beneficiaries of these plans. Id. ¶ 2; Pl. Toby Sidlo's First Am. Class Action Compl. (“FAC”) ¶¶ 3, 11, ECF No. 227. The documents relevant to the health plans that the court has considered with respect to this Motion include the Group Medical and Hospital Service Agreement (“Service Agreement”) and the Member Handbook.[4] See Ex. A to Decl. of May Goya at 1, ECF No. 249-2; Ex. B to Decl. of Jan Kagehiro at 15, ECF No. 249-4.

         During the relevant time period, HLF provided medical air transportation services to certain members of KFHP's health plans and submitted claims to KFHP for reimbursement of those services. Complaint ¶ 7. AMRG shares certain corporate officers with HLF and holds a FAA Part 135 Certificate, under which certain aircraft operate. Answer ¶¶ 7-8. HLF is one of at least nine medical transportation companies affiliated with AMRG. Ex. Q to Decl. of Michelle Scannell at 36:5-37:22, ECF No. 325-26.

         I. The Sidlo Litigation

         In the Sidlo litigation, KFHP member Toby Sidlo alleged that KFHP and Kaiser Permanente Insurance Company (“KPIC”) 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. In its Complaint in this action, KFHP alleges that the Sidlo litigation was “brought by [HLF and AMRG], or either of them, in Mr. Sidlo's name, pursuant to a purported assignment, in violation of the anti-assignment provision of Mr. Sidlo's Plan.” Complaint ¶ 35.

         The Court issued a Summary Judgment Order in the Sidlo litigation on October 31, 2016. In the Order, the Court granted summary judgment to KFHP on Sidlo's Count I because it determined that KFHP properly applied its “Inter-Facility Transport Policy” when processing Sidlo's benefits claim.[5] The Court also granted summary judgment in favor of KFHP and KPIC on Sidlo's Counts II through V. As to Sidlo's Count VI, which sought a determination that KFHP and KPIC “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, ” the Court dismissed the claim without prejudice after determining that it was not yet ripe for adjudication.

         II. Appeal to Insurance Commissioner

         In addition to the Sidlo litigation, KFHP asserts that HLF has used KFHP members such as Sidlo to “file HLF-drafted complaints with the Insurance Commissioner in an attempt to obtain further payment from KFHP.” Motion at 15. In a letter dated May 22, 2015, Sidlo, through HLF, filed a complaint with the Hawaii Insurance Commissioner (“Insurance Commissioner”), requesting that the Insurance Commissioner review Sidlo's claim and require that KFHP pay the remaining amount Sidlo claimed KFHP owed under his health plan. Ex. S to Decl. of Michelle Scannell, ECF No. 249-22. At present, there does not appear to be an active matter before the Insurance Commissioner regarding Sidlo's complaint, as Sidlo never responded to a letter from the Insurance Commissioner stating, “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.” See Exs. AA, BB to Decl. of Michelle Scannell, ECF Nos. 325-36, 325-37.

         III. The Relevant Plan Documents

         Sidlo's 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. A to Decl. of May Goya at 1. It also includes an anti-assignment provision that states:

Neither this Service Agreement nor any of the rights, interest, claims for money due, benefits or obligations hereunder shall be assigned by Group or Member without the prior written consent of Health Plan.

Id. at 20. Further, Section 10.I of the Service Agreement, entitled “No Waiver, ” provides, “Failure by [KFHP] to enforce any term or condition of this Service Agreement will not be considered a waiver or an impairment of [KFHP's] right thereafter to require strict performance of any term or condition by Group or Members.” Id.

         The Member Handbook provides information regarding, among other things, filing a claim, reimbursement for a claim, and filing an appeal. With regards to filing a claim, the Handbook states, “You or the provider should submit a claim form, including itemized statements describing the services received.” Ex. B to Decl. of Jan Kagehiro at 15. The Handbook then provides, “If approved, reimbursement is made to providers according to your health plan benefits.” Id. With respect to appeals, the Handbook states, “If we deny your request for payment or coverage, you have the right to file an appeal and ask that we reconsider our decision . . . . You may appoint someone to file the appeal on your behalf. If you choose to appoint a representative, you must name this person in writing and state that he or she may file the appeal on your behalf.” Id. at 16.

         IV. HLF's Assignment Forms

         HLF requires its patients to sign certain forms containing assignment language prior to providing medical air transport. Opposition at 4. Its Standard Ambulance Signature Form states, in relevant part:

I authorize the submission of a claim for payment and request that payment of authorized Medicare, Medicaid or other insurance benefits to [sic] be made on my behalf directly to Hawaii Life Flight. I assign Hawaii Life Flight all right, title and interest in all benefit plans from which my dependents or I are entitled to recover and agree to immediately remit and assign any payment for the services provided by Hawaii Life Flight.

         Ex. K to Decl. of Michelle Scannell, ECF No. 249-14. Prior to his transport Sidlo signed a Standard Ambulance Signature Form, which Sidlo, HLF, and AMRG admit is an assignment. KFHP's CSF ¶ 12; Defs.' CSF ¶ 12.

         Similarly, HLF's Billing and Consent to Transport Form provides, in relevant part:

I authorize the submission of a claim for payment and request that payment of authorized Medicare, Medicaid or other insurance benefits to [sic] be made on my behalf directly to Hawaii Life Flight. I assign Hawaii Life Flight all right, title and interest in all benefit plans from which my dependents or I are entitled to recover, and agree to immediately remit and assign any payment for the services provided by Hawaii Life Flight.

Ex. N to Decl. of Michelle Scannell, ECF No. 249-17. Again, the parties agree that this form constitutes an assignment. KFHP's CSF ¶¶ 18-19; Defs.' CSF ¶¶ 18-19. HLF contends that it uses these forms for all patients - not just Sidlo and other KFHP members. Opposition at 5.

         Finally, HLF uses a Patient First Agreement, which states, in relevant part:

2. Excepting my obligation for my copay and deductible, in consideration for the Company waiving the right to collect from me the Balance Bill that I/We owe to the Company for the Transport, I/We agree to assist the Company in pursuing all claims for reimbursement under my insurance policy/plan, including but not limited to, signing required documents, assisting with an appeal and filing a lawsuit in my name under ERISA, or filing a lawsuit ...

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