United States District Court, D. Hawaii
(1) DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT, ECF
NO. 42 (2) GRANTING PLAINTIFF'S CROSS MOTION FOR SUMMARY
JUDGMENT, ECF NO. 50 (3) GRANTING IN PART AND DENYING IN PART
PLAINTIFF'S MOTION TO DISMISS COUNT I OF DEFENDANTS'
COUNTERCLAIM, ECF NO. 34, AND (4) DENYING PLAINTIFF'S
MOTIONS TO STRIKE, ECF NOS. 48, 63; APPENDIX
principle issues are currently before the court: (1) the
correct interpretation of the Letter of Agreement
(“LOA” or “the Agreement”) between
Plaintiff Liberty Dialysis - Hawaii LLC
(“Liberty”) and Defendant Kaiser Foundation
Hospitals (“KFH”), and (2) whether the statute of
limitations on contract actions bars Count I of KFH and
Defendant Kaiser Foundation Health Plan, Inc.'s
(collectively “Kaiser”) Counterclaim against
the court finds that the LOA unambiguously supports
Liberty's interpretation, Liberty's Motion for
Summary Judgment is GRANTED, and Kaiser's Cross Motion is
DENIED. Also DENIED are Liberty's Motions to Strike
certain evidence that Kaiser submitted in support of its
Summary Judgment Motion.
Motion to Dismiss is GRANTED in part and DENIED in part
because the statute of limitations has run on some, but not
all, of the overpayments asserted in Count I of the
and KFH entered into the LOA for Liberty to provide
outpatient renal dialysis and related services to
Kaiser's patients. LOA at 1, ¶ 1, ECF No. 41-2. The
LOA became effective on August 1, 2007, and by its terms has
been “automatically extend[ed] for additional one-year
period[s]” since then. Id. at 1, ¶ 3;
Compl. ¶ 16, ECF No. 1-2.
incorporates “Exhibit A, ” which covers the
services and reimbursement to be provided under the
Agreement. LOA at 4, ¶ 14(a) and A-1 through A-5.
Section I of Exhibit A includes a description of services.
Id. at A-1. Section II includes rate tables for the
various health plans, and it provides that “KFH shall
pay to [Liberty] as payment in full the rates listed”
therein. Id. at A-3 through A-5.
I of Exhibit A also describes the first of two
“composite rates” that govern Kaiser's
payment obligations. For clarity, this composite rate,
referred to in Section II as simply “the composite
rate, ” will be referred to hereinafter as the
“Contractual Composite Rate.” Section I.B of
Exhibit A describes the services and medications to be
included in the Contractual Composite Rate:
[Contractual Composite Rate] set forth in Section II,
Reimbursement, shall only include the following
drugs and services which shall not be separately
1. Any necessary staff services related to specimen
collection, injections described in I.B.6 below, declotting
of external shunts, and other routine, non-surgical services
related to items, all of the above as covered under the
Medicare composite rate.
2. Medically necessary dialysis equipment and support
equipment as covered under the Medicare composite rate.
3 Purchase and delivery of all necessary dialysis supplies as
covered under the Medicare composite rate.
4. Declotting supplies as covered under the Medicare
5. Oxygen and its administration as covered under the
Medicare composite rate 6. Medications, which are
included in the Medicare composite rate, such as Heparin,
Protamine, Mannitol, Saline, Glucose, Dextrose, and local
7. The following laboratory Services as covered under the
Medicare composite rate.
. . .
Id. at A-1 (emphasis added).
second composite rate, the “Medicare Composite
Rate” is the base composite rate used for dialysis
services by the Centers for Medicare and Medicaid Services
(“CMS”). See id. at A-4, rate table B.
The parties agree that before 2011, the drug Epogen was not
included in either the Contractual Composite Rate or the
Medicare Composite Rate. See Compl. ¶ 18;
Answer ¶ 18, ECF No. 27. The parties also agree that on
January 1, 2011, CMS added Epogen to the list of drugs
compensable under the Medicare Composite Rate. Compl
¶ 18; Answer ¶ 18. They
disagree, however, about whether Epogen became included in
the Contractual Composite Rate, by virtue of subsection 6
above, when it was added to the Medicare Composite Rate.
Compl. ¶ 19; Answer ¶ 19.
rate tables in Section II of Exhibit A, which are reproduced
and attached as “Appendix A” to this Order, refer
to both the Contractual Composite Rate and the Medicare
Composite Rate. See LOA at A-3 through A-5, rate
tables A through D (referring in table B to the
“Medicare composite base rate”). A separate table
applies to each applicable health plan; and each table is
divided according to location (either Oahu or
“Neighboring Islands”), the service or medication
provided, and the amount due. Id. For all plans,
“Hemodialysis per visit” and “Peritoneal
dialysis (CAPD, CCPD), per visit” are payable on Oahu
at a specific Contractual Composite Rate, the dollar figure
of which varies according to plan. Id. For all plans
other than Medicare Advantage, those same services on
Neighboring Islands are payable at a specific dollar amount
not tied to any composite rate (referred to by the parties at
oral argument as a “flat rate”). Id. For Medicare
Advantage members on Neighboring Islands, hemodialysis and
peritoneal dialysis are payable at the Medicare Composite
Rate “that is current at the time Services are
provided.” Id. at A-4, table B.
the rate tables include a separate section for Epogen. And
under all plans for services on Oahu, Epogen is compensable
at a specific dollar amount with no reference to a composite
rate. Id. at A-3 through A-5, tables A through D.
The same is true for Epogen administered on Neighboring
Islands for all plans except Medicare Advantage. Id.
For Medicare Advantage members on Neighboring Islands, Epogen
is compensable at “[a]n amount equal to 100% of the
Medicare eligible rate of reimbursement that is current at
the time Services are provided.” Id. at A-4,
January 2011, Kaiser stopped separately reimbursing Liberty
for Epogen administered to at least some patients under some
of the plans, and the parties have been engaged in a payment
dispute ever since. See Compl. ¶¶ 17-40.
According to the Complaint, the dispute involves not only
Kaiser's failure to pay separately for Epogen, but also
its failure to pay for unspecified “Other Covered
Services, ” id. ¶¶ 17, 19, and it
includes allegations regarding Kaiser's recoupment for
alleged overpayments to Liberty, id. ¶¶
filed its Complaint in state court on December 23, 2016,
alleging claims for breach of contract, declaratory judgment,
and an accounting, id. ¶¶ 41-56, to
include “a strict and total explanation of the
accounting of all payments, reimbursements, recoupments, and
offsets by [Kaiser], and to provide ...