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Adams v. Hawaii Medical Service Association

Supreme Court of Hawaii

September 30, 2019

PATRICIA E.G. ADAMS, IN HER CAPACITY AS PERSONAL REPRESENTATIVE OF THE ESTATE OF BRENT ADAMS, ANDIN HER PERSONAL CAPACITY, Petitioner/Plaintiff-Appellant,
v.
HAWAII MEDICAL SERVICE ASSOCIATION, Respondent/Defendant-Appellee.

          CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-15-0000396; 1CC071001388)

          Rafael G. Del Castillo Robert H. Thomas Tred R. Eyerly Joanna C. Zeigler for Petitioner

          Dianne Winter Brookins John-Anderson L. Meyer for Respondent

          NAKAYAMA, ACTING C.J., McKENNA, POLLACK, AND WILSON, JJ., AND CIRCUIT JUDGE SOMERVILLE, IN PLACE OF RECKTENWALD, C.J., RECUSED

          OPINION

          WILSON, J.

         Brent Adams ("Brent") was forty years old when he was diagnosed with stage III multiple myeloma, an aggressive and life-threatening form of bone marrow cancer. Doctors determined that Brent's best chance of survival was to undergo a tandem stem cell transplant in which he would receive a transplant of his own stem cells, known as an autologous transplant, and, two to four months later, a stem cell transplant from a matched sibling donor, referred to as an allogenic transplant. Shortly after his diagnosis, Brent informed his insurance provider, Respondent/Defendant-Appellee Hawaii Medical Service Association ("HMSA"), of his intent to pursue autologous and allogenic transplants. Brent and HMSA worked closely for the next several months to ensure that Brent's treatment would be covered by insurance, but when Brent applied for coverage for the second phase of the treatment, the allogenic transplant, HMSA denied the claim. Less than three years after his diagnosis, Brent died.

         Brent and his wife, Petitioner/Plaintiff-Appellant Patricia E.G. Adams ("Patricia"), filed the instant action alleging that HMSA acted in bad faith in administering Brent's claim for the allogenic transplant; following Brent's death, Patricia pursued the action in her capacity as personal representative of Brent's estate and in her individual capacity. There are genuine issues of material fact as to whether HMSA fulfilled its duty of good faith and fair dealing in its handling of Brent's claim. Therefore, the Intermediate Court of Appeals ("ICA") erred when it affirmed the holding of the Circuit Court of the First Circuit ("circuit court") that there are no genuine issues of material fact regarding whether HMSA acted in bad faith.

         I. Background

         Brent was diagnosed with stage III multiple myeloma in August 2005. He informed HMSA of his condition on November 1, 2005 and requested information regarding facilities that provide stem cell transplants. HMSA directed Brent and Patricia to seek treatment at City of Hope, an HMSA-approved Blue Quality Center for Transplant located in Duarte, California.[1] Dr. Anthony Stein ("Dr. Stein") enrolled Brent in a clinical trial for stem cell transplants at City of Hope on December 29, 2005. At the time of his diagnosis, Brent was a member of the HMSA Preferred Provider Plan for Hawaii Employer-Union Health Benefits Trust Fund ("the Plan"). Under Chapters 4 and 5 of the Plan, Brent was required to submit a precertification[2] request by mail or fax to HMSA seeking approval for the autologous and allogenic transplants. HMSA had fifteen days to respond to a non-urgent request.

         HMSA assigned case managers to oversee Brent's case and they created a log of notes and communications.[3] According to HMSA's log, Patricia notified HMSA that she and Brent were leaving for City of Hope on December 11, 2005 to pursue "testing and consultation[.]" Patricia states in her declaration that she told HMSA that Brent was going to City of Hope specifically for the autologous and allogenic transplants and asked if there was anything else that Brent needed to do to inform HMSA of the treatment plan. She alleges that HMSA did not provide any further instructions.

         On December 15, 2005, Dr. Stein submitted a precertification request for an autologous transplant. The request notes that Brent's siblings would be tested to determine if they could serve as stem cell donors, in which case Brent would consider pursuing an allogenic transplant following the autologous transplant. HMSA timely approved the request for an autologous transplant on December 21, 2005. Two days later, City of Hope submitted an "urgent" precertification request to test Brent's siblings' stem cells. The request was rescinded, however, when HMSA explained to Dr. Stein that HMSA would only pay for the matched sibling donor if, and when, there was a match. HMSA told Dr. Stein that "[o]nly the testing for the person donating to this member will be paid for. If all 5 siblings are tested, only the donor sibling testing will be paid for." This effectively meant that Brent and Patricia would pay out-of-pocket to test Brent's five siblings, and if one of the siblings matched, HMSA would reimburse Brent and Patricia for the cost of testing the matched sibling.

         Brent underwent an autologous transplant in January 2006. In preparation for the second phase of the treatment, the allogenic transplant, Dr. Stein contacted HMSA regarding Brent's participation in City of Hope's clinical trial for stem cell transplants. HMSA's log indicates that HMSA informed Dr. Stein that clinical trials require precertification approval and are assessed on a case-by-case basis. HMSA referred Dr. Stein to the precertification division and recommended that he submit data supporting the efficacy of the clinical trial.

         In January and February 2006, Brent and Patricia communicated numerous times with HMSA about Brent's intent to undergo the second phase of his treatment-the allogenic transplant. On January 17, 2006, HMSA informed Patricia that Dr. Stein had yet to submit a precertification request for the allogenic transplant. On February 6, 2006, HMSA faxed Dr. Stein information regarding the process to submit a precertification request for an allogenic transplant and noted that this request was required "if they plan to do anything other than the tandem autologous transplant."[4] On February 22, 2006, Brent informed HMSA that one of his siblings appeared to be a match and he hoped to pursue the allogenic transplant. HMSA replied that a precertification request must be submitted and advised Brent that "[i]n terms of the care plan, the goals remain appropriate and on target[.]" Patricia checked on the status of the process two weeks later, on February 27, 2006, and HMSA informed Patricia that Dr. Stein had yet to submit a precertification request for an allogenic transplant. HMSA noted that Patricia wanted Dr. Stein to complete the precertification request because they were "desperately trying to avoid any delays" and "with the possibility that an alio transplant may be needed, they will need as much advance notice as possible[.]" Patricia maintains that the autologous and allogenic transplants were recommended by Dr. Stein and accepted by HMSA as Brent's treatment plan from the beginning, as evidenced by his attempt to enroll in the clinical trial for stem cell transplants on December 29, 2005. HMSA advised Patricia that each phase of the treatment required precertification authorization.

         On March 2, 2006, Dr. Stein submitted a precertification request for an allogenic transplant.[5] Four days later, on March 6, 2006, HMSA notified Dr. Stein that the request was denied because the procedure was "investigational." A formal denial letter was mailed on March 8, 2006. Patricia and Brent were "taken by surprise[.]" They viewed the denial as an abrupt change of position for HMSA, especially in light of the fact that Brent had a matched sibling donor. Without approval for an allogenic transplant, and wary of further delays in his treatment, Brent underwent a second autologous transplant in April 2006, instead of an allogenic transplant.

         In February 2007, Dr. Stein submitted another precertification request for an allogenic transplant. This, too, was denied. HMSA's internal appeals board upheld the denial of coverage because multiple myeloma was not listed as a condition for which an allogenic transplant was covered under the Plan.[6] Shortly thereafter, Brent filed a request for an expedited external review of HMSA's 2007 denial of coverage for the allogenic transplant with the Insurance Commissioner of the Department of Commerce and Consumer Affairs ("Insurance Panel"). In its April 18, 2007 Findings of Fact, Conclusions of Law, and Discussion and Order ("FOFs, COLs, and D&O"), the Insurance Panel reversed HMSA's 2007 denial of coverage. The Insurance Panel found that although the allogenic transplant was not specifically included under the Plan, it was not specifically excluded either, and HMSA failed to consider professional standards of care and expert opinions in concluding that the efficacy of allogenic transplants was not supported by sufficient evidence. The Insurance Panel ordered HMSA to provide coverage for an allogenic transplant. Brent finally received an allogenic transplant covered by HMSA in 2007, but he died approximately one year later.

         A. Procedural History

         1. Related Appeals

         HMSA appealed the Insurance Panel's decision that the allogenic transplant was covered under the Plan to the circuit court. Shortly thereafter, Brent and Patricia filed the instant case in circuit court asserting claims for breach of contract, bad faith, intentional infliction of emotional distress ("IIED"), negligent infliction of emotional distress ("NIED"), and punitive damages. The circuit court stayed the instant case pending the resolution of HMSA's appeal of the Insurance Panel's determination granting coverage for the allogenic transplant.[7]

         HMSA's appeal from the Insurance Panel's decision to provide coverage for the allogenic transplant was affirmed by the circuit court; the circuit court held that the allogenic transplant was covered under the Plan. HMSA appealed to the ICA and the ICA reversed the circuit court, holding that coverage for an allogenic transplant was expressly excluded under the terms of the Plan. Haw. Med. Serv. Ass'n v. Adams, 120 Hawai'i 446, 457, 209 P.3d 1260, 1271 (App. 2009) ("Adams I"). Because the ICA found that the allogenic transplant was not covered, it vacated the circuit court's judgment and ...


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