Orthopedic Associates of Hawaii, Inc. v. Hawaiian Insurance & Guaranty Co.

124 P.3d 930, 109 Haw. 185, 2005 Haw. LEXIS 601
CourtHawaii Supreme Court
DecidedDecember 7, 2005
DocketNo. 24634
StatusPublished
Cited by10 cases

This text of 124 P.3d 930 (Orthopedic Associates of Hawaii, Inc. v. Hawaiian Insurance & Guaranty Co.) is published on Counsel Stack Legal Research, covering Hawaii Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Orthopedic Associates of Hawaii, Inc. v. Hawaiian Insurance & Guaranty Co., 124 P.3d 930, 109 Haw. 185, 2005 Haw. LEXIS 601 (haw 2005).

Opinion

Opinion of the Court by

MOON, C.J.

Plaintiffs-appellants, approximately 322 unaffiliated Hawaii health care providers [hereinafter, collectively, the providers], bring this interlocutory appeal pursuant to Hawaii Revised Statutes (HRS) § 641-l(b) (1993),1 challenging the August 30, 2001 non-final appealable ruling of the Circuit Court of the First Circuit, the Honorable Virginia L. Crandall presiding, denying their motion for partial summary judgment and granting partial summary judgment in favor of defendants-appellees automobile insurers and adjusters [hereinafter, collectively, the insurers].2

On appeal, the providers argue that the circuit court erred in: (1) finding that the written notice of denial of benefits mandated by HRS § 431:10C-304(3)6b) (1993), quoted infra, [hereinafter, HRS § 43L10C-304(3)(B), Section (3)(B), or the subject stat[191]*191ute] is inapplicable to the subject billing disputes; (2) concluding that Hawai'i Administrative Rules (HAR) § 16-23-120 (1993), quoted infra, applies; and (3) retroactively applying the May 30, 2000 legislative amendments to the subject statute and the September 18, 2000 Insurance Commissioner’s Order in GEICO v. Dep’t of Commerce & Consumer Affairs (DCCA), INS-DR-2001-1.

For the reasons discussed herein, we vacate the circuit court’s August 30, 2001 order denying the providers’ motion for partial summary judgment and granting partial summary judgment in favor of the insurers and remand this case for further proceedings consistent with this opinion.

I. BACKGROUND

A. Factual Background

The facts of this case are uncontested. Between January 1, 1993 and December 31, 1999, each of the providers submitted bills to one or more of the insurers for non-emergency treatments rendered to thousands of personal injury protection (PIP) insureds allegedly injured in motor vehicle accidents. The insurers were obligated to pay appropriate PIP benefits under HRS chapter 431:10C on behalf of their insureds. For purposes of billing, the existing workers’ compensation fee schedule was adopted as the payment fee schedule applicable to medical and rehabilitative services provided as no-fault benefits for persons injured in automobile accidents. HRS §§ 431:10C-308.5(a) and (b) (1993). Under section 431:10C-308.5(a), “the term ‘workers’ compensation schedules’ means the schedules adopted and ... establishing [the] fees and frequency of treatment guidelines.” The workers’ compensation schedule assigns a medical procedure code and a fee to each item of service rendered by health care providers. The providers, in preparing their bills for submission to the insurers, are required to follow the “fees and frequency of treatment guidelines” contained in the workers’ compensation schedules. HRS § 431:10C-308.5(b). The insurers, however, rather than pay the bills as submitted, or deny the claim (in whole or in part), altered the treatment code because they believed that, “[biased on the available information, the services rendered appear to be best described by [a different medical treatment] code.” The resulting effect of changing the treatment codes was a reduction in the payment for the service rendered, which the parties generally refer to as “down-coding.”3 The insurers, thus, (1) paid the bills pursuant to the adjusted treatment codes and (2) offered to negotiate with the providers as to the unpaid portions.

B. Procedural Background

On April 15, 1998, the providers filed a complaint against the insurers for the alleged underpayment for services rendered under their respective no-fault insurance contracts. Count I alleged that the insurers unlawfully down-coded, thereby reducing the amounts of the providers’ bills without issuing denial letters, in violation of HRS § 431:10C-304(3)(B), or seeking peer review, as required by HRS § 431:100-308.6 (1993).4 [192]*192Count II alleged that the insurers breached their no-fault insurance contracts by failing or refusing to pay for services rendered.5 The complaint sought declaratory and injunc-tive relief against down-coding of the providers’ bills and damages for the underpaid amounts of the bills. The providers’ complaint involves disputes regarding over 30,-000 bills, approximately 10,000 of which have been produced in discovery.

In May 2000, Act 138 was signed into law, which amended HRS §§ 431:100-304 and 431:100-308.5 by, among other things, adding section 6 to HRS § 431:100-304 and section (e) to HRS § 431:100-308.5. Section 4 of the act stated that “[tjhis Act shall take effect upon its approval.” 2000 Haw. Sess. L. Act 138, § 4 at 271. The act was approved on May 30, 2000. Id. The new sub-paragraph (6) of HRS § 431:100-304 (Supp. 2004) states:

Disputes between the provider and the insurer over the amount of a charge or the correct fee or procedure code to be used under the workers’ compensation supplemental medical fee schedule shall be governed by section 431:10C-308.5[.]

HRS § 431:10C-308.5(e) (Supp.2004) states:

In the event of a dispute between the provider and the insurer over the amount of a charge or the correct fee or procedure code to be used under the workers’ compensation supplemental medical fee schedule, the insurer shall:
(1) Pay all undisputed charges within thirty days after the insurer has received reasonable proof of the fact and amount of benefits accrued and demand for payment thereof; and
(2) Negotiate in good faith with the provider on the disputed charges for a period up to sixty days after the insurer has received reasonable proof of the fact and amount of benefits accrued and demand for payment thereof.
If the provider and the insurer are unable to resolve the dispute, the provider, insurer, or claimant may submit the dispute to the commissioner, arbitration, or court of competent jurisdiction. The parties shall include documentation of the efforts of the insurer and the provider to reach a negotiated resolution of the dispute.

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Cite This Page — Counsel Stack

Bluebook (online)
124 P.3d 930, 109 Haw. 185, 2005 Haw. LEXIS 601, Counsel Stack Legal Research, https://law.counselstack.com/opinion/orthopedic-associates-of-hawaii-inc-v-hawaiian-insurance-guaranty-co-haw-2005.