Hawaii Supreme Court Clarifies Client Rights in Insurance Disputes

Honolulu – The Hawaii Supreme Court has provided clarity on how clients of the state’s largest health insurance provider can challenge denials of compensation that they feel negatively impacted them or their families.

The Hawaii Health Services Association (HMSA) claims the existing process is fair and efficient. Yet, critics argue that this ruling might push HMSA toward better collaboration with medical professionals.

At first glance, it seemed like a win for HMSA, as the court found that a Circuit Court judge was incorrect in declaring the contract with HMSA doctors as harsh and unenforceable.

Nevertheless, the court stated that some patients can now bypass arbitration if they believe they were harmed due to denial of compensation.

Previous coverage

• Doctors say health insurance approval reforms will help patients get care faster
• Hawaii’s biggest insurance company defends provider contracts in the state Supreme Court

One of the case’s plaintiffs is the family of Scott Norton, a 60-year-old who believes HMSA’s refusal to cover an MRI for back pain contributed to his cancer diagnosis.

This ruling allows them to seek monetary damages in court, as opposed to undergoing arbitration, according to Attorney Ted Hong.

“This is groundbreaking for the dynamics between insurance companies and individuals,” Hong remarked.

During a discussion in June regarding complaints from doctors and patients about HMSA’s previous authorization process, HMSA’s legal team argued that the system promotes quick and fair decisions regarding denial of compensation and subsequent appeals.

However, the court stated that HMSA’s arbitration requirements, in certain situations, would allow patients like Norton and Dr. Orsino to pursue lawsuits.

“They can now be held accountable for these comprehensive denials of medical care recommended by doctors,” Hong continued.

While the court did not invalidate the doctors’ contracts, it did outline how they could be contested in the future, a welcome development for Hawaii Medical Association lawyer Clarence Kekina.

“I believe this gives doctors more leverage than they had prior to the case—they now have a clearer path to challenge HMSA,” Kekina said.

“The primary concern here is ensuring fair patient access to quality care and allowing physicians to practice medicine in Hawaii effectively.”

Though HMSA has not made direct comments regarding the ruling, it continues to defend the pre-approval process. Additionally, state working groups are attempting to align physicians with insurance companies to standardize procedures.