Handling the third appeal of the matter, the Hawaii Intermediate Court of Appeals rejected the insured's claim for bad faith based upon an untimely denial of the claim. Adams v. Haw. Med. Serv. Ass'n, 2018 Haw. App. LEXIS 245 (Haw. Ct. App. June 8, 2018) (Disclaimer - our office is co-counsel for the Appellant).
The decedent sought treatment for multiple myeloma. After a prior appeal, the ICA remanded the case for further proceedings on whether the Hawaii Medical Services Association (HMSA) had engaged in bad faith by mishandling a 2006 request for pre-authorization for an allogeneic stem-cell transplant (allo-transplant). Adams v. Haw. Med. Serv. Ass'n, 130 Haw. 351 (Haw. Ct. App 2013) (Adams II). The court noted in Adams II that due to the suspension of discovery, very little discovery had been conducted in the case.
On remand, after discovery, HMSA moved for summary judgment, arguing its response to the March 2, 2006 written request for pre-authorization for an allo-transplant was timely and reasonable. HMSA argued it did "keep silent" about the fact that the policy did not cover allo-transplants for multiple myeloma. Appellant responded that there were genuine issues of material fact regarding whether HMSA mishandled the request for pre-authorization. For example, if HMSA had merely told Appellant at an earlier date that the procedure would not be covered, her husband could have looked into other options for treatment, including clinical trials. Nevertheless, the circuit court granted HMSA's motion for summary judgment.
On appeal, Appellant argued that HMSA violated Haw. Rev. Stat. Sec. 432-1:101.5 by neglecting on several successive occasions to respond to Appellant's documented requests for information with current, understandable, and timely responses regarding coverage and benefits. The ICA determined this argument was waived because it was not properly raised at the summary judgment stage. Nor was the violation alleged in the Second Amended Complaint filed after remand. Instead, appellant had relied upon a different statute, Haw. Rev. Stat. Sec. 432-10:237, to argue that HMSA was obligated to provide Appellant with a complete copy of the policy but had not done so.
Although the policy required a written request for pre-authorization of a procedure, Appellant argued that telephone calls, beginning in December 2005, should have been deemed adequate as formal pre-authorization requests. The ICA rejected this argument. The duties of good faith and fair dealing arose after the insured complied with the claims procedures described in the policy.
Chapter 5 of the policy directed that pre-authorization requests be made in writing or by fax. HMSA had reminded the provider, City of Hope (COH), by fax correspondence that it was awaiting a modified request for the allo-transplant on February 6, 2006 and February 27, 2006. Until HMSA received the written request, as required by the policy, there was no claim for it to process, nor would it know what the specific request would be. Once HMSA received the request on March 2, 2006, it called on March 6, 2006, COH to deny the request. HMSA followed with a formal letter of denial which was received by Appellant on March 8, 2006.
Thus, the circuit court did not err when it held there were no genuine issues of material fact and granted summary judgment in favor of HMSA based on its timely denial of Appellant's written request.