Hawaii physicians can sue state's biggest health plan

Doctors say a court decision allowing their lawsuit to go forward is an important step in battling insurers' wrongful payment practices.

By Amy Lynn Sorrel, AMNews staff. Nov. 13, 2006.

Hawaii doctors will not have to individually arbitrate payment concerns they have with the state's dominant health plan. Instead, the Hawaii Medical Assn. can bring one lawsuit on its physician members' behalf, the state's high court ruled.

The HMA sued Hawaii Medical Service Assn. in 2002, accusing the health plan of arbitrarily overruling doctors' medical decisions, and instituting policies for underpaying or denying physicians' claims.

The HMA claims that the insurer breached its contracts with doctors and violated state unfair competition laws, according to the lawsuit.

The health plan argued that doctors should have to arbitrate their payment claims individually, not pursue a collective lawsuit. The high court disagreed, however, and ruled that the doctors' accusations fall outside of the scope of the arbitration clause. The court said the arbitration clause was meant to address decisions related to individual physicians, not broad-based "systemic practices" used to make those decisions.

The HMA said the decision was a significant step in challenging health insurance companies' wrongful reimbursement practices that interfere with doctors' ability to provide patient care.

"The physicians felt strongly that they were not getting any relief from the state Legislature and not seeing any improvements in the health insurance market with respect to competition," said HMA Executive Director Paula Arcena. "Their last remaining relief was through the court system."