Summary
The Hawaiʻi Supreme Court reviewed an interlocutory appeal concerning insurers’ practice of down-coding medical bills submitted for no-fault insurance benefits. The court held that partial denials of claims for treatment services or related charges trigger the written-notice requirements of Hawaiʻi Revised Statutes § 431:10C-304(3)(B), and that an administrative rule exempting certain billing disputes from peer review was invalid to the extent it conflicted with that statute. The court vacated the circuit court’s summary judgment ruling and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether a partial reduction of a no-fault medical bill based on treatment charges or procedure codes constitutes a partial denial of a claim for benefits requiring written notice under HRS § 431:10C-304(3)(B).
- Whether HAR § 16-23-120 governs the billing disputes and is consistent with HRS § 431:10C-304(3)(B).
- Whether the circuit court improperly applied the 2000 legislative amendments to the no-fault statutes and the Insurance Commissioner's GEICO order retroactively.
Holdings
- A denial or partial denial of a no-fault claim for treatment services and/or the charges for those services triggers the statutory written-notice requirement. An insurer that reduces a bill through down-coding must provide the required notice to the claimant and, when the denial involves treatment services, also to the provider.
- HAR § 16-23-120 was void and unenforceable to the limited extent that, before the repeal of the peer-review statute, it exempted disputes involving treatment services or related costs from the peer-review procedure required by HRS § 431:10C-304(3)(B). After the peer-review statute's repeal effective January 1, 1998, the rule no longer conflicted with the statute, but it did not eliminate the statutory written-notice requirement or authorize down-coding.
- The providers failed to demonstrate that the circuit court retroactively applied the 2000 statutory amendments or the GEICO order; therefore, the court did not reach or grant relief on that asserted error.
Key quotations
“In light of the unambiguous mandatory language of HRS § 431:10C-304(3)(B), an insurer is required to provide written notice of its denial—in whole or in part—of the claim for benefits.” (109 Haw. at 196)
“It is axiomatic that an administrative rule cannot contradict or conflict with the statute it attempts to implement.” (109 Haw. at 197)
Factual background
Between January 1, 1993, and December 31, 1999, approximately 322 health care providers submitted bills to automobile insurers for nonemergency medical and rehabilitative services provided to personal-injury-protection insureds. The insurers accepted the treatments as reasonable and appropriate but altered the medical procedure codes, reducing the amounts paid; the parties referred to this practice as down-coding. The insurers paid the amounts associated with the adjusted codes and offered to negotiate over the unpaid portions, without issuing formal denial notices.
Procedural history
The providers sued automobile insurers and adjusters for allegedly underpaying more than 30,000 no-fault medical bills through down-coding and failing to issue statutory denial notices or seek peer review. The circuit court denied the providers' motion for partial summary judgment and granted the insurers' cross-motion, concluding that the disputes were governed by HAR § 16-23-120 and did not require formal denial notices or peer review. The circuit court granted leave for an interlocutory appeal, and the providers timely appealed.
Remand instructions
Remanded to the Circuit Court of the First Circuit for further proceedings consistent with the opinion.