Adams v. Hawaii Medical Service Association

Brent Adams (plaintiff) was diagnosed with multiple myeloma. His doctors recommended an autologous stem-cell transplant, followed by an allogenic transplant using a sibling donor. On November 1, 2005, Brent and his wife, Patricia Adams (plaintiff), informed their insurer, Hawaii Medical Service Association (HMSA) (defendant), of Brent’s diagnosis. On December 15, Brent’s physician, Dr. Stein, requested precertification for the autologous transplant, noting that Brent’s siblings would be tested as possible donors for a later allogenic transplant. HMSA approved the autologous transplant but denied coverage for the sibling testing, agreeing only to reimburse testing costs once a matched donor was identified. On February 6, HMSA provided instructions for submitting a precertification request for an allogenic transplant. On February 22, Brent informed HMSA that one of his siblings was a match. HMSA responded that precertification was required but assured Brent that his “care plan” and “goals remain appropriate and on target.” On March 2, Dr. Stein submitted the precertification request. HMSA denied the request on March 6, calling the allogenic transplant “investigational.” Dr. Stein and the Adamses were surprised, as HMSA had never previously suggested that an allogenic transplant was not covered. In February 2007, Dr. Stein again sought approval, which HMSA again denied. In April 2007, the Department of Commerce and Consumer Affairs’ insurance commissioner reversed HMSA’s denial and ordered HMSA to provide coverage. HMSA appealed to the circuit court, while the Adamses filed a separate suit against HMSA for bad faith. The circuit court stayed the Adamses’ case pending resolution of HMSA’s appeal. Ultimately, the appeals court held that coverage for an allogenic transplant was expressly excluded under the Adamses’ plan. However, the court allowed the Adamses’ bad-faith claim to proceed. On remand, the circuit court granted HMSA summary judgment. The appeals court affirmed, reasoning that HMSA’s duty of good faith arose only on March 2 when Brent formally submitted a claim, which HMSA timely denied four days later. The Hawaii Supreme Court granted certiorari.