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IN THE SUPREME COURT OF THE STATE OF HAWAIʻI 

---o0o--- 

________________________________________________________________ 

PATRICIA E.G. ADAMS, IN HER CAPACITY AS PERSONAL REPRESENTATIVE 

OF THE ESTATE OF BRENT ADAMS, AND IN HER PERSONAL CAPACITY, 

Petitioner/Plaintiff-Appellant, 

vs. 

HAWAII MEDICAL SERVICE ASSOCIATION, 

Respondent/Defendant-Appellee. 

________________________________________________________________ 

SCWC-15-0000396 

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS 

(CAAP-15-0000396; 1CC071001388) 

September 30, 2019 

NAKAYAMA, ACTING C.J., McKENNA, POLLACK, AND WILSON, JJ., 

AND CIRCUIT JUDGE SOMERVILLE, 

IN PLACE OF RECKTENWALD, C.J., RECUSED 

OPINION OF THE COURT BY WILSON, J. 

 Brent Adams (“Brent”) was forty years old when he was 

diagnosed with stage III multiple myeloma, an aggressive and 

life-threatening form of bone marrow cancer. Doctors determined 

that Brent’s best chance of survival was to undergo a tandem 

stem cell transplant in which he would receive a transplant of 

Electronically Filed

Supreme Court

SCWC-15-0000396

30-SEP-2019

09:10 AM
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his own stem cells, known as an autologous transplant, and, two 

to four months later, a stem cell transplant from a matched 

sibling donor, referred to as an allogenic transplant. Shortly 

after his diagnosis, Brent informed his insurance provider, 

Respondent/Defendant-Appellee Hawaii Medical Service Association 

(“HMSA”), of his intent to pursue autologous and allogenic 

transplants. Brent and HMSA worked closely for the next several 

months to ensure that Brent’s treatment would be covered by 

insurance, but when Brent applied for coverage for the second 

phase of the treatment, the allogenic transplant, HMSA denied 

the claim. Less than three years after his diagnosis, Brent 

died. 

 Brent and his wife, Petitioner/Plaintiff-Appellant 

Patricia E.G. Adams (“Patricia”), filed the instant action 

alleging that HMSA acted in bad faith in administering Brent’s 

claim for the allogenic transplant; following Brent’s death, 

Patricia pursued the action in her capacity as personal 

representative of Brent’s estate and in her individual capacity. 

There are genuine issues of material fact as to whether HMSA 

fulfilled its duty of good faith and fair dealing in its 

handling of Brent’s claim. Therefore, the Intermediate Court of 

Appeals (“ICA”) erred when it affirmed the holding of the 

Circuit Court of the First Circuit (“circuit court”) that there 
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are no genuine issues of material fact regarding whether HMSA 

acted in bad faith. 

I. Background 

Brent was diagnosed with stage III multiple myeloma in 

August 2005. He informed HMSA of his condition on November 1, 

2005 and requested information regarding facilities that provide 

stem cell transplants. HMSA directed Brent and Patricia to seek 

treatment at City of Hope, an HMSA-approved Blue Quality Center 

for Transplant located in Duarte, California.1 Dr. Anthony Stein 

(“Dr. Stein”) enrolled Brent in a clinical trial for stem cell 

transplants at City of Hope on December 29, 2005. At the time 

of his diagnosis, Brent was a member of the HMSA Preferred 

Provider Plan for Hawaii Employer-Union Health Benefits Trust 

Fund (“the Plan”). Under Chapters 4 and 5 of the Plan, Brent 

was required to submit a precertification2 request by mail or fax 

to HMSA seeking approval for the autologous and allogenic 

transplants. HMSA had fifteen days to respond to a non-urgent 

request. 

 

1 A Blue Quality Center for Transplant “is a centers of excellence 

bone marrow program offered through participating Blue Cross Blue Shield 

Plans.” 

2 The Plan defines “precertification” as “a special approval 

process to ensure that certain medical treatments, procedures, or devices 

meet payment determination criteria prior to the service being rendered.” 
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HMSA assigned case managers to oversee Brent’s case 

and they created a log of notes and communications.3 According 

to HMSA’s log, Patricia notified HMSA that she and Brent were 

leaving for City of Hope on December 11, 2005 to pursue “testing 

and consultation[.]” Patricia states in her declaration that 

she told HMSA that Brent was going to City of Hope specifically 

for the autologous and allogenic transplants and asked if there 

was anything else that Brent needed to do to inform HMSA of the 

treatment plan. She alleges that HMSA did not provide any 

further instructions. 

On December 15, 2005, Dr. Stein submitted a 

precertification request for an autologous transplant. The 

request notes that Brent’s siblings would be tested to determine 

if they could serve as stem cell donors, in which case Brent 

would consider pursuing an allogenic transplant following the 

autologous transplant. HMSA timely approved the request for an 

autologous transplant on December 21, 2005. Two days later, 

City of Hope submitted an “urgent” precertification request to 

test Brent’s siblings’ stem cells. The request was rescinded, 

however, when HMSA explained to Dr. Stein that HMSA would only 

pay for the matched sibling donor if, and when, there was a 

 

3 Patricia claims that “[m]any of the things in [the log] do not 

square with the facts, and many of the things [the case managers] wrote 

either would not have been said or seem to be things they added which were 

not discussed.” 
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match. HMSA told Dr. Stein that “[o]nly the testing for the 

person donating to this member will be paid for. If all 5 

siblings are tested, only the donor sibling testing will be paid 

for.” This effectively meant that Brent and Patricia would pay 

out-of-pocket to test Brent’s five siblings, and if one of the 

siblings matched, HMSA would reimburse Brent and Patricia for 

the cost of testing the matched sibling. 

Brent underwent an autologous transplant in January 

2006. In preparation for the second phase of the treatment, the 

allogenic transplant, Dr. Stein contacted HMSA regarding Brent’s 

participation in City of Hope’s clinical trial for stem cell 

transplants. HMSA’s log indicates that HMSA informed Dr. Stein 

that clinical trials require precertification approval and are 

assessed on a case-by-case basis. HMSA referred Dr. Stein to 

the precertification division and recommended that he submit 

data supporting the efficacy of the clinical trial. 

In January and February 2006, Brent and Patricia 

communicated numerous times with HMSA about Brent’s intent to 

undergo the second phase of his treatment—the allogenic 

transplant. On January 17, 2006, HMSA informed Patricia that 

Dr. Stein had yet to submit a precertification request for the 

allogenic transplant. On February 6, 2006, HMSA faxed Dr. Stein 

information regarding the process to submit a precertification 

request for an allogenic transplant and noted that this request 
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was required “if they plan to do anything other than the tandem 

autologous transplant.”4 On February 22, 2006, Brent informed 

HMSA that one of his siblings appeared to be a match and he 

hoped to pursue the allogenic transplant. HMSA replied that a 

precertification request must be submitted and advised Brent 

that “[i]n terms of the care plan, the goals remain appropriate 

and on target[.]” Patricia checked on the status of the process 

two weeks later, on February 27, 2006, and HMSA informed 

Patricia that Dr. Stein had yet to submit a precertification 

request for an allogenic transplant. HMSA noted that Patricia 

wanted Dr. Stein to complete the precertification request 

because they were “desperately trying to avoid any delays” and 

“with the possibility that an allo transplant may be needed, 

they will need as much advance notice as possible[.]” Patricia 

maintains that the autologous and allogenic transplants were 

recommended by Dr. Stein and accepted by HMSA as Brent’s 

treatment plan from the beginning, as evidenced by his attempt 

to enroll in the clinical trial for stem cell transplants on 

December 29, 2005. HMSA advised Patricia that each phase of the 

treatment required precertification authorization. 

 

4 A tandem autologous transplant refers to two autologous 

transplants in a row, as opposed to a tandem autologous-allogenic transplant. 
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On March 2, 2006, Dr. Stein submitted a 

precertification request for an allogenic transplant.5 Four days 

later, on March 6, 2006, HMSA notified Dr. Stein that the 

request was denied because the procedure was “investigational.” 

A formal denial letter was mailed on March 8, 2006. Patricia 

and Brent were “taken by surprise[.]” They viewed the denial as 

an abrupt change of position for HMSA, especially in light of 

the fact that Brent had a matched sibling donor. Without 

approval for an allogenic transplant, and wary of further delays 

in his treatment, Brent underwent a second autologous transplant 

in April 2006, instead of an allogenic transplant. 

In February 2007, Dr. Stein submitted another 

precertification request for an allogenic transplant. This, 

too, was denied. HMSA’s internal appeals board upheld the 

denial of coverage because multiple myeloma was not listed as a 

condition for which an allogenic transplant was covered under 

the Plan.6 Shortly thereafter, Brent filed a request for an 

 

5 In his deposition, Dr. Stein explained that he waited to file the 

precertification request for the allogenic transplant because he was under 

the impression that he could not submit the request until it was determined 

whether one of Brent’s siblings could serve as a stem cell donor. 

6 Chapter 6 of the Plan provided “[y]ou are not covered for 

transplant services or supplies or related services or supplies other than 

those described in Chapter 4: Description of Benefits under Organ and Tissue 

Transplants. Related Transplant Supplies are those that would not meet 

payment determination criteria but for your receipt of the transplant, 

including, and without limitation, all forms of bone marrow or peripheral 

stem cell transplants.” Multiple myeloma was not included in the list of 

conditions for which allogenic transplants were covered in Chapter 4. 
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expedited external review of HMSA’s 2007 denial of coverage for 

the allogenic transplant with the Insurance Commissioner of the 

Department of Commerce and Consumer Affairs (“Insurance Panel”). 

In its April 18, 2007 Findings of Fact, Conclusions of Law, and 

Discussion and Order (“FOFs, COLs, and D&O”), the Insurance 

Panel reversed HMSA’s 2007 denial of coverage. The Insurance 

Panel found that although the allogenic transplant was not 

specifically included under the Plan, it was not specifically 

excluded either, and HMSA failed to consider professional 

standards of care and expert opinions in concluding that the 

efficacy of allogenic transplants was not supported by 

sufficient evidence. The Insurance Panel ordered HMSA to 

provide coverage for an allogenic transplant. Brent finally 

received an allogenic transplant covered by HMSA in 2007, but he 

died approximately one year later. 

A. Procedural History 

1. Related Appeals 

HMSA appealed the Insurance Panel’s decision that the 

allogenic transplant was covered under the Plan to the circuit 

court. Shortly thereafter, Brent and Patricia filed the instant 

case in circuit court asserting claims for breach of contract, 

bad faith, intentional infliction of emotional distress 

(“IIED”), negligent infliction of emotional distress (“NIED”), 

and punitive damages. The circuit court stayed the instant case 
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pending the resolution of HMSA’s appeal of the Insurance Panel’s 

determination granting coverage for the allogenic transplant.7 

HMSA’s appeal from the Insurance Panel’s decision to 

provide coverage for the allogenic transplant was affirmed by 

the circuit court; the circuit court held that the allogenic 

transplant was covered under the Plan. HMSA appealed to the ICA 

and the ICA reversed the circuit court, holding that coverage 

for an allogenic transplant was expressly excluded under the 

terms of the Plan. Haw. Med. Serv. Ass’n v. Adams, 120 Hawaiʻi 

446, 457, 209 P.3d 1260, 1271 (App. 2009) (“Adams I”). Because 

the ICA found that the allogenic transplant was not covered, it 

vacated the circuit court’s judgment and remanded to the circuit 

court with instructions to reverse the Insurance Panel’s FOFs, 

COLs, and D&O granting coverage for the allogenic transplant. 

Id. 

After the circuit court reversed the Insurance Panel’s 

FOFs, COLs, and D&O pursuant to the ICA’s order, HMSA moved to 

lift the stay and sought summary judgment on all claims in the 

instant case, which included breach of contract, bad faith, 

IIED, NIED, and punitive damages.8 The circuit court granted 

 

7 The Honorable Eden E. Hifo presided. 

8 By this time, Brent had passed away. Patricia continued the 

lawsuit in her capacity as personal representative of the estate of Brent and 

in her individual capacity. 
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summary judgment in favor of HMSA on all claims. On appeal, the 

ICA affirmed in part and reversed in part the circuit court’s 

judgment. Adams v. Haw. Med. Serv. Ass’n, No. 30314, 2013 WL 

5443025, at *2 (App. Sept. 30, 2013) (SDO) (“Adams II”). The 

ICA affirmed the circuit court’s grant of summary judgment in 

favor of HMSA as to the breach of contract claim. Id. at *2. 

It held that there were no genuine issues of material fact 

because it previously found, in Adams I, that the Plan expressly 

excluded coverage for allogenic transplants for the treatment of 

multiple myeloma. Id. at *1. Accordingly, the ICA affirmed the 

finding of the circuit court that HMSA did not breach its 

contract with Brent by refusing to cover the allogenic 

transplant. Id. at *1. 

As to the bad faith claim, the ICA vacated the circuit 

court’s entry of summary judgment in favor of HMSA on Brent’s 

bad faith claim that HMSA mishandled his claim for an allogenic 

transplant. Id. at *2. In so doing, the ICA distinguished 

between an insurer’s bad faith failure to investigate a claim 

and an insurer’s bad faith mishandling of a claim. Id. at *1-2. 

The ICA noted that Patricia’s bad faith claim was based on 

HMSA’s unreasonable delay in notifying Brent that an allogenic 

transplant was not a covered benefit under the Plan. Id. at *2. 

The ICA emphasized that in her declaration, Patricia alleged 

that she had multiple conversations with HMSA’s representatives 
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regarding the allogenic transplant in late 2005 and early 2006 

and “they were not forthcoming with information crucial to the 

Adamses’ understanding of coverage under the plan, and that 

later, in March 2006, when HMSA notified the Adamses that 

authorization for the procedure was denied, they were 

‘surprised.’” Id. 

The ICA characterized Patricia’s claim as “an 

insurer’s bad faith mishandling of a claim, which would include 

an unreasonable handing of a claim, such as an unreasonable 

delay.” Id. at *1. Based on Patricia’s declaration, and the 

fact that HMSA introduced no evidence that the March 2, 2006 

request for an allogenic transplant was reasonably handled, the 

ICA held that it could not conclude, as a matter of law, that 

HMSA reasonably handled Brent’s claim for an allogenic 

transplant. Id. at *2. Similarly, the ICA found that “based on 

the evidence presented below, we cannot say that, as a matter of 

law, the Adamses did not present a prima facie case for their 

NIED and IIED claims in opposition to HMSA’s motion for summary 

judgment.” Id. Accordingly, the ICA vacated the circuit 

court’s grant of summary judgment in favor of HMSA as to the 

NIED and IIED claims, as well as the bad faith claim based on 
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HMSA’s mishandling of the claim.9 Id. It affirmed the circuit 

court’s judgment in all other respects and remanded the case to 

the circuit court for further proceedings. Id. 

2. The Instant Appeal 

a) Circuit Court Proceedings 

On remand to the circuit court, Patricia asserted that 

HMSA mishandled Brent’s claim for an allogenic transplant and 

therefore acted in bad faith. She also maintained her claims 

for IIED, NIED, and punitive damages. As to the bad faith 

claim, Patricia argued that HMSA knew that Brent was seeking an 

allogenic transplant and misled her by providing assurances that 

an allogenic transplant would be covered under the Plan. She 

claimed that HMSA intentionally “kept silent” its policy to 

exclude coverage for allogenic transplants for the treatment of 

multiple myeloma. By remaining silent about its policy, 

Patricia argued, HMSA intentionally delayed the denial of 

coverage to deprive Brent of the opportunity to appeal the 

 

9 The ICA affirmed the circuit court’s entry of summary judgment in 

favor of HMSA on Patricia’s claim for bad faith based on HMSA’s failure to 

investigate. Adams II, 2013 WL 5443025, at *2. It addressed Patricia’s 

contention that HMSA acted in bad faith by failing to investigate the claim 

“by refusing to consider new evidence in 2007 that allo-transplants had been 

established as the gold standard for treating patients in Brent’s 

circumstances.” Id. The ICA noted that “an insured [cannot] recover for the 

tort of bad faith failure to investigate where the insured could not 

establish liability on the part of the insurer on the underlying policy.” 

Id. (alteration and emphasis in original) (quoting Enoka v. AIG Hawaiʻi Ins. 

Co., 109 Hawaiʻi 537, 551, 128 P.3d 850, 864 (2006)). Because there was no 

liability on the part of HMSA to pay for the allogenic transplant, the ICA 

held that a claim based on HMSA’s failure to investigate the claim could not 

lie. Id. 
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decision. Patricia argued that HMSA mishandled the claim by 

failing to timely inform Brent that the allogenic transplant was 

not covered under the Plan and, therefore, breached the duty of 

good faith and fair dealing implied in the insurance contract. 

HMSA denied Patricia’s allegations and brought a 

motion for summary judgment on all claims. HMSA argued that it 

was entitled to summary judgment on the bad faith claim, 

specifically, because: (1) the two-day period to deny coverage 

was objectively reasonable, (2) HMSA did not “keep silent” its 

policy on allogenic transplants for multiple myeloma, and (3) it 

did not intentionally deprive Brent of the opportunity to appeal 

the decision. The circuit court agreed and granted HMSA’s 

motion for summary judgment as to all claims. 

b) ICA Proceedings 

On appeal to the ICA, Patricia challenged the circuit 

court’s grant of summary judgment on the bad faith claim, in 

part, on the basis that the record contained genuine issues of 

material fact with regard to whether HMSA acted in bad faith by 

mishandling Brent’s claim.10 In its June 8, 2018 summary 

 

10 Patricia alleged three other points of error, none of which are 

before this court. She argued that: (1) there was a genuine issue of 

material fact as to whether City of Hope and Dr. Stein acted as HMSA’s 

agents; (2) City of Hope was not required to identify a matched donor prior 

to submitting the precertification request; and (3) the circuit court abused 

its discretion by failing to order a continuance to provide Brent an 

opportunity to obtain affidavits from his siblings in New Zealand. 
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disposition order, the ICA affirmed the circuit court’s order 

granting summary judgment in favor of HMSA. Adams v. Haw. Med. 

Serv. Ass’n, CAAP-15-0000396, 2018 WL 2753319, at *4 (App. June 

8, 2018) (SDO) (“Adams III”). The ICA determined that no 

genuine issues of material fact exist regarding whether HMSA 

mishandled the claim because HMSA denied the precertification 

request for the claim within the time period required under the 

Plan. Id. at *3. Noting that Chapter 5 of the Plan explicitly 

directed the insured to submit a written precertification 

request, the ICA found that the absence of such a request meant 

there was no claim for HMSA to process. Id. The ICA noted that 

Brent’s request for an allogenic transplant was first submitted 

on March 2, 2006, and within four days HMSA responded to the 

request by calling Dr. Stein to inform him that the request was 

denied; the ICA also found significant that a formal denial 

letter was dispatched six days later on March 8, 2006. Id. 

Because HMSA responded to the request within fifteen days, as 

required under the Plan, the ICA held as a matter of law that 

HMSA timely replied to the request. Id. 

The ICA noted that “the duties of good faith and fair 

dealing implied in every insurance contract[] arise after the 

insured complies with the claims procedure described in the 

insurance policy.” Id. (citing Safeco Ins. Co. of Am. v. Parks, 

88 Cal. Rptr. 3d 730, 740 (Cal. Ct. App. 2009)). Thus, the ICA 
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held, HMSA’s duty of good faith did not arise until Brent 

complied with the claims procedure under the Plan by submitting 

a formal precertification request for an allogenic transplant. 

Id. Because Brent submitted the request on March 2, 2006 and 

HMSA timely responded four days later, on March 6, 2006, the ICA 

held that HMSA did not mishandle Brent’s claim. Id. It 

affirmed the circuit court’s entry of summary judgment in favor 

of HMSA on all claims, including the bad faith mishandling 

claim. Id. at *4. 

II. Standard of Review 

An appellate court reviews “the circuit court’s grant 

or denial of summary judgment de novo.” Querubin v. Thronas, 

107 Hawaiʻi 48, 56, 109 P.3d 689, 697 (2005). This court has 

also articulated that: 

[S]ummary judgment is appropriate if the pleadings, 

depositions, answers to interrogatories, and admissions on 

file, together with the affidavits, if any, show that there 

is no genuine issue as to any material fact and that the 

moving party is entitled to judgment as a matter of law. A 

fact is material if proof of that fact would have the 

effect of establishing or refuting one of the essential 

elements of a cause of action or defense asserted by the 

parties. The evidence must be viewed in the light most 

favorable to the non-moving party. In other words, we must 

view all of the evidence and the inferences drawn therefrom 

in the light most favorable to the party opposing the 

motion. 

Id. (alteration in original) (quoting Haw. Cmty. Fed. Credit 

Union v. Keka, 94 Hawaiʻi 213, 221, 11 P.3d 1, 9 (2000)). 

 Hawaiʻi Rules of Civil Procedure (“HRCP”) Rule 56(e) 

(2000) provides in relevant part: 
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When a motion for summary judgment is made and supported as 

provided in this rule, an adverse party may not rest upon 

the mere allegations or denials of the adverse party’s 

pleading, but the adverse party’s response, by affidavits 

or as otherwise provided in this rule, must set forth 

specific facts showing that there is a genuine issue for 

trial. If the adverse party does not so respond, summary 

judgment, if appropriate, shall be entered against the 

adverse party. 

Thus, “[a] party opposing a motion for summary judgment cannot 

discharge his or her burden by alleging conclusions, ‘nor is he 

[or she] entitled to a trial on the basis of a hope that he [or 

she] can produce some evidence at that time.’” Henderson v. 

Prof’l Coatings Corp., 72 Haw. 387, 401, 819 P.2d 84, 92 (1991) 

(quoting 10A Charles Alan Wright, Arthur R. Miller & Mary Kay 

Kane, Federal Practice and Procedure: Civil 2d § 2727 (1983)). 

III. Discussion 

 The issue in this case is whether, viewing the 

evidence in the light most favorable to Patricia, the record 

contains evidence establishing that HMSA committed the tort of 

bad faith by unreasonably handling Brent’s claim for an 

allogenic transplant. It is well settled in this jurisdiction 

that in every first-party insurance contract, the implied 

covenant of good faith and fair dealing ensures “that neither 

party will do anything that will deprive the other of the 

benefits of the agreement.” Best Place, Inc. v. Penn Am. Ins. 

Co., 82 Hawaiʻi 120, 123-24, 920 P.2d 334, 337-38 (1996). A 

breach of this covenant is referred to as “bad faith.” Id. at 
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127, 920 P.2d at 341. When an insurer acts in bad faith, it 

gives rise to a cause of action for the tort of bad faith. 

[T]he tort of bad faith is not a tortious breach of 

contract, but rather a separate and distinct wrong which 

results from the breach of a duty imposed as a consequence 

of the relationship established by contract. Therefore, 

the tort of bad faith allows an insured to recover even if 

the insurer performs the express covenant to pay claims. 

As such, an insurer could be liable for the tort of bad 

faith for certain conduct where it would not be liable for 

a tortious breach of contract. 

Id. at 131, 920 P.2d at 345 (internal quotation marks and 

citation omitted). Thus, the tort of bad faith does not arise 

from a breach of the terms of the contract, but rather, from a 

breach of a duty to act in good faith inherent in the 

relationship between the insurer and the insured. 

 A claim for bad faith arising from the relationship 

between the insurer and the insured can be grounded in an 

“unreasonable handl[ing]” of the insured’s claim. Francis v. 

Lee Enter., Inc., 89 Hawaiʻi 234, 238, 971 P.2d 707, 711 (1999). 

“This court has held that reasonableness can only constitute a 

question of law suitable for summary judgment when the facts are 

undisputed and not fairly susceptible of divergent inferences, 

because, where, upon all the evidence, but one inference may 

reasonably be drawn, there is no issue for the jury.” Willis v. 

Swain, 129 Hawaiʻi 478, 496, 304 P.3d 619, 637 (2013) (internal 

quotation marks omitted) (quoting Guajardo v. AIG Haw. Ins., 118 

Hawaiʻi 196, 206, 187 P.3d 580, 590 (2008)). Consequently, the 
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issue of whether HMSA “unreasonably handle[d,]” Francis, 89 

Hawaiʻi at 238, 971 P.2d at 711, Brent’s claim for an allogenic 

transplant is suitable for summary judgment if the only 

inference to be reasonably drawn from the record is that HMSA 

reasonably handled the claim for the allogenic transplant, 

Willis, 129 Hawaiʻi at 496, 304 P.3d at 637. 

 To determine whether an insurer reasonably handled a 

claim, we consider the conduct of the parties to the contract 

before and after the formal submission of the claim. See 

Guajardo, 118 Hawaiʻi at 202-07, 187 P.3d at 586-91. In 

Guajardo, the plaintiff was struck by a vehicle while she was 

crossing the street. 118 Hawaiʻi at 198, 187 P.3d at 582. The 

insurer of the driver of the vehicle offered to settle the 

plaintiff’s claim for $100,000, but the plaintiff’s insurer, AIG 

Hawaiʻi Insurance Company, Inc. (“AIG”), refused to authorize the 

settlement. Id. AIG required the plaintiff to obtain a 

judgment against the driver “to protect [AIG’s] subrogation 

rights as required under her policy.” Id. The plaintiff filed 

suit against AIG, alleging that it acted in bad faith by 

misrepresenting that the policy required the plaintiff to pursue 

the driver to judgment. Id. at 202, 187 P.3d at 586. This 

court analyzed AIG’s conduct starting at “[t]he first 

communication” between the plaintiff and AIG, when the plaintiff 

reported that she had been hit by a vehicle. Id. at 203, 187 
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P.3d at 587. Review of the conduct of AIG throughout the course 

of the claims process revealed genuine issues of material fact 

as to whether AIG breached its duty of good faith by 

unreasonably handling the claim. Id. at 206, 187 P.3d at 590. 

 Similarly, in the instant case, it is necessary to 

examine the relationship between the insurer and the insured 

throughout the entire claims process, starting from “[t]he first 

communication” between the parties, to determine whether the 

insurer acted in bad faith. Id. at 203, 187 P.3d at 587. It is 

not sufficient to determine only whether the insurer complied 

with the terms of the contract. Best Place, 82 Hawaiʻi at 131-

32, 920 P.2d at 346-47; see also Enoka, 109 Hawaiʻi at 552, 128 

P.3d at 865 (“Surely an insurer must act in good faith in 

dealing with its insured and in handling the insured’s claim, 

even when the policy clearly and unambiguously excludes 

coverage.”). Here, the ICA analyzed HMSA’s conduct without 

considering its conduct throughout the duration of its 

relationship with Brent, starting with the first communication. 

The ICA’s analysis was limited to the period from the day the 

precertification request was filed, March 2, 2006, to the day 

the request was denied, March 6, 2006. Adams III, 2018 WL 

2753319, at *3. It found that HMSA handled Brent’s claim in a 

reasonable manner when it responded to his claim for benefits 

within four days of receipt of the request, as required under 
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the Plan. Id. The covenant of good faith and fair dealing 

implied in the insurance contract, however, required HMSA to act 

in good faith before and after the formal submission of the 

claim. See Best Place, 82 Hawaiʻi at 131-32, 920 P.2d at 345-46. 

Thus, the ICA erred because it did not examine the conduct of 

the parties before the formal submission of the claim on March 

2, 2006. 

 Taking into consideration HMSA’s conduct throughout 

its entire contractual relationship with Brent, the record 

contains facts that are “fairly susceptible of divergent 

inferences,” Willis, 129 Hawaiʻi at 496, 304 P.3d at 637 

(citation omitted), regarding whether HMSA “unreasonably 

handle[d]” Brent’s claim for an allogenic transplant, Francis, 

89 Hawaiʻi at 238, 971 P.2d at 711. HMSA became aware that Brent 

was considering pursuing an allogenic transplant on December 15, 

2005, but did not inform him that an allogenic transplant was 

not a covered benefit under the Plan until after the claim was 

submitted on March 2, 2006. In light of the evidence in the 

record, a reasonable inference could be made that HMSA’s failure 

during this two and a half month period to inform the Adamses 

that an allogenic transplant was not covered under the Plan 

could have led Brent and Patricia to believe that an allogenic 

transplant was covered. 
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21

 There is further evidence in the record that could 

support the inference that HMSA unreasonably handled the claim 

because it was aware that Brent was attempting to test his five 

siblings to determine if one was a match, and yet, did not 

inform Brent that the treatment was not covered under the Plan. 

The December 15, 2005 precertification request for an autologous 

transplant noted that Brent’s siblings would be tested to 

determine if they could serve as stem cell donors, and that if 

one of them could, Brent would consider pursuing an allogenic 

transplant. Two days later, on December 17, 2005, City of Hope 

submitted an urgent precertification request to test Brent’s 

siblings’ stem cells in the hopes that one of the siblings would 

match and Brent would be eligible for an allogenic transplant. 

The request was rescinded, however, when HMSA explained to Dr. 

Stein that it would only pay for testing if one of the siblings 

proved to be a matching donor. Brent and Patricia paid out-ofpocket to test Brent’s five siblings to determine whether he was 

eligible for an allogenic transplant. Thus, the record could 

support the inference that HMSA unreasonably handled the claim 

because it was aware that Brent was taking steps to pursue the 

treatment by having his siblings tested, but did not inform 

Brent that an allogenic transplant was not covered under the 

Plan. Instead, HMSA’s conduct may have implied that an 

allogenic transplant was covered because it assured Brent that 
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22

if one of his siblings was a match, HMSA would pay for the cost 

of testing that sibling. 

 In the two months preceding the formal submission of 

the claim on March 2, 2006, there is evidence that HMSA 

continually instructed Brent to submit a precertification 

request for an allogenic transplant and assured Brent that his 

“care plan” and “goals remain appropriate and on target[.]” 

This could also support the inference that HMSA “unreasonably 

handle[d]” the claim by leading Brent and Patricia to believe 

that an allogenic transplant was covered under the Plan. 

Francis, 89 Hawaiʻi at 238, 971 P.2d at 711. According to HMSA’s 

log of its communications with Brent and Patricia, on January 

17, 2006, Patricia discussed with HMSA Brent’s intent to pursue 

the allogenic transplant if one of his siblings could serve as a 

donor. Also according to the log, on February 22, 2006, Brent 

informed HMSA that it appeared that his sibling was a match and 

“he didn’t want to wait until the last minute to get [the 

allogenic transplant] approved and wanted to know what needs to 

happen[.]” HMSA advised Brent that it sent Dr. Stein the 

necessary documentation and instructions for submitting the 

precertification request. HMSA also noted that “[i]n terms of 

the care plan, the goals remain appropriate and on target; no 

change in plan or acuity.” Again, on February 27, 2006, 

Patricia stated that she checked on the status of approval for 
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23

the allogenic transplant and noted that they “were desperately 

trying to avoid any delays[.]” She also stated that, “with the 

possibility that an allo transplant may be needed, they will 

need as much advance notice as possible[.]” HMSA replied that 

it would send Dr. Stein another reminder to file the 

precertification request. Dr. Stein submitted the 

precertification request on March 2, 2006 and HMSA denied the 

claim on March 6, 2006. Dr. Stein stated in a deposition that 

he was surprised by HMSA’s denial of coverage because, 

throughout months of contact, HMSA never indicated that an 

allogenic transplant was not covered under the Plan: 

My office and other City of Hope personnel had several 

contacts with HMSA in early 2006 attempting to obtain 

authorization for Brent’s second tandem transplant to be an 

allogenic rather than autologous transplant, and we were 

never advised that allogenic transplant was not a benefit 

of Brent’s Plan. 

Patricia also described in her declaration being “taken by 

surprise” when HMSA denied the claim “because no one had ever 

mentioned anything about HMSA denying the allo transplant. . . . 

We could not understand how HMSA could suddenly change its 

position on covering the allo transplant when we knew Brent had 

a matched donor.” Thus, the statements of Dr. Stein and 

Patricia could constitute evidence that HMSA acted in a manner 

that may have led Brent, Patricia, and Dr. Stein to believe that 

the allogenic transplant was covered under the Plan, which could 

support an inference that HMSA unreasonably handled the claim. 
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 As noted, “reasonableness can only constitute a 

question of law suitable for summary judgment when the facts are 

undisputed and not fairly susceptible of divergent 

inferences[.]” Willis, 129 Hawaiʻi at 496, 304 P.3d at 637 

(internal quotation marks omitted) (quoting Guajardo, 118 Hawaiʻi 

at 206, 187 P.3d at 590). The foregoing facts are “fairly 

susceptible of divergent inferences,” id., namely that HMSA may 

or may not have “unreasonably handle[d]” Brent’s claim for an 

allogenic transplant. Francis, 89 Hawaiʻi at 238, 971 P.2d at 

711. Because divergent inferences may be reached based on the 

facts of this case, the issue of whether HMSA “unreasonably 

handle[d]” Brent’s claim for an allogenic transplant is not 

suitable for summary judgment. Id. 

IV. Conclusion 

 HMSA’s duty of good faith and fair dealing arose as a 

consequence of the relationship established by the insurance 

contract entered into by Brent and HMSA. Evidence of HMSA’s 

conduct during its relationship with Brent raises genuine issues 

of material fact as to whether HMSA “unreasonably handle[d]” 

Brent’s claim for an allogenic transplant. Id. We vacate the 

ICA’s July 6, 2018 judgment on appeal affirming the circuit 

court’s grant of HMSA’s motion for summary judgment on the bad 

faith claim and also vacate the circuit court’s order granting 

summary judgment in favor of HMSA as to the bad faith claim. We 
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25

remand to the circuit court for further proceedings consistent 

with this opinion. 

Rafael G. Del Castillo /s/ Paula A. Nakayama 

Robert H. Thomas 

Tred R. Eyerly /s/ Sabrina S. McKenna 

Joanna C. Zeigler 

for Petitioner /s/ Richard W. Pollack 

Dianne Winter Brookins /s/ Michael D. Wilson 

John-Anderson L. Meyer 

for Respondent /s/ Rowena A. Somerville