Opinion ID: 2561867
Heading Depth: 4
Heading Rank: 3

Heading: the underlying purchase

Text: In this case, Plaintiffs assert that they are consumers because after receiving medical services HMSA demanded payment in the form of an interest-free loan should they recover from a third-party. The services received had a personal purpose within the meaning of HRS § 480-1. Cf. Adams v. Law Offices of Stuckert & Yates, 926 F.Supp. 521, 526 (E.D.Pa.1996) (characterizing plaintiffs receipt of medical treatment at a plastic surgery center as personal medical services, and finding that the plaintiffs' obligation to pay for such services was a debt under the FDCPA, which requires that the underlying transaction be primarily for personal, family, or household purposes). Therefore, based on the obligations arising from the loan agreements, which HMSA required Plaintiffs to sign when they received their medical treatment, Plaintiffs appear to be consumers. However, at oral argument, Rawlings asserted that the loan agreement could not be the basis of one's consumer status, arguing that the loan agreement was an inartfully-titled document that did not create any new rights. Rather, Rawlings contended that HMSA had pre-existing subrogation rights, arising as a matter of law, to some portion of the amounts that Plaintiffs recovered from third-party tortfeasors, such that the loan agreement was nothing more than a written formalization giving Plaintiffs notice of these rights. [20] Although the precise status of the loan agreement was neither put at issue below nor discussed extensively in the appellate briefings, if correct, Rawlings's assertion would mean that there was no underlying transaction and that Plaintiffs were therefore not consumers of medical services. Rawlings's theory is not convincing. The loan agreement provided by HMSA and signed by Plaintiffs is also known as a loan receipt. A loan receipt is an agreement which states that the insurance proceeds paid by the insurer to the insured constitute an interest-free loan which must be repaid to the extent that money is recovered in an action brought by the insurer in the name of the insured. 4 Rowland H. Long, The Law of Liability Insurance § 23.03[2][b][ii] (2007). In other contexts, courts have considered whether such loan receipts are true loans. [21] The weight of authority holds that loan receipts are valid, although as in any agreement, the intention of the parties should be considered. See Annotation, Validity and effect of loan receipt or agreement between insured and insurer for a loan repayable to extent of insured's recovery from another, 13 A.L.R.3d 42 (1967). [22] Without specific arguments to the contrary, the plainest conclusion is that the loan agreement in this case constituted a true loan that could have been enforced by HMSA. As such, the loan agreement has created obligations, and could be considered a form of payment for the health care Plaintiffs received. Accordingly, Plaintiffs were consumers who, by virtue of the agreement, engaged in a consumer transaction.