Opinion ID: 6491398
Heading Depth: 5
Heading Rank: 2

Heading: whether the plaintiffs can rely upon allegations of HMSA’s unfair or deceptive acts or practices to support their claims of unfair methods of competition

Text: The plaintiffs alleged, inter alia, that: 66. [HMSA] has engaged in unfair methods of competition that delay, impede, and/or deny lawful claims of reimbursement made by [the plaintiffs] who have entered into agreements with [HMSA]. 67. [HMSA’s] improper, unfair and deceptive acts constitute unfair methods of competition in material aspects. [The plaintiffs], unaware of [HMSA’s] deception, rendered medically necessary services to [HMSA’s] plan members, reasonably expecting to be fully reimbursed for such services in a timely fashion. As a result of [HMSA’s] unfair methods of competition, however, [the plaintiffs] have been denied monies to which they are lawfully entitled for medical semces rendered to [HMSA’s] plan members.[ 28 ] The circuit court concluded that the plaintiffs’ “allegations are in reality nothing more than claims of unfair and deceptive practices, which ... are clearly barred [because the plaintiffs are not consumers].” However, in so concluding, the circuit court overlooked the fact that the plaintiffs may bring claims of unfair methods of competition based on conduct that would also support claims of unfair or deceptive acts or practices. Indeed, the United States District Court for the District of Hawai'i, in Star Markets, Ltd. v. Texaco, Inc., 945 F.Supp. 1344 (D.Haw.1996), was faced with the issue whether “conduct which supports a claim [of] deceptive acts or practices could also support a claim [of] unfair methods of competition.” Id. at 1348. The U.S. district court answered in the affirmative, explaining that: In Kukui Nuts [of Hawai'i, Inc. v. R. Baird & Co., Inc., 7 Haw.App. 598, 789 P.2d 501 (1990) ], the Intermediate Court of Appeals determined that the defendants’ alleged conduct constituted deceptive acts or practices under the definition in [HRS chapter] 481A[, entitled “Uniform Deceptive Trade Practice Act,] and such conduct also supported Kukui Nuts’ § 480-2 claims [of] both unfair methods of competition and deceptive acts or practices. [Id.] at 611-12, 615, 789 P.2d at 511, 513. Under the law today, Kukui Nuts would lack standing to bring a § 480-2 claim [of] deceptive acts or practices. However, the standing limitation of § 480—2(d)[, limiting-persons who may bring an action based upon unfair or deceptive acts or practices to consumers, the attorney general or the director of the office of consumer protection,] does not invalidate the court’s determination that the same allegations could support claims [of] both §§ 481A and 480-2 unfair methods of competition. ... Likewise, this court finds [In re Oxwall Tool. Co., 59 F.T.C. 1408, 1961 WL 65419 (1961),] to be instructive. In that case, tools manufactured in foreign countries were labelled in such a way that consumers could be confused and believe that they were manufactured domestically. The FTC adopted the decision of the hearing examiner that such conduct constituted both unfair methods of competition and deceptive acts or practices within the intent and meaning of the FTCA. 59 F.T.C. at 1413. From this language, the court finds that the FTC allows the same conduct to support claims for both clauses of § 5 of the FTCA. Thus, this couR also finds that Plaintiff’s allegations can su-pport a § 480-2 unfair methods of competition claim. Whether Plaintiff’s allegations also support a § 481A deceptive acts or practices claim makes no difference. Id. (emphasis added). Accordingly, we conclude that the plaintiffs may rely upon HMSA’s alleged unfair or deceptive acts or practices to support their claims of unfair methods of competition. However, notwithstanding the foregoing and our holding that the plaintiffs need not be “competitors” of, or “in competition” with, HMSA, the question remains whether the nature of the competition must be sufficiently alleged. Contrary to the dissent, we conclude that it does because, in the absence of such allegations, the distinction between claims of unfair or deceptive acts or practices and claims of unfair methods of competition that are based upon such acts or practices would be lost where both claims are based on unfair and deceptive acts or practices. In other words, the existence of the competition is what distinguishes a claim of unfair or deceptive acts or practices from a claim of unfair methods of competition. Based on our review of the plaintiffs’ complaints, we believe the allegations contained therein sufficiently allege claims of unfair methods of competition based upon conduct that could otherwise support claims of unfair or deceptive acts or practices. For example, in addition to ¶¶ 66 and 67, quoted supra, the plaintiffs also allege: 11. ... [HMSA’s] conduct has adversely impacted, and continues to adversely impact, members of [HMSA’s] plans by, among other things: (a) imposing financial hardships on, and in some cases threatening the continued viability of, the medical practices run by [the plaintiffs]; (b) threatening the continuity of care provided to patients by [the plaintiffs], as required by sound medical judgment; (c) requiring [the plaintiffs] to expend considerable resources seeking reimbursement that could otherwise be available to provide enhanced healthcare services to [HMSA’s] plan members; (d) making it more costly and difficult for [the plaintiffs] to maintain and enhance the availability and quality of care that all patients receive; and (e) increasing the costs of rendering healthcare services in Hawaii as a result of the additional costs incurred and considerable effort expended by HMA members in seeking reimbursement from HMSA for services rendered.... [[Image here]] 21. In order to treat patients who are insured by HMSA, HMSA requires HMA members to enter into agreements with HMSA. 22. If physicians ■ refuse to sign HMSA’s one-sided agreements, those physicians are effectively prevented from seeing and treating patients, including long-time patients, who are covered for health insurance through one of HMSA’? plans. 23. Physicians who object to provisions contained in HMSA’s agreements are faced with an untenable choice: they can either accept the take-it-or-leave-it term? and provisions contained in the agreement? that are unfair to both physicians and patients or they can choose to no longer treat patients, who they have developed long-term relationship with, who are insured by HMSA. [[Image here]] 25. Throuyh its market dominance and oppressive conduct, HMSA has improperly and unfairly attempted to impose unconscionably low reimbursements upon physicians. Thus physicians are forced to either accept the unconscionably low reimbursement rates or to simply not contract with HMSA. 26. HMSA dominates the enrollee market in Hawaii with over 65% of Ha ■ waii’s population enrolled in one of HMSA’s plans. In this reyard, HMSA is the laryest provider of fee-for-service insurance in the State with more than 90% of the market and is the second largest HMO provider in the State. Similarly, HMSA dominates the physician market, with approximately 90% of Hawaii’s physicians participatiny in HMSA’s networks. 27. It is throuyh such market dominance that HMSA is able to dictate the terms and amount of reimbursement HMA physicians will receive.[ 29 ] (Emphases added.) HMSA facilitates access to the dispensing of medical services, and the plaintiffs provide medical services directly. Thus, in our view, HMSA and the plaintiff;? share the same goal or mission, i.e., ensuring that medical services are accessible to their “customers.” Their success in meeting the common goal—-and, in turn, ensuring the profitability of their respective businesses— is dependent upon their ability to effectively provide medical services to their customers, i.e., the patients. However, if HMSA engages in acts or practices that impede or interfere with physicians’ ability to provide effective healthcare services to their patients and/or create incentives for patients to look elsewhere for medical services—that is, to other participating physicians who may be reluctant to challenge HMSA or to non-participating physicians—such acts or practices can, if proven, constitute unfair methods of competition, notwithstanding the fact that the same conduct could also support a claim of unfair or deceptive acts or practices. For purposes of our analysis, we accept, as we must, the allegations in the plaintiffs’ complaint as true, see Aames Funding Corp. v. Mores, 107 Hawai'i 95, 98, 110 P.3d 1042, 1045 (2005) (“[R]eview of a motion to dismiss is based on the contents of the complaint, the allegations of which we accept as true and construe in the light most favorable to the plaintiff.” (Internal quotation marks, citation, and ellipsis omitted.)), and view such allegations in the light most favorable to them as the nonmoving parties, see Ruf v. Honolulu Police Dep’t, 89 Hawai'i 315, 319, 972 P.2d 1081, 1085 (1999) (in motion for judgment on the pleadings, court is required “to view facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party” (citations omitted)). In sum, we hold that any person may bring a claim of unfair methods of competition based upon conduct that could also support a claim of unfair or deceptive acts or practices as long as the nature of the competition is sufficiently alleged in the complaint. Accordingly, we hold that the circuit court erred in concluding that the plaintiffs’ post-June 28, 2002 claims are barred. ' However, inasmuch as the circuit court’s May 23, 2003 orders differed in one respect—that is, in the HMA Appeal case, the circuit court additionally concluded that HMA had failed to show injury for its claim of unfair methods of competition—we turn now to address the sufficiency of HMA’s allegations of injury.