Opinion ID: 871688
Heading Depth: 2
Heading Rank: 2

Heading: Both accident and health insurers and HMOs are authorized to provide the closed panel plan required by the QExA contracts

Text: In COL 16, the Insurance Commissioner identified a substantial overlap between the powers granted to health maintenance organizations under HRS Chapter 432D and entities licensed under HRS [article] 431:10A. The Insurance Commissioner went on to state that a key distinction is that HMOs are the only licensed entities that may furnish health care directly to their members through facilities that it owns or operates and utilizing the services of physicians employed by the HMO and require that coverage is only provided when a member either utilizes its facilities and providers or is specifically authorized by its providers to utilize outside facilities or providers. An entity licensed as an HMO is not limited to furnishing care directly to its members through its owned facilities and employed providers, but it is authorized to do so. That authorization distinguishes entities licensed as HMOs from other risk-bearing entities licensed by the Insurance Commissioner in the State of Hawaii. Conversely, risk bearing entities licensed under HRS [article] 431:10A are prohibited from requiring that service[s] be rendered by a particular hospital or person. HRS § 431:10A-205(b). (Emphasis added). AlohaCare argues that the two statutory provisions do not overlap and the Insurance Commissioner's interpretation of HRS 431:10A-205(b) effectively [] repealed [the HMO Act] by administrative fiat. As set forth below, HRS chapter 432D and HRS article 431:10A authorize both HMOs and accident and health insurers to provide the closed panel product envisioned by the QExA program. Moreover, this interpretation of the statutory schemes does not nullify the HMO Act.
This court must determine whether both HRS chapter 432D and HRS article 431:10A authorize the provision of health care services as required by the QExA contracts. [36] Initially, we note that the RFP appears to contemplate that both HMOs and accident and health insurers could provide the closed panel product required by the QExA RFP. [37] Nevertheless, the question for decision here is whether, under Hawaii's insurance code, accident and health insurers are authorized to provide that product. There is no dispute that the HMO Act authorizes HMOs to provide or arrange for the services required under the QExA contracts. The plain language of HRS § 432D-1 indicates that HMOs are authorized to provide or arrange for the delivery of basic health care services to enrollees on a prepaid basis, except for enrollee responsibility for copayments, deductibles or both. [B]asic health care services are defined in HRS § 432D-1 as preventive care, emergency care, inpatient and outpatient hospital and physician care, diagnostic laboratory services, and diagnostic and therapeutic radiological services. Applying those definitions to the instant case, it is clear that properly licensed HMOs, like AlohaCare, are authorized pursuant to HRS § 432D-1 to provide or arrange[,] at their option, for the closed panel health care services required under the QExA program. Although the QExA RFP did not define healthcare services[,] the foregoing definitions appear to coincide with HMOs' authorization to provide or arrange for preventive care, emergency care, inpatient and outpatient hospital and physician care, diagnostic laboratory services, and diagnostic and therapeutic radiological services. See HRS § 432D-1. Therefore, HRS § 432D authorizes HMOs to provide or arrange for the closed panel services required under the QExA RFP. The plain language of HRS § 431:10A-205(b), on the other hand, is not as clear as HRS chapter 432D regarding whether the statute authorizes accident and health insurers to offer the closed panel product required by the QExA contracts, because the statute prohibits a risk-bearing entity licensed as an accident and health insurer from requiring that medical services be rendered by a particular hospital or person. The plain language of HRS § 431:10A-205(b) is written in the singular, indicating that insurers may not require that services be rendered by a single hospital or person. Accordingly, it appears that HRS § 431:10A-205(b) would allow accident and health insurers like United and Ohana to provide the QExA closed panel product because the RFP required that enhanced quality healthcare services be obtained from a network of providers and not a single hospital or person. See HRS § 431:10A-205(b). Nevertheless, the use of singular language is not determinative. Nobriga v. Raybestos-Manhattan, Inc., 67 Haw. 157, 163, 683 P.2d 389, 394 (1984) (The use of words in a statute signifying the singular is ... not conclusive.). HRS § 1-17 sets forth the general rule of statutory construction that [w]ords ... in the singular or plural number signify both the singular and plural number[.] HRS § 1-17 (1993). This provision suggests that HRS § 431:10A-205(b) would not simply prohibit an accident and health insurer from requiring that services be rendered by a particular hospital or person, but also by particular hospitals or persons. If HRS § 431:10A-205(b) prohibits accident and health insurers from providing services by particular hospitals or persons[,] United and Ohana would not be able to provide the closed panel product required under the QExA contracts with their accident and health insurance licenses because the RFP required that services be rendered by a designated provider network[.] This court has interpreted statutes using the statutory presumption in HRS § 1-17 only after reviewing the legislative history and context in which a statute was passed to determine whether the legislature intended to signify both the singular and plural forms of a word. See Nobriga, 67 Haw. at 163, 683 P.2d at 394 (looking to the legislative objective of HRS § 663-14 to determine that the legislature did not intend for there to be a different result based on whether the singular or plural form of the phrase one joint tortfeasor and the word release was used in the Uniform Contribution Among Joint Tortfeasors Act); see Wong v. Hawaiian Scenic Tours, Ltd., 64 Haw. 401, 403-05, 642 P.2d 930, 932-33 (1982) (per curiam) (reviewing the relevant legislative history and applying HRS § 1-17 to the term person to mean persons in a comparative negligence statute). Therefore, this court must look to legislative history to determine whether the legislature intended for HRS § 431:10A-205(b) to prohibit an accident and health insurer from requiring that services be rendered both by a particular hospital or person, and also by particular hospitals or persons. The legislative history of HRS § 431:10A-205(b) is silent on whether accident and health insurers are prohibited from requiring that services be rendered by particular hospitals or persons. See, e.g., S. Stand. Comm. Rep. No. 713, in 1955 Senate Journal, at 668. The legislative history also is silent regarding whether the statute precludes accident and health insurers from offering a closed panel product, such as required by the QExA program. See Id. Nevertheless, because of the historical context in which HRS § 431:10A-205(b) developed, it appears that the legislature did not intend to prohibit accident and health insurers from requiring that services be rendered by particular hospitals or persons when it adopted HRS § 431:10A-205(b). Although HRS § 431:10A-205(b) was enacted in 1987, the statute has remained virtually unchanged since 1955, when it was originally codified as Revised Laws of Hawai`i (RLH) § 181-55(b). [38] The text of HRS § 431:10A-205(b) also substantially conforms to a model law proposed by the National Association of Insurance Commissioners. See Digest of Bills Passed, 14th Legislature, Regular Session of 1987, p. 374-75. Closed panel plans, however, became popular only more recently and were unlikely to have been discussed in 1955, when the language of HRS § 431:10A-205(b) was first drafted. See, e.g., Nw. Med. Labs., Inc. v. Blue Cross and Blue Shield of Oregon, Inc., 310 Or. 72, 794 P.2d 428, 432, n. 2 (1990) (citation omitted) (stating that in 1973, Congress enacted the federal HMO Act, 42 USC § 300(e), which specifically authorized closed panel HMOs). Other jurisdictions have interpreted the phrase particular hospital or person in similar statutes to mean a single hospital or person and not hospitals or persons[.] In Insurance Commissioners v. Mutual Medical Insurance, Inc., 251 Ind. 296, 241 N.E.2d 56, 60-61 (1968), superceded by statute on other grounds as held in Huffman v. Office of Envtl. Adjudication, 811 N.E.2d 806, 811-12 (Ind.2004), the Indiana Supreme Court looked to the intent of the Indiana legislature when it required, as a basic provision of individual and group accident and sickness policies, that `the policy may not require that the service be rendered by a particular hospital or person[.]' In that case, the Appellant-Commissioner contend[ed] that this language reflects the legislative intent that no policy defeat an insured's right of recovery for medical services covered in the policy when the services are rendered by a person duly qualified in Indiana to perform them. Id. The case arose after insurers, under the applicable insurance laws of Indiana, allegedly did not compensate podiatrists for the performance of podiatry services because the podiatrists did not hold unlimited licenses to practice medicine in Indiana. Id. at 57-58. The Indiana Supreme Court held: It is our opinion that the language relied on by the appellants before the Commissioner is statutory language of differentiation, by which policy designs that would permit the insurer to direct the destiny of the cure through the specific designation of the person or facilities, are prohibited. The phrase `may not require that the service be rendered by a particular hospital or person' distinguishes accident and sickness policy standards from the standards of the Workmens' Compensation Laws, which expressly permit and authorize an employer to select for the treatment of his employee, specific physicians, hospitals, nurses, or spiritual healers. Burns' Indiana Statutes, Anno., (1965 Repl.), s[sic] 40-1225. Therefore, Burns' ss [sic] 39-4253 and 39-4260 (supra) serve to prohibit this selective and discretionary designation of personnel for the treatment of the ill, rather than to affirmatively require insurers to indemnify for all attempted cures which are legally rendered. Id. at 61 (emphasis added). The same statutory language also was at issue in Herring v. American Bankers Insurance Co., 216 So.2d 137 (La.App.1969). In Herring, the Court of Appeal of Louisiana considered whether an insurance policy provision that benefits would be paid for confinement only in hospitals recognized by any of three medical associations violated a Louisiana statute providing that such insurance policies may not require that services be rendered by a particular hospital or person. Id. at 138-39. The Court of Appeal held: We do not construe the provision requiring treatment by a hospital recognized by at least one of the associations named in the policy as naming a particular hospital. The statute is not intended to prevent a provision in a policy requiring an institution to meet certain standards before it may be classed as a hospital within the meaning of the policy. We believe that the intent of the statute in prohibiting the naming of a particular hospital has reference to the specification in the policy that an insured must go to a certain hospital designated in the contract by its trade name. We do not believe that the statute intended to prohibit a contract containing a provision prescribing a quality or status which an institution must possess before it will be included under the definition of an acceptable hospital within the terms of the policy. The statute, we feel, was intended to prevent any practice of favoritism between an insurance company and some particular hospital or institution. This is not the situation in the case under consideration. Id. at 140 (emphasis added). Similar to the provision at issue in Herring, the QExA RFP did not require that QExA members go to a particular hospital or person to receive health care. Instead, the QExA RFP required that members receive services in the QExA network, and if medically necessary covered services were not available in the network or on the island of residence, that the member be provided services out-of-network or transported to another island to access the services. The analyses in Mutual Medical Insurance and Herring support the conclusion that HRS § 431:10A-205(b) only applies to a single particular hospital or person, and that the statute should be read without resorting to HRS § 1-17. Moreover, prohibiting accident and health insurers from requiring that services be rendered by particular hospitals or persons would be inconsistent with the ability of those insurers to offer managed care plan[s,] as recognized under HRS § 432E-1. [39] HRS § 432E-1 was enacted in 199843 years after the particular hospital or person provision in HRS § 431:10A-205(b) was first codifiedand recognized that authorized insurers may provide for the financing or delivery of health care services or benefits to enrollees through ... [a]rrangements with selected providers or provider networks to furnish health care services or benefits. Prohibiting accident and health insurers from requiring that services be rendered by particular hospitals or persons would conflict with the recognition of authority in HRS § 432E-1, thereby repealing a portion of the later-enacted statute. See G. ex rel. K. v. State Dep't of Human Servs., 676 F.Supp.2d 1046, 1081 (D.Haw.2009). [40] Such a result would violate two rules of statutory construction. First, [t]he general rule is that repeals by implication are not favored and that if effect can reasonably be given to two statutes, it is proper to presume that the earlier statute is to remain in force and that the later statute did not repeal it. State v. Pacariem, 67 Haw. 46, 47, 677 P.2d 463, 465 (1984) (quoting State v. Gustafson, 54 Haw. 519, 521, 511 P.2d 161, 162 (1973) (per curiam)); see also Richardson v. City & Cnty. of Honolulu, 76 Hawai`i 46, 55, 868 P.2d 1193, 1202 (1994) (quoting Mahiai v. Suwa, 69 Haw. 349, 356-57, 742 P.2d 359, 366 (1987))(stating that where there is a `plainly irreconcilable' conflict between a general and a specific statute concerning the same subject matter, the specific will be favored. However, where the statutes simply overlap in their application, effect will be given to both if possible, as repeal by implication is disfavored[ ]). Second, [l]aws in pari materia, or upon the same subject matter, shall be construed with reference to each other. What is clear in one statute may be called upon in aid to explain what is doubtful in another. HRS § 1-16 (1993). Here, it is possible to give effect to HRS § 431:10A-205(b) and HRS § 432E-1 by reading the former statute in the singular, thereby avoiding repeal by implication. Accordingly, both HMOs and accident and health insurers are authorized to arrange for medical services for members using a defined network of providers, i.e., particular hospitals or persons. HRS § 432D-1; HRS § 431:1-201(a). We note, however, that only an HMO is authorized to arrange for services to be rendered by a single hospital or person. In addition, an HMO, unlike an accident and health insurer, may provide for the delivery of basic health care services in facilities it owns or operates utilizing the services of physicians employed by the HMO. See HRS § 432D-1. Based on the foregoing, HRS article 431:10A and chapter 432D authorize accident and health insurers and HMOs, as riskbearing entities, to provide the closed panel product required by the QExA contracts.
AlohaCare contends that, by allowing accident and health insurers to provide a closed panel product, the Decision authorized these insurers to operate an HMO in violation of HRS chapter 432D. AlohaCare presents two arguments in support of its position: 1) the HMO Act unambiguously provides that no person [41] shall operate a health maintenance organization without a license, and providing services pursuant to the QExA contracts requires an HMO license; and 2) the legislature intended for the HMO Act to occupy the `field' of activities to which the [HMO] Act applie[s] (and for which it require[s] a license) thereby prohibiting other risk-bearing entities from engaging in activities authorized by HRS chapter 432D. For the reasons set forth below, AlohaCare's arguments are meritless.
AlohaCare contends that the Insurance Commissioner improperly departed from the broad, literal meaning of the phrase operate a health maintenance organization in HRS § 432D-2(a). HRS § 432D-2(a) provides, in pertinent part: No person shall establish or operate a health maintenance organization in this State without obtaining a certificate of authority under this chapter. HRS § 432D-2(a) (emphasis added). AlohaCare contends that the words shall [42] and operate in HRS § 432D-2(a) are not ambiguous and indicate that the HMO Act preempts the field of activities to which the HMO Act applies. Moreover, even if the terms are ambiguous, AlohaCare contends that the proper course of action is to look to a dictionary to determine the ordinary meaning[s,] which confirm that the HMO Act preempts the field of activities to which it applies. As set forth below, the language of HRS § 432D-2(a) is not clear and unambiguous. Moreover, a literal interpretation would have the effect of repealing a portion of HRS § 432E-1, which was enacted three years after the HMO Act. The HMO Act does not define the word operate or what it means to operate a health maintenance organization[.] See HRS § 432D-1. An HMO, however, is defined pursuant to HRS § 432D-1 as any person that undertakes to provide or arrange for the delivery of basic health care services to enrollees on a prepaid basis, except for enrollee responsibility for copayments, deductibles, or both. (Emphasis added). It is true that when a term is not statutorily defined, this court may resort to legal or other well accepted dictionaries as one way to determine its ordinary meaning. Estate of Roxas v. Marcos, 121 Hawai`i 59, 66, 214 P.3d 598, 605 (2009) (internal quotation marks and citation omitted). Operate is defined in the sixth edition of Black's Law Dictionary as [t]o perform a function, or operation, or produce an effect. Black's Law Dictionary 1091 (6th ed. 1990). [43] Webster's Third New International Dictionary similarly defines operate, as it relates to an entity, as to manage and put or keep in operation whether with personal effort or not[.] Webster's Third New International Dictionary 1581 (1966). If this court defined operate for purposes of HRS § 432D-2(a) according to the dictionaries above, as AlohaCare requests, any provi[sion] or arrange[ment] for the delivery of basic health care services[ ] would require a certificate of authority under [HRS chapter 432D]. However, this broad definition conflicts with the conclusion that accident and health insurers, pursuant to HRS article 431:10A, may provide a closed panel product like the one required by the QExA contracts pursuant to their insurance licenses. AlohaCare's proffered definition also conflicts with the plain text of HRS § 432E-1, which recognizes that managed care plan[s] (like the one required by the QExA RFP) can be offered or administered by several types of risk-bearing entities licensed by the Insurance Division, including both HMOs licensed under HRS chapter 432D and insurers governed by HRS article 431:10A. See HRS § 432E-1. Therefore, if AlohaCare's definition of operat[ing] a health maintenance organization is correct, the definition would nullify the portion of HRS § 432E-1 that recognizes that risk-bearing entities other than HMOs are authorized to offer or administer managed care plans. In the instant case, the Insurance Commissioner properly gave effect to all three relevant statutory schemes, and thereby avoided possible repeal by implication, by defining operate a health maintenance organization in HRS § 432D-2(a) as engaging in activities which only an HMO is authorized to do. See Pacariem, 67 Haw. at 47, 677 P.2d at 465 (noting that repeals by implication are disfavored). Under this definition, accident and health insurers licensed pursuant to HRS article 431:10A may still offer managed care plans as recognized in HRS § 432E-1. Accordingly, it is not appropriate to define the word operate in HRS § 432D-2(a) in the way suggested by AlohaCare, because to do so would be to ignore the interplay among HRS chapters 432D, 432E and article 431:10A, and would nullify a portion of HRS § 432E-1. This definition does not nullify the HMO Actor strip AlohaCare of its HMO licensebecause HMOs may still provide or arrange for the delivery of basic health care services in accordance with HRS § 432D-1. Instead, this definition focuses on a distinguishing feature of HMOstheir authorization to provide or furnish health care directly to their members through facilities they own or operate and utilizing the services of physicians employed by the HMO. See HRS §§ 432D-1 and 432D-3(a)(3); see also G. ex rel. K., 676 F.Supp.2d at 1081, n. 24. [44]
In support of its position that the Decision nullifies the HMO Act, AlohaCare contends that the legislature intended for the HMO Act to occupy the field of activities to which the HMO Act applies, thereby disallowing other risk-bearing entities to engage in activities authorized by HRS chapter 432D. AlohaCare contends that the legislature was clear in its desire to regulate HMOs because they were not being regulated by any law even though a number were already in business. However, AlohaCare misstates the applicable legislative history, which conversely indicates that the HMO Act was not enacted to preempt the field to which it applies. Prior to the HMO Act's enactment in 1995, HMOs were, in fact, regulated by the Department of Labor and Industrial Relations and were not unregulated entities. See H. Stand. Comm. Rep. No. 168, in 1995 House Journal, at 1091. Thus, contrary to AlohaCare's assertion, the legislative history does not indicate that the act was passed to fill a regulatory void. See H. Stand. Comm. Rep. No. 168, in 1995 House Journal, at 1091. Instead, the legislative history repeatedly reveals that the HMO Act was passed in order to monitor the financial soundness of HMOs. [45] See S. Stand. Comm. Rep. No. 1283, in 1995 Senate Journal, at 1309 (stating that HMOs in Hawaii are not regulated or monitored on a continuing basis for financial soundness[;]  this bill will provide for the prudent financial regulation of HMOs that is needed in Hawaii[;] and that [t]he purpose of this bill is to provide for the financial regulation of [HMOs] in [Hawai`i]) (emphasis added); H. Stand. Comm. Rep. No. 418, in 1995 House Journal, at 1181 (stating that the purpose of this bill is to authorize the regulation of the financial soundness of [HMOS]) (emphasis added); S. Stand. Comm. Rep. No. 884, in 1995 Senate Journal, at 1161 (stating that [s]upporters [of the bill] were interested in guarding against insolvencies in these organizations and protecting the consumers enrolled in these plans from losses[ ]) (emphasis added); H. Stand. Comm. Rep. No. 168, in 1995 House Journal, at 1091 (stating that [t]he purpose of this bill is to regulate [HMOs], including the establishment of minimum financial requirements to ensure the stability of these entities[ ]) (emphasis added). The underlying purpose of regulating the financial soundness of HMOs is further clarified when it is considered that prior to 1995, health insurance companies and mutual benefit societies, like Hawai`i Medical Services Association, were routinely monitored for financial soundness by the Insurance Division of the DCCA, but HMOs were not. See H. Stand. Comm. Rep. No. 168, in House Journal, at 1091. Because the HMO Act does not cover the field of managed care regulation, and because the relevant statutes can be read together and there is no explicit language or policy reason not to give each statute effect, we do not read the HMO Act as repealing HRS chapter 432E by implication. Cf. Gardens at West Maui, 90 Hawai`i at 340-41, 978 P.2d at 778-79 (finding that constitutional provisions and legislative acts covered the whole subject of property taxation power and embraced the entire law in that regard thereby repealing another statute by implication); see also Gustafson, 54 Haw. at 520, 511 P.2d at 162 (reading two statutes together recognizing the rule of statutory interpretation avoiding implied amendment or repeal, and holding that a later-enacted statute did not repeal by implication an earlier-enacted statute because there was an absence of any clear countervailing policy reason to disregard our maxims of statutory construction).