by Andrew Walden
Plaintiffs may sue HMSA over some of the insurer’s medical provider and patient contract language. That’s the word from the State Supreme Court September 12, 2025 ruling in Nitta v HMSA.
Skipping the ICA, the Supreme Court had asserted direct jurisdiction on appeal after a February 2, 2024 Order by 3rd Circuit Judge Robert D S Kim voiding HMSA, HMSA Medicare, and Quest ‘Participating Physician Agreements.’ In his order, Judge Kim described HMSA physician contracts as, “oppressive, unconscionable, and unenforceable.”
Plaintiffs include Dr Frederick Nitta, an OBGYN known as “Hilo’s welfare doctor". In a separate case, the Hawaii Department of Human Services, in February, 2022, was defeated in Hawaii’s Intermediate Court of Appeals suing Nitta for having the temerity to also serve as a General Practitioner after discovering that most of his OBGYN patients couldn’t find a GP due to Hawaii’s chronic shortage of doctors.
Nitta was joined by the Hawaii County Medical Society and medical patients Charlene Orcino and the late Adrian Scott Norton, both of whom suffered due to HMSA meddling.
The State Supreme Court ruling allows plaintiffs to immediately litigate three key claims while relegating others to arbitration.
Here are some key excerpts from the Court opinion:
In general, this appeal concerns whether a doctor and his medical practice, as well as Hawaiʻi Island patients, must be compelled to arbitrate various claims they brought against the Hawaiʻi Medical Service Association (“HMSA”). This appeal concerns arbitrability, not the merits of the alleged unconscionability of various HMSA contracts….
Even if a dispute is arbitrable under an arbitration clause, arbitration clauses are voidable upon such grounds as exist at law or in equity for the revocation of a contract. …. One of those grounds is unconscionability. But unconscionability must be raised and addressed only as to the arbitration clause itself, not as to the contract as a whole. …. In addition, “unless the challenge is to the arbitration clause itself, the issue of the contract’s validity [including unconscionability] is considered by the arbitrator in the first instance.” The Circuit Court of the Third Circuit did not engage in this analytical framework when it addressed HMSA’s motion to compel arbitration and for other relief. Instead of determining whether plaintiffs’ claims were arbitrable, it focused on their claims of unconscionability of the contracts as a whole. The circuit court erroneously addressed the merits, concluding that HMSA’s contracts were unconscionable and caused harm to the plaintiffs.
These rulings were beyond the scope of a motion to compel arbitration. Hence, we vacate in part the circuit court’s order as to certain of plaintiffs’ claims that were arbitrable. But we also determine that one plaintiff’s claims are not arbitrable under an arbitration clause, one plaintiff’s claims are not required to be arbitrated, and another plaintiff’s claims are not subject to a grievance and appeals clause….
ii. Claims of Dr. Nitta as a patient
As a patient insured by HMSA, Dr. Nitta experienced a medical emergency in 2021 and was taken to Queen’s Hospital on Oʻahu. HMSA refused to make any payments to the physicians treating him or to Queens.
iii. Norton’s claims
Norton was a patient of Dr. R. Lee-Ching. After examining Norton, Dr. Lee-Ching referred him for a diagnostic MRI. HMSA denied the recommendation and required Norton to instead undergo physical therapy. Norton’s health then deteriorated, and HMSA allowed Norton to undergo a diagnostic MRI. The MRI revealed prostate cancer that had spread to Norton’s back and spine. Norton was flown to Queen’s Medical Center on Oʻahu for emergency surgery. Once a strong, healthy, active man, Norton became wheelchair-bound with limited walking ability.
iv. Orcino’s claims
Orcino was a patient who entered into a contractual relationship with FNI in 1999. Years later, after examining a pregnant Orcino, Dr. Nitta immediately prescribed Nifedipine to prevent premature labor. But when Orcino went to fill the prescription at two separate pharmacies, she was told HMSA would not honor it. Orcino then spent some time trying to raise money for Nifedipine on her own. During that delay, she went into premature labor and had to be Medivaced to Kapiolani Hospital for Women and Children on Oʻahu, where she delivered a baby at only 25 weeks gestation. The child survived, but now requires significant and regular medical attention based on his developmental challenges resulting from his premature birth….
V. Conclusion
Based on the reasons above, the circuit court’s order is vacated in part and affirmed in part.
Specifically
(1) plaintiffs’ claims arising under the Participating Physician Agreement are subject to arbitration because the delegation provision was unchallenged and it is up to the arbitrator to determine arbitrability;
(2) plaintiffs’ claims arising under the Medicare Agreement and QUEST Agreement are subject to arbitration because the claims are arbitrable and the defense of unconscionability of the arbitration clause fails due to a lack of showing of substantive unconscionability;
(3) Norton’s claims are not subject to arbitration because whether or not an arbitration agreement exists, the subject matter of his claims is not arbitrable;
(4) Dr. Nitta’s claims as a patient under his Small Business CompMED plan are not subject to arbitration because there is no mandatory arbitration clause; and
(5) Orcino’s claims arising under Orcino’s member handbook are not subject to arbitration. Therefore, the claims asserted by Norton, Dr. Nitta as a patient, and Orcino may be bifurcated and proceed to litigation on remand.
We therefore order that this case be remanded to the circuit court for further proceedings consistent with this opinion.
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PDF: Supreme Court Opinion Sept 12, 2025
June 2025: Supreme Court to Decide: Are HMSA Physician Contracts “oppressive, unconscionable, and unenforceable”?
June, 2025: Hawaii justices examine doctors’ ability to challenge denied health insurance claims