Park v. Haw. Med. Serv. Ass'n

582 F.Supp.3d 760

PARK, Sook Ja; Park, Soon Y.; Park, Grace; and Kim, Jae Sook, on behalf of themselves and on behalf of all others similarly situated, Plaintiffs,

v.HAWAII MEDICAL SERVICE ASSOCIATION, Defendant.

CIV. NO. 21-00039 JMS-WRP

United States District Court, D. Hawai‘i.

Signed January 27, 2022

Rafael G. del Castillo, Jouxson-Meyers & Del Castillo LLLC, Addison D. Bonner, Trevor N. Tamashiro, Tamashiro Sogi & Bonner, a Law Corporation, Honolulu, HI, for Plaintiff Sook Ja Park.

Rafael G. del Castillo, Jouxson-Meyers & Del Castillo LLLC, Addison D. Bonner, Hosoda & Bonner LLLC, Trevor N. Tamashiro, Tamashiro Sogi & Bonner, a Law Corporation, Honolulu, HI, for Plaintiffs Soon Y. Park, Grace Park, Jae Sook Kim.

Dianne W. Brookins, Jenny Nakamoto, John-Anderson L. Meyer, Dentons US LLP, Honolulu, HI, for Defendant.

ORDER GRANTING DEFENDANT'S MOTIONS FOR JUDGMENT ON THE PLEADINGS REGARDING COUNTS VI AND VIII OF THE FIRST AMENDED COMPLAINT, ECF NOS. 65, 66

J. Michael Seabright, Chief United States District Judge

I. INTRODUCTION

Before the court are two Motions for Partial Judgment on the Pleadings, ECF Nos. 65 and 66, filed by Defendant Hawaii Medical Services Association ("HMSA" or "Defendant"). The first Motion seeks judgment on Count VI of Plaintiffs’¹ First Amended Complaint ("FAC"), ECF No. 57, on the basis that Plaintiffs lack statutory standing to assert a claim under Hawaii Revised Statutes ("HRS") § 28-94 because only the Attorney General of the State of Hawaii can bring a claim under that statute. ECF No. 65-1. The second Motion seeks judgment on Count VIII, on the basis that Plaintiffs lack statutory standing to assert a claim under HRS § 480-2 because they are not "consumers," as defined in HRS § 480-1, and also on the basis that the FAC fails to allege facts concerning § 480-2 ’s requirement that there be competitive harm. ECF No. 66-1. For the reasons provided below, the Motions are GRANTED.

II. BACKGROUND

This case concerns the State of Hawaii's Medicaid program. See ECF No. 57. "Medicaid is a joint state-federal funding program for medical assistance in which the Federal Government approves a state plan for the funding of medical services for the needy and then subsidizes a significant portion of the financial obligations the State has agreed to assume." Alexander v. Choate , 469 U.S. 287, 289 n.1, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985). Hawaii's Department of Human Services ("DHS") administers the state's "Plan for Medicaid, QUEST Integration," i.e., the "PLAN." ECF No. 57 at PageID # 506, ¶¶ 5, 8. Through that plan, "DHS contracts with Medicaid Managed Care Organizations (‘MMCO’) such as HMSA ... to arrange or provide medically necessary services, including [Long-Term Services and Supports (‘LTSS’) benefits] and certain home and community-based services (‘HCBS’)," for Medicaid enrollees such as Plaintiffs. Id. at ¶ 6. As Medicaid enrollees, Plaintiffs do not pay for services rendered by HMSA—"the State of Hawaii pays for medical assistance arranged and provided by HMSA." Id. at PageID # 539, ¶ 160. Plaintiffs are thus "beneficiar[ies]." Id. at PageID # 506, ¶ 9. And although Plaintiffs were assigned by DHS to a particular MMCO at the outset of their enrollments, they did have the ability to change MMCOs after that initial assignment. Id.

The FAC is founded on two allegations: first, that HMSA "fail[ed] to properly apply or to reach the correct lawful result of applying the medical necessity criteria which are mandated by Hawaii law to govern covered LTSS benefits." Id. at PageID # 507, ¶ 12. As a result, benefits were improperly denied to Plaintiffs, who are "aged, blind, [or] disabled" and "living alone on very limited means," "all hav[ing] no caregiver" and "unable to care for themselves with sufficient independence to live safely every day in the community without assistance." Id. at PageID ## 507, 510. Some Plaintiffs were allegedly forced to remain HMSA enrollees despite "HMSA continu[ing] to deny [those Plaintiffs] medically necessary covered LTSS benefits," because disenrolling "would [have] deprive[d] them of the relationships they [had] with their (comparatively rare) Korean-speaking providers who participate only with HMSA." Id. at PageID # 508, ¶¶ 13, 15. Other Plaintiffs "were compelled to disenroll from HMSA in order to be covered for medically necessary LTSS services," and "suffered the loss of valuable established relationships with Korean-speaking providers, together with the concomitant loss of continuity of care, a valuable health asset." Id. at ¶ 14.

The second allegation is that all Plaintiffs have Korean backgrounds and speak Korean as their first language, causing "challenging language issues, oral and written," with respect to the delivery of healthcare services in a primarily English-speaking country. See id. at PageID ## 509, 541–42. HMSA, the FAC alleges, "was contractually obligated to effectively address cultural and language barriers to ensure the delivery of appropriate and necessary health services to each [Plaintiff]," but "HMSA's translations violated the cultural competency terms of its contract with DHS because its translations fail to provide Class Representatives and Class Members proper notice of their Medicaid rights and benefits." Id. at PageID # 509, ¶¶ 17, 19.

Those two allegations provide the foundation for the claims asserted in Counts I through X. See id. at PageID ## 548–64. Count VI asserts a claim for "Declaratory Judgment – Elder Abuse" under HRS § 28-94, by alleging that Plaintiffs "were members of the class of elderly persons who were protected from neglect, abuse, and bullying by [ § 28-94 ]," and that "HMSA used [its] position of advantage and power over the health and safety of Class Representatives and Class Members to wrongfully intimidate them into refraining from exercising or pursuing their rights." ECF No. 57 at PageID # 557. Count VI requests "an order declaring that HMSA violated" the elder-abuse statute. Id.

Count VIII asserts claims for "Violation[s] of [HRS] Chapter 480," Hawaii's statute prohibiting unfair and deceptive acts and practices in the conduct of any trade or commerce ("UDAP"). Id. at PageID # 559. Count VIII alleges that Plaintiffs are "consumers" under HRS § 480-1, and that "HMSA acted deceptively and/or misled [Plaintiffs] as to the availability of coverage for HCBS services under the PLAN." ECF No. 57 at PageID # 559 (asserting claim under the "deceptive acts or practices" prong of HRS § 480-2(a) ). Count VIII further alleges that "HMSA is competing unfairly" "[d]ue to its improper handling of HCBS services under the PLAN." ECF No. 57 at PageID # 559 (asserting claim under the "[u]nfair methods of competition" prong of § 480-2(a) ). Count VIII requests "damages in an amount to be proven at trial." ECF No. 57 at PageID # 560.

HMSA filed both Motions on November 29, 2021. ECF Nos. 65, 66. Plaintiffs belatedly filed their Oppositions on January 4, 2022, see ECF Nos. 77 and 78, but the court granted Plaintiffs an extension after the fact, see ECF No. 81. HMSA submitted Replies on January 13, 2022. ECF Nos. 90, 91. And the court held a hearing on the Motions on January 18, 2022. ECF No. 94.

III. STANDARD OF REVIEW

After the pleadings are closed, but early enough not to delay trial, a party may move for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Doe v. United States , 419 F.3d 1058, 1061 (9th Cir. 2005). Analysis under Rule 12(c) is "substantially identical to analysis under Rule 12(b)(6) because, under both rules, a court must determine whether the facts alleged in the complaint, taken as true, entitle the plaintiff to a legal remedy." Chavez v. United States , 683 F.3d 1102, 1108 (9th Cir. 2012) (internal quotation marks and citation omitted). Courts must accept as true the facts as pled by the non-movant and construe the pleadings in the light most favorable to the nonmoving party. See Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1053 (9th Cir. 2011).

Although Rule 12(c) does not expressly address leave to amend versus final dismissal, courts have the discretion to grant a Rule 12(c) motion with leave to amend. Lonberg v. City of Riverside , 300 F. Supp. 2d 942, 945 (C.D. Cal. 2004). "Leave to amend may be denied if a court determines that ‘allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency,’ " i.e., when there is futility. Abagninin v. AMVAC Chem. Corp. , 545 F.3d 733, 742 (9th Cir. 2008) (quoting Schreiber Distrib. Co. v. Serv–Well Furniture Co. , 806 F.2d 1393, 1401 (9th Cir. 1986) ).

IV. ANALYSIS

As for HMSA's Motion challenging Plaintiffs’ elder-abuse claim under HRS § 28-94, the court grants that Motion and dismisses Plaintiffs’ claim because they lack standing under both § 28-94 and the U.S. Constitution. Specifically, Plaintiffs cannot enforce § 28-94—either directly or in a declaratory-judgment posture—because they are not the Attorney General for the State of Hawaii. Further, Plaintiffs seek an impermissible advisory opinion from this court via their request for a declaratory judgment that "may be enforced" by the attorney general. As for HMSA's Motion challenging Plaintiffs’ deceptive-practices claim and unfair-competition claim under HRS § 480-2, the court grants that Motion and dismisses Plaintiffs’ claims. The court dismisses the deceptive-practices claim with prejudice because Plaintiffs lack standing to assert that claim given that they are not "consumers" as defined in HRS § 480-1. The court dismisses the unfair-competition claim—but with leave to amend—because the FAC lacks allegations concerning the required element of competitive harm.

A. Judgment on the Pleadings as to Count VI, the Elder-Abuse Claim

Defendant contends that Plaintiffs’ claim under Hawaii's elder-abuse statute, HRS § 28-94, should be dismissed because a claim under § 28-94 can be brought by only the Attorney General for the ...