The Hawaii Supreme Court has sent a lawsuit filed by a cancer patient’s widow against the Hawaii Medical Service Association back to a lower court for another review.

Patricia Adams’ lawsuit alleges the insurance company acted in bad faith toward its client, her husband Brent Adams, who died in 2008. Adams was diagnosed in 2005 with a rare type of bone marrow cancer and was referred by his doctors to undergo two stem cell transplants.

Adams’ case alleges HMSA failed to inform them in a timely manner, or before a claim was filed, that his policy would not cover the second of two transplants recommended by his doctors for the Stage-3 multiple myeloma.

Courtesy Patricia Adams

A circuit court and intermediate court of appeals initially sided with HMSA, but Adams appealed and the case was sent to the Hawaii Supreme Court, which vacated the former judgements.

“To determine whether an insurer reasonably handled a claim, we consider the conduct of the parties to the contract before and after the formal submission of the claim,” wrote Hawaii Supreme Court Associate Justice Michael Wilson in the opinion. “The Intermediate Court of Appeals analyzed HMSA’s conduct without considering its conduct throughout the duration of its relationship with Brent, starting with the first communication.

HMSA became aware that Brent was considering pursuing an allogenic transplant on Dec. 15, 2005, but did not inform him that an allogenic transplant was not a covered benefit under the Plan until after the claim was submitted on March 2, 2006.”

The case has been sent back to the Intermediate Court of Appeals because “evidence of HMSA’s conduct during its relationship with Brent raises genuine issues of material fact as to whether HMSA ‘unreasonably handle[d]’ Brent’s claim for an allogenic transplant,” the opinion states.

A spokeswoman for HMSA declined to comment on the ongoing litigation.

Tred Eyerly, director at the Damon Key Leong Kupchak Hastert law firm, said the Hawaii Supreme Court opinion sets national precedence for health insurance company conduct.

“If there’s a similar situation in which an insurance company is not accurately giving information to their insured, I think the policy holder’s lawyer would cite this case from the Hawaii Supreme Court,” he said. “You can’t string along the insured into thinking that it’s going to be covered and then when they finally submit a claim, say, ‘No it’s not covered.'”