Queen’s asks federal judge to dismiss Kaiser lawsuit

KAILUA-KONA — The Queen’s Health Systems has a filed a motion to dismiss a lawsuit over billing filed in June by Kaiser Health Foundation.

The filing Tuesday in U.S. District Court in Honolulu comes more than two months after Kaiser Health Foundation initiated the litigation following Queen’s notifying the health plan that it would will be billing Kaiser members for the balance of any emergency services it provides that aren’t reimbursed after a contract between Kaiser and Queen’s expired.


Queen’s motion to dismiss sets forth what it says are numerous legal deficiencies in Kaiser’s lawsuit and asks the court to dismiss Kaiser’s claims with prejudice, or permanently.

Judge Derrick K. Watson is set to take up the motion at 10:30 a.m. Oct. 11.

“Though Kaiser represents a small portion of our total volume, Queen’s cannot agree to contracts that place the financial burden of treating patients on the hospital. Doing so would jeopardize Queen’s ability to fulfill the vision of our Founders,” said Mich Riccioni, The Queen’s Health Systems CFO, in a Wednesday news release. “We are willing to have continued discussions with Kaiser, if Kaiser is willing to act in good faith. Regardless of the outcome with Kaiser, Queen’s employees and physicians look forward to the opportunity to continue the work initiated by our Founders, Queen Emma and King Kamehameha IV.”

The dispute stems from the expiration of a hospital services agreement between The Queen’s Medical Center and Kaiser Permanente on May 31. As a result, The Queen’s Health Systems hospitals, including North Hawaii Community Hospital, are no longer considered participating providers within Kaiser’s network.

With the contract’s cessation, Queen’s said in June, services provided to Kaiser members — including Medicare Advantage members, Medicaid members, QUEST Integration members and commercial members — would be billed at non-participating provider rates.

Kaiser’s June 12 complaint asked the court to bar Queen’s from directly billing its members, except for deductibles and co-pays, and to declare Kaiser must only pay “the reasonable value” for emergency services the hospitals provide its members.

Queen’s said Wednesday it will continue to send initial bills directly to Kaiser and that members will only receive invoices if Kaiser refuses to pay. However, billing will be under the “industry standard process” for out-of-network services provided to Kaiser members after May 30.

“Since there is no longer an agreement with Kaiser, there is no longer a favorable negotiated rate and standard rates apply,” the Queen’s Wednesday news release stated.

The release also noted the contract that expired May 31 had been in place for five years. That agreement came after a lawsuit was filed over Kaiser’s failure to pay for services provided to its members.

Since that time, Queen’s said, Kaiser “systematically reduced the volume of its patients utilizing Queen’s services.”

“Queen’s attempted to reach a new agreement with Kaiser, but the parties were unable to come to terms on a new contract. The negotiations failed because Kaiser insisted upon a payment structure that would allocate to Queen’s the financial risk of treating Kaiser members with complicated medical conditions. Kaiser’s refusal to accept its responsibility to pay for the actual costs of services Queen’s provides to its members is what caused the contract negotiations to fail,” the release states.

On Wednesday, Kaiser said it was “disappointed that Queen’s continues to put patients in the middle of a rate negotiation.”

The company is currently paying more than it was when under the contract, which Kaiser said Queen’s terminated and demanded Kaiser “pay rates above market norms that exceed what other hospitals charge.”


“It is unacceptable for Queen’s to use patients, who may already be dealing with serious and stressful health issues, as bargaining tools. Kaiser Permanente filed its lawsuit to protect its members, and other Hawaii residents, from Queen’s repeated threats to use unfair billing practices,” the news release states. “While we remain committed to working toward a fair and equitable agreement, we cannot agree to Queen’s unreasonable demands that make health care increasingly unaffordable. We will not tolerate Queen’s use of patients’ health care as a negotiating tool.

“We look forward to a court reviewing this case and are confident we will prevail following an impartial review of the facts,” the release concluded.

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