Kaiser Permanente sues Queen’s Health System over contract dispute

Top view of family paper chain on a doctor desk. Medical worktable with keyboard, blue stethoscope, pills and eyeglasses. Family healthcare, medicine and insurance concept.

Kaiser Permanente is turning to the courts to try to resolve a contract dispute with Queen’s Health System, alleging that it is unduly putting Kaiser members in the middle of the fight.

Kaiser, an integrated healthcare system based in Oakland, Calif. that covers individuals at Queen’s four hospitals in Hawaii, disputed Queen’s alleged assertion that it would bill Kaiser members who receive emergency care at Queen’s if Kaiser does not pay all the billed charges, according to a lawsuit Kaiser filed in federal court Wednesday.

The contract expired May 30, although Kaiser maintained that they had an enforceable “implied contract” in place that stipulates Queen’s would still provide emergency services for Kaiser members and Kaiser was still going to pay a “usual and customary” rate.

Kaiser is seeking an injunction to prevent Queen’s from directly billing Kaiser members for emergency services, except for deductibles and co-payments. It also wants to ensure that it only pays the reasonable value for Queen’s services, not the full charges. A similar conflict landed them in court in 2012.

Kaiser cites Hawaii “hold-harmless” statutes that prevent hospitals from seeking payment from the patients under any circumstances, except standard deductibles and co-payments. These provisions apply regardless of whether a contract is written or implied, Kaiser claimed.

“This practice, known as balance billing, is intolerable and puts patients, who may already be dealing with serious and stressful health issues, in the middle of a contract dispute,” Kaiser Permanente said in a statement. “While we remain committed to working toward a fair and equitable agreement, we cannot agree to QHS demands for unreasonable rate increases. Such payments are unsustainable and would greatly increase medical inflation and escalate the overall cost of care for all Hawaii residents.”

Queen’s said in a statement that it is reviewing the lawsuit and will continue to ensure all patients, regardless of insurance coverage, receive the highest-quality care.

“It has been our mission for 160 years to provide great clinical care for all the people of Hawaii, and we will continue to serve all patients, including Kaiser members, any time they need our services,” the company said.

Queen’s also allegedly said that that it would not notify or seek prior-authorization from Kaiser, even though Kaiser is responsible for the payment of some services but not others, Kaiser wrote in the complaint.

This isn’t the first time the organizations have tried to settle a contract debate in court. Queen’s filed a similar lawsuit against Kaiser in 2012 after they failed to reach a new agreement. That lawsuit was settled in 2014.

Queen’s warned that Kaiser would be liable for full charges for Kaiser patients who received care at Queen’s. But Kaiser allegedly enlisted a company known as a “re-pricer” to help it pay “deeply discounted rates,” Queen’s said in the previous complaint.