Opinion of the Court by GINOZA, J.
Defendant-Appellant Hawaii Medical Service Association (HMSA) appeals from the Order Denying HMSA's Motion to Compel Arbitration (Order) filed on April 9, 2008 in the Circuit Court of the First Circuit (circuit court).
On appeal, HMSA contends the circuit court erred in denying its motion to compel arbitration because the Yogis' claims are within the scope of an arbitration provision contained in an HMSA Preferred Provider Plan. For the reasons set forth below, we conclude that the circuit court was correct in denying HMSA's motion to compel arbitration.
The parties do not dispute the facts in this case. In 1997, while working, Bert Yogi (Mr. Yogi) sustained injuries to his shoulder, neck, and back which resulted in multiple surgeries between 1998 and mid-2003. Over the years, Mr. Yogi received various medications to alleviate the pain.
In February 2005, while Mr. Yogi was enrolled in HMSA's Preferred Provider Plan for Hawaii Employer-Union Health Benefits Trust Fund (Plan), his physician, Dr. Endicott, submitted a preauthorization request to HMSA for an intrathecal infusion pump to treat Mr. Yogi.
In January 2006, Mr. Yogi appealed HMSA's denial under an internal appeal process set out in the Plan. Later that month, HMSA issued its internal appeal decision denying coverage.
In February 2006, Mr. Yogi sought external review by initiating a proceeding with the Hawai`i Insurance Commissioner. Such external review was provided for under the terms of the Plan, as required pursuant to Hawaii Revised Statutes (HRS) § 432E-6 (2005 Repl.). A hearing was held before a three-member panel selected by the Insurance Commissioner and, in July 2006, the Insurance Commissioner issued a decision reversing HMSA's denial of coverage for the intrathecal infusion pump. Mr. Yogi thereafter underwent the procedure for placement of the intrathecal infusion pump.
On January 23, 2008, the Yogis initiated this action in the circuit court, alleging that HMSA acted unreasonably, wantonly, and oppressively in denying the preauthorization request for the intrathecal infusion pump. In their complaint, the Yogis assert claims for breach of contract, bad faith, IIED and NIED, and seek damages.
On February 13, 2008, HMSA filed a Motion to Compel Arbitration. After a hearing on March 18, 2008, the circuit court issued its April 9, 2008 Order denying the motion, stating in relevant part:
On May 7, 2008, HMSA filed a Notice of Appeal from the Order denying the motion to compel arbitration.
We review a ruling on a motion to compel arbitration de novo and based on the same standards that apply to a summary judgment ruling. The Hawai`i Supreme Court has articulated the applicable standards as follows:
Koolau Radiology, Inc. v. Queen's Medical Center, 73 Haw. 433, 439-40, 834 P.2d 1294, 1298 (1992) (citations omitted). See also, Brown v. KFC Nat'l Mgmt. Co., 82 Haw. 226, 231, 921 P.2d 146, 151 (1996); Peters v. Aipa, 118 Haw. 308, 312-13, 188 P.3d 822, 826-27 (App.2008).
The standard of review applicable to the circuit court's interpretation of the arbitration agreement is as follows:
Brown, 82 Hawai`i at 239, 921 P.2d at 159 (internal quotation marks and citations omitted).
As set forth by the Hawai`i Supreme Court:
Hawaii Medical Ass'n v. Hawaii Medical Service Ass'n, 113 Haw. 77, 91, 148 P.3d 1179, 1193 (2006).
Here, there is no dispute that an arbitration provision is contained as part of Chapter 8 of the Plan. The crux of this case, therefore, is whether the claims asserted by the Yogis in this action come within the scope of that arbitration provision. Because there are no genuine issues of material fact and the issue presented turns on contract interpretation, we decide the issue on appeal as a matter of law.
Given that our "principal objective is to ascertain and effectuate the intention of the parties as manifested by the contract in its entirety", Brown, 82 Hawai`i at 240, 921 P.2d at 160 (citation omitted), and to give proper context to the arbitration provision in this case, we set out all of the pertinent parts of Chapter 8 of the Plan.
(Emphasis added.)
In addition to the above, Chapter 10 of the Plan contains a provision that the Yogis contend is relevant. It states:
(Emphasis added.)
The Hawai`i Supreme Court has stated:
Hawaii Medical Ass'n, 113 Hawai`i at 92, 148 P.3d at 1194 (emphasis in original).
Particularly important in this case, "a contract `should be construed as a whole and its meaning determined from the entire context and not from any particular word, phrase, or clause.'" Hawaii Medical Ass'n, 113 Hawai`i at 92, 148 P.3d at 1194 (quoting Hawaiian Isles Enters., Inc. v. City & County of Honolulu, 76 Haw. 487, 491, 879 P.2d 1070, 1074 (1994)). Further, "in interpreting contracts, ambiguous terms are construed against the party who drafted the contract." Luke v. Gentry Realty, Ltd., 105 Haw. 241, 249, 96 P.3d 261, 269 (2004) (refusing to enforce an ambiguous arbitration clause despite public policy favoring arbitration).
Based on our reading of the Plan, it does not manifest an intent by the parties to submit to arbitration the Yogis' claims for breach of contract, bad faith, IIED or NIED, which seek money damages. Rather, considering all of its relevant parts, we construe the Plan to mean that arbitration is one of two options an enrollee may select—arbitration or review by a panel appointed by the Insurance Commissioner—to challenge or dispute an HMSA determination, action or decision that the enrollee seeks to change. At best, the arbitration provision is ambiguous.
The starting point for our interpretation of the Plan is the sentence: "[i]f you disagree with HMSA's appeals decision, you must either 1) request arbitration before a mutually selected arbitrator, or 2) request a review by a panel appointed by the Hawaii State Insurance Commissioner." (Emphasis added). Given this language, the scope of any potential arbitration is based on the matters or issues that come within HMSA's appeal process under the Plan.
In turn, the matters or issues within HMSA's appeal process are delineated by the following language: "[i]f you wish to dispute a determination made by HMSA related to coverage, reimbursement, any other decision or action by HMSA, or any other matter related to this Agreement, you must request an appeal." (Emphasis added.) HMSA argues that this language is very broad and that the arbitration provision applies to any dispute related to coverage or to any other matter related to the Plan. We do not read this provision or the Plan so broadly. This language, when properly construed along with the rest of Chapter 8, does not convey an intent that HMSA's appeal process encompasses the type of claims asserted in this case, seeking damages and alleging a series of actions over time denying and delaying approval of a medical procedure. In this action, the Yogis do not seek to have HMSA change its decision about covering the intrathecal infusion pump because that question has already been addressed by the review panel and Mr. Yogi has received the medical procedure. Rather, the Yogis bring this action seeking damages for HMSA's alleged conduct over the approximate year and a half period from when Dr. Endicott sought preauthorization for the intrathecal infusion pump to when Mr. Yogi was able to undergo the procedure.
Similarly, the mandatory contents of an appeal "request", as detailed in Chapter 8, focus on setting out the specific action or decision by HMSA that is being challenged. Under Chapter 8, "[t]o be recognized as an appeal" the request must contain information including: "[t]he date of the service we denied", or the "date of the contested action or decision", or the date of HMSA's denial of coverage for precertification for a service or supply; the provider's name; and "[a] description of facts related to your request and why you believe our action or decision was in error." (Emphasis added.) Requiring this type of information indicates that the intended scope of an internal appeal—and therefore the arbitration provision—is not as broad as HMSA contends and it is not contemplated that the claims for damages brought by the Yogis would be part of the appeal process.
The arbitration provision itself further suggests its limited scope. As noted above, if an enrollee disagrees with HMSA's appeal decision, the enrollee: "must either 1) request arbitration before a mutually selected arbitrator, or 2) request a review by a panel appointed by the Hawaii State Insurance Commissioner." (Emphasis added.) Read in its entirety and within the context of Chapter 8, this language could reasonably be interpreted to mean that the scope of issues to be addressed in arbitration is similar to the scope of issues to be addressed in a panel review.
The parties agree that panel reviews are done pursuant to HRS § 432E-6. Under HRS § 432E-6(a), a panel reviews a managed care plan's final internal determination of a "complaint", and a complaint is defined as "an expression of dissatisfaction, either oral or written." HRS § 432E-1. The three-member panels consist of "a representative from a managed care plan not involved in the complaint, a provider licensed to practice and practicing medicine in Hawaii not involved in the complaint, and the commissioner or the commissioner's designee." The panel is authorized to "issue an order affirming, modifying, or reversing the decision" and to award reasonable attorney's fees and costs. HRS § 432E-6(a) and (e). Under this statutory scheme, given the composition of a panel and the scope of its authority, such panels are not established to consider, nor are they authorized to award, damages. Review panels under HRS Chapter 432E would not address claims such as breach of contract, bad faith, IIED or NIED.
In sum, Chapter 8 of the Plan does not establish an intent by the parties to have the claims in this action subject to the arbitration provision. Rather, a reasonable reading of Chapter 8 leads to the contrary conclusion. At a minimum, there is ambiguity under Chapter 8 regarding the intent and meaning of the arbitration provision. As the drafter of the Plan, ambiguous terms are construed
Chapter 10 of the Plan covers the following areas: "Eligibility for Coverage", "When Coverage Begins", "When Coverage Ends", "Continued Coverage", "Confidential Information" and "Dues and Terms of Coverage". Under the section entitled "Dues and Terms of Coverage," there is a provision entitled "Governing Law". As noted above, the Yogis contend the "Governing Law" provision creates further ambiguity as to the intent of the arbitration provision contained in Chapter 8. The "Governing Law" provision states:
(Emphasis added.) Because this provision speaks to litigating claims against the Plan's coverage in Hawaii's state or federal courts, it undermines HMSA's argument that arbitration is required for any dispute as to coverage or "any other matter" related to the Plan.
HMSA relies on some of the headings within Chapter 10 to contend that the "Governing Law" language applies only where HMSA denies coverage because of lack of eligibility, termination of coverage, or non-payment of dues—in other words, where coverage as a whole does not exist. We disagree. First, the headings, structure and language of Chapter 10 do not support HMSA's argument. Second, such a reading is inconsistent with the language of the "Governing Law" provision itself. The initial sentence states "this coverage will be construed in accord with ... the laws of the state of Hawaii." If, as HMSA argues, this provision applied only where coverage did not exist at all (i.e. for lack of eligibility, termination of coverage, or non-payment of dues), there would be no need to "construe" the coverage. Most importantly, the second sentence applies to "[a]ny action brought because of a claim against this coverage" (emphasis added), and not just claims involving lack of eligibility, termination of coverage, or non-payment of dues.
The "Governing Law" provision in Chapter 10 clearly contemplates litigation in Hawaii's state or federal courts for claims against coverage, and it therefore reflects that the arbitration provision in Chapter 8 is not as broad as HMSA contends. We agree with the Yogis that the "Governing Law" provision adds to the already existing ambiguity of the arbitration provision.
We conclude that the Plan does not reflect an intent by the parties to arbitrate the claims asserted in this action, including the relief sought for damages. Alternatively, at a minimum, the arbitration provision is ambiguous. We therefore affirm the circuit court's denial of HMSA's motion to compel arbitration.
