Ninth Circuit denies AlohaCare’s Medicaid appeal

AlohaCare, the state's nonprofit health plan, has lost its appeal of a U.S. District Court ruling dismissing its lawsuit that sought to overturn the awarding of a $1.5 billion Medicaid contract to two for-profit, mainland-based health plans.

AlohaCare had alleged that the state had violated the Medicaid Act. In a July 14 ruling, the Ninth U.S. Circuit Court of Appeals affirmed the dismissal of AlohaCare’s lawsuit by U.S. District Judge Susan Oki Mollway in June 2008.

The nonprofit HMO was one of three losing bidders for the contract to administer the state’s Quest Expanded Access program. For more than a decade, AlohaCare had provided health-care benefits to underinsured and uninsured families through the state’s Quest program. AlohaCare’s suit claimed it was unfairly shut out of the bidding when the state Department of Human Services in February 2008 awarded the three-year contract to affiliates of Tampa, Fla.-based WellCare Health Plans Inc. and Minneapolis-based UnitedHealth Group.

AlohaCare also filed a protest with the state Procurement Office challenging the validity of the contract, but that also was rejected last year. AlohaCare’s attorneys have said they were reviewing the ruling and exploring options. Last year, a health advocacy group called the Hawaii Coalition for Health filed a similar but separate lawsuit against the state making many of the same allegations as AlohaCare. That lawsuit also was dismissed in Honolulu federal court.