$1.5B Medicaid contract award suit dismissed

Federal Judge J. Michael Seabright on Aug. 28 ruled in favor of the Hawai‘i Department of Human Services, which oversees public health insurance programs, dismissing a suit filed by a health advocacy group that sought to overturn the award of a $1.5 billion Medicaid contract to two Mainland health plans instead of a local health maintenance organization. The judge gave no immediate reasons for the decision.

The Hawaii Coalition for Health, a physicians and patients advocacy group, sued DHS in June for awarding the three-year contract to Tampa, Fla.-based WellCare Health Plans Inc. and an affiliate of Minneapolis-based UnitedHealth Group, instead of to Honolulu nonprofit AlohaCare.

The coalition’s lawsuit was one of two separate lawsuits that challenged the validity of the Medicaid contract awarded to the Mainland firms. The first, filed by AlohaCare, one of three losing bidders for the contract, was also dismissed.

The suits claimed the state violated federal Medicaid law by awarding the contract to two companies that had no provider networks already established in Hawai‘i, that AlohaCare was unfairly shut out of the bidding and that the state’s request for proposal process was skewed to benefit large, for-profit, out-of-state health plans at the expense of nonprofit Hawai‘i plans.

The Hawaii Coalition for Health sued on behalf of patients who it said would be at “significant risk” under the new contract. The State Procurement Office also rejected in May a formal bid protest by AlohaCare filed in February.