(Amended 8/22/13)

No. SCWC-29352 Thursday, October 17, 2013, 8:45 a.m.

STATE OF HAWAI`I, ex rel. DAVID M. LOUIE, Attorney General, and DEAN H. SEKI, Comptroller,

State of Hawai`i, Petitioners/Plaintiffs-Appellants, Cross-Appellees, vs. HAWAI`I GOVERNMENT EMPLOYEES ASSOCIATION, AFSCME LOCAL NO. 152, AFL-CIO; UNITED PUBLIC WORKERS, AFSCME LOCAL NO. 646, AFL-CIO; ROYAL STATE CORPORATION; ROYAL STATE NATIONAL INSURANCE COMPANY, LTD.; THE ROYAL INSURANCE AGENCY, INC.; VOLUNTARY EMPLOYEES’ BENEFIT ASSOCIATION OF HAWAI`I; MANAGEMENT APPLIED PROGRAMMING, INC., Respondents-Defendants-Appellees, Cross-Appellants.

The above-captioned case has been set for argument on the merits at:

Supreme Court Courtroom
Ali`iolani Hale, 2nd Floor
417 South King Street
Honolulu, HI 96813

Attorney for Petitioners:

Deirdre Marie-Iha, Deputy Solicitor General

Attorney for Royal respondents:

Paul A. Schraff of Dwyer Schraff Meyer Grant & Green

Attorneys for Respondent HGEA:

James E.T. Koshiba and Charles A. Price of Koshiba Price Gruebner & Mau

Attorneys for Respondent UPW:

Adrian W. Rosehill and Alan J. Ma of Durrett, Rosehill & Ma, LLLP

NOTE: Order accepting Application for Writ of Certiorari, filed 07/31/13.

NOTE: Order granting in part motions for postponement of oral argument from 09/11/13 to 10/17/13 at 8:45 a.m., filed 08/22/13.

COURT: MER, CJ; PAN, SRA, SSM, & RWP, JJ.

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Brief Description:

Petitioner/plaintiffs-appellants/cross-appellees State of Hawaiʻi, ex rel. David M. Louie, Attorney General, and Dean H. Seki, Comptroller of the State of Hawai`i (collectively, the State), timely petitioned this court for a writ of certiorari to review the April 26, 2013 judgment entered by the Intermediate Court of Appeals (ICA) pursuant to its February 27, 2013 memorandum opinion. The ICA’s judgment affirmed in part and vacated in part the Circuit Court of the First Circuit’s (circuit court) September 29, 2008 judgment against the State. Respondents/defendants-appellees/cross-appellants include the Hawaiʻi Government Employees Association; United Public Workers; Royal State Corporation, Royal State National Insurance Company, Ltd.; The Royal Insurance Agency, Inc.; Voluntary Employees’ Benefit Association of Hawai`i; and Management Applied Programming, Inc.

In brief summary, this case arises out of the Hawai`i Public Employees Health Fund’s (Health Fund) porting program, in which state and county employers made monetary contributions to public employee unions to provide health benefits and long-term care benefits plans to public employees and their dependents. The instant action stems from the State’s allegations that funds ported to certain unions exceeded the “actual cost of coverage.” The circuit court ultimately bifurcated the case into (1) a declaratory judgment action with regard to the interpretation of the statutory phrase “actual monthly cost of coverage” as it appeared in Health Fund statutes, Hawaiʻi Revised Statutes §§ 87-22.3, 87-22.5 and 87-23 (repealed), and (2) dependent on the declaratory judgment ruling, litigation on the State’s remaining claims. The circuit court entered a summary judgment order concluding that “actual monthly cost of coverage” meant “the premium charged by and paid to the carrier” and entered judgment against the State. A majority of the ICA agreed with the circuit court’s interpretation and did not rule on whether the circuit court erred in denying the State leave to amend its complaint.

The State raises two questions in its application, including whether the ICA erred when it: (1) interpreted the phrase “actual monthly cost of the coverage” to mean the premium set by an insurance carrier, where the State alleges that the amount charged for the premium was “grossly inflated” and did not reflect the “actual cost” of the coverage in a legitimate arm’s-length business transaction; and (2) failed to vacate the circuit court’s orders denying the State leave to amend its complaint.