WAILUKU - The first legal skirmish in 2nd Circuit Court in a dispute over an exclusive radiology services contract at Maui Memorial Medical Center ended Friday with a judge taking arguments under advisement and setting another hearing for Wednesday morning.
RadCare, a division of EmCare, a national health care company based in Dallas, was supposed to take over radiology services at the hospital Thursday. But a temporary restraining order issued Monday by Judge Kelsey Kawano remained in effect Friday, keeping incumbent contractor Maui Radiology Associates on the job at least until Wednesday.
By then, Kawano is expected to rule on whether the court has jurisdiction to handle the case. A hearing is scheduled for 10 a.m. Wednesday in 2nd Circuit Court.
Maui Radiology Associates is the plaintiff in the case, represented by the Honolulu law firm of Margery Bronster, a former state attorney general. The defendants include Wesley Lo, the hospital's chief executive officer and the Hawaii Health Systems Corp.'s Maui region chief procurement officer; the HHSC; and the corporation's Maui regional system.
Randy Vitousek, representing Lo and Hawaii Health Systems Corp., argued that the physicians with Maui Radiology Associates have no legal basis to challenge the award of the contract to RadCare because the Legislature set up the state's public hospital system to give administrators autonomy to manage procurement, to upgrade facilities and to control costs.
Lawmakers granted public hospital administrators "very broad powers" to manage their facilities, he said. They wanted hospital administrators to be "nimble" and flexible in providing quality health care to residents.
And, because the plaintiffs don't have a legal basis to challenge the contract award, then they cannot prevail on the merits of the case and the temporary retraining order should be lifted, Vitousek argued.
Bronster disputed Vitousek's claim that the court may not review the hospital's bid award to RadCare.
"The law that they cited specifically says that they must comply with procurement policies," she said outside of court. "They have to promulgate policies and then follow them. There's nothing in the law anywhere that says they're exempt from judicial review."
Bronster added that there have been two recent Hawaii Supreme Court decisions that tossed out the same argument made on behalf of other state agencies. The state's high court ruled that the agency's actions are subject to court review, she said.
"If the agency were simply independent that would violate the (state) constitution," she said. "All we're saying is that we're allowed to have the court review this."
Bronster said that if Kawano allows the case to go forward to an evidentiary hearing, the plaintiffs will point out that Maui Memorial violated its own request for proposal policies in reviewing the radiology services contract.
She showed the hospital's request for proposal document that says an applicant would be disqualified and automatically rejected if a proposal is conditional, incomplete, indefinite or ambiguous.
Of the four bidders for the radiology services contract, only Maui Radiology had qualified physicians ready to work at the time the proposals were submitted, she said.
The other three proposals, including RadCare's, were conditional, Bronster said.
Those said, essentially, "if we get selected, we will hire somebody," she said. "Under (the hospital's) own rules, they should have been automatically rejected."
In court, Bronster told Kawano that the defendants didn't want the judge to review the hospital's request for proposals process because it was "rotten."
Outside of court, Vitousek said Maui Radiology finished last in the hospital's bid review process and wanted a $600,000 annual subsidy, while RadCare did not demand a subsidy and would earn money simply by billing patients.
On Tuesday, David Karlen, senior hearings officer with the state Department of Commerce and Consumer Affairs, issued a written ruling that Maui Radiology's request for an administrative hearing was dismissed because the state agency lacks jurisdiction in the case.
Karlen noted three separate laws in which Hawaii Health Systems Corp. is exempt from provisions of the Hawaii Public Procurement Code.
Maui Memorial spokeswoman Carol Clark said that she wanted to assure residents that the legal dispute would not affect hospital services.
"Irrespective of the outcome of these hearings, we are committed to continuing to provide our community with uninterrupted, high-quality radiology services," she said.
* Brian Perry can be reached at bperry@mauinews.com.
