Hawaii Supreme Court Hears Nitta v. HMSA: Landmark Case Spotlights Urgent Need for Fair Provider Contracts and Systemic Healthcare Reform

A legal challenge exposes how one-sided contract terms and restrictive arbitration clauses threaten Hawaii’s provider workforce and patient access, drawing high-profile support and prompting calls for legislative action.

Honolulu, HI June 10, 2025 — The Hawaii Supreme Court’s hearing of Nitta v. HMSA has brought unprecedented attention to the systemic barriers that Hawaii’s healthcare providers face. At the center of this pivotal case is Dr. Frederick Nitta’s challenge to the enforceability of HMSA’s provider contract terms contracts that, according to many, undermine the state’s ability to recruit and retain physicians, particularly in rural and underserved communities.

The hearing, held at Aliʻiolani Hale, was attended by prominent leaders and healthcare advocates, including former Governor Benjamin J. Cayetano and his wife, First Lady Vicky Cayetano. Both expressed solidarity with Dr. Nitta and Hawaii’s provider community, underscoring the broad, bipartisan concern over contract practices that may jeopardize the future of medical care in the islands.

A Systemic Issue, Not an Isolated Dispute

“This case is about more than one provider or contract,” said David Isei, Hawaii Healthcare Task Force Executive Director. “It is about whether Hawaii’s providers who care for our families, friends, and neighbors have any real say in the rules that govern how they practice medicine. The outcome will have far-reaching consequences for every patient in our state.”

Background

• HMSA, Hawaii’s largest health insurer, covers most of the state’s population and sets the terms of provider contracts that most providers cannot refuse.

• HMSA describes its contracts as standardized. Providers, however, widely characterize them as “take it or leave it,” with virtually no opportunity for individual negotiation.

• Arbitration clauses, often deeply embedded and unilaterally drafted, restrict providers’ ability to seek fair dispute resolution and limit available remedies.

• While HMSA references input from the Hawaii Medical Association (HMA), many providers report feeling unrepresented or unaware of the terms being negotiated on their behalf.

Key Legal Issues at Stake

• HMSA seeks to dismiss Dr. Nitta’s claims or compel private arbitration, relying on contract provisions alleged to be unconscionable both procedurally and substantively.

• Plaintiffs argue that the arbitration clause is procedurally unfair due to the lack of negotiation and substantively unjust because it imposes disparate standards and restricts damages.

• The case raises significant questions about the state’s compliance with the Hawaii Uniform Arbitration Act and its broader public policy interests.

Judicial Scrutiny and Public Interest

During oral arguments, the justices of the Hawaii Supreme Court posed incisive questions regarding the fairness and transparency of HMSA’s contracting process:

• “When the substantive terms affect the public health and welfare, do we need heightened scrutiny of the initial contract formulation?”

• “Is the arbitration clause stacked in favor of HMSA? And if so, how?”

• “Is consulting with the Hawaii Medical Association and sending copies out for comment enough, or is more discovery needed to ensure fairness?”

At the same time, the Court sought clarification from Dr. Nitta’s counsel regarding the scope of the challenge, whether it pertains to specific treatment disputes, the arbitration provision, or the entirety of the contract.

Community and Leadership Support

The hearing galvanized support from across Hawaii’s healthcare and civic communities. Former Governor Ben Cayetano, the nation’s first Filipino American state governor and a lifelong advocate for public service and equity, attended with his wife, Vicky Cayetano, to stand with Dr. Nitta and all providers seeking contract reform. Their presence was a powerful reminder of the stakes for Hawaii’s future.

Implications for Hawaii’s Healthcare System

If HMSA’s current contract and arbitration practices are upheld, providers warn that it will:

• Further, it erodes providers’ ability to resolve disputes fairly and transparently.

• Entrench contract terms that do not reflect rural and independent practices' unique needs.

• Accelerate provider burnout and exacerbate the state’s critical provider shortage.

“This case is a turning point,” said Dr. Scott Grosskreutz, a physician leader and advocate for Hawaii’s rural healthcare workforce. “HMSA’s contracts need broader review by additional provider organizations, especially those representing Hawaii’s understaffed Neighbor Island and rural communities, as well as oral health, nursing, and APRN providers. Our state’s future depends on fair and transparent agreements that put patients and communities first.”

Recommendations for Reform

The Hawaii Healthcare Task Force strongly recommends that HMSA’s provider contracts, especially those affecting clinicians practicing in federally designated Health Professional Shortage Areas (HPSAs), undergo additional review by local provider and patient advocacy

organizations, such as the Hawai‘i Rural Health Association. Broader input from organizations representing Neighbor Island and rural communities and oral health, nursing, and APRN providers is essential to ensure that contract terms support access to care where it is needed most.

A Call to Action

The Hawaii Healthcare Task Force urges:

• Lawmakers to reexamine the legality and ethics of forced arbitration in medical contracts.

• Regulators should investigate whether HMSA’s contract practices align with Hawaii’s public policy and healthcare goals.

• The public should recognize that provider shortages and burnout are not merely financial issues but fundamental matters of fairness and power.

The Task Force is committed to advocating for sustainable, patient-centered solutions to Hawaii’s healthcare crisis and encourages all stakeholders to follow the progress of this landmark case.

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About the Hawaii Healthcare Task Force

The Hawaii Healthcare Task Force is dedicated to advancing fair, transparent, and sustainable solutions to the state’s provider shortage and healthcare access crisis. Through advocacy, education, and community engagement, the Task Force brings together stakeholders to build a healthier Hawaii for all.