Doctors routinely or unfairly denied payments by the Hawaii Medical Service Association can now sue the state's largest health insurer for reimbursement, under a ruling by the state Supreme Court.

In the past, physicians had to go to arbitration if they had a billing problem with HMSA, which is a process some doctors say is unfair. But the high court ruled last week that doctors can take the insurer to court if they can show that HMSA systematically or improperly denied or delayed payments.

Doctors and HMSA said the ruling is not expected to increase costs for consumers. But it will give physicians more leverage when dealing with the insurer on billing issues.

"That's great news for physicians because the arbitration clause in the contract made it difficult for physicians to do anything against HMSA," said Dr. Gerald McKenna, a Kaua'i psychiatrist and former president Hawaii Medical Association, which represents about 1,600 doctors statewide.

"They basically tell you what they're going to pay and you have to take it or leave it," McKenna said.

HMSA spokesman Cliff Cisco said in an e-mailed response that the ruling won't likely have a direct impact on HMSA members' premiums.

Cisco said HMSA will ask the Supreme Court to reconsider its decision, adding that arbitration is the company's preferred option for resolving billing issues.

In previous court filings, the insurer said doctors participating in the HMSA system voluntarily signed agreements that they would take any billing disputes to arbitration.

HMSA, established in 1938, is the state's largest health insurer, covering about 700,000 people statewide.

The Supreme Court's decision reverses a lower court ruling in 2003 by Circuit Judge Dexter Del Rosario.

Del Rosario dismissed separate suits filed in 2002 by the doctors' association and plastic surgeon Maxwell Cooper and neurosurgeon Michon Morita, who alleged that the nonprofit insurer deprived them of millions of dollars by using unfair and anti-competitive reimbursement practices.

The suits also charged that HMSA routinely reduced or denied physicians' claims using computers that automatically "downcode" medical procedures to less expensive reimbursement levels without proper clinical review or justification.

The Supreme Court's ruling does not order HMSA to pay damages to doctors nor does it conclude that HMSA or any other insurer improperly denied or delayed reimbursements. It also does not give doctors the right to sue just because the insurer refuses to pay for parts or all of an individual patient's bill.

Instead, the decision allows doctors to sue HMSA if they can show that the insurer engaged in a systematic attempt to lower the reimbursements in an arbitrary or unfair way.

Morita, one of the doctors who sued HMSA, said HMSA routinely refused to cover some aspects in microsurgery cases involving hundreds of his Parkinson's disease patients.

Morita, the chief of neurosurgery at Queen's and Kapi'olani medical centers, said the underfunding amounted to about $250 for each surgery, which has added up over the years.

Rick Eichor, attorney for the doctors' group, said many doctors feel that the arbitration process is stacked in favor of the insurance company.

Doctors like Morita would have to take HMSA to arbitration for each instance in which the insurer didn't pay the full amount of the medical bill. The process is too cumbersome and time consuming, Eichor said.

HMSA's Cisco said benefit denials are rare and represent a very small portion of total claims paid.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.