The 9th U.S. Circuit Court of Appeals has turned down AlohaCare's effort to challenge the state's award of $1.5 billion in contracts to Mainland companies.

The panel ruled that U.S. District Judge Susan Oki Mollway was correct last June in tossing a lawsuit filed by AlohaCare in Honolulu. AlohaCare attorney Ed Kemper said he and the health plan were reviewing the ruling and exploring their options.

The lawsuit was filed last year as the state worked on switching to a new Medicaid program for blind, elderly and disabled recipients. In preparation, it had awarded contracts for the service to Ohana Health Plan and Evercare, subsidiaries of Mainland health plans WellCare Health Plans and UnitedHealth Group.

In a lawsuit filed last year, Aloha-Care had alleged the state's process in awarding the contracts was flawed because the request for proposals was among other things skewed in favor of for-profit health plans.

AlohaCare, which had been ruled ineligible for bidding on the contracts, had asked the federal court to void the contracts and force the state Department of Human Services to consider it an eligible participant in future procurements.

The appeals court decision was the latest setback for AlohaCare, which had unsuccessfully appealed to Lillian Koller, DHS director, and the state Procurement Office to set aside the contract awards.

A similar lawsuit filed by the Hawaii Coalition for Health also was thrown out last year, while another brought by Medicaid recipients is still proceeding in federal court.

The program, called QExA by the state, started up in February.

The program generated a number of complaints by both Medicaid participants and health care providers in its first few weeks as Ohana, Evercare and the state worked on problems occurring with the new system.