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                                                              Electronically Filed
                                                              Supreme Court
                                                              SCWC-XX-XXXXXXX
                                                              30-SEP-2019
                                                              09:10 AM

           IN THE SUPREME COURT OF THE STATE OF HAWAIʻI

                            ---o0o---
________________________________________________________________

 PATRICIA E.G. ADAMS, IN HER CAPACITY AS PERSONAL REPRESENTATIVE
   OF THE ESTATE OF BRENT ADAMS, AND IN HER PERSONAL CAPACITY,
                 Petitioner/Plaintiff-Appellant,

                                    vs.

               HAWAII MEDICAL SERVICE ASSOCIATION,
                  Respondent/Defendant-Appellee.
________________________________________________________________

                            SCWC-XX-XXXXXXX

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
                 (CAAP-XX-XXXXXXX; 1CC071001388)

                           September 30, 2019

    NAKAYAMA, ACTING C.J., McKENNA, POLLACK, AND WILSON, JJ.,
                   AND CIRCUIT JUDGE SOMERVILLE,
              IN PLACE OF RECKTENWALD, C.J., RECUSED

                 OPINION OF THE COURT BY WILSON, J.

          Brent Adams (“Brent”) was forty years old when he was

diagnosed with stage III multiple myeloma, an aggressive and

life-threatening form of bone marrow cancer.          Doctors determined

that Brent’s best chance of survival was to undergo a tandem

stem cell transplant in which he would receive a transplant of
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his own stem cells, known as an autologous transplant, and, two

to four months later, a stem cell transplant from a matched

sibling donor, referred to as an allogenic transplant.            Shortly

after his diagnosis, Brent informed his insurance provider,

Respondent/Defendant-Appellee Hawaii Medical Service Association

(“HMSA”), of his intent to pursue autologous and allogenic

transplants.     Brent and HMSA worked closely for the next several

months to ensure that Brent’s treatment would be covered by

insurance, but when Brent applied for coverage for the second

phase of the treatment, the allogenic transplant, HMSA denied

the claim.     Less than three years after his diagnosis, Brent

died.

             Brent and his wife, Petitioner/Plaintiff-Appellant

Patricia E.G. Adams (“Patricia”), filed the instant action

alleging that HMSA acted in bad faith in administering Brent’s

claim for the allogenic transplant; following Brent’s death,

Patricia pursued the action in her capacity as personal

representative of Brent’s estate and in her individual capacity.

There are genuine issues of material fact as to whether HMSA

fulfilled its duty of good faith and fair dealing in its

handling of Brent’s claim.      Therefore, the Intermediate Court of

Appeals (“ICA”) erred when it affirmed the holding of the

Circuit Court of the First Circuit (“circuit court”) that there




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are no genuine issues of material fact regarding whether HMSA

acted in bad faith.

                              I.    Background

            Brent was diagnosed with stage III multiple myeloma in

August 2005.    He informed HMSA of his condition on November 1,

2005 and requested information regarding facilities that provide

stem cell transplants.      HMSA directed Brent and Patricia to seek

treatment at City of Hope, an HMSA-approved Blue Quality Center

for Transplant located in Duarte, California. 1          Dr. Anthony Stein

(“Dr. Stein”) enrolled Brent in a clinical trial for stem cell

transplants at City of Hope on December 29, 2005.            At the time

of his diagnosis, Brent was a member of the HMSA Preferred

Provider Plan for Hawaii Employer-Union Health Benefits Trust

Fund (“the Plan”).     Under Chapters 4 and 5 of the Plan, Brent

was required to submit a precertification 2 request by mail or fax

to HMSA seeking approval for the autologous and allogenic

transplants.    HMSA had fifteen days to respond to a non-urgent

request.




      1
            A Blue Quality Center for Transplant “is a centers of excellence
bone marrow program offered through participating Blue Cross Blue Shield
Plans.”
      2
            The Plan defines “precertification” as “a special approval
process to ensure that certain medical treatments, procedures, or devices
meet payment determination criteria prior to the service being rendered.”




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            HMSA assigned case managers to oversee Brent’s case

and they created a log of notes and communications. 3           According

to HMSA’s log, Patricia notified HMSA that she and Brent were

leaving for City of Hope on December 11, 2005 to pursue “testing

and consultation[.]”      Patricia states in her declaration that

she told HMSA that Brent was going to City of Hope specifically

for the autologous and allogenic transplants and asked if there

was anything else that Brent needed to do to inform HMSA of the

treatment plan.     She alleges that HMSA did not provide any

further instructions.

            On December 15, 2005, Dr. Stein submitted a

precertification request for an autologous transplant.             The

request notes that Brent’s siblings would be tested to determine

if they could serve as stem cell donors, in which case Brent

would consider pursuing an allogenic transplant following the

autologous transplant.      HMSA timely approved the request for an

autologous transplant on December 21, 2005.           Two days later,

City of Hope submitted an “urgent” precertification request to

test Brent’s siblings’ stem cells.         The request was rescinded,

however, when HMSA explained to Dr. Stein that HMSA would only

pay for the matched sibling donor if, and when, there was a
      3
            Patricia claims that “[m]any of the things in [the log] do not
square with the facts, and many of the things [the case managers] wrote
either would not have been said or seem to be things they added which were
not discussed.”




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match.    HMSA told Dr. Stein that “[o]nly the testing for the

person donating to this member will be paid for.           If all 5

siblings are tested, only the donor sibling testing will be paid

for.”    This effectively meant that Brent and Patricia would pay

out-of-pocket to test Brent’s five siblings, and if one of the

siblings matched, HMSA would reimburse Brent and Patricia for

the cost of testing the matched sibling.

            Brent underwent an autologous transplant in January

2006.    In preparation for the second phase of the treatment, the

allogenic transplant, Dr. Stein contacted HMSA regarding Brent’s

participation in City of Hope’s clinical trial for stem cell

transplants.    HMSA’s log indicates that HMSA informed Dr. Stein

that clinical trials require precertification approval and are

assessed on a case-by-case basis.        HMSA referred Dr. Stein to

the precertification division and recommended that he submit

data supporting the efficacy of the clinical trial.

            In January and February 2006, Brent and Patricia

communicated numerous times with HMSA about Brent’s intent to

undergo the second phase of his treatment—the allogenic

transplant.    On January 17, 2006, HMSA informed Patricia that

Dr. Stein had yet to submit a precertification request for the

allogenic transplant.     On February 6, 2006, HMSA faxed Dr. Stein

information regarding the process to submit a precertification

request for an allogenic transplant and noted that this request


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was required “if they plan to do anything other than the tandem

autologous transplant.”4      On February 22, 2006, Brent informed

HMSA that one of his siblings appeared to be a match and he

hoped to pursue the allogenic transplant.          HMSA replied that a

precertification request must be submitted and advised Brent

that “[i]n terms of the care plan, the goals remain appropriate

and on target[.]”     Patricia checked on the status of the process

two weeks later, on February 27, 2006, and HMSA informed

Patricia that Dr. Stein had yet to submit a precertification

request for an allogenic transplant.         HMSA noted that Patricia

wanted Dr. Stein to complete the precertification request

because they were “desperately trying to avoid any delays” and

“with the possibility that an allo transplant may be needed,

they will need as much advance notice as possible[.]”             Patricia

maintains that the autologous and allogenic transplants were

recommended by Dr. Stein and accepted by HMSA as Brent’s

treatment plan from the beginning, as evidenced by his attempt

to enroll in the clinical trial for stem cell transplants on

December 29, 2005.     HMSA advised Patricia that each phase of the

treatment required precertification authorization.




      4
            A tandem autologous transplant refers to two autologous
transplants in a row, as opposed to a tandem autologous-allogenic transplant.




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             On March 2, 2006, Dr. Stein submitted a

precertification request for an allogenic transplant. 5            Four days

later, on March 6, 2006, HMSA notified Dr. Stein that the

request was denied because the procedure was “investigational.”

A formal denial letter was mailed on March 8, 2006.            Patricia

and Brent were “taken by surprise[.]”         They viewed the denial as

an abrupt change of position for HMSA, especially in light of

the fact that Brent had a matched sibling donor.            Without

approval for an allogenic transplant, and wary of further delays

in his treatment, Brent underwent a second autologous transplant

in April 2006, instead of an allogenic transplant.

             In February 2007, Dr. Stein submitted another

precertification request for an allogenic transplant.             This,

too, was denied.     HMSA’s internal appeals board upheld the

denial of coverage because multiple myeloma was not listed as a

condition for which an allogenic transplant was covered under

the Plan.6    Shortly thereafter, Brent filed a request for an

      5
            In his deposition, Dr. Stein explained that he waited to file the
precertification request for the allogenic transplant because he was under
the impression that he could not submit the request until it was determined
whether one of Brent’s siblings could serve as a stem cell donor.
      6
            Chapter 6 of the Plan provided “[y]ou are not covered for
transplant services or supplies or related services or supplies other than
those described in Chapter 4: Description of Benefits under Organ and Tissue
Transplants. Related Transplant Supplies are those that would not meet
payment determination criteria but for your receipt of the transplant,
including, and without limitation, all forms of bone marrow or peripheral
stem cell transplants.” Multiple myeloma was not included in the list of
conditions for which allogenic transplants were covered in Chapter 4.




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expedited external review of HMSA’s 2007 denial of coverage for

the allogenic transplant with the Insurance Commissioner of the

Department of Commerce and Consumer Affairs (“Insurance Panel”).

In its April 18, 2007 Findings of Fact, Conclusions of Law, and

Discussion and Order (“FOFs, COLs, and D&O”), the Insurance

Panel reversed HMSA’s 2007 denial of coverage.          The Insurance

Panel found that although the allogenic transplant was not

specifically included under the Plan, it was not specifically

excluded either, and HMSA failed to consider professional

standards of care and expert opinions in concluding that the

efficacy of allogenic transplants was not supported by

sufficient evidence.     The Insurance Panel ordered HMSA to

provide coverage for an allogenic transplant.          Brent finally

received an allogenic transplant covered by HMSA in 2007, but he

died approximately one year later.

     A.     Procedural History
            1.   Related Appeals

            HMSA appealed the Insurance Panel’s decision that the

allogenic transplant was covered under the Plan to the circuit

court.    Shortly thereafter, Brent and Patricia filed the instant

case in circuit court asserting claims for breach of contract,

bad faith, intentional infliction of emotional distress

(“IIED”), negligent infliction of emotional distress (“NIED”),

and punitive damages.     The circuit court stayed the instant case



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pending the resolution of HMSA’s appeal of the Insurance Panel’s

determination granting coverage for the allogenic transplant. 7

             HMSA’s appeal from the Insurance Panel’s decision to

provide coverage for the allogenic transplant was affirmed by

the circuit court; the circuit court held that the allogenic

transplant was covered under the Plan.            HMSA appealed to the ICA

and the ICA reversed the circuit court, holding that coverage

for an allogenic transplant was expressly excluded under the

terms of the Plan.       Haw. Med. Serv. Ass’n v. Adams, 120 Hawaiʻi

446, 457, 209 P.3d 1260, 1271 (App. 2009) (“Adams I”).               Because

the ICA found that the allogenic transplant was not covered, it

vacated the circuit court’s judgment and remanded to the circuit

court with instructions to reverse the Insurance Panel’s FOFs,

COLs, and D&O granting coverage for the allogenic transplant.

Id.

             After the circuit court reversed the Insurance Panel’s

FOFs, COLs, and D&O pursuant to the ICA’s order, HMSA moved to

lift the stay and sought summary judgment on all claims in the

instant case, which included breach of contract, bad faith,

IIED, NIED, and punitive damages. 8         The circuit court granted


       7
             The Honorable Eden E. Hifo presided.
       8
            By this time, Brent had passed away. Patricia continued the
lawsuit in her capacity as personal representative of the estate of Brent and
in her individual capacity.




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summary judgment in favor of HMSA on all claims.           On appeal, the

ICA affirmed in part and reversed in part the circuit court’s

judgment.     Adams v. Haw. Med. Serv. Ass’n, No. 30314, 2013 WL

5443025, at *2 (App. Sept. 30, 2013) (SDO) (“Adams II”).            The

ICA affirmed the circuit court’s grant of summary judgment in

favor of HMSA as to the breach of contract claim.           Id. at *2.

It held that there were no genuine issues of material fact

because it previously found, in Adams I, that the Plan expressly

excluded coverage for allogenic transplants for the treatment of

multiple myeloma.     Id. at *1.    Accordingly, the ICA affirmed the

finding of the circuit court that HMSA did not breach its

contract with Brent by refusing to cover the allogenic

transplant.     Id. at *1.

            As to the bad faith claim, the ICA vacated the circuit

court’s entry of summary judgment in favor of HMSA on Brent’s

bad faith claim that HMSA mishandled his claim for an allogenic

transplant.     Id. at *2.   In so doing, the ICA distinguished

between an insurer’s bad faith failure to investigate a claim

and an insurer’s bad faith mishandling of a claim.           Id. at *1-2.

The ICA noted that Patricia’s bad faith claim was based on

HMSA’s unreasonable delay in notifying Brent that an allogenic

transplant was not a covered benefit under the Plan.           Id. at *2.

The ICA emphasized that in her declaration, Patricia alleged

that she had multiple conversations with HMSA’s representatives


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regarding the allogenic transplant in late 2005 and early 2006

and “they were not forthcoming with information crucial to the

Adamses’ understanding of coverage under the plan, and that

later, in March 2006, when HMSA notified the Adamses that

authorization for the procedure was denied, they were

‘surprised.’”       Id.

             The ICA characterized Patricia’s claim as “an

insurer’s bad faith mishandling of a claim, which would include

an unreasonable handing of a claim, such as an unreasonable

delay.”   Id. at *1.      Based on Patricia’s declaration, and the

fact that HMSA introduced no evidence that the March 2, 2006

request for an allogenic transplant was reasonably handled, the

ICA held that it could not conclude, as a matter of law, that

HMSA reasonably handled Brent’s claim for an allogenic

transplant.     Id. at *2.    Similarly, the ICA found that “based on

the evidence presented below, we cannot say that, as a matter of

law, the Adamses did not present a prima facie case for their

NIED and IIED claims in opposition to HMSA’s motion for summary

judgment.”    Id.     Accordingly, the ICA vacated the circuit

court’s grant of summary judgment in favor of HMSA as to the

NIED and IIED claims, as well as the bad faith claim based on




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HMSA’s mishandling of the claim. 9        Id.   It affirmed the circuit

court’s judgment in all other respects and remanded the case to

the circuit court for further proceedings.           Id.

            2.    The Instant Appeal
                  a)    Circuit Court Proceedings

            On remand to the circuit court, Patricia asserted that

HMSA mishandled Brent’s claim for an allogenic transplant and

therefore acted in bad faith.        She also maintained her claims

for IIED, NIED, and punitive damages.           As to the bad faith

claim, Patricia argued that HMSA knew that Brent was seeking an

allogenic transplant and misled her by providing assurances that

an allogenic transplant would be covered under the Plan.              She

claimed that HMSA intentionally “kept silent” its policy to

exclude coverage for allogenic transplants for the treatment of

multiple myeloma.      By remaining silent about its policy,

Patricia argued, HMSA intentionally delayed the denial of

coverage to deprive Brent of the opportunity to appeal the

      9
            The ICA affirmed the circuit court’s entry of summary judgment in
favor of HMSA on Patricia’s claim for bad faith based on HMSA’s failure to
investigate. Adams II, 2013 WL 5443025, at *2. It addressed Patricia’s
contention that HMSA acted in bad faith by failing to investigate the claim
“by refusing to consider new evidence in 2007 that allo-transplants had been
established as the gold standard for treating patients in Brent’s
circumstances.” Id. The ICA noted that “an insured [cannot] recover for the
tort of bad faith failure to investigate where the insured could not
establish liability on the part of the insurer on the underlying policy.”
Id. (alteration and emphasis in original) (quoting Enoka v. AIG Hawaiʻi Ins.
Co., 109 Hawaiʻi 537, 551, 128 P.3d 850, 864 (2006)). Because there was no
liability on the part of HMSA to pay for the allogenic transplant, the ICA
held that a claim based on HMSA’s failure to investigate the claim could not
lie. Id.




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decision.    Patricia argued that HMSA mishandled the claim by

failing to timely inform Brent that the allogenic transplant was

not covered under the Plan and, therefore, breached the duty of

good faith and fair dealing implied in the insurance contract.

            HMSA denied Patricia’s allegations and brought a

motion for summary judgment on all claims.          HMSA argued that it

was entitled to summary judgment on the bad faith claim,

specifically, because:      (1) the two-day period to deny coverage

was objectively reasonable, (2) HMSA did not “keep silent” its

policy on allogenic transplants for multiple myeloma, and (3) it

did not intentionally deprive Brent of the opportunity to appeal

the decision.    The circuit court agreed and granted HMSA’s

motion for summary judgment as to all claims.

                  b)    ICA Proceedings

            On appeal to the ICA, Patricia challenged the circuit

court’s grant of summary judgment on the bad faith claim, in

part, on the basis that the record contained genuine issues of

material fact with regard to whether HMSA acted in bad faith by

mishandling Brent’s claim.10       In its June 8, 2018 summary


      10
            Patricia alleged three other points of error, none of which are
before this court. She argued that: (1) there was a genuine issue of
material fact as to whether City of Hope and Dr. Stein acted as HMSA’s
agents; (2) City of Hope was not required to identify a matched donor prior
to submitting the precertification request; and (3) the circuit court abused
its discretion by failing to order a continuance to provide Brent an
opportunity to obtain affidavits from his siblings in New Zealand.




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disposition order, the ICA affirmed the circuit court’s order

granting summary judgment in favor of HMSA.            Adams v. Haw. Med.

Serv. Ass’n, CAAP-XX-XXXXXXX, 2018 WL 2753319, at *4 (App. June

8, 2018) (SDO) (“Adams III”).       The ICA determined that no

genuine issues of material fact exist regarding whether HMSA

mishandled the claim because HMSA denied the precertification

request for the claim within the time period required under the

Plan.   Id. at *3.   Noting that Chapter 5 of the Plan explicitly

directed the insured to submit a written precertification

request, the ICA found that the absence of such a request meant

there was no claim for HMSA to process.          Id.    The ICA noted that

Brent’s request for an allogenic transplant was first submitted

on March 2, 2006, and within four days HMSA responded to the

request by calling Dr. Stein to inform him that the request was

denied; the ICA also found significant that a formal denial

letter was dispatched six days later on March 8, 2006.            Id.

Because HMSA responded to the request within fifteen days, as

required under the Plan, the ICA held as a matter of law that

HMSA timely replied to the request.        Id.

           The ICA noted that “the duties of good faith and fair

dealing implied in every insurance contract[] arise after the

insured complies with the claims procedure described in the

insurance policy.”    Id. (citing Safeco Ins. Co. of Am. v. Parks,

88 Cal. Rptr. 3d 730, 740 (Cal. Ct. App. 2009)).            Thus, the ICA


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held, HMSA’s duty of good faith did not arise until Brent

complied with the claims procedure under the Plan by submitting

a formal precertification request for an allogenic transplant.

Id.    Because Brent submitted the request on March 2, 2006 and

HMSA timely responded four days later, on March 6, 2006, the ICA

held that HMSA did not mishandle Brent’s claim.             Id.   It

affirmed the circuit court’s entry of summary judgment in favor

of HMSA on all claims, including the bad faith mishandling

claim.     Id. at *4.

                           II.   Standard of Review

             An appellate court reviews “the circuit court’s grant

or denial of summary judgment de novo.”            Querubin v. Thronas,

107 Hawaiʻi 48, 56, 109 P.3d 689, 697 (2005).            This court has

also articulated that:

             [S]ummary judgment is appropriate if the pleadings,
             depositions, answers to interrogatories, and admissions on
             file, together with the affidavits, if any, show that there
             is no genuine issue as to any material fact and that the
             moving party is entitled to judgment as a matter of law. A
             fact is material if proof of that fact would have the
             effect of establishing or refuting one of the essential
             elements of a cause of action or defense asserted by the
             parties. The evidence must be viewed in the light most
             favorable to the non-moving party. In other words, we must
             view all of the evidence and the inferences drawn therefrom
             in the light most favorable to the party opposing the
             motion.

Id. (alteration in original) (quoting Haw. Cmty. Fed. Credit

Union v. Keka, 94 Hawaiʻi 213, 221, 11 P.3d 1, 9 (2000)).

             Hawaiʻi Rules of Civil Procedure (“HRCP”) Rule 56(e)

(2000) provides in relevant part:


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          When a motion for summary judgment is made and supported as
          provided in this rule, an adverse party may not rest upon
          the mere allegations or denials of the adverse party’s
          pleading, but the adverse party’s response, by affidavits
          or as otherwise provided in this rule, must set forth
          specific facts showing that there is a genuine issue for
          trial. If the adverse party does not so respond, summary
          judgment, if appropriate, shall be entered against the
          adverse party.

Thus, “[a] party opposing a motion for summary judgment cannot

discharge his or her burden by alleging conclusions, ‘nor is he

[or she] entitled to a trial on the basis of a hope that he [or

she] can produce some evidence at that time.’”          Henderson v.

Prof’l Coatings Corp., 72 Haw. 387, 401, 819 P.2d 84, 92 (1991)

(quoting 10A Charles Alan Wright, Arthur R. Miller & Mary Kay

Kane, Federal Practice and Procedure: Civil 2d § 2727 (1983)).

                            III. Discussion

          The issue in this case is whether, viewing the

evidence in the light most favorable to Patricia, the record

contains evidence establishing that HMSA committed the tort of

bad faith by unreasonably handling Brent’s claim for an

allogenic transplant.     It is well settled in this jurisdiction

that in every first-party insurance contract, the implied

covenant of good faith and fair dealing ensures “that neither

party will do anything that will deprive the other of the

benefits of the agreement.”      Best Place, Inc. v. Penn Am. Ins.

Co., 82 Hawaiʻi 120, 123-24, 920 P.2d 334, 337-38 (1996).            A

breach of this covenant is referred to as “bad faith.”            Id. at




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127, 920 P.2d at 341.     When an insurer acts in bad faith, it

gives rise to a cause of action for the tort of bad faith.

          [T]he tort of bad faith is not a tortious breach of
          contract, but rather a separate and distinct wrong which
          results from the breach of a duty imposed as a consequence
          of the relationship established by contract. Therefore,
          the tort of bad faith allows an insured to recover even if
          the insurer performs the express covenant to pay claims.
          As such, an insurer could be liable for the tort of bad
          faith for certain conduct where it would not be liable for
          a tortious breach of contract.

Id. at 131, 920 P.2d at 345 (internal quotation marks and

citation omitted).    Thus, the tort of bad faith does not arise

from a breach of the terms of the contract, but rather, from a

breach of a duty to act in good faith inherent in the

relationship between the insurer and the insured.

          A claim for bad faith arising from the relationship

between the insurer and the insured can be grounded in an

“unreasonable handl[ing]” of the insured’s claim.           Francis v.

Lee Enter., Inc., 89 Hawaiʻi 234, 238, 971 P.2d 707, 711 (1999).

“This court has held that reasonableness can only constitute a

question of law suitable for summary judgment when the facts are

undisputed and not fairly susceptible of divergent inferences,

because, where, upon all the evidence, but one inference may

reasonably be drawn, there is no issue for the jury.”            Willis v.

Swain, 129 Hawaiʻi 478, 496, 304 P.3d 619, 637 (2013) (internal

quotation marks omitted) (quoting Guajardo v. AIG Haw. Ins., 118

Hawaiʻi 196, 206, 187 P.3d 580, 590 (2008)).         Consequently, the




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issue of whether HMSA “unreasonably handle[d,]” Francis, 89

Hawaiʻi at 238, 971 P.2d at 711, Brent’s claim for an allogenic

transplant is suitable for summary judgment if the only

inference to be reasonably drawn from the record is that HMSA

reasonably handled the claim for the allogenic transplant,

Willis, 129 Hawaiʻi at 496, 304 P.3d at 637.

          To determine whether an insurer reasonably handled a

claim, we consider the conduct of the parties to the contract

before and after the formal submission of the claim.           See

Guajardo, 118 Hawaiʻi at 202-07, 187 P.3d at 586-91.           In

Guajardo, the plaintiff was struck by a vehicle while she was

crossing the street.     118 Hawaiʻi at 198, 187 P.3d at 582.           The

insurer of the driver of the vehicle offered to settle the

plaintiff’s claim for $100,000, but the plaintiff’s insurer, AIG

Hawaiʻi Insurance Company, Inc. (“AIG”), refused to authorize the

settlement.   Id.   AIG required the plaintiff to obtain a

judgment against the driver “to protect [AIG’s] subrogation

rights as required under her policy.”        Id.   The plaintiff filed

suit against AIG, alleging that it acted in bad faith by

misrepresenting that the policy required the plaintiff to pursue

the driver to judgment.     Id. at 202, 187 P.3d at 586.         This

court analyzed AIG’s conduct starting at “[t]he first

communication” between the plaintiff and AIG, when the plaintiff

reported that she had been hit by a vehicle.          Id. at 203, 187


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P.3d at 587.   Review of the conduct of AIG throughout the course

of the claims process revealed genuine issues of material fact

as to whether AIG breached its duty of good faith by

unreasonably handling the claim.         Id. at 206, 187 P.3d at 590.

          Similarly, in the instant case, it is necessary to

examine the relationship between the insurer and the insured

throughout the entire claims process, starting from “[t]he first

communication” between the parties, to determine whether the

insurer acted in bad faith.      Id. at 203, 187 P.3d at 587.        It is

not sufficient to determine only whether the insurer complied

with the terms of the contract.       Best Place, 82 Hawaiʻi at 131-

32, 920 P.2d at 346-47; see also Enoka, 109 Hawaiʻi at 552, 128

P.3d at 865 (“Surely an insurer must act in good faith in

dealing with its insured and in handling the insured’s claim,

even when the policy clearly and unambiguously excludes

coverage.”).   Here, the ICA analyzed HMSA’s conduct without

considering its conduct throughout the duration of its

relationship with Brent, starting with the first communication.

The ICA’s analysis was limited to the period from the day the

precertification request was filed, March 2, 2006, to the day

the request was denied, March 6, 2006.         Adams III, 2018 WL

2753319, at *3.    It found that HMSA handled Brent’s claim in a

reasonable manner when it responded to his claim for benefits

within four days of receipt of the request, as required under


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the Plan.     Id.   The covenant of good faith and fair dealing

implied in the insurance contract, however, required HMSA to act

in good faith before and after the formal submission of the

claim.     See Best Place, 82 Hawaiʻi at 131-32, 920 P.2d at 345-46.

Thus, the ICA erred because it did not examine the conduct of

the parties before the formal submission of the claim on March

2, 2006.

             Taking into consideration HMSA’s conduct throughout

its entire contractual relationship with Brent, the record

contains facts that are “fairly susceptible of divergent

inferences,” Willis, 129 Hawaiʻi at 496, 304 P.3d at 637

(citation omitted), regarding whether HMSA “unreasonably

handle[d]” Brent’s claim for an allogenic transplant, Francis,

89 Hawaiʻi at 238, 971 P.2d at 711.       HMSA became aware that Brent

was considering pursuing an allogenic transplant on December 15,

2005, but did not inform him that an allogenic transplant was

not a covered benefit under the Plan until after the claim was

submitted on March 2, 2006.      In light of the evidence in the

record, a reasonable inference could be made that HMSA’s failure

during this two and a half month period to inform the Adamses

that an allogenic transplant was not covered under the Plan

could have led Brent and Patricia to believe that an allogenic

transplant was covered.




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           There is further evidence in the record that could

support the inference that HMSA unreasonably handled the claim

because it was aware that Brent was attempting to test his five

siblings to determine if one was a match, and yet, did not

inform Brent that the treatment was not covered under the Plan.

The December 15, 2005 precertification request for an autologous

transplant noted that Brent’s siblings would be tested to

determine if they could serve as stem cell donors, and that if

one of them could, Brent would consider pursuing an allogenic

transplant.   Two days later, on December 17, 2005, City of Hope

submitted an urgent precertification request to test Brent’s

siblings’ stem cells in the hopes that one of the siblings would

match and Brent would be eligible for an allogenic transplant.

The request was rescinded, however, when HMSA explained to Dr.

Stein that it would only pay for testing if one of the siblings

proved to be a matching donor.       Brent and Patricia paid out-of-

pocket to test Brent’s five siblings to determine whether he was

eligible for an allogenic transplant.        Thus, the record could

support the inference that HMSA unreasonably handled the claim

because it was aware that Brent was taking steps to pursue the

treatment by having his siblings tested, but did not inform

Brent that an allogenic transplant was not covered under the

Plan.   Instead, HMSA’s conduct may have implied that an

allogenic transplant was covered because it assured Brent that


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if one of his siblings was a match, HMSA would pay for the cost

of testing that sibling.

             In the two months preceding the formal submission of

the claim on March 2, 2006, there is evidence that HMSA

continually instructed Brent to submit a precertification

request for an allogenic transplant and assured Brent that his

“care plan” and “goals remain appropriate and on target[.]”

This could also support the inference that HMSA “unreasonably

handle[d]” the claim by leading Brent and Patricia to believe

that an allogenic transplant was covered under the Plan.

Francis, 89 Hawaiʻi at 238, 971 P.2d at 711.         According to HMSA’s

log of its communications with Brent and Patricia, on January

17, 2006, Patricia discussed with HMSA Brent’s intent to pursue

the allogenic transplant if one of his siblings could serve as a

donor.   Also according to the log, on February 22, 2006, Brent

informed HMSA that it appeared that his sibling was a match and

“he didn’t want to wait until the last minute to get [the

allogenic transplant] approved and wanted to know what needs to

happen[.]”    HMSA advised Brent that it sent Dr. Stein the

necessary documentation and instructions for submitting the

precertification request.      HMSA also noted that “[i]n terms of

the care plan, the goals remain appropriate and on target; no

change in plan or acuity.”      Again, on February 27, 2006,

Patricia stated that she checked on the status of approval for


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the allogenic transplant and noted that they “were desperately

trying to avoid any delays[.]”       She also stated that, “with the

possibility that an allo transplant may be needed, they will

need as much advance notice as possible[.]”          HMSA replied that

it would send Dr. Stein another reminder to file the

precertification request.      Dr. Stein submitted the

precertification request on March 2, 2006 and HMSA denied the

claim on March 6, 2006.     Dr. Stein stated in a deposition that

he was surprised by HMSA’s denial of coverage because,

throughout months of contact, HMSA never indicated that an

allogenic transplant was not covered under the Plan:

          My office and other City of Hope personnel had several
          contacts with HMSA in early 2006 attempting to obtain
          authorization for Brent’s second tandem transplant to be an
          allogenic rather than autologous transplant, and we were
          never advised that allogenic transplant was not a benefit
          of Brent’s Plan.

Patricia also described in her declaration being “taken by

surprise” when HMSA denied the claim “because no one had ever

mentioned anything about HMSA denying the allo transplant. . . .

We could not understand how HMSA could suddenly change its

position on covering the allo transplant when we knew Brent had

a matched donor.”    Thus, the statements of Dr. Stein and

Patricia could constitute evidence that HMSA acted in a manner

that may have led Brent, Patricia, and Dr. Stein to believe that

the allogenic transplant was covered under the Plan, which could

support an inference that HMSA unreasonably handled the claim.


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           As noted, “reasonableness can only constitute a

question of law suitable for summary judgment when the facts are

undisputed and not fairly susceptible of divergent

inferences[.]”    Willis, 129 Hawaiʻi at 496, 304 P.3d at 637

(internal quotation marks omitted) (quoting Guajardo, 118 Hawaiʻi

at 206, 187 P.3d at 590).      The foregoing facts are “fairly

susceptible of divergent inferences,” id., namely that HMSA may

or may not have “unreasonably handle[d]” Brent’s claim for an

allogenic transplant.     Francis, 89 Hawaiʻi at 238, 971 P.2d at

711.   Because divergent inferences may be reached based on the

facts of this case, the issue of whether HMSA “unreasonably

handle[d]” Brent’s claim for an allogenic transplant is not

suitable for summary judgment.       Id.

                            IV.    Conclusion

           HMSA’s duty of good faith and fair dealing arose as a

consequence of the relationship established by the insurance

contract entered into by Brent and HMSA.         Evidence of HMSA’s

conduct during its relationship with Brent raises genuine issues

of material fact as to whether HMSA “unreasonably handle[d]”

Brent’s claim for an allogenic transplant.         Id.   We vacate the

ICA’s July 6, 2018 judgment on appeal affirming the circuit

court’s grant of HMSA’s motion for summary judgment on the bad

faith claim and also vacate the circuit court’s order granting

summary judgment in favor of HMSA as to the bad faith claim.                We


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remand to the circuit court for further proceedings consistent

with this opinion.

Rafael G. Del Castillo            /s/ Paula A. Nakayama
Robert H. Thomas
Tred R. Eyerly                    /s/ Sabrina S. McKenna
Joanna C. Zeigler
for Petitioner                    /s/ Richard W. Pollack

Dianne Winter Brookins            /s/ Michael D. Wilson
John-Anderson L. Meyer
for Respondent                    /s/ Rowena A. Somerville




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