Embattled medevac firm files bankruptcy

A former employee was awarded over $700,000 after being wrongfully terminated for complaining the company violated state regulations

By Kristen Consillio
The Honolulu Star-Advertiser

HONOLULU — Hawaii Air Ambulance Inc., predecessor of Hawaii Life Flight, filed for bankruptcy Wednesday following a lengthy battle with a former whistleblower employee.

The air medical transport company, which flew critically ill and injured patients between the islands until it merged in 2010 with another medevac provider, AirMed Hawaii, listed former employee James P. Stone as one of two creditors.

Stone, a former Hawaii Life Flight pilot, was awarded $760,680 last year by the Hawaii Labor Relations Board for being wrongfully terminated in 2010 after complaining that his employer did not follow state and federal requirements when refueling planes, among other safety issues. The decision was affirmed by the First Circuit Court. An appeal by Hawaii Life Flight was dismissed in May by the Intermediate Court of Appeals, and the company has filed a second appeal.

The bankruptcy was filed in the middle of the appeals process, essentially preventing the court from moving ahead with the case, said Honolulu attorney Gregory Kugle, who represents Stone.

“(The bankruptcy filing) is a gimmick to try to delay collection efforts. It’s probably a bad-faith filing intended only to try to avoid (paying) James Stone’s judgment,” he said. “We’re evaluating our options, but we are going to continue to pursue recovery of the money they owe Mr. Stone for violating whistleblower protection laws.”

Hawaii Life Flight attorney Jesse Riddle, based in Utah, said the current company has never filed for bankruptcy and is not part of that proceeding. However, Hawaii Life Flight and Hawaii Air Ambulance share common executives, including President Joseph Hunt and Chief Financial Officer Zandra Anderson, who signed the bankruptcy filing on behalf of Hawaii Air Ambulance. The second creditor, Air Medical Resource Group, is the parent company of Hawaii Life Flight Corp.

The company listed assets of up to $50,000 and liabilities of $1 million to $10 million and estimates there will be no funds available to unsecured creditors after the bankruptcy.

Stone, a former Aloha Airlines pilot, joined Hawaii Air Ambulance in 2008 and was laid off in June 2010, shortly after the company merged and changed its name to Hawaii Life Flight.

Meanwhile, Kaiser Foundation Health Plan Inc. is suing Hawaii Life Flight, one of the state’s two air ambulance providers, for secretly funding patient lawsuits against the health plan to pay for what Kaiser calls excessive medevac charges.

The state’s largest health maintenance organization filed the suit in U.S. District Court on Feb. 18, claiming that the air ambulance company is charging exorbitant rates that are significantly higher than those of its competitor, AMR Air Hawaii.

Kaiser’s complaint is related to a lawsuit against the health plan by Toby Sidlo, a tour boat captain who was flown to Oahu after falling into a beach bonfire last year on Kauai. He is the lead plaintiff in a class-action suit against Kaiser, which paid 28 percent — or $14,000 — of his $50,000 air ambulance bill from Hawaii Life Flight. Sidlo was left with a $36,000 balance due and is attempting to get Kaiser to pay the full amount for the emergency transportation services.

Copyright 2016 The Honolulu Star-Advertiser

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