Nielsen v. Hawai'i Medical Service Association

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI‘I
ELISE NIELSEN,
Plaintiff,
v.
HAWAI‘I MEDICAL SERVICE
ASSOCIATION,
Defendant.
Case No. 25-cv-00288-DKW-RT
ORDER (1) GRANTING
DEFENDANT’S MOTION TO
DISMISS, AND (2) DISMISSING
COMPLAINT WITH PREJUDICE
After dismissal of her original Complaint with limited leave to amend the
three claims she asserted, Plaintiff Elise Nielsen, proceeding without counsel, filed
an Amended Complaint, this time asserting six claims against Defendant Hawai‘i
Medical Service Association (HMSA), each arising out of HMSA’s alleged denial
of “medically necessary care”. 	HMSA has moved to dismiss the Amended
Complaint with prejudice on numerous grounds, including the failure to comply
with this Court’s earlier instructions, “improper[] expan[sion]” of the claims, and
failure to state a claim. 	Nielsen opposes dismissal, arguing that her amended
claims cure deficiencies with the original Complaint that were identified by the
Court.
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Upon review, the Court finds that Nielsen’s claims, whether newly added or
amended, fail to cure the deficiencies identified in the Order dismissing the original
Complaint. 	Specifically, Nielsen continues to omit the facts, rather than
conclusions, in support of each claim. 	For example, Nielsen—again—asserts that
HMSA acted “on the basis of [her] disability” without any facts that would plausibly
lead to that conclusion. 	Similarly, Nielsen conclusorily asserts that HMSA’s
activities are “traditionally performed by the State” without any explanation of how
or why that is so. 	Once shorn of these and many other factually unsupported
assertions, the amended claims in toto fail to state any plausible claim under federal
pleading standards. 	Therefore, the motion to dismiss, Dkt. No. 46, is GRANTED.
Further, because Nielsen has been apprised of this basic pleading deficiency in the
past and has failed to cure the same, dismissal, this time, is WITH PREJUDICE.
BACKGROUND
I. 	Dismissal of the Complaint
On November 21, 2025, the Court, among other things, dismissed the
Complaint with leave to amend (Dismissal Order). 	Dkt. No. 44. 	The Court
dismissed Nielsen’s claims under the ADA and the Rehabilitation Act because,
except for the conclusory assertion that she had been discriminated against due to
her disability, the Complaint alleged no facts supporting the same. 	In fact, the
Complaint strongly suggested otherwise. 	Id. at 9-10. 	The Court also dismissed
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Nielsen’s claim under Section 1983 for alleged violations of Medicaid regulations
because the Complaint did not allege any relevant State action, as required.
Because it was possible for these deficiencies to be cured, the Court granted leave to
amend, but “only the claims brought under the ADA, the Rehabilitation Act, and
Section 1983….” 	Id. at 12 (emphasis in original).
II. 	The Amended Complaint
Nielsen filed a timely Amended Complaint on December 12, 2025. 	Dkt.
No. 45. 	The Amended Complaint asserts six claims, three more than the original:
(1) discrimination under the Americans With Disabilities Act (ADA) “on the basis
of disability”; (2) denial of benefits and services under Section 504 of the
Rehabilitation Act of 1973 “by reason of [Nielsen’s] disability”; (3) numerous
violations of the “Medicaid Act” under 42 U.S.C. Section 1983 (Section 1983); (4)
violation of procedural due process under Section 1983; (5) violation of equal
protection under Section 1983; and (6) “[r]etaliation” under the ADA and Section
504.1
In connection with these claims, the Amended Complaint alleges as follows.
Nielsen is a “Medicaid beneficiary enrolled in HMSA Quest” who is “permanently
disabled due to complex medical conditions including hEDS, POTS, severe
arrhythmias, gastroparesis, mitochondrial dysfunction, inflammatory myopathies,
1 The Amended Complaint also purports to bring a seventh claim for “declaratory and injunctive
relief”. 	Dkt. No. 45 at ¶ 42. 	However, because this purported claim seeks only relief and relies
upon the preceding claims for such relief, the Court does not construe it as a standalone claim.
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neurological impairment, and autoimmune and vascular complications.” 	Id. at
¶¶ 2, 7. 	HMSA is a “managed care organization (MCO) contracted to administer
Medicaid benefits under Hawai‘i’s Med-QUEST program.” 	Id. at ¶ 9. 	In addition,
the State of Hawai‘i’s Department of Human Services (DHS) “delegates Medicaid
coverage determinations and enforcement of federal Medicaid rights to HMSA
QUEST.” 	Id. at ¶ 11.
Nielsen requires evaluation and treatment from specialists at “Stanford
Medical Center,” including for bladder surgery, immunology, and cardiovascular
electrophysiology. 	Id. at ¶ 12. 	Nielsen’s “treating physicians issued multiple
medically necessary referrals, all approved by the BCBS Medicaid system and valid
through 2026.” 	Id. at ¶ 13. 	“Despite physician approvals,” HMSA “overturned”
her referrals, issued denials, and responded that “in-state alternatives existed when
they did not.” 	Id. at ¶ 14. 	Although Nielsen made “hundreds of documented calls”
to HMSA, HMSA “dropped calls” and failed to process medical requests, leading to
“dangerous delays in cardiology, neurology, and vascular evaluations”. 	Id. at
¶¶ 16-18. 	Also, after Nielsen “asserted rights, filed grievances, and sought judicial
relief, HMSA increased denials, delays, and obstructions.” 	Id. at ¶ 20.
III. 	Motion to Dismiss
On December 24, 2025, HMSA filed the pending motion to dismiss. 	Dkt.
No. 46. 	HMSA argues that all claims in the Amended Complaint should be
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dismissed with prejudice for various reasons. 	First, HMSA asserts that the
Amended Complaint “improperly expanded the scope” of Nielsen’s claims by
alleging “new” claims for retaliation, due process and equal protection, and
violations of Medicaid statutes, without Court approval. 	Second, the Amended
Complaint fails to cure deficiencies in Nielsen’s discrimination claims. 	Third, the
Amended Complaint fails to cure deficiencies in Nielsen’s claim under Section
1983. 	Fourth, the Amended Complaint fails to state a claim for retaliation. 	Fifth,
the Amended Complaint does not allege that Nielsen exhausted “administrative
remedies” related to any alleged coverage determination. 	And sixth, it is
“advisable to refer” Nielsen’s claims to DHS “under the doctrine of primary
jurisdiction.”
Nielsen opposes the motion to dismiss. 	Dkt. No. 49. 	First, she argues that
the “additional” legal theories in the Amended Complaint “directly address []
pleading defects” and arise from the “same operative conduct” as her original
claims. 	Second, she argues that her discrimination claims are “plausibly pleaded”
because the Amended Complaint “alleges procedural exclusion, denial of
accommodations, and systematic barriers to Medicaid access….” 	Third, she argues
that the Amended Complaint sufficiently alleges State action for purposes of her
Section 1983 claims. 	Fourth, she argues that her procedural due process claim
sufficiently alleges “the exact procedures denied.” 	Fifth, she argues that her equal
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protection claim sufficiently alleges that HMSA “treated her differently….” 	Sixth,
she argues that her retaliation claim sufficiently alleges she engaged in protected
activity. 	And seventh, Nielsen argues that her claims are not barred by principles of
administrative exhaustion or primary jurisdiction.
On January 29, 2026, HMSA filed a reply in support of the motion to dismiss.
Dkt. No. 53. 	With briefing complete, this Order now follows.
STANDARD OF REVIEW
Rule 12(b)(6) authorizes the Court to dismiss a complaint that fails “to state a
claim upon which relief can be granted.” 	Rule 12(b)(6) is read in conjunction with
Rule 8(a), which requires “a short and plain statement of the claim showing that the
pleader is entitled to relief.” 	Fed.R.Civ.P. 8(a)(2). 	Pursuant to Ashcroft v. Iqbal,
“[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” 	556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
In addition, “the tenet that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions.” 	Id. 	Accordingly,
“[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” 	Id. (citing Twombly, 550 U.S. at 555).
Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for
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the misconduct alleged.” 	Id. (citing Twombly, 550 U.S. at 556). 	Factual
allegations that only permit the court to infer “the mere possibility of misconduct”
do not show that the pleader is entitled to relief, as required by Rule 8(a)(2). 	Id.
at 679.
In addition, the Court liberally construes the allegations of the pro se
Amended Complaint. 	See Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987).
A pro se litigant is also generally “entitled to notice of the complaint’s deficiencies
and an opportunity to amend prior to dismissal of the action.” 	Lucas v. Dep’t of
Corr., 66 F.3d 245, 248 (9th Cir. 1995).
DISCUSSION
In the Dismissal Order, the Court dismissed Nielsen’s claims because they
improperly relied upon conclusory assertions unsupported by any factual
allegations. 	The Court, nonetheless, permitted Nielsen leave to amend to correct
this deficiency. 	The Amended Complaint, however, fails in this task with respect to
Nielsen’s original and “additional” claims. 	Therefore, for the reasons discussed
more fully below, the motion to dismiss, Dkt. No. 46, is GRANTED. 	Further,
because Nielsen has been apprised of the need to plead factual allegations, and has
failed to correct this deficiency in any meaningful sense, dismissal is WITH
PREJUDICE.
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I. 	The ADA and Rehabilitation Act Claims
Nielsen brings disability discrimination and retaliation claims under both
Title II of the ADA and Section 504 of the Rehabilitation Act. 	Dkt. No. 45 at ¶¶ 1,
39-40. 	Title II of the ADA provides that “no qualified individual with a disability
shall, by reason of such disability, be excluded from participation in or be denied the
benefits of the services, programs, or activities of a public entity, or be subjected to
discrimination by any such entity.” 	42 U.S.C. § 12132. 	To state a prima facie
claim under Title II, a plaintiff must allege:
(1) [s]he is a qualified individual with a disability; (2) [s]he was either
excluded from participation in or denied the benefits of a public entity’s
services, programs, or activities, or was otherwise discriminated
against by the public entity; and (3) such exclusion, denial of benefits,
or discrimination was by reason of [her] disability.
Payan v. Los Angeles Cmty. Coll. Dist., 11 F.4th 729, 737 (9th Cir. 2021)
(quotations omitted).
Section 504 of the Rehabilitation Act provides that “[n]o otherwise qualified
individual with a disability…shall, solely by reason of her or his disability, be
excluded from the participation in, be denied the benefits of, or be subjected to
discrimination under any program or activity receiving Federal financial
assistance….” 	29 U.S.C. § 794(a). 	A prima facie claim under the Rehabilitation
Act mirrors that of the ADA, except, with respect to the second element, instead of
the defendant needing to be a “public entity” as under the ADA, the defendant must
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receive “federal financial assistance” under the Rehabilitation Act. 	See Wong v.
Regents of Univ. of Cal., 192 F.3d 807, 816 (9th Cir. 1999) (involving claims of
employment discrimination under the ADA and the Rehabilitation Act).
As for retaliation, under both the ADA and the Rehabilitation Act, a prima
facie claim requires a plaintiff to show: “(1) involvement in a protected activity, (2)
an adverse … action and (3) a causal link between the two.” 	Coons v. Sec’y of U.S.
Dep’t of Treasury, 383 F.3d 879, 887 (9th Cir. 2004) (quotation omitted). 	The
“causal link” required is “but-for causation….” 	T.B. ex rel. Brenneise v. San Diego
Unified Sch. Dist., 806 F.3d 451, 473 (9th Cir. 2015).
In the motion to dismiss, HMSA argues that these claims are deficient
because, among other things, Nielsen has again failed to allege facts indicating she
was discriminated against by reason of her disability and failed to allege facts
suggesting a causal link between any protected activity and adverse action(s). 	The
Court agrees.
In fact, with respect to disability, the Amended Complaint is essentially a
regurgitation of Nielsen’s doomed allegations from the original: a listing of things
HMSA has allegedly done (or not done), such as “denying medically necessary
care”, followed by the conclusory assertion that it was all “on the basis of disability”.
Dkt. No. 45 at ¶ 25. 	The arguments in Nielsen’s response brief are no different.
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See Dkt. No. 49 at 4-5.2 	As explained in the Dismissal Order, this is insufficient.
Dkt. No. 44 at 9-10. 	As a result, there remains not one factual allegation in the
Amended Complaint indicating that HMSA’s alleged conduct was “on the basis of”
or “because of” disability. 	Instead, the entire premise of disability discrimination is
Nielsen’s say-so. 	The same is true of Nielsen’s retaliation claim, as there are no
factual allegations linking, causally or otherwise, the alleged protected
activity—unidentified grievances, requested accommodations, and this lawsuit—to
the alleged adverse actions—an “increasing” rate of unidentified denials, delays,
and obstruction. 	See Dkt. No. 45 at ¶¶ 39-40.3 	Therefore, Nielsen’s claims under
the ADA and the Rehabilitation Act must be dismissed for failure to state a plausible
claim.
II. 	Section 1983 Claims
Nielsen’s other claims—for alleged violations of Medicaid, due process, and
equal protection—are brought under Section 1983. 	To establish a prima facie
claim under Section 1983, a plaintiff must allege: “(1) the action occurred under
2 In citing Nielsen’s response, the Court cites to the page numbers in the top-right corner of the
same, e.g., “Page 4 of 14”.
3 To the extent one is alleged, which is not clear, the same is also true of any “disparate impact”
claim in the Amended Complaint. 	To state such a claim, a plaintiff must allege that “a facially
neutral government policy or practice has the effect of denying meaningful access to public
services to people with disabilities.” 	Payan, 11 F.4th at 738 (quotation omitted). 	Here, any
claim in this respect is, like Nielsen’s other claims, replete with conclusory assertions, not factual
allegations, including her contention that HMSA’s policies “disproportionately harm disabled
beneficiaries[.]” 	See Dkt. No. 45 at ¶ 25.
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color of law and (2) the action resulted in a deprivation of a constitutional right or a
federal statutory right.” 	Souders v. Lucero, 196 F.3d 1040, 1043 (9th Cir. 1999).
In the motion to dismiss, HMSA argues that Nielsen has failed to sufficiently
allege both elements. 	The Court opts to focus upon the first element—requiring
action under “color of law”, i.e., State action—as it is the one to which deficiency
was identified in the Dismissal Order. 	In that regard, HMSA argues that the
Amended Complaint fails to plead State action because (1) the alleged “contractual
relationship” between HMSA and Hawai‘i is insufficient, and (2) the assertions in
the Amended Complaint--that HMSA performs a “public function”--are conclusory.
The Court agrees.
As explained in the Dismissal Order, although Section 1983 requires State
action, action taken by a private entity, such as HMSA, may be under color of law
“where there is significant state involvement in the action.” 	Dkt. No. 44 at 10-11
(citing Howerton v. Gabica, 708 F.2d 380, 382 (9th Cir. 1983) (quotation omitted)).
As the Court further explained, the allegation that HMSA has contracted with the
State of Hawai’i, without more, does not come close to significant State involvement
in the actions challenged here—i.e., the denial of “medically necessary services”.
In fact, alone, which is all that is alleged in the Amended Complaint, contracting
with the State does not represent any State involvement in HMSA’s alleged
decisions. 	Because this allegation has not changed at all relative to the one made in
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the original Complaint, it remains deficient as a basis to hold HMSA liable under
Section 1983.
This leaves Nielsen’s reliance on HMSA allegedly performing a “traditional,
exclusive public function” in determining benefits eligibility and providing
Medicaid services. 	Dkt. No. 45 at ¶ 10; Dkt. No. 49 at 6. 	The Ninth Circuit Court
of Appeals has described the “public function” test Nielsen relies upon as follows.
It is true that a private entity may be deemed a state actor when it
conducts a public function, but the relevant function must be
traditionally and exclusively governmental. This test is difficult to
meet. It is not enough that the relevant function is something that a
government has exercised in the past, or still does or that the function
serves the public good or the public interest in some way. Rather, the
relevant function must have been traditionally the exclusive prerogative
of the state. Indeed, while many functions have been traditionally
performed by governments, the lean list of the very few recognized
public functions includes running elections, operating a company town,
and not much else.
Prager Univ. v. Google LLC, 951 F.3d 991, 997-998 (9th Cir. 2020) (quotations,
citations, ellipsis, and alterations omitted, emphasis in original).
To state the obvious, HMSA’s alleged actions fall into the “not much else”
bucket, as they involve neither the running of elections nor operating a town.
Putting that aside, in her response, Nielsen identifies not one case or other authority
suggesting that HMSA’s actions—determining eligibility for and providing
Medicaid services—represent traditional and exclusive governmental functions, as
required. 	See Dkt. No. 49 at 6. 	Rather, case law indicates otherwise. 	See Anglin
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v. Kennard, 2025 WL 1224194, at *8 (D. Ariz. Apr. 28, 2025) (collecting cases and
finding that a provider of Medicaid services under contract with the State of Arizona
and pursuant to federal and State statutes was not a State actor for purposes of
Section 1983). 	The Court agrees with this line of cases: Nielsen provides no reason
or basis to find that HMSA, as alleged here, is performing a “public function” or
otherwise should be considered a State actor for purposes of Section 1983. 	The
Court, therefore, finds that all of Nielsen’s Section 1983 claims—i.e., Claims Three
through Five of the Amended Complaint—must be dismissed for failure to state a
plausible claim.
III. 	Dismissal Without Leave to Amend
Dismissal is also without leave to amend and, thus, with prejudice. 	This is
because, despite clear instruction in the Dismissal Order, Nielsen has failed to cure
the identified deficiency: the lack of factual allegations supporting her claims. 	This
deficiency is equally true of the claims newly added in the Amended Complaint.
While the legal premise of the same may be of some difference to the original
claims, all the claims, new or not, suffer from the same pleading deficiency: a
reliance upon conclusions and the absence of factual allegations. 	Having been
advised of this deficiency, and failed to correct it, the Court finds that further
amendment to attempt to do the same thing again meets the definition of futility.
Therefore, all of Nielsen’s claims are DISMISSED WITH PREJUDICE.
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CONCLUSION
For the reasons set forth herein, the motion to dismiss, Dkt. No. 46, is
GRANTED.4 	The Amended Complaint is DISMISSED WITH PREJUDICE for
failure to state a claim.
After entry of this Order, the Clerk is instructed to enter Judgment in favor of
Defendant HMSA and then close this case.
IT IS SO ORDERED.
Dated: March 3, 2026 at Honolulu, Hawai‘i.
4 Because it is unnecessary, the Court does not address herein any other reason for dismissal raised
by HMSA.
___________________________
Derrick K. Watson
Chief United States District Judge
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