Kaiser Found. Health Plan Inc. v. the Queen's Med. Ctr. Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 8, 2022
• Docket: 19-17283
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 8 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

KAISER FOUNDATION HEALTH PLAN, No. 19-17283 INC., a foreign non-profit corporation, D.C. No. Plaintiff-Appellant, 1:19-cv-00301-DKW-WRP

v. MEMORANDUM* THE QUEEN'S MEDICAL CENTER, INC.,; NORTH HAWAII COMMUNITY HOSPITAL, INC.; MOLOKAI GENERAL HOSPITAL; DOES, 1-10, inclusive,

Defendants-Appellees.

KAISER FOUNDATION HEALTH PLAN, No. 20-15438 INC., a foreign non-profit corporation, D.C. No. Plaintiff-Appellee, 1:19-cv-00301-DKW-WRP

v.

THE QUEEN'S MEDICAL CENTER, INC.,; NORTH HAWAII COMMUNITY HOSPITAL, INC.; MOLOKAI GENERAL HOSPITAL,

Defendants-Appellants,

and

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. DOES, 1-10, inclusive,

Defendant.

Appeal from the United States District Court for the District of Hawaii Derrick Kahala Watson, District Judge, Presiding

Argued and Submitted January 21, 2022 Honolulu, Hawaii

Before: O’SCANNLAIN, MILLER, and LEE, Circuit Judges.

The Queen’s Medical Center (QMC) operates hospitals in Hawaii that

provide emergency care; Kaiser Foundation Health Plan is a health maintenance

organization (HMO). In the past, the two had a series of written contracts setting

the price Kaiser would pay QMC for services that QMC rendered to Kaiser

enrollees. But in May 2019, QMC informed Kaiser that it was terminating those

contracts and that in the future it would provide emergency care to Kaiser members

at 100 percent of billed charges and would “balance bill” Kaiser members for any

amounts Kaiser did not pay.

Kaiser sued QMC in federal district court, seeking declaratory and injunctive

relief. Specifically, it sought a declaration stating that Kaiser was obligated to pay

QMC only the reasonable value of services rendered to Kaiser members under the

principles of quantum meruit, as well as an injunction prohibiting QMC from

demanding more. It also sought a declaration that the Hawaii Health Maintenance

2 Organization Act, Haw. Rev. Stat. § 432D-8, prohibits QMC from “balance

billing” Kaiser members, and an injunction prohibiting QMC from seeking

payment from them. The district court dismissed all of Kaiser’s claims without

leave to amend.

QMC then sought attorney’s fees under Haw. Rev. Stat. § 607-14, but the

district court adopted a magistrate judge’s recommendation that fees be denied.

Kaiser appeals the dismissal of its claims, and QMC cross-appeals the denial of its

motion for attorney’s fees. The district court had jurisdiction under 28 U.S.C.

§ 1332. We have jurisdiction under 28 U.S.C. § 1291, and we vacate in part, affirm

in part, and remand.

1. The district court did not decide whether Kaiser had standing to bring

its claims, but we are obliged to examine standing before addressing the merits.

See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101 (1998). In the rate-

related claims, Kaiser requests a declaration stating that principles of restitution

dictate that it must pay QMC only the reasonable value of services rendered to

Kaiser enrollees. It seeks this declaration to establish the measure of recovery to

which QMC would be entitled in subsequent litigation. But at oral argument, QMC

expressly and unequivocally disclaimed any right to seek such recovery from

Kaiser, stating that it lacks any legal entitlement to be reimbursed by Kaiser for the

cost of emergency services it provides to Kaiser enrollees. This representation to

3 the court by QMC constitutes a judicial admission that is “binding in any forum in

which the same controversy arises.” ACLU of Nev. v. Masto, 670 F.3d 1046, 1065

(9th Cir. 2012). In light of that commitment from QMC, Kaiser cannot show a

“substantial likelihood” that a declaration would redress any injury, so it lacks

standing to seek such relief. Mayfield v. United States, 599 F.3d 964, 971–72 (9th

Cir. 2010) (quoting Johnson v. Stuart, 702 F.2d 193, 196 (9th Cir. 1983)). For

similar reasons, Kaiser lacks standing to seek an injunction. Clapper v. Amnesty

Int’l USA, 568 U.S. 398, 410 (2013). We therefore vacate the district court’s

dismissal with prejudice as to these claims and remand with instructions to dismiss

for lack of jurisdiction.

2. Though Kaiser’s complaint likely could have been amended to

establish standing as to its balance-billing claims, we “decline to order that leave

be granted to amend the complaint” because Kaiser would “still fail to state a

claim.” See Novak v. United States, 795 F.3d 1012, 1020 (9th Cir. 2015). Section

432D-8(d) of the Health Maintenance Organization Act requires that “[e]very

contract between a health maintenance organization and a participating provider of

health care services shall be in writing” and establishes that HMO subscribers and

enrollees “shall not be liable to the provider for any sums owed by the” HMO. It

also prohibits providers from balance billing enrollees “[i]n the event that a

contract with a participating provider has not been reduced to writing” or when “a

4 contract fails to contain the required prohibition.” Haw. Rev. Stat. § 432D-8(d). By

its terms, the statute restricts balance billing only when a contract exists. But

Kaiser does not have an express contract with QMC; it waived any argument that it

and QMC have an implied-in-fact contract; and Hawaii law does not recognize

implied-in-law contracts where, as here, there is no apparent mutual intent to form

a contract. Kemp v. State of Hawai’i Child Support Enf’t Agency, 141 P.3d 1014,

1038 (Haw. 2006). Accordingly, Section 432D-8 does not prohibit QMC from

balance billing Kaiser patients. The district court therefore correctly dismissed

Kaiser’s claim for declaratory relief with prejudice.

Kaiser’s request for an injunction fails here as well. Because Kaiser cannot

plausibly allege that money damages would be inadequate to redress any harm, the

district court correctly denied an injunction. See eBay Inc. v. MercExchange,

L.L.C., 547 U.S. 388, 391 (2006).

3. In the cross-appeal, QMC seeks attorney’s fees under Haw. Rev. Stat.

§ 607-14, which provides that the losing party shall pay the prevailing party’s

attorney’s fees “in all actions in the nature of assumpsit.” Though QMC did not

object to the magistrate’s recommendation that it was not entitled to fees, we may

review this challenge because “failure to object to the magistrate’s report,

‘standing alone’ does not constitute [forfeiture].” Robbins v. Carey, 481 F.3d 1143,

1147 (9th Cir. 2007) (quoting Martinez v. Ylst, 951 F.2d 1153, 1156 (9th Cir.

5 1991)). We review de novo whether the district court correctly interpreted and

applied the relevant statute granting attorney’s fees. Kona Enters., Inc. v. Estate of

Bishop, 229 F.3d 877, 883 (9th Cir. 2000).

“When the recovery of money damages is not the basis of a claim factually

implicating a contract, the action is not ‘in the nature of assumpsit.’” Leslie v.

Estate of Tavares, 994 P.2d 1047, 1053 (Haw. 2000). Kaiser sought declaratory

and injunctive relief; it did not seek money damages. This action is therefore not in

the nature of assumpsit, and QMC is not entitled to attorney’s fees.

The parties shall bear their own costs on appeal.

VACATED IN PART and AFFIRMED IN PART; REMANDED.