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

NOT FOR PUBLICATION FILED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
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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
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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
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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.
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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.
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