Sidlo v. Kaiser Permanente Insurance Company

Filing 507

ORDER DENYING KAISER FOUNDATION HEALTH PLAN INC.'S MOTION FOR SUMMARY JUDGMENT AND GRANTING SUMMARY JUDGMENT IN FAVOR OF HAWAII LIFE FLIGHT CORPORATION AND AIR MEDICAL RESOURCE GROUP, INC. PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 56(F) AND LOCAL RULE 56.1(I) re ( #248 ) Motion for Summary Judgment in case 1:15-cv-00269-ACK-KSC - Signed by JUDGE ALAN C. KAY on 11/17/2016. Associated Cases: 1:15-cv-00269-ACK-KSC, 1:16-cv-00073-ACK-KSC (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
___________________________________
)
TOBY SIDLO, on behalf of himself, )
and all others similarly situated, )
)
Plaintiff(s),
)
)
vs.
) Civ. No. 16-00073 ACK-KSC
) [CONSOLIDATED]
KAISER PERMANENTE INSURANCE
)
COMPANY, a California non-profit
)
corporation, KAISER FOUNDATION
)
HEALTH PLAN, INC., a foreign non- )
profit corporation, and DOE
)
DEFENDANTS 1-50,
)
)
Defendants.
)
___________________________________)
)
KAISER FOUNDATION HEALTH PLAN,
)
INC., a foreign non-profit
)
corporation,
)
)
Plaintiff,
)
)
vs.
)
)
HAWAII LIFE FLIGHT CORPORATION, a )
Hawaii corporation, and AIR
)
MEDICAL RESOURCE GROUP, INC., a
)
Utah Corporation,
)
)
Defendants.
)
___________________________________)
)
HAWAII LIFE FLIGHT CORPORATION, a )
Hawaii corporation,
)
)
Counterclaim Plaintiff, )
)
vs.
)
)
KAISER FOUNDATION HEALTH PLAN,
)
INC., a foreign non-profit
)
corporation,
)

)
Counterclaim Defendant. )
___________________________________)
ORDER DENYING KAISER FOUNDATION HEALTH PLAN INC.’S MOTION FOR
SUMMARY JUDGMENT AND GRANTING SUMMARY JUDGMENT IN FAVOR OF
HAWAII LIFE FLIGHT CORPORATION AND AIR MEDICAL RESOURCE GROUP,
INC. PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 56(F) AND LOCAL
RULE 56.1(I)
For the reasons set forth below, the Court DENIES
Kaiser Foundation Health Plan, Inc.’s Motion for Summary
Judgment Against Hawaii Life Flight and Air Medical Resource
Group.

ECF No. 248.1

Further, because the Court finds as a

matter of law that members may assign their rights under the
health plans to their medical providers without violating the
plans’ anti-assignment provision, the Court GRANTS summary
judgment to that limited extent in favor of Hawaii Life Flight
Corporation and Air Medical Resource Group, Inc. pursuant to
Federal Rule of Civil Procedure 56(f) and Local Rule 56.1(i).
PROCEDURAL BACKGROUND2
On February 18, 2016, Kaiser Foundation Health Plan,
Inc. (“KFHP”) filed a Complaint against Hawaii Life Flight

1

Unless otherwise noted, all Electronic Case File (“ECF”)
citations refer to the civil docket for Sidlo v. Kaiser
Permanente Insurance Company, et al., Civ. No. 15-00269 ACK-KSC,
which has been consolidated with the instant action for purposes
of discovery. See Order Consolidating Cases. ECF No. 85.
2

The Court incorporates by reference the procedural background
as laid out in the Sidlo Summary Judgment Order, filed October
31, 2016. See ECF No. 487.

- 2 -

Corporation (“HLF”) and Air Medical Resource Group, Inc.
(“AMRG”).

KFHP’s Compl. Against HLF and AMRG for Violation of

29 U.S.C. § 1132(a)(3) (“Complaint”), D. Haw., Civ. No. 16-00073
ACK-KSC, ECF No. 1.

KFHP’s claim arises out of the events

underlying and comprising consolidated lawsuit Sidlo v. Kaiser
Permanente Insurance Company, et al., Civ. No. 15-00269 ACK-KSC.
In its Complaint, KFHP alleges HLF and AMRG have violated and
attempted to violate an anti-assignment provision contained in
KFHP’s health plans within Hawaii, which are governed by the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq.

Complaint ¶¶ 49-56.

KFHP alleges that

HLF and/or AMRG “have repeatedly attempted to procure broad
assignments of members of the Plans’ rights, interest, claims
for money due, benefits and/or obligations under the Plans, in
violation of the anti-assignment provision.”

Id. ¶ 33.

More

specifically, KFHP asserts that the Sidlo litigation has been
brought by HLF and/or AMRG in Sidlo’s name, which constitutes a
violation of the anti-assignment provision.

Id. ¶ 35.

HLF

agrees that it is participating in the litigation in Sidlo’s
name.

See Opposition at 2 (“Kaiser and HLF agree that the

subject Kaiser members have assigned to HLF, and HLF has
accepted, the members’ right to enforce Kaiser’s obligation to
pay HLF for the services rendered.”).

- 3 -

HLF and AMRG filed an Answer to the Complaint on April
14, 2016.

ECF No. 102.

against KFHP.
ECF No. 103.

That same day, HLF filed a Counterclaim

HLF’s Countercl. Against KFHP (“Counterclaim”),
HLF’s Counterclaim asserts four counts:

1) unfair

competition in violation of Hawaii Revised Statutes § 480-2; 2)
tortious interference with contract; 3) defamation; and 4) trade
libel/disparagement.

Id. ¶¶ 23-49.

HLF asserts that KFHP, “in

connection with its health insurance services, has made written
and oral demands that hospitals arrange for emergency
transportation of patients exclusively through or as designated
by KFHP, even where those hospitals have contracts with HLF and
contrary to the federal law that exclusively provides that
emergency patient transport is arranged by the treating
physician.”

Id. ¶ 24.

Further, HLF contends that KFHP has sent

letters to patients that received air ambulance services from
HLF, which letters contain “numerous falsehoods,
misrepresentations, and otherwise disparaging and defamatory
statements” regarding HLF.

Id. ¶ 25.

On July 18, 2016, KFHP filed its Motion for Summary
Judgment Against HLF and AMRG, along with a Memorandum in
Support of Motion (“Motion”), ECF No. 248-1, and a Concise
Statement of Facts in Support of Motion for Summary Judgment
(“KFHP’S CSF”), ECF No. 249.

In its Motion, KFHP requests that

the Court issue an order declaring that KFHP’s health plans

- 4 -

contain an enforceable anti-assignment provision; that KFHP has
not waived the anti-assignment provision; and that HLF and AMRG
“cannot enforce assignments against KFHP through, among other
things, the Sidlo Litigation and any other use of an assignment
to stand in the shoes of Members.”

Motion at 25.

On October 17, 2016, HLF and AMRG filed an Opposition
to KFHP’s Motion (“Opposition”), ECF No. 474, as well as a
Response to KFHP’s CSF, which included a Concise Statement of
Facts in Opposition to KFHP’s CSF (“Defs.’ CSF”), ECF No. 476.
In their Opposition, HLF and AMRG request that summary judgment
be granted in their favor pursuant to Local Rule 56.1(i).
at 1.

Id.

KFHP filed a Reply in Support of Motion (“Reply”) on

October 24, 2016.

ECF No. 478.

The Court held a hearing regarding KFHP’s Motion on
November 7, 2016.

During the hearing, the Court notified KFHP

that it was considering granting summary judgment on KFHP’s
Complaint in favor of HLF and AMRG.
FACTUAL BACKGROUND3
KFHP serves as a claim fiduciary of certain group
health plans within the State of Hawaii that are governed by
ERISA.

KFHP’s CSF ¶ 1.

At all relevant times, Consolidated

3

The Court incorporates by reference the factual background as
laid out in the Sidlo Summary Judgment Order, filed October 31,
2016. See ECF No. 487.

- 5 -

Plaintiff Toby Sidlo and a group of proposed class members were
participants in or beneficiaries of these plans.

Id. ¶ 2; Pl.

Toby Sidlo’s First Am. Class Action Compl. (“FAC”) ¶¶ 3, 11, ECF
No. 227.

The documents relevant to the health plans that the

court has considered with respect to this Motion include the
Group Medical and Hospital Service Agreement (“Service
Agreement”) and the Member Handbook.4

See Ex. A to Decl. of May

Goya at 1, ECF No. 249-2; Ex. B to Decl. of Jan Kagehiro at 15,
ECF No. 249-4.
During the relevant time period, HLF provided medical
air transportation services to certain members of KFHP’s health
plans and submitted claims to KFHP for reimbursement of those
services.

Complaint ¶ 7.

AMRG shares certain corporate

officers with HLF and holds a FAA Part 135 Certificate, under
which certain aircraft operate.

Answer ¶¶ 7-8.

HLF is one of

at least nine medical transportation companies affiliated with
AMRG.

Ex. Q to Decl. of Michelle Scannell at 36:5-37:22, ECF

No. 325-26.

4

HLF and AMRG state that “Kaiser’s members’ obligations and
benefits are set forth in the Service Agreement and Benefit
Schedule, not the Member Handbook.” Defs.’ CSF ¶ 38. However,
HLF and AMRG do not appear to deny that the Member Handbook is a
plan document.

- 6 -

I.

The Sidlo Litigation

In the Sidlo litigation, KFHP member Toby Sidlo
alleged that KFHP and Kaiser Permanente Insurance Company
(“KPIC”) violated ERISA by underpaying or under-reimbursing
claims for medical air transportation services provided to plan
participants or beneficiaries by HLF since 2013.

FAC ¶¶ 55-56.

In its Complaint in this action, KFHP alleges that the Sidlo
litigation was “brought by [HLF and AMRG], or either of them, in
Mr. Sidlo’s name, pursuant to a purported assignment, in
violation of the anti-assignment provision of Mr. Sidlo’s Plan.”
Complaint ¶ 35.
The Court issued a Summary Judgment Order in the Sidlo
litigation on October 31, 2016.

In the Order, the Court granted

summary judgment to KFHP on Sidlo’s Count I because it
determined that KFHP properly applied its “Inter-Facility
Transport Policy” when processing Sidlo’s benefits claim.5

The

Court also granted summary judgment in favor of KFHP and KPIC on
Sidlo’s Counts II through V.

As to Sidlo’s Count VI, which

sought a determination that KFHP and KPIC “are liable for the

5

While the Court held that Sidlo’s claim was properly considered
and ruled upon in accordance with the Inter-Facility Transport
Policy, the Court also noted that an issue remains as to whether
KFHP reimbursed HLF at the proper rate. Sidlo Summary Judgment
Order at 62 n.14. However, that issue was not brought before
the Court in the Sidlo litigation, nor has it been brought
before the Court in the instant action.

- 7 -

full unpaid balances owed by each class member under the
doctrine of equitable indemnification as well as all other
indemnity requirements imposed by law,” the Court dismissed the
claim without prejudice after determining that it was not yet
ripe for adjudication.
II.

Appeal to Insurance Commissioner

In addition to the Sidlo litigation, KFHP asserts that
HLF has used KFHP members such as Sidlo to “file HLF-drafted
complaints with the Insurance Commissioner in an attempt to
obtain further payment from KFHP.”

Motion at 15.

In a letter

dated May 22, 2015, Sidlo, through HLF, filed a complaint with
the Hawaii Insurance Commissioner (“Insurance Commissioner”),
requesting that the Insurance Commissioner review Sidlo’s claim
and require that KFHP pay the remaining amount Sidlo claimed
KFHP owed under his health plan.
Scannell, ECF No. 249-22.

Ex. S to Decl. of Michelle

At present, there does not appear to

be an active matter before the Insurance Commissioner regarding
Sidlo’s complaint, as Sidlo never responded to a letter from the
Insurance Commissioner stating, “In the event we do not hear
from you by September 7, 2015, we will presume that this matter
has been resolved to your satisfaction and this file will be
closed and no further action taken.”

See Exs. AA, BB to Decl.

of Michelle Scannell, ECF Nos. 325-36, 325-37.

- 8 -

III.

The Relevant Plan Documents

Sidlo’s Service Agreement lists KFHP as “a fiduciary
to review claims under [the] Service Agreement,” and indicates
that KFHP “has the authority to review claims and determine
whether a Member is entitled to the benefits of [the] Service
Agreement.”

Ex. A to Decl. of May Goya at 1.

It also includes

an anti-assignment provision that states:
Neither this Service Agreement nor any of
the rights, interest, claims for money due,
benefits or obligations hereunder shall be
assigned by Group or Member without the
prior written consent of Health Plan.
Id. at 20.

Further, Section 10.I of the Service Agreement,

entitled “No Waiver,” provides, “Failure by [KFHP] to enforce
any term or condition of this Service Agreement will not be
considered a waiver or an impairment of [KFHP’s] right
thereafter to require strict performance of any term or
condition by Group or Members.”

Id.

The Member Handbook provides information regarding,
among other things, filing a claim, reimbursement for a claim,
and filing an appeal.

With regards to filing a claim, the

Handbook states, “You or the provider should submit a claim
form, including itemized statements describing the services
received.”

Ex. B to Decl. of Jan Kagehiro at 15.

The Handbook

then provides, “If approved, reimbursement is made to providers
according to your health plan benefits.”

- 9 -

Id.

With respect to

appeals, the Handbook states, “If we deny your request for
payment or coverage, you have the right to file an appeal and
ask that we reconsider our decision . . . . You may appoint
someone to file the appeal on your behalf.

If you choose to

appoint a representative, you must name this person in writing
and state that he or she may file the appeal on your behalf.”
Id. at 16.
IV.

HLF’s Assignment Forms

HLF requires its patients to sign certain forms
containing assignment language prior to providing medical air
transport.

Opposition at 4.

Its Standard Ambulance Signature

Form states, in relevant part:
I authorize the submission of a claim for
payment
and
request
that
payment
of
authorized
Medicare,
Medicaid
or
other
insurance benefits to [sic] be made on my
behalf directly to Hawaii Life Flight.
I
assign Hawaii Life Flight all right, title
and interest in all benefit plans from which
my dependents or I are entitled to recover
and agree to immediately remit and assign
any payment for the services provided by
Hawaii Life Flight.
Ex. K to Decl. of Michelle Scannell, ECF No. 249-14.

Prior to

his transport Sidlo signed a Standard Ambulance Signature Form,
which Sidlo, HLF, and AMRG admit is an assignment.

KFHP’s CSF ¶

12; Defs.’ CSF ¶ 12.
Similarly, HLF’s Billing and Consent to Transport Form
provides, in relevant part:

- 10 -

I authorize the submission of a claim for
payment
and
request
that
payment
of
authorized
Medicare,
Medicaid
or
other
insurance benefits to [sic] be made on my
behalf directly to Hawaii Life Flight.
I
assign Hawaii Life Flight all right, title
and interest in all benefit plans from which
my dependents or I are entitled to recover,
and agree to immediately remit and assign
any payment for the services provided by
Hawaii Life Flight.
Ex. N to Decl. of Michelle Scannell, ECF No. 249-17.

Again, the

parties agree that this form constitutes an assignment.
CSF ¶¶ 18-19; Defs.’ CSF ¶¶ 18-19.

KFHP’s

HLF contends that it uses

these forms for all patients – not just Sidlo and other KFHP
members.

Opposition at 5.
Finally, HLF uses a Patient First Agreement, which

states, in relevant part:
2. Excepting my obligation for my copay and
deductible, in consideration for the Company
waiving the right to collect from me the
Balance Bill that I/We owe to the Company
for the Transport, I/We agree to assist the
Company
in
pursuing
all
claims
for
reimbursement
under
my
insurance
policy/plan, including but not limited to,
signing required documents, assisting with
an appeal and filing a lawsuit in my name
under ERISA, or filing a lawsuit in my name
under other laws/actions, in order to compel
payment under the terms of my insurance
policy/plan.
3.
I/We understand and agree that the
Company will select my attorney and that the
Company will have financial responsibility
to pay all expenses, court costs and
attorney fees that they incur in attempting
to collect money from my insurance company.

- 11 -

4.
I/We understand and agree that any
amounts collected by the Company (including
an award of damages, costs and attorney
fees)
will
belong
to
the
Company
to
recompense/reimburse the Company for their
time, costs, for the payment of attorney
fees and for other expenses.
5.
I/We understand and agree that the
Company, in its sole discretion, has the
right to determine and pursue the amount
that they believe should be paid under the
policy.
Ex. O to Decl. of Michelle Scannell, ECF No. 249-18.

HLF sent

the Patient First Agreement to nine individuals who received air
transportation services, and two such individuals signed the
agreement.

KFHP’s CSF ¶ 21; Defs.’ CSF ¶ 21.
V.

HLF’s Joint Litigation Agreement with Sidlo

On July 15, 2015, Sidlo and HLF entered into a Joint
Litigation Agreement (“JLA”) with respect to the Sidlo
litigation.
20.

Ex. Q to Decl. of Michelle Scannell, ECF No. 249-

The JLA states that HLF has engaged counsel to represent

both Sidlo and HLF in the Sidlo litigation, and that HLF agrees
to pay all attorneys’ fees and costs related to the lawsuit.
Id. at 1-2, 4.

The JLA further provides that any recovery will

go to HLF, both to repay it for its attorneys’ fees and costs,
as well as to satisfy any of its outstanding invoices.
4.

Id. at

HLF also “agrees to limit any liability by [Sidlo] to the

amount recovered in Lawsuit after [Sidlo] has paid any co-pay or

- 12 -

out-of-pocket expenses as set out in the Plan.”

Id.

The JLA

states that Sidlo and HLF “agree to waive any conflict of
interest in the Attorneys representing the interests of both HLF
and [Sidlo] as well as other clients similarly situated as
[Sidlo].”

Id. at 1.
KFHP contends that the JLA operates as an assignment

of rights from Sidlo to HLF, a fact which HLF does not dispute.
See Reply at 3.
VI.

HICF 1500 Form and KFHP’s Contract with EMI

When submitting claims to KFHP, HLF fills out KFHP’s
Health Insurance Claim Form (“HICF”) 1500.

Defs.’ CSF ¶ 43.

Box 13 of the form reads, “INSURED’S OR AUTHORIZED PERSON’S
SIGNATURE.

I authorize payment of medical benefits to the

undersigned physician or supplier for services described below.”
Ex. 10 to Decl. of Andrew J. Lautenbach, ECF No. 476-12.

Box 27

states, “ACCEPT ASSIGNMENT?” and has boxes for “YES” and “NO.”
Id.

The HICF 1500 form HLF submitted in connection with Sidlo’s

claim indicates “SIGNATURE ON FILE” for Box 13, and checks “YES”
for Box 27.

Id.

Finally, KFHP has an Administrative Services Agreement
with its third party claims administrator for transportation
claims, Employers Mutual, Inc. (“EMI”).
Andrew J. Lautenbach, ECF No. 476-14.

See Ex. 12 to Decl. of

Article 2 of the

agreement outlines the claims processing services EMI has

- 13 -

contracted to provide for KFHP, and states that “EMI shall
promptly . . . receive, process, adjudicate, and (if
appropriate) pay, in accordance with the terms of the Membership
Agreements, all claims submitted by or on behalf of Members with
respect to medical transportation services and authorized
transportation claims provided by Health Plans’ contracted
medical transportation providers and other air and land
transportation providers identified from time to time by Health
Plans . . . .”

Id. at 5.

Article 2.1.C further provides that

EMI’s services shall include “[v]erify[ing] the validity of
assignments of benefits by Members.”

Id.

STANDARD
Summary judgment is proper where there is no genuine
issue of material fact and the moving party is entitled to
judgment as a matter of law.

Fed. R. Civ. P. 56(a).

Federal

Rule of Civil Procedure (“Rule”) 56(a) mandates summary judgment
“against a party who fails to make a showing sufficient to
establish the existence of an element essential to the party’s
case, and on which that party will bear the burden of proof at
trial.”

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see

also Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252, 1258
(9th Cir. 1999).
“A party seeking summary judgment bears the initial
burden of informing the court of the basis for its motion and of

- 14 -

identifying those portions of the pleadings and discovery
responses that demonstrate the absence of a genuine issue of
material fact.”

Soremekun v. Thrifty Payless, Inc., 509 F.3d

978, 984 (9th Cir. 2007) (citing Celotex, 477 U.S. at 323); see
also Jespersen v. Harrah’s Operating Co., 392 F.3d 1076, 1079
(9th Cir. 2004).

“When the moving party has carried its burden

under Rule 56[(a)] its opponent must do more than simply show
that there is some metaphysical doubt as to the material facts
[and] come forward with specific facts showing that there is a
genuine issue for trial.”

Matsushita Elec. Indus. Co. v. Zenith

Radio, 475 U.S. 574, 586–87 (1986) (citation and internal
quotation marks omitted); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247–48 (1986) (stating that a party cannot
“rest upon the mere allegations or denials of his pleading” in
opposing summary judgment).
“An issue is ‘genuine’ only if there is a sufficient
evidentiary basis on which a reasonable fact finder could find
for the nonmoving party, and a dispute is ‘material’ only if it
could affect the outcome of the suit under the governing law.”
In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing
Anderson, 477 U.S. at 248).

When considering the evidence on a

motion for summary judgment, the court must draw all reasonable
inferences on behalf of the nonmoving party.

Matsushita Elec.

Indus. Co., 475 U.S. at 587; see also Posey v. Lake Pend Oreille

- 15 -

Sch. Dist. No. 84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating
that “the evidence of [the nonmovant] is to be believed, and all
justifiable inferences are to be drawn in his favor”).
Furthermore, Rule 56(f) allows the Court to grant
summary judgment for a nonmovant, so long as “the losing party
has reasonable notice that the sufficiency of his or her claim
will be in issue.”

Norse v. City of Santa Cruz, 629 F.3d 966,

971 (9th Cir. 2010) (citation omitted).

The Ninth Circuit has

expounded on Rule 56’s notice requirement, stating, “Reasonable
notice implies adequate time to develop the facts on which the
litigant will depend to oppose summary judgment.’”

Albino v.

Baca, 747 F.3d 1162, 1176 (9th Cir. 2014) (quoting Buckingham v.
United States, 998 F.2d 735, 742 (9th Cir. 1993)) (concluding
that a party moving for summary judgment had sufficient notice
for purposes of Rule 56(f), because as the movant for summary
judgment, the party had a “full opportunity” to gather evidence
supporting its claim and was on notice of the need to come
forward with all of the evidence in support of its motion).
Similarly, Local Rule 56.1(i) allows the Court to
grant summary judgment in favor of a nonmoving party.

The rule

states:
If a party moves for summary judgment and
the record establishes as a matter of law
that another party is entitled to summary
judgment against the moving party, the
court, in the court’s discretion, may enter

- 16 -

summary judgment against the moving party
after providing that party with oral or
written notice and an opportunity to be
heard.
In order to obtain summary judgment pursuant to Local Rule
56.1(i), a nonmoving party must establish that there is “no
evidence from which a jury could reasonably decide” the relevant
claim in the moving party’s favor.

See Pac. Radiation Oncology,

LLC v. Queen’s Med. Ctr., Civ. No. 12-00064 LEK-KSC, 2014 WL
6749117, at *13 (D. Haw. Nov. 30, 2014) (citation omitted).
DISCUSSION
I.

KFHP’s Motion for Summary Judgment

In its Motion, KFHP argues that HLF has taken an
assignment of rights from Sidlo in violation of an antiassignment provision in KFHP’s health plans.

Motion at 1.

Accordingly, KFHP seeks an order from this Court not only
enjoining HLF’s participation in the Sidlo litigation,6 but also
permanently enjoining HLF’s and AMRG’s solicitation or use of
any forms that purport to effect an assignment of rights from
KFHP’s members to HLF or AMRG.

Id. at 22-25.

HLF and AMRG

argue in their Opposition that HLF has procured a valid
6

To the extent KFHP requests an order enjoining the Sidlo
litigation in its entirety, the Court notes that this would be
inappropriate because Sidlo is not a party to this action and is
therefore unable to defend against this request. However, the
Court also notes that it has in effect dismissed the Sidlo
litigation in its summary judgment Order dated October 31, 2016.

- 17 -

assignment of rights from Sidlo, and that neither an order
enjoining its participation in the Sidlo litigation nor a
permanent injunction precluding future assignments is
appropriate.

Opposition at 2-4.

HLF and AMRG also request that

summary judgment on KFHP’s claim be granted in their favor
pursuant to Local Rule 56.1(i).7
“ERISA provides for a federal cause of action for
civil claims aimed at enforcing the provisions of an ERISA
plan.”

Reynolds Metals Co. v. Ellis, 202 F.3d 1246, 1247 (9th

Cir. 2000) (citing 29 U.S.C. § 1132(e)(1)).

In order to have

standing to bring such a claim, “a plaintiff must fall within
one of ERISA’s nine specific civil enforcement provisions, each
of which details who may bring suit and what remedies are
available.”

Id.

“ERISA’s civil enforcement provision, 29

U.S.C. § 1132(a) identifies only plan participants,
beneficiaries, fiduciaries, and the Secretary of Labor as
persons empowered to bring a civil action.”

Spinedex Physical

Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d
1282, 1288-89 (9th Cir. 2014) (brackets and quotation marks
omitted).
Nevertheless, the Ninth Circuit has held that a
beneficiary may assign his rights under a health care plan to
7

The Court may also enter summary judgment for a nonmoving party
pursuant to Rule 56(f).

- 18 -

his medical provider, which in turn has standing to assert the
beneficiary’s claims pursuant to 29 U.S.C. § 1132(a).

Misic v.

Bldg. Serv. Emps. Health & Welfare Trust, 789 F.2d 1374, 1379
(9th Cir. 1986).

In Misic, the court noted that “[a]ssignment

of trust monies to health care providers results in precisely
the benefit the trust is designed to provide and [ERISA] is
designed to protect.”

Id. at 1377.

However, “absent a valid

assignment enforceable under the plan, there can be no
derivative standing.”

Brand Tarzana Surgical Inst., Inc. v.

Int’l Longshore & Warehouse Union-Pac. Maritime Ass’n Welfare
Plan, Case No. CV 14-3191 FMO (AGRx), 2016 WL 3480782, at *6
(C.D. Cal. Mar. 8, 2016) (citing Davidowitz v. Delta Dental Plan
of Cal., Inc., 946 F.2d 1476, 1480-81 (9th Cir. 1991)); see also
Davidowitz, 946 F.2d at 1481 (“Congress intended not to mandate
assignability, but intended instead to allow the free
marketplace to work out such competitive, cost effective,
medical expense reducing structures as might evolve.”) (emphasis
in original).
Thus, while the Ninth Circuit recognizes the
importance and utility of allowing a beneficiary to assign his
rights to a medical provider, the court has also held that
“anti-assignment clauses in ERISA plans are valid and
enforceable.”

Spinedex, 770 F.3d at 1296; Davidowitz, 946 F.2d

at 1481 (“ERISA welfare plan payments are not assignable in the

- 19 -

face of an express non-assignment clause in the plan.”); see
also id. at 1478 (“As a general rule of law, where the parties’
intent is clear, courts will enforce non-assignment
provisions.”).
Because HLF and AMRG “agree that the subject [KFHP]
members have assigned to HLF, and HLF has accepted, the members’
right to enforce [KFHP’s] obligation to pay HLF for the services
rendered,” Opposition at 2, the Court must determine whether the
health plans contain a valid anti-assignment provision
enforceable against HLF and AMRG.

As KFHP points out, courts in

this circuit have precluded providers from suing on claims
barred by valid anti-assignment provisions.

See, e.g.,

Spinedex, 770 F.3d at 1296-97; Brand Tarzana, 2016 WL 3480782,
at *11.
For their part, HLF and AMRG argue that “[t]here is a
clear distinction between assigning a claim to an unrelated
third-party (for example, a creditor that was not the provider
of a covered medical service) versus assigning a claim to a
provider that provided covered services.”

Opposition at 17.

HLF and AMRG cite to Fifth Circuit case Hermann Hospital v. MEBA
Medical Benefits Plan, which interpreted an anti-assignment
clause as applying “only to unrelated, third-party assignees other than the health care provider of assigned benefits – such
as creditors who might attempt to obtain voluntary assignments

- 20 -

to cover debts having no nexus with the Plan or its benefits, or
even involuntary alienations such as attempting to garnish
payments for plan benefits.”

959 F.2d 569, 575 (5th Cir. 1992)

(overruled on other grounds by Access Mediquip, L.L.C. v.
UnitedHealthcare Ins. Co., 698 F.3d 229 (5th Cir. 2012) (en
banc)).

In Hermann, the health plan at issue contained an anti-

assignment provision that stated:
No employee, dependent or beneficiary shall
have
the
right
to
assign,
alienate,
transfer,
sell,
hypothecate,
mortgage,
encumber, pledge, commute, or anticipate any
benefit payment hereunder, and any such
payment shall not be subject to any legal
process to levy execution upon or attachment
or garnishment proceedings against for the
payment of any claims.
Id. at 574.

Because the provision failed to specify as to whom

a purported assignment would be rendered invalid, the court
concluded the provision did not apply when the assignee was “the
provider of the very services which the plan is maintained to
furnish.”

Id. at 575.

The court continued:

Were we to conclude otherwise, health care
providers such as Hermann, which is entitled
to payment for the services it provided as
benefits covered under the Plan, would be
unable to recover for those services unless
[a beneficiary] were to sue MEBA for
recovery of benefits and Hermann in turn sue
[the beneficiary]. Such a result would be
inequitable as [the beneficiary], knowing
that
any
recovery
from
MEBA
would
immediately go to Hermann, would have no
incentive to pursue payment – and might be

- 21 -

reluctant to sue the Plan maintained by his
own employer or his own union.
Id. at 575.
Here, the Court is likewise troubled that to construe
the anti-assignment provision at issue as barring HLF’s attempts
to bring a civil claim pursuant to a purported assignment of
rights would place members in the middle of a dispute between
KFHP and HLF; indeed, both parties have consistently maintained
that they wish to avoid such member involvement.

Furthermore,

consistent with what the Fifth Circuit alluded to in Hermann,
the Court is concerned that barring such a suit would prevent
this consolidated litigation from reaching the penultimate issue
in this case:

the proper payment for medical air transportation

provided to Sidlo.
Nevertheless, Ninth Circuit precedent does not go so
far as to invalidate any and all anti-assignment provisions as
to medical providers, and in fact, Fifth Circuit precedent has
clarified that Hermann does not “stand[] for the proposition
that all anti-assignment clauses are per se invalid vis-à-vis
providers of health care services.”

LeTourneau Lifelike

Orthotics & Prosthetics, Inc. v. Wal-Mart Stores, Inc., 298 F.3d
348, 352 (5th Cir. 2002).

In LeTourneau, the court was faced

with an anti-assignment provision that stated:
Medical coverage benefits of this Plan may
not be assigned, transferred or in any way

- 22 -

made over to another party by a participant.
Nothing contained in the written description
of
Wal–Mart
medical
coverage
shall
be
construed to make the Plan or Wal–Mart
Stores, Inc., liable to any third-party to
whom a participant may be liable for medical
care, treatment, or services.
Id. at 349 (emphasis added).

There, the court noted that the

anti-assignment provision with which it was faced “[i]n no way
resembl[ed]” the provision in Hermann.

Id. at 351.

Rather, the

provision at issue was “unquestionably directed at providers of
health care services.”

Id.

Accordingly, the court found the

anti-assignment provision did apply to health care providers and
deemed the purported assignment of benefits to the provider
void.

Id. at 352.
Like the provision in LeTourneau, the anti-assignment

provision in Spinedex provided, “You may not assign your
Benefits under the Plan to a non-Network provider without our
consent.”

Spinedex, 770 F.3d at 1296 (emphasis added).

Similarly, the subject anti-assignment provision in Brand
Tarzana included the proviso, “Where benefits are paid directly
to a doctor, hospital, or other provider of care . . . , such
direct payments are provided at the discretion of the Trustees
as a convenience to Plan participants and do not imply an
enforceable assignment of Welfare benefits or the right to
receive such benefits.”

Brand Tarzana, 2016 WL 3480782, at *3

(emphasis added and alteration omitted).

- 23 -

The Court thus finds

wisdom in the Fifth Circuit’s approach and notes that such
reasoning does not contradict this circuit’s precedent.
Unlike the anti-assignment provisions discussed above,
the one at issue in the instant case contain no such language
specifically barring assignments to non-contracted providers
like HLF.

KFHP’s various forms and plan documents, as well as

its method of interacting with providers like HLF, further
support the notion that the anti-assignment provision does not
apply to medical providers.
KFHP argues that the Member Handbook allows medical
providers to submit claims directly, receive direct payment, and
pursue appeals as authorized representatives of members.
at 6-7.

Motion

It asserts that “[t]hese terms show that interactions

with providers during the administrative process are permitted
by the Plans and do not waive the anti-assignment provision.”
Id. at 7.

However, nowhere in the relevant portion of the

Member Handbook, nor in any of the other plan documents, is
there language clarifying that such activities do not serve to
waive the anti-assignment provision, similar to the plan
documents in Brand Tarzana.

Likewise, the anti-assignment

provision in Spinedex suggests that direct payment to a medical
provider will not waive the provision as to that provider.
Spinedex, 770 F.3d at 1296 (“You may not assign your Benefits
under the Plan to a non-Network provider without our consent.

- 24 -

The Claims Administrator may, however, in their discretion, pay
a non-Network provider directly for services rendered to you.”)
(emphasis removed); see also Aviation West Charters, Inc. v.
United Healthcare Ins. Co., No. CV–14–00338–PHX–NVW, 2014 WL
5814232, at *2 (D. Ariz. Nov. 10, 2014) (containing an antiassignment provision stating, “You may not assign your Benefits
under the Policy to a non-Network provider without our consent
. . . . We may, however, in our discretion, pay a non-Network
provider directly for services rendered to you.”).

Here, the

language in the Member Handbook simply states, “If approved,
reimbursement is made to providers according to [the member’s]
plan benefits.”

Ex. B to Decl. of Jan Kagehiro at 15.

There is

no additional language to clarify that such direct reimbursement
does not constitute an assignment.
Additionally, as KFHP asserts, and HLF agrees, the
Member Handbook anticipates that the health care provider can
submit a claim form directly to KFHP.

See id.

If anything, the

type of direct involvement between a medical provider and KFHP
permitted by the Member Handbook suggests that an assignment of
rights to a medical provider is permissible under the plans.
Again, this idea finds support in the fact that missing from the
Member Handbook or other plan documents is any language
clarifying that such activities are encompassed by the antiassignment provision.

Apart from this absence of more specific

- 25 -

language in the anti-assignment provision or plan documents,
there is further evidence that KFHP intended the anti-assignment
provision not to apply to a provider.
For example, KFHP’s Administrative Services Agreement
with EMI directs EMI to “[v]erify the validity of assignments of
benefits by Members” when processing medical air transportation
claims.

Ex. 12 to Decl. of Andrew J. Lautenbach at 5.

KFHP

asserts that this agreement governs EMI’s services for KFHP
nationally, and therefore that this provision does not
necessarily apply to the Hawaii Region or the ERISA plans at
issue.

Reply at 7.

While this agreement does appear to govern

all KFHP health plans for which EMI processes claims, at the
very least it reflects KFHP’s stance that a member can assign
benefits related to a medical air transportation claim in
certain geographic regions, indicating that KFHP does not have
in place a blanket policy against assignments.
In fact, the language in Box 13 on the HICF 1500 form
seems to be the mechanism by which EMI verifies the validity of
such an assignment.8

Specifically, Box 13 states, “INSURED’S OR

8

HLF filled out a HICF 1500 form for Sidlo’s claim and checked
“YES” in Box 27, which states, “ACCEPT ASSIGNMENT?” See
Opposition at 9; Ex. 10 to Decl. of Andrew J. Lautenbach.
However, EMI Vice President John Martella testified that Box 27
applies solely to claims made on behalf of Medicare
beneficiaries. Ex. 11 to Decl. of Andrew J. Lautenbach at
44:10-46:3. Thus, to the extent HLF and AMRG argue that this
(continued . . .)
- 26 -

AUTHORIZED PERSON’S SIGNATURE.

I authorize payment of medical

benefits to the undersigned physician or supplier for services
described below.”

Ex. 10 to Decl. of Andrew J. Lautenbach.

The

signature line in Box 13 for the HICF 1500 form submitted on
behalf of Sidlo states, “SIGNATURE ON FILE.”

Id.

Counsel for

HLF deposed EMI Vice President John Martella on this point, and
the following exchange took place:
Q.
And it says, “Signature on file.”
Is
that indicating to EMI that the provider has
a document that the patient has signed that
authorizes direct payment?
A.

Yes.

Q.
And is that something that EMI is
required to verify prior to making direct
payment to the provider?
A.
Not over and above
indicated on this form.

what

is

already

Q.
Right.
So you are going to check to
make sure that there is a representation on
this form that such a document has been
signed; correct?
A.

Correct.

Q.
But you are not going to go back to the
provider and ask to see a copy of the
document signed by the patient?
A.

No.

. . .
box supports their position that KFHP permits assignments by
members such as Sidlo, who is not a Medicare beneficiary, HLF
and AMRG appear to be incorrect.

- 27 -

Q.
[I]f you were to receive a 1500 form
that was blank in Line 13 in Box 13, would
you go back to the provider and ask them
whether or not they held a right to receive
direct payment or whether they could get a
signature on Box 13?
. . .
A.

Yes.

Q.
So prior to making direct payment to a
provider,
EMI
needs
to
see
either
a
signature or a representation from the
provider that they have a signature from the
patient that authorizes that direct payment;
correct?
A.

Correct.

Ex. 11 to Decl. of Andrew J. Lautenbach at 39:14-41:12, ECF No.
476-13.

KFHP emphasizes that the language in Box 13 simply

states that the member “authorizes” payment of medical benefits
to the provider, and that this does not indicate an assignment.
Reply at 6.

While the Court ultimately does not place much

weight on the HICF 1500 form, EMI’s practice of checking for a
signature or confirming with the provider that it has a right to
receive direct payment seems in keeping with its duty to verify
assignments.
KFHP’s conduct also indicates that the anti-assignment
provision does not apply to medical providers such as HLF.

HLF

argues that “Kaiser and EMI have worked directly with HLF on all
issues related to processing the subject invoices.

- 28 -

HLF and

Kaiser exchanged information about patients, engaged in direct
negotiations over payment amounts, and Kaiser partially paid
numerous pending claims in the aggregate.”

Defs.’ CSF ¶ 53.

KFHP’s response is that the Member Handbook allows for these
activities, and that such interaction with a provider cannot
therefore waive the anti-assignment provision.

However, the

bare statements in the Handbook stating, for example,
“reimbursement is made to providers according to your health
plan benefits,” do not appear to contemplate the type of
involved communication or negotiation that has taken place
between KFHP and HLF, absent an assignment.
The Court is guided by the Fifth Circuit’s reasoned
approach to anti-assignment provisions, and finds that the
evidence here supports that approach with respect to the antiassignment provision at issue.

The Court thus concludes that

KFHP’s members may assign their rights under the health plans to
medical providers that offer the very services for which the
members have a right to benefits.

Moreover, the Court’s

takeaway in reviewing the various plan documents, the
Administrative Services Agreement, the HICF 1500 form, and the
parties’ conduct is that the anti-assignment provision does not
clearly apply to and is not enforceable against medical
providers.

See Davidowitz, 946 F.2d at 1478 (“As a general rule

- 29 -

of law, where the parties’ intent is clear, courts will enforce
non-assignment provisions.”).
As a final matter, the Court addresses KFHP’s argument
that to the extent any rights have been assigned to HLF, HLF has
received only a right to payment of benefits – not a right to
bring suit under ERISA to recover such benefits.

See Reply at 8

(“Even if the cited language were relevant to the Plans, EMI’s
services for KFHP are limited to claim administration, so the
term could not possibly be used to permit assignments outside of
the initial claims process, such as administrative appeals and
litigation.”) (emphasis in original); id. at 6 n.6 (“Although
KFHP believes the actions contemplated by the Member Handbook
are not assignments, if the Court disagrees, KFHP has allowed
these actions in writing in the Member Handbook, and has
therefore satisfied the terms of the anti-assignment clause for
a limited assignment.”).

The Court disagrees with this logic.

As an assignee of Sidlo’s right to benefits, HLF also has a
right to sue for the denial of those benefits.

See Brand

Tarzana, 2016 WL 3480782, at *8 (“[A] non-assignment clause
limits who owns a claim and who can sue over its
denial . . . .”).
For all the foregoing reasons, the Court DENIES KFHP’s
Motion for Summary Judgment.

Further, the Court GRANTS summary

judgment on KFHP’s Complaint in favor of HLF and AMRG pursuant

- 30 -

to Rule 56(f) and Local Rule 56.1(i).9

The Court specifically

confines its grant of summary judgment in favor of HLF and AMRG
to its holding that members may assign their rights under the
health plans to their medical providers without violating the
plans’ anti-assignment provision.
II.

Injunctive Relief

Because the Court finds that KFHP’s plans’ antiassignment provision does not apply to assignments to health
care providers, the Court denies KFHP’s request for an
injunction.

9

Summary judgment in favor of HLF and AMRG is appropriate
because KFHP had “reasonable notice that the sufficiency of
[its] claim [would] be in issue,” both because it had a full and
fair opportunity to gather evidence supporting its own summary
judgment motion and because HLF and AMRG requested summary
judgment pursuant to Local Rule 56.1(i) in their Opposition.
See Norse, 629 F.3d at 971; Albino, 747 F.3d at 1176.
Local Rule 56.1(i) requires the Court to provide a moving
party with “oral or written notice and an opportunity to be
heard” before granting summary judgment in favor of a nonmoving
party. The language in the local rule closely tracks its
federal analogue, which requires the Court to “give[] notice and
a reasonable time to respond” before granting summary judgment
in favor of a nonmovant. See Fed. R. Civ. P. 56(f). Because
the Ninth Circuit finds reasonable notice where a moving party
has a “full opportunity” to gather evidence supporting its own
motion for summary judgment, this Court will not read Local Rule
56.1(i) to impose any further obligations on the Court. See
Albino, 747 F.3d at 1176.

- 31 -

CONCLUSION
For the foregoing reasons, the Court DENIES KFHP’s
Motion for Summary Judgment Against HLF and AMRG, and GRANTS
summary judgment on KFHP’s Complaint in favor of HLF and AMRG.
IT IS SO ORDERED.
DATED:

Honolulu, Hawai’i, November 17, 2016.

________________________________
Alan C. Kay
Sr. United States District Judge

Kaiser Foundation Health Plan, Inc. v. Hawaii Life Flight Corporation, et
al., Civ. No. 16-00073 ACK-KSC, Order Denying Kaiser Foundation Health Plan
Inc.’s Motion for Summary Judgment and Granting Summary Judgment in Favor of
Hawaii Life Flight Corporation and Air Medical Resource Group Pursuant to
Federal Rule of Civil Procedure 56(f) and Local Rule 56.1(i).

- 32 -