The 9th Circuit Court of Appeals on Tuesday temporarily blocked Gov. David Ige’s plans to turn over three state-run hospitals on Maui and Lanai to Kaiser Permanente, a decision that effectively stalls the largest privatization initiative in state history.

The terse two-page decision did not specify why the court granted the request for an injunction by the United Public Workers union to stop the changeover, but state Attorney General Douglas Chin said in a written statement that judges on the court expressed concerns about the impact of the hospital deal on the UPW members.

“The administration and legislature have put together multiple solutions to address these concerns,” Chin said in his statement. “We will comply with the 9th Circuit’s order and report our progress to them.”

Kaiser Permanente, the state’s largest health maintenance organization, was scheduled to take control of Maui Memorial Medical Center, Kula Hospital &Clinic and Lanai Community Hospital on July 1.

Ige in January announced he had signed an agreement to have Kaiser operate the three hospitals, which he predicted will save the state $260 million in hospital subsidies over the next decade.

Under the agreement signed by Ige, the state would continue to own the hospitals, but Kaiser would operate them under a 30-year lease. Maui Health Systems, a limited-liability corporation formed by Kaiser, signed an agreement in April to lease the three facilities from the state.

Many or most of the 1,400 unionized employees at Maui Memorial, Kula and Lanai are expected to continue to work at the hospitals for Kaiser, but they will no longer be state workers.

The state Legislature authorized the privatization of the Maui and Lanai facilities in a bill passed in 2015, and Ige signed the measure into law. The UPW promptly sued to try to block the transition, claiming the new law violated the contract clause of the U.S. Constitution.

Lawyers for the union said the UPW has two negotiated contracts with the Hawaii Health Care Systems Corp., which is part of the state government and operates Hawaii’s public hospitals. Those union contracts will not expire until July 1, 2017.

Chin personally presented oral arguments in the case before a three-member panel of the 9th Circuit Court on April 6.

The decision issued by the court Wednesday prohibits Ige from implementing the new privatization law before Sept. 30 unless the injunction is “sooner terminated by the court.”

The ruling also requires the UPW and the state to file a joint report by June 30 describing any change in the status of the case.

Chin noted that U.S. District Judge Helen Gillmor had ruled in favor of the state on Feb. 19, and while the 9th Circuit order temporarily blocks the privatization effort, it does not resolve the underlying issues raised in the UPW lawsuit.

Kaiser Permanente issued a statement Tuesday saying that all transition activities at the three hospitals have been stopped.

“Although we are disappointed by today’s order by the 9th Circuit Court of Appeals, we are optimistic that this issue will be resolved quickly and we will be able to continue our work toward improving the health of the people of Maui and Lanai,” according to the Kaiser statement.

Maui Region HHSC CEO Wes Lo said in a statement that “while we are still working to understand how this injunction will affect the operations of HHSC’s Maui Region, we will work with the Attorney General’s office and comply with the 9th Circuit Court’s decision. Our job is to ensure that we continue to provide Maui County with services through our three hospitals on Maui and Lanai.”

A spokeswoman for Ige said the governor was traveling, and referred questions about the court decision to the attorney general’s office.

In an effort to ease the impact of the privatization initiative, state lawmakers this year approved Senate Bill 2077 to provide severance payments or extra pension bonuses to outgoing Maui and Lanai hospital workers who would lose their state jobs because of the privatization.

That bill could cost the state $40 million, according to state estimates. It is now pending before Ige, who will decide in the weeks ahead whether to approve or veto it.

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Star-Advertiser staff writer Kristen Consillio contributed to this report.