A federal court issued an order today allowing the state to resume the transfer of three public hospitals on Maui and Lanai to Kaiser Permanente Hawaii, but is still barring the close of the deal indefinitely.

Kaiser, the state’s largest health maintenance organization, was scheduled to assume control of Maui Memorial Medical Center, Kula Hospital & Clinic and Lanai Community Hospital on July 1. But the 9th Circuit Court of Appeals on May 17 blocked the plan to consider claims from the United Public Workers union that its members would be hurt by the change.

“Allowing transition activities to resume is the best way to give everyone involved adequate time to prepare and minimize disruption in services,” said Hawaii Attorney General Doug Chin.

Gov. David Ige and the United Public Workers union representing 1,400 unionized employees at the Maui County hospitals filed a status report two days ago, acknowledging that the parties are moving forward with productive negotiations to resolve a lawsuit brought by the union to stop privatization of the hospitals. UPW did not oppose the governor’s request to allow transition activities to resume.

In 2015 the state Legislature passed a law allowing a private operator to take over the operations at the financially-troubled Maui County hospitals and, on Jan. 14, HHSC’s board signed an agreement to transition to a new Kaiser entity called Maui Health Systems. UPW sued to stop it, arguing that the agreement violates the contracts clause of the U.S. Constitution and interferes with collective bargaining agreements that remain in effect until June 2017.

On Feb. 19, U.S. District Court Judge Helen Gillmor ruled in favor of the state. UPW appealed to the 9th Circuit Court of Appeals, which ordered the state to temporarily stop all activities related to the transition until Sept. 30.

“Today’s order documents the parties’ agreement that while negotiations continue, the state will not unilaterally change the status of UPW’s members affected by this transition, or close the transaction,” Chin said. “Other transition activities, however, may resume. Ultimately we all just want an orderly and safe transition to Kaiser’s operation of the Maui region hospitals.”

The court has asked for another joint status report on June 30.