A federal judge dismissed a lawsuit Tuesday filed by the United Public Workers, clearing a potential roadblock to the takeover of operations of three Maui County public hospitals by Kaiser Permanente on July 1.

U.S. District Judge Helen Gillmor denied the UPW’s motion for a preliminary injunction to block the takeover and granted the state’s motion to dismiss the case.

In August, the UPW, which represents about a quarter of the 1,500 workers at Maui Memorial Medical Center, sought an injunction in federal court to prevent the state from forging a public-private partnership involving Maui Memorial, Kula and Lanai Community hospitals. UPW claimed that the bill, signed by Gov. David Ige in June, violated the U.S. Constitution by impairing a contract between the union and the state.

“Privatization of our state hospitals would have a profound effect on the communities they were originally intended to serve,” UPW State Director Dayton Nakanelua said when filing the lawsuit.

“We’re already seeing how layoffs at several of our hospitals are not only affecting those who work there, but also patients and their families, as well as diminishing our ability to care for an aging population in the future. We have to keep in mind that health care is about people, and people should be the number one priority,” he added.

When Ige signed Act 103 in June, Maui County’s three public hospitals were facing a projected $28 million deficit for the current fiscal year that ends June 30, and hospital officials hoped a public-private partnership would help save the state money. Hawaii Health Systems Corp. Maui Region CEO Wesley Lo said on Jan. 14, the day the Kaiser agreement was signed, that it is projected to save the state around $260 million over the next 10 years.

In a response to UPW’s complaint, the state said in November that the act did not “impinge upon” collective bargaining agreements, and that HHSC already had the authority to take certain actions, including reducing staff, before Act 103 was signed.

State attorneys also argued that while the collective bargaining agreements guarantee things such as work hours, wages, sick leave and fringe benefits, they do not guarantee “that specific facilities will continue to be operated by a public employer.”

The state also said that HHSC “will be the private entity’s landlord,” and that UPW still will be able to enter into collective bargaining agreements with the private entity, Kaiser.

Avery Chumbley, chairman of the HHSC Maui Region Board, said the ruling is “good news for us.”

“It clearly clears up a lot of uncertainty,” Chumbley said. “We’re very excited that the judge ruled and now we can move forward and address employees’ concerns through the process which we’ve committed to.”

UPW has the second largest union membership at the Maui Region hospitals, behind the Hawaii Government Employees Association. UPW officials could not be immediately reached for comment Tuesday afternoon.

* Colleen Uechi can be reached at cuechi@mauinews.com.