The opinion of the court was delivered by: SMITH
FERN M. SMITH, UNITED STATES DISTRICT JUDGE
In granting an interlocutory injunction the Court must set forth the findings of fact and conclusions of law which constitute the grounds of its action. Fed.R.Civ.Pro. 52(a). Findings of fact shall not be set aside unless clearly erroneous. Id.
Defendant provides group dental benefit plans to California employees. The employees are beneficiaries of the plan contracts. Three parties enter into each plan contract: an employee, his or her employer, and defendant. The plan contracts explicitly state that defendant will not honor a beneficiary's assignment of the right to payment.
Some dentists receive coverage payments directly from defendant, while others must bill their patients for these amounts. "Participating" dentists contract with defendant to provide services for beneficiaries and are paid directly by defendant. Direct payment enables participating dentists to receive compensation for the covered portion of the services without billing their patients for this amount.
In consideration for the direct payment structure, participating dentists agree to contractually stated fees and certain quality control procedures. Participating dentists also agree to bill their patients for co-payments, which represent the portion of dental services not covered by defendant's insurance plans.
Plaintiffs are "non-participating" dentists. They do not contract with defendant to provide services to plan beneficiaries. Defendant's insurance plans do provide coverage for visits to these non-participating dentists; however, non-participating dentists are not subject to defendant's fee structure or quality control, nor do they receive direct payment when they provide services to plan beneficiaries.
Plaintiffs have attempted to circumvent defendant's policy against direct payment to non-participating dentists through two different methods. First, plaintiffs have asked their patients who are plan beneficiaries to assign their rights to payment. Defendant has refused to honor these assignments, in conformity with the contract provision which prohibits such assignments. Defendant has also ignored requests to mail covered payments directly to plaintiffs' offices, rather than to the beneficiaries' residences. Plaintiffs seek to enjoin defendant from refusing to honor the beneficiaries' assignments of their rights to payment, and from refusing to honor the requests to send payments directly to plaintiffs.
Plaintiffs provide a unique service by agreeing to waive the co-payments which beneficiaries would otherwise be required to pay. Unlike participating dentists, plaintiffs are not bound by a requirement to bill beneficiaries for the co-payments. Dental treatment at plaintiffs' offices is thus generally "free" to beneficiaries, because plaintiffs only seek compensation for the covered portion of the services.
I. Standards for preliminary ...