                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


REBECCA MORRIS, individually              No. 17-55878
and on behalf of all others
similarly situated; BECKY                    D.C. No.
EBENKAMP, individually and on          2:16-cv-05914-JAK-
behalf of all others similarly                 JPR
situated,
              Plaintiffs-Appellants,
                                           OPINION
                 v.

CALIFORNIA PHYSICIANS’
SERVICE, DBA Blue Shield of
California; DOES, 1–10, inclusive,
            Defendants-Appellees.


      Appeal from the United States District Court
         for the Central District of California
      John A. Kronstadt, District Judge, Presiding

         Argued and Submitted October 10, 2018
                  Pasadena, California

                  Filed March 18, 2019
2        MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

    Before: Mary M. Schroeder and Jacqueline H. Nguyen,
    Circuit Judges, and Thomas J. Whelan,* District Judge.

                   Opinion by Judge Schroeder


                            SUMMARY**


         Patient Protection and Affordable Care Act

    The panel affirmed the district court’s dismissal of a
claim that plaintiffs’ insurer violated the Patient Protection
and Affordable Care Act’s “Medical Loss Ratio” provision.

    This provision of the ACA requires an insurer to pay a
rebate to enrollees if the ratio between what it pays out in
claims for medical services is less than 80% of the revenue it
takes in. The panel held that, in determining its Medical Loss
Ratio under 42 U.S.C. § 300gg-18, the defendant insurer
properly included as part of its payout the payments it made
in settling a dispute with some of its enrollees, and there was
no basis for excluding payments for services rendered by out-
of-network physicians.




     *
      The Honorable Thomas J. Whelan, United States District Judge for
the Southern District of California, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE               3

                         COUNSEL

Jay Angoff (argued) and Christine H. Monahan, Mehri &
Skalet PLLC, Washington, D.C.; Dan Stormer, Randy
Renick, and Cornelia Dai, Hadsell Stormer & Renick LLP,
Pasadena, California; for Plaintiffs-Appellants.

Gregory N. Pimstone (argued), Craig S. Bloomgarden, and
Joanna S. McCallum, Manatt, Phelps & Phillips, LLP, Los
Angeles, California; Michael S. Kolber, Manatt, Phelps &
Phillips, LLP, New York, New York; for Defendant-Appellee
California Physicians’ Service.


                          OPINION

SCHROEDER, Circuit Judge:

    In this appeal, Plaintiffs-Appellants contend that their
insurer, Blue Shield of California (“Blue Shield”), violated an
integral provision of the Patient Protection and Affordable
Care Act (“ACA”), the Medical Loss Ratio (“MLR”), 42
U.S.C. § 300gg-18, a provision that has not yet been
interpreted by our Court or our sister circuits. The MLR is
the ratio between what an insurer pays out in claims for
medical services and the revenue it takes in.               Id.
§ 300gg-18(a). The insurer must pay a rebate to enrollees if
the payout is less than 80% of the revenue.                  Id.
§ 300gg-18(b)(1). Plaintiffs in this case, enrollees seeking a
larger rebate, argued that Blue Shield improperly included as
part of its payout the payments it made in settling a dispute
with some of its enrollees. The district court dismissed
Plaintiffs’ action, ruling that pursuant to the settlement, the
4      MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

payments had been made, whether earlier disputed or not, and
were therefore properly included. We affirm.

                    INTRODUCTION

A. The Medical Loss Ratio (“MLR”) Defined

    Congress enacted the ACA in 2010 to decrease the cost of
health care and increase the number of Americans with health
insurance. See Nat’l Fed. of Indep. Bus. v. Sebelius, 567 U.S.
519, 538 (2012). The MLR plays a key role in furthering
Congress’ plan to decrease health care costs by requiring
health insurance companies to spend at least 80 percent of
their premium income on health care claims and health
quality improvement. 42 U.S.C. § 300gg-18(a), (b). Health
insurance companies that do not meet the 80 percent spending
requirement must refund to their enrollees the difference
between the amount actually spent and the 80 percent figure.
Id. § 300gg-18(b)(1). For example, if a health insurance
company has spent only 70 percent of premiums on clinical
services and health improvements, its enrollees are entitled to
a 10 percent rebate of premium revenue. This rule is intended
to ensure that spending is focused on health care expenses,
as opposed to administrative costs such as salaries
or marketing. Id. § 300gg-18(b)(2); 45 C.F.R.
§ 158.140(b)(3)(iii).

    The statute spells out the enforcement scheme. Health
insurance companies must calculate and annually report their
MLR to the Department of Health and Human Services
(HHS), the agency tasked with enforcing the provision.
42 U.S.C. § 300gg-18(a). The instructions for calculating the
ratio are provided under the MLR provision of the ACA and
further explained in federal regulations. The statute defines
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE              5

the MLR as “the ratio of the incurred loss (or incurred claims)
plus the loss adjustment expense (or change in contract
reserves) to earned premiums.” Id. The MLR regulations
define “incurred claims” to include payments made by an
issuer for “clinical services” and to exclude administrative
expenses or work unrelated to clinical services. 45 C.F.R.
§ 158.140(a), (b)(3)(iii). Thus, the MLR compares what the
health insurance company has spent on clinical services to the
premium revenue the insurance company received from its
enrollees. The statute requires a rebate when reported
amounts paid out for actual clinical and related services are
less than 80% of reported premium revenue. It thereby
encourages insurers to use premium revenue to reimburse the
costs of enrollees’ medical treatment rather than to use it on
administrative expenses. Indeed, the statutory section
containing the MLR is entitled “Bringing down the cost of
health care coverage.” 42 U.S.C. § 300gg-18.

B. This Dispute

    Blue Shield was selected by the State of California in
2010 to provide affordable health care plans on the state’s
health insurance exchange, “Covered California.” Under
Blue Shield’s plans, “participating” or “in-network” providers
accepted Blue Shield Covered California patients and charged
for medical services at Blue Shield’s participating provider
benefit level. “Out-of-network” providers billed for medical
services at higher rates than the in-network participating
provider benefit level.

   Shortly after Blue Shield was selected as an insurance
company on California’s health insurance exchange,
however, enrollees who had purchased Blue Shield Covered
California plans began complaining of difficulty finding in-
6      MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

network providers charging in-network rates. The enrollee
complaints led to the discovery that Blue Shield had
erroneously listed out-of-network physicians in its network
directory who had not in fact agreed to accept Blue Shield
Covered California patients. As a result of Blue Shield’s
network directory mistake, some enrollees were charged the
higher, out-of-network rates for medical services they
received. To remedy the problem, Blue Shield executed a
settlement agreement to reprocess the out-of-network claims
at in-network rates, and to reimburse enrollees for the extra
money they were charged on account of using an out-of-
network provider. Blue Shield then included these settlement
payments in the numerator of the MLR as “incurred claims,”
or payments for clinical services. According to the settlement
agreement, Blue Shield reimbursements already totaled more
than 35 million dollars.

    Two Blue Shield enrollees, Becky Ebenkamp and
Rebecca Morris, on behalf of a class of more than 446,000
enrollees (“Plaintiffs”), filed an action in Los Angeles County
Superior Court in 2016, alleging Blue Shield violated the
ACA by including the settlement payments in the MLR
numerator. The named plaintiffs are Blue Shield enrollees
who had received a MLR rebate for 2014, but they asserted
that Blue Shield’s settlement payments improperly inflated
Blue Shield’s MLR, thereby unfairly decreasing their rebate.
In Plaintiffs’ view, under the terms of the statute and of the
settlement agreement, Blue Shield should have included in
the MLR numerator only reimbursements for services
provided by in-network providers. Plaintiffs asserted that
including the payments for services rendered by providers
outside those in the policy’s network violated the federal
statute and regulations and resulted in the insurer’s having
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE              7

been unjustly enriched through unfair competition. This
allegedly entitled Plaintiffs to damages under state law.

    Blue Shield timely removed the case to the Central
District of California and filed a motion to dismiss pursuant
to Federal Rule of Civil Procedure 12(b)(6). The district
court reviewed the MLR statute, regulations, and the
settlement agreement. It concluded that the settlement
payments compensated enrollees for clinical services covered
by their policies, regardless of whether the providers who
furnished the services were outside of Blue Shield’s network.
The district court reasoned that because the payments
compensated enrollees for clinical services, Blue Shield
correctly included those payments under the MLR numerator
as “incurred claims.” We affirm the district court’s judgment
of dismissal.

    Plaintiffs are understandably desirous of receiving a
larger rebate, but the MLR is an integral part of the ACA’s
intended purpose to broaden access to health care and
decrease health care costs. The purpose of the MLR is thus
to encourage use of premium income to provide benefits to
insureds and discourage its use to offset administrative costs,
thus serving the primary goal of expanding affordable care.
See 42 U.S.C. § 300gg-18(b)(2); King v. Burwell, 135 S. Ct.
2480, 2485 (2015). The statute does not make a distinction
between in-network and out-of-network providers. We must
conclude that the MLR can act as an effective incentive to
insurers to provide benefits only if disputes are discouraged
and all benefit payments are included in the ratio, whether
they go to providers in-network or out-of-network.

  This is best illustrated by looking to the history of the
ACA and how its key provisions relevant to this dispute are
8      MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

designed to operate. We therefore turn first to the statute
itself.

             STATUTORY BACKGROUND

    The ACA was enacted in 2010 after “a long history of
failed health insurance reform.” See King, 135 S. Ct. at 2485.
Past experiences in many states had led to what the Supreme
Court termed “an economic ‘death spiral.’” Id. at 2486. As
the price of premiums increased, the number of people
purchasing health insurance dropped dramatically. Id.

    The outcome was very different in Massachusetts,
however, and Congress turned to it as a model. Id. Adopting
some of the key reforms that made the Massachusetts
insurance system successful, the ACA represented the most
significant regulatory overhaul and national expansion of
health care coverage since Medicare and Medicaid in 1965.
See id.; see also Sebelius, 567 U.S. at 538–39, 541. The ACA
was signed into law in 2010, and many of its private health
insurance provisions went into effect in 2014. See, e.g., 42
U.S.C. §§ 18022(c)(1), 18041(c)(1); see King, 135 S. Ct. at
2487; Sebelius, 567 U.S. at 538. As the Supreme Court
emphasized, its purpose is to provide affordable, quality
health insurance for all Americans and decrease the cost of
health care. Sebelius, 567 U.S. at 538.

    Composed of ten titles spanning over 900 pages and
hundreds of provisions, the ACA brought sweeping reforms
to our health care system. Id. at 538–39. Under the ACA,
health insurance companies must accept every individual who
applies for coverage. 42 U.S.C. § 300gg-1(a). These insurers
are prohibited from charging higher premiums based on the
condition of an applicant’s health. See id. § 300gg(a).
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE               9

    To facilitate the purchasing of affordable health plans, the
ACA created government-regulated health insurance
“exchanges.” Id. § 18031(b)(1). Exchanges are essentially
online marketplaces where people can shop for insurance.
King, 135 S. Ct. at 2487. The ACA directs each state to
establish an exchange. 42 U.S.C. § 18031(b)(1). If a state
decides not to establish an exchange, the ACA provides that
the exchange shall be established and operated by the
Secretary of Health and Human Services. Id. § 18041(c)(1).
Further, the federal government has published a website
(http://www.healthcare.gov) that explains the ACA to
individual health insurance consumers and provides
instructions on how to obtain coverage.

    While policymakers continue to debate the ACA’s future,
there is research demonstrating that coverage expansion has
particularly benefitted two historically vulnerable populations
— low-income adults and those with chronic conditions.
Benjamin D. Sommers, Bethany Maylone, Robert J. Blendon,
E. John Orav, and Arnold M. Epstein, Three-Year Impacts of
the Affordable Care Act: Improved Medical Care and Health
Among Low-Income Adults, 36 Health Affairs 1119 (2017).
According to at least one report, the number of uninsured
Americans under the age of 65 has decreased from 44 million
in 2013 to less than 27 million at the end of 2016. Key Facts
About the Uninsured Population, Henry J Kaiser Family
Foundation (Dec. 7, 2018), https://www.kff.org/uninsured/
fact-sheet/key-facts-about-the-uninsured-population/.

    As we have seen, this appeal concerns an important
provision of the ACA commonly referred to as the Medical
Loss Ratio or “MLR.” 42 U.S.C. § 300gg-18(a). Although
the basic formula for calculating the MLR ratio is defined by
the ACA and federal regulations, the parties here dispute how
10     MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

the ratio should be calculated in this case. The Centers for
Medicare & Medicaid Services (CMS), a division within
HHS, promulgated the standards for MLR calculation and
reporting. 45 C.F.R. § 158.120. CMS requires a health
insurer to submit, for each state in which it provides
coverage, data on the aggregate premiums, claims experience,
quality improvement expenditures, and non-claims costs it
incurs in connection with the policies it issues. See id.
§§ 158.120, 158.150, 150.160. The MLR report must detail
the issuer’s spending on medical benefits, including clinical
services and activities that improve health care, compared to
the revenue the issuer receives from enrollees. 42 U.S.C.
§ 300gg-18(a). The required reporting does not distinguish
between in-network and out-of-network providers.

    The applicable regulations explain the MLR is to act as an
incentive to provide medical services and reduce
administrative costs. 45 C.F.R. § 158.140(b)(3)(iii). The
MLR is thus intended to further the ACA’s goal of decreasing
health care costs by providing greater transparency on how
consumers’ premium dollars are used and incentivizing
issuers to maximize spending on health care and activities
that improve health care quality, thereby promoting greater
efficiency in health insurance markets. Medical Loss Ratio
Requirements Under the Patient Protection and Affordable
Care Act, 77 Fed. Reg. 28,790, 28,791, 28,793 (May 16,
2012). HHS has further explained that the MLR is intended
to ensure that “policyholders receive value for their premium
dollars” because the higher the MLR, the more value a
policyholder receives for each premium dollar. Health
Insurance Issuers Implementing Medical Loss Ratio (MLR)
Requirements Under the Patient Protection and Affordable
Care Act, 75 Fed. Reg. 74864-01, 74865 (Dec. 1, 2010). The
purpose of the ACA, as demonstrated by the content of its
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE             11

provisions and the implementing regulations, as well as its
history, is to broaden access to health care. This strongly
indicates that the ACA should be interpreted and applied in
a manner that encourages insurers to spend premium revenue
on medical services.

               FACTUAL BACKGROUND

    This dispute began when consumers purchased Blue
Shield insurance plans through the State of California’s health
insurance exchange. The ACA established health insurance
exchanges in all 50 states. The exchanges are regulated,
online marketplaces administered by either the federal or
state government, where individuals and small businesses can
purchase affordable, private health insurance plans. These
exchanges commenced operation on October 1, 2013, with
health insurance coverage beginning on January 1, 2014.

    To implement the ACA’s requirements, California created
a state-run health exchange, known as Covered California. It
selected Blue Shield as one of the insurance companies to
offer health care plans on the Covered California
marketplace. Individuals who enrolled in a Blue Shield plan
through Covered California were able to look up physicians
accepting Covered California patients in an online directory
posted on Blue Shield’s website. Blue Shield Covered
California enrollees could also select a doctor by calling Blue
Shield’s customer service representatives, who in turn shared
participating provider information from the directory.

   Shortly after the online Covered California marketplace
went live in late 2013, the California Department of Managed
Heath Care (“DMHC”), the state regulatory body that
governs managed health care plans, began receiving
12     MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

complaints from Covered California consumers who had
signed up for a Blue Shield plan. These enrollees reported
difficulty finding in-network physicians. In response, DMHC
conducted an informal telephone survey of randomly selected
providers that Blue Shield had identified as contracted
physicians for the Blue Shield Covered California plans.
During the course of this survey, several offices informed
DMHC that they were not in fact accepting Covered
California enrollees.

    DMHC then began a formal survey of the entire Blue
Shield provider directory. On November 17, 2014, DHMC
issued its final report which revealed that approximately nine
percent of the physicians listed in the Blue Shield online
provider directory were not accepting Covered California
patients. Blue Shield acknowledged it had mistakenly listed
out-of-network providers in its directory, and also
acknowledged the confusion it caused among enrollees and
providers. To resolve the problem, Blue Shield agreed to
update and correct the provider list and to reprocess
out-of-network claims at in-network rates. In October 2015,
DMHC and Blue Shield executed a settlement agreement
describing the provider directory mistake and outlining Blue
Shield’s obligations to remedy it.

     Under Exhibit A of the settlement agreement, entitled
“Corrective Action,” Blue Shield agreed to adjust claims for
enrollees who had paid out-of-network rates for services of
providers mistakenly listed as in-network. They were defined
as enrollees who “paid a provider in excess of the amount
they would have paid if the claim had been processed at the
participating provider benefit level as a result of inaccuracies
in its [p]rovider [d]irectory during the 2014 and 2015 benefit
years.” To be reimbursed, enrollees were required to attest
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE               13

that they received “covered services.” Paragraph six of
Exhibit A describes the process that required enrollees to
identify the specific services they received from a provider
outside the network:

        The [Blue Shield] notice shall advise
        recipients that if they received covered
        services from a provider outside of their
        plan’s network as a result of misinformation
        from Blue Shield regarding the provider’s
        participation status, and paid the provider out
        of pocket for care, they may submit a written
        claims submission form to a designated
        address within 30 days to request reprocessing
        of the claim. The claims submission form
        shall require members to attest: a. that they
        received covered services from a specific
        provider who was represented in Blue
        Shield’s Provider Directory or by Blue Shield
        as participating in the network. . . .

Enrollees were also required to list the date of their visit, and
confirm that they paid the provider for the services at issue or
that the provider was actively seeking payment. The
submission form included an explanation of benefits or claim
number so that Blue Shield could identify and reprocess the
disputed claim. If an enrollee submitted all of the required
information identified in paragraph six of Exhibit A, and Blue
Shield confirmed that the provider directory mistake led to
the claim or alternatively that the attestation was acceptable,
Blue Shield was required to reprocess the claim at the
participating provider benefit level. Blue Shield paid over
$38 million in claims adjustments to enrollees who had
received clinical services from providers that did not accept
14     MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

Covered California patients. Blue Shield included the claims
adjustments in the MLR report for 2014, but nevertheless fell
short of the 80% requirement and paid rebates to enrollees.
Plaintiffs in this case are Blue Shield enrollees who received
a MLR rebate for 2014, but now claim they are entitled to a
larger rebate because Blue Shield improperly included in the
MLR the claim adjustments paid out under the settlement
agreement.

                PROCEDURAL HISTORY

    This case began in state court, because Plaintiffs claimed
the alleged MLR miscalculation amounted to unfair
competition and unjust enrichment under California law. On
July 1, 2016, Plaintiffs filed a class action in Los Angeles
County Superior Court, alleging Blue Shield improperly
included the settlement payments as “incurred claims” in the
MLR numerator, so that enrollees did not receive the rebate
they should have received. Blue Shield removed the case to
the Central District of California and moved to dismiss the
complaint. Rather than opposing the motion, Plaintiffs filed
a First Amended Complaint (“FAC”). The FAC alleged the
claim adjustments should not have been included in the MLR
because they were restitution payments pursuant to the
settlement agreement for payments to out-of-network
providers and not to providers covered by the policy.

    Blue Shield moved to dismiss Plaintiffs’ FAC, arguing
the restitution payments fall within the definition of “incurred
claims” because they were for covered services, and that it
did not matter for purposes of the MLR whether the providers
were in or out-of-network. Plaintiffs opposed the motion,
asserting that because the providers were not in-network, the
services were not covered under the policy, and therefore the
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE              15

payments did not fall within the definition of “incurred
claims” or payments for services “covered by the policy.” 45
C.F.R. § 158.140(a). The district court granted Blue Shield’s
motion to dismiss without leave to amend. It concluded that
because the settlement agreement provided reimbursement
for services that were covered by the policy, these payments
were properly included in the MLR numerator. The district
court explained, “[a]lthough the providers were not covered
by the policies, their services were.” This appeal followed.

                       DISCUSSION

    The dispositive issue in this appeal is whether the MLR
was properly calculated under federal law by including the
settlement reimbursements for medical services by non-
network providers. If there was no violation of the applicable
federal law, we need not decide whether such an alleged
violation could constitute a violation of California consumer
protection laws.

     Plaintiffs’ position is that the reimbursements do not
count because they were for services from out-of-network
providers. We look first to the provisions of the statute to see
if it supports such a distinction. It does not. The statute
requires annual reporting of the ratio of claims
reimbursements to premium revenue. 42 U.S.C. § 300gg-
18(a). Reimbursements for clinical services must be included
in the MLR numerator as “incurred claims.” Id. § 300gg-
18(a)(1). In relevant part it provides:

       (a) Clear accounting for costs

       A health insurance issuer offering group or
       individual health insurance coverage
16     MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

       (including a grandfathered health plan) shall,
       with respect to each plan year, submit to the
       Secretary a report concerning the ratio of the
       incurred loss (or incurred claims) plus the loss
       adjustment expense (or change in contract
       reserves) to earned premiums. Such report
       shall include the percentage of total premium
       revenue, after accounting for collections or
       receipts for risk adjustment and risk corridors
       and payments of reinsurance, that such
       coverage expends--

       (1) on reimbursement for clinical services
       provided to enrollees under such coverage;

       (2) for activities that improve health care
       quality; and

       (3) on all other non-claims costs, including an
       explanation of the nature of such costs, and
       excluding Federal and State taxes and
       licensing or regulatory fees. . . .

Id. The critical statutory focus is on health insurers providing
coverage for health services. The statute measures total
expenditures on health services.            See id. § 300gg-
18(a)(1)–(3). For purposes of the statutory provisions, which
the parties agree are controlling, the relative amounts required
to be paid to in-network as opposed to out-of-network
providers is irrelevant. Only the total matters.

    Plaintiffs point out that the numerator’s reimbursement
for clinical services under the statute has some limitation, in
that to be included in the numerator, the services must fall
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE              17

within the policy’s coverage. The statute refers to
reimbursement “for clinical services . . . under such
coverage.” Id. § 300gg-18(a)(1). This limitation, however,
is on the nature of the services that qualify for inclusion, not
on any characteristic or qualification of the provider.

    Plaintiffs therefore go on to focus their argument on the
text of the applicable regulations and specifically the
definition of “incurred claims” to be included in the
numerator. These must include payments to providers
“whose services are covered by the policy.” 45 C.F.R.
§ 158.140(a).

        (a) General requirements. The report required
        in § 158.110 must include direct claims paid
        to or received by providers, including under
        capitation contracts with physicians, whose
        services are covered by the policy for clinical
        services or supplies covered by the policy. In
        addition, the report must include claim
        reserves associated with claims incurred
        during the MLR reporting year, the change in
        contract reserves, reserves for contingent
        benefits and the medical claim portion of
        lawsuits, and any incurred experience rating
        refunds. Reimbursement for clinical services,
        as defined in this section, is referred to as
        “incurred claims.” All components of and
        adjustments to incurred claims, with the
        exception of contract reserves, must be
        calculated based on claims incurred only
        during the MLR reporting year and paid
        through March 31st of the following year.
18     MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

       Contract reserves must be calculated as of
       December 31st of the applicable year.

Id. Plaintiffs contend that the condition that the services be
covered by the policy means that the providers must be in-
network. Yet the regulation does not say that. Like the
statute, the regulation makes no distinction between in-
network and out-of-network providers.

    Nor does the settlement agreement assist Plaintiffs. It is
intended to compensate enrollees who paid out-of-network
rates because Blue Shield mistakenly listed some providers as
being in-network. It does no more than establish that Blue
Shield agreed to provide the compensation in satisfaction of
claims, and to that extent, it supports Blue Shield’s position
that such amounts should be included in the MLR numerator.
The settlement agreement does not expressly refer to the
MLR and in no way suggests that the settlement payments
should be excluded from the MLR numerator.

    We do not minimize the differences in the way various
plans treat services performed by in-network as opposed to
out-of-network providers. Whether and to what extent a
provider’s services are covered depends on the type of
insurance plan. A government website is helpful in
explaining the differences. Health Insurance Plan &
Network Types: HMOs, PPOs, and More, Healthcare.gov,
https://www.healthcare.gov/choose-a-plan/plan-types/ (last
visited February 4, 2019). The insurance universe can be
bewildering. For the purposes of this case, however, none of
the relevant documents or provisions of federal law contain
any language that supports Plaintiffs’ contention that the
MLR numerator must exclude payments to out-of-network
providers.
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE             19

    Nor would there be any point in straining the language in
the manner Plaintiffs suggest in order to narrow the definition
of claims that should be included. This is because the
purpose of the ACA was to broaden access to healthcare and
reduce costs. The MLR was enacted to further that purpose
by incentivizing insurers to pay for health services. The more
the percentage of premium income paid out in benefits falls
below 80%, the greater the rebate the insurer must pay to the
enrollees.

    Congress passed the ACA to expand health insurance
coverage. See King, 135 S. Ct. at 2485, 2493. The MLR 80
percent spending requirement on incurred claims furthers this
goal by encouraging health insurance companies to pay for
clinical services. Should that spending requirement on
clinical services not be met, the MLR rebate serves the
ACA’s twin goal of lowering health care costs by
reimbursing to consumers some of the premium money paid
to the health insurance company. See Sebelius, 567 U.S. at
538; 42 U.S.C. § 300gg-18. The 80 percent spending
requirement on incurred claims and the rebate work together
to create an incentive for health insurance companies to
maximize the amount of money spent on health care and
activities that promote health care. See Medical Loss Ratio
Requirements Under the Patient Protection and Affordable
Care Act, 77 Fed. Reg. 28,790, 28,791, 28,793 (May 16,
2012).

    Thus, Congress was quite clearly concerned with
expanding benefits and reducing costs. The MLR is
inclusively defined with respect to payouts and contains an
express exclusion for administrative costs. The structure is
meant to encourage insurers to pay benefits and to discourage
disputes. Plaintiffs ask us to turn the system on its head by
20     MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE

essentially contending that the goal should be to provide
rebates to enrollees rather than insurance benefits. Insureds
pay premiums in order to be eligible for reimbursement of
health care costs, not for rebates. Plaintiffs seek to draw a
type of distinction that would discourage the payment of
benefits and encourage costly disputes like the one that is at
the root of this case.

    For all of these reasons, we conclude there is no basis in
the language, history, intent or spirit of the ACA to narrow
the MLR by excluding payments for services rendered by
out-of-network physicians. As the district court correctly
recognized, the services were covered by the plan and the
payments were made.

     The district court did not err in dismissing the action
without leave to amend because Plaintiffs never asked for
leave to amend the complaint. See Alaska v. United States,
201 F.3d 1154, 1163 (9th Cir. 2000). Plaintiffs belatedly ask
us to remand so that they may amend the complaint to claim
that some of the reimbursements were for services outside the
plan. The request is untimely. See id. at 1163–64. It is also
inconsistent with the history of the underlying dispute.
Plaintiffs have never asserted that the services for which
reimbursement was made were not covered by the plan. This
dispute has always been over the increased costs of out-of-
network providers rendering covered services, and that is the
dispute the settlement agreement resolved. Plaintiffs chose
to litigate how that resolution should be treated in the MLR,
and can not now go back and try to change the terms of the
settlement itself. Those terms were clear: Blue Shield agreed
to reprocess claims for clinical services at in-network rates
only if the enrollee submitted a written form attesting he or
she received covered services from a provider who was
       MORRIS V. CALIFORNIA PHYSICIANS’ SERVICE            21

erroneously listed in the Blue Shield provider directory.
Enrollees were not eligible for a claims adjustment if the
services they received were not covered by their plan. Thus,
the settlement agreement sought to remedy the provider
directory mistake as to the cost of covered services. There is
no valid reason to reopen it.

    The district court’s judgment of dismissal must be
affirmed.

   AFFIRMED.
