Case Title: Capua v. Weyerhauser Company. Concurring Opinion by J. Acoba, with whom J. Nakayama joins [pdf]. ICA s.d.o., filed 09/27/2007 [pdf], 115 Haw. 476. Dissenting Opinion by J. Foley [pdf]. ICA Order of Correction, filed 10/25/2007 [pdf]. S.Ct. Order Accepting Application for Writ of Certiorari, filed 02/27/2008 [pdf]. S.Ct. Order Amending Concurring Opinion by J. Acoba, with whom J. Nakayama joins, filed 05/29/2008 [pdf].

Citation: 117 Haw. 439

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2008-05-27T00:00:00Z

Document:
LAW LIBRARY

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IN THE SUPREME COURT OF THE STATE OF HAWAI'I

~ 000

   

LAN CAPUR, Petitioner/Claimant-Appellant,
WEYERHAEUSER COMPANY, Respondent /Employer-Appellee,

Self-Ineured.

NO. 26369

   
 

CERTIORARI TO THE INTERMEDIATE COURT OF APPI
(CASE NO.: AB 2001-23096-561 (29215704))

MAY 27, 2008

MOON, C.J., LEVINSON, AND DUFFY, JJ. ;
ACOBA, J., CONCURRING SEPARATELY, WITH WHO
NAKAYAMA, J., JOINS

Bh HY LZ AVR ONL
a3

 

OPINION OF THE COURT BY MOON, C.J.

on February 27, 2008, thie court accepted a timely
application for a writ of certiorari, filed by petitioner/
claimant-appellant Lani Capua on January 24, 2008, requesting
thie court review the Intermediate Court of Appeals’ (ICA)
October 26, 2007 judgment on appeal, entered pursuant to its
Septenber 27, 2007 sunmary disposition order (SD0). Therein, the
ICA affirmed the December 30, 2003 deciaion and order of the
Labor and Industrial Relations Appeals Board (LIRA), which, in
turn, affirmed the decision of the director of the Department of

Labor and Industrial Relations (director). Both the LIRAB and
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the director determined that, inasmuch as Capua was previously

 

awarded permanent partial disability (PPD) benefits, she was
barred from receiving vocational rehabilitation (VR) services
under Hawai'i Administrative Rules (HAR) § 12-14-36 (governing
waiver of VR services under certain circumstances). Oral
argument was held on April 17, 2008.

on application, Capua challenges -- ae she did before
the ICA -- the LIRAB’s denial of VR services to her, arguing that

HAR § 12-14-36 is inconsistent with Hawai'i Revised statuti

 

(HRS) § 386-25 (1993) (governing an employes

 

#8 eligibility for VR
eervices), Based on the discussion infra, we hold that the

director exc

 

ded hie statutorily designated authority in
promulgating HAR § 12-14-36 and, thus, the ICA erred in affirming
the LIRAB’s December 30, 2003 decision and order. Accordingly,
we vacate the ICA’s Qctober 26, 2007 judgment on appeal and the
LIRAB’s December 30, 2003 decision and order and remand this case
to the director with instructions to provide Capua with VR

services, if she so desires at thie time.

 

‘BACKGROUND
A, 1e Indu the Awa BED Be

Om July 8, 1992, Capua suffered an on-the-job accident
while employed as 2 sheet catcher! by respondent /employer-

appellee Weyerhaeuser Company. Capua injured her lower back

 

tA sheet catcher’s responsibilities entail collecting cardboard sheets
hat come out of © sachine, measuring the cardboard sheets, and preparing them
for the finishing department to make them into boxe

 

 

 
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while lifting and restacking cardboard sheets that had fallen off
@ conveyor belt. On July 14, 1992, Weyerhaeuser filed a WC-1
Enployer‘s Report of Industrial Injury, indicating that Capua
“felt [a] sharp pain in [her] lower left back area” after
sattempting to lift a stack (handful) of sheets.” on August 12,

1992, Weyerha

 

ser filed a second WC-1 report, accepting
Liability for capua’e injury.

[eapua) continued to work until septenber of 1992,
een she was taken off work by her doctor. [eapual wae off
fork from Septenber to Novenber of 1982, and for various,
Periods thereatter. (Weyerhaeuser! provided [capual with
Eexporary light duty work upon her return and she sradeally
worked her way back to full tine status.

 

 

Although Capua eventually returned to full-time status, she
remained at her light duty position.

Some time after her July 9, 1992 injury, capua
apparently sought and was granted temporary total disability
(27D) benefice

 

‘Thereafter, on June 18, 1996, Capua applied for
PPD benefits. The director, on December 4, 1996, issued a
Gecision awarding Capua, inter alia, eight percent (8%) PPD of
the whole person as a result of her work injury. After she
received her PPD award, Capua continued to work at Weyerhaeuser

in her light duty position.

 

* _capus received TID benefits between the period of September 1, 1992
land Novenber 30, 1992. The record aleo Indicates that Capua received varying
amounts of tenporary partial disability (10) benefite between Decesber 1,
1992 and March 14, 1993. Capua received additionally 71D benefits on February
16," 1994, May 2-3, 1954, August 3-7, 1994, August 21, 1994, February 3-29,
A995, Mazen 24-25, 1995" and Auguet 1-6, 1997

 

 
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Gapua‘s Termination and the Determination of

nt to VE

Im @ letter to Capua, dated July 9, 1999, Weyerhaeuser
advised Capua

hat it would not be able to provide {her with indefinite
Light duty work, and that VR services would help her secure
alternate employment elsewhere. Since (Capua) had expressed
gu interest in VR, [leyernaeuser] advised her to contact
Laurie Nanano, a VR counselor, for services, oF any other
counselor of her choice.

   

 

On August 29, 2000, (Capua) met [Hamano) for an
initial inforeational interview, but did not at that tine
commit to selecting (Manano] as her VR provider. [Capua]
Jater interviewed two other VR counselors. By October of
2000, {Capual stiii had not decided on a VE provider:

On Octeber 13, 2000 Ineyerhaeuser’s) new human
resource manager, Alan Maeda, met with [Capua] to alec
services. [Maeda] told (Capa) that she needed to make @
decision about VR services soon. [Capua] wanted nore time
to think about VR, and promised to make a decision by
cecober 18, 2000.

 

ve

   

On the morning of October 16, 2000, Capua called Hamano and
indicated that she intended to participate in the VR process with
Hamano as her counselor. Later that afternoon, Weyerhaeuser
issued 4 letter terminating Capua from her light duty position
Thereinafter, the termination letter]. In ite termination
letter, Weyerhaeuser stated:

Although not obligated to, weyerhseuser provided you
with temporary light duty work in order to afford you tine
fo find another jeb ang further attempted vo aesiet you in
IWR). However, a8 you know, Ineyerhaeuter] does not have
“permanent” light duty work. we have only provides such
right duty work to enployees while they are locking for
replacenent enploynent.

‘Eased on your medical condition, the (clonpany ha
nade an esesonent that we have no cufrent poultion that you
would be nedically capable of fulfilling on a regular basis.

In light of your refusal to seek [VR servicesl to help
yourself in seeking alternative employment, we have 10
alternative but to terminate your temporary light duty
Potition and therefore your employment at weyerhacuser.

 

 

     

 
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upon receipt of the termination letter, Capua informed
Hamano that she had been terminated. However, Capua continued to
meet with Hamano and receive VR services because Hamano
determined that VR services were appropriate for Capua.’

Likewii

 

on November 21, 2000, the Department of Labor and

Industrial Relations (DLIR) Disability compen:

 

tion Diviaion
(Dep) made a determination that Capua was eligible for VR

services."

 

‘Thereafter, on November 30, 2000, pursuant to HAR
5 12-14-48," Weyerhaeuser filed its request for reconsideration

of the DcD’s determination regarding capu

 

eligibility for vk
services. Weyerhaeuser, relying upon HAR § 12-14-36, contended
that Capua was not entitled to VR services. HAR § 12-14-36
provides in relevant part that *[aln employee who has been issued

» specitically, Hamano testified that, in her opinion, Capua wae

qualified for VR services beceune:

 

Icapual had Linitations that precluded her return to what
he was doing before. Therefore, that becane part of [ay]
Getermination of it being feasible for services.

Tialso have to indicate whether or not have the
exile and knowledge to be able to seelet her to get to the
Place where she can return to work. Go at that point in the
Initial evaluation we had stated that yes. she had
Limitations, [Weyerhaeuser] stopped her from being able to
return to [the] work she was doing, she had been in Light
uty. And therefore not able to return £0 what she wae,
Going. “Therefore, you know, the was deened feasible for

 

 

 

‘The record provides ne specific facts regarding the events
surrounding Capua’s entrance into the VR program

® HAR § 12-14-48 (a) provides in relevant part: “Except az otherwise
provided, determinations of the rehabilitation unit are considered final
Unless a written request for reconsideration is filed with the rehabilitation
Unit within ten calendar aye from the date of the determination.”

 
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a (PPD) award by the director . . . is determined to have waived
the right to rehabilitation.* As such, Weyerhaeuser argued that,
because Capua had previously received an award for PPD benefits
on Decenber 4, 1996, she waived her right to VR services.
Agreeing with Weyerhaeuser, the director entered a supplemental
Gecision on Nay 8, 2001, finding that, under HAR § 12-14-36,
Capua had waived her right to VR services. Consequently, Hamano

 

wed providing VR services to Capua
C. Appeal to the LIRAB

on May 18, 2002, Capua appealed the director’s
supplemental decision to the LIRAB. After a hearing, held on May
23, 2003, the hearing officer entered a proposed decision and
order, pursuant to HRS § 91-11 (1993),* affirming the director's
supplemental decision. The hearing officer entered the following

proposed conclusions of law:

«mas § 91-11 provides:

Whenever in a contested case the officials of the
jency who are to render the final decision have not heard
and examined a1] of the evidence, the decision. if adverse
koa party to the proceedina other than the ascncy iteelt.
shall not be sade until a proposal for decision contaising a

 

‘been gerved uson the parties, and an opportunity has been
afforded to each party adversely affected to file exceptions
and present argument to the officials who are to render the
Gecision, who shall personally consider the whole record or
Such portions thereof aa may be cited by the parties.

 

 
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Pursuant to (HAR) § 12-14-36... , an employee who
been esued a 970 avard by the [ajitector is determined to
have waived the right to rehabilitation. In this case,
[Capual was awardes PPD by the. (a) irector in a Decenber 4,
1596 decision. Under (HAR) § 12-14-36, (Capua) is not
entitled to VR services. Accordingly, we conclude that the
(alirector dia not err in denying [Capua] VR services,

(Weyerhseuser's] offer of YR after PPD vas awarded was
gratuitous and not required by lav. However, ‘having made
the offer of VR, and having agreed to an October 18, 2000
Geadline for lCapual to accept vk, [Weyerhaeuser] could have
acted nore honorably in this case:

 

 

 

Both Capua and Weyerhaeuser filed exceptions to the proposed
decision and order in accordance with HRS § 91-11, quoted eupra
note 6. On December 29, 2003, a hearing was held, wherein Capua
argued, inter alia, that HAR § 12-14-36 could not serve as a
ground to deny her VR services because HAR § 12-14-36 was
“inconsistent” with HRS § 386-25. At the time of Capua’s
disability, HRS § 386-25 (1953) provided in relevant part:

(b) the director shall refer emlovess who may have
‘px have autfered permanent disability ss « result of work
Injuries and who in the director's opinion can be physically
or vocationaliy rehabilitated to the dezartaant of himaa
pervices or to private providers of Tebsbiiication services
for such physical ano vocational rehabilitation services a2
arefeasibie.

 

igi ‘the eliginitity of any injured employee to
xeceive other benefite under this chapter shall in no way be
‘by the employee's entrance upon a course of
Physics! or yocatienal rehabilitation as herein provided:

(Emp

 

9 added.) In essence, Capua argued that HAR § 12-14-36

  

conflicted with HRS § 386-25. Conversely, Weyerhaeuser contended
that, inasmuch as HAR § 12-14-36 was “clear* and ‘unambiguous, *
there was "no room for exceptions." On December 30, 2003, the

hearing officer issued an order, adopting the proposed decision

 
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and order in toto. Thereafter, Capua filed her notice of appeal

with the ICA, pursuant to HRS § 386-88 (Supp. 2007).”
D. Appeal _Before the ICA

On direct appeal, Capua argued, inter alia, that HAR
§ 12-14-36 *[was] invalid ae inconsistent with the Hawai'i

[wlorkers’ (c]ompen:

 

tion [1]aw." Weyerha

 

\ser responded that
Capua had no “right” to VR under HRS § 386-25 and, therefore,
argued that the LIRAB correctly determined that HAR § 12-14-36

 

e “entirely consistent with the [VR] atatute.* on guly 29,
2007, the ICA issued an order requesting that the Attorney
General file an amicus curiae brief because “the appeal raise (d]
a challenge to the validity of a regulation promulgated by the
[alizector of the DLIR.*! Thereafter, on August 24, 2007, the
Attorney General filed its amicus curiae brief, taking the

position that HAR § 12-14-36 was valid.”

 

HRS ¥ 386-88 provides in relevant parts

The decision or order of the appellate bosrd shall be
fsnei and conclusive... unless within thirty days after
ailing of a certified Copy of the decision or orcer, the
Glrector or any other party sppeaie to the (Teal << . BY.
filing a written notice of appeal with the appellate board.

 

Specifically, the ICA requested that the Attorney General's brief

address the following ierve:

 

Weether the portion of HAR § 12-14-36 providing that *faln
employee who hus been issued a (P¥0] avard by the director
O's determine! to have waived the right to
Eehabilitation(]* ie tavalid as inconsistent with 15
(elhapter 306-

 

 

(some brackets in original and sone added.)

 

Additionally, the Attorney General argued that,

hough
wa § 12-34

36 was valid, the LIFAB exred in finding that’ veyerhaeuser’s offer
(continued...)

 

 
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On Septenber 27, 2007, the ICA, in @ 2-1 Spo, affirmed
the LIRAB‘s decision, with Associate Judge Daniel R. Foley
Gissenting (ICA Dissent). Therein, as discussed more fully
Anfxa, the ICA rejected Capua’s contention that HAR § 12-14-36
was “invalid as inconsistent with HRS (c]hapter 386." The

dissent, however,

 

jerted that HAR § 12-14-36 was “inconsii

   

with the express purposes contained in the language of HRS § 386-
25" and stated that, “[i]nasmuch as the (LIRAB] relied on an

invalid rule to deny Capua’s petition for [VR] benefits, [he]

 

would vacate and remand." ICA Dil

 

nt at 5-6, 8.
The ICA entered ite judgment on appeal on October 26,
2007. On January 24, 2008, Capua filed her application for a
writ of certiorari. Meyerhaeuser did not file a response. This
court accepted Capua’s application on February 27, 2008 and heard

oral argument on April 17, 2008."

1. continued)

to provide VR co Capua was merely gratuitous. Accordingly, the Attorney
General urged the TCA to reverse the LIRAB’s decision because it believed that
Weyerhacuser's offer of VE wae an offer that was made in exchange for
terminating Copua's ten-year exploynent and, thus, was an offer supported by
consideration. However, the Ick declined to address this argunent "because it
vee not raised by Capua on appeal." S00 at 4.3)

 

 

  

™ on March 25, 2008, state Solicitor General Dorothy Sellers filed, on

behalf of the state of Hawai'i, a notion for leave to appear anicue curiae and
to participate in oral armument (hereinafter, the State's motion). We granted
the state's motion on april 9, 2008

 
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IT. STANDARDS OF REVIEW
A. Agency Decisions

Appellate review of the LIRAB’® decision is governed
by ung $'91-14(q) (2953), which provides

Upon review of the record{,] the court may
affirm the decision of the agency or remand the
Gace with instruct ions for further proceedings)
or it'may reverse or modify the decision and
order if the gusstantisl righte of the
Petitioners may have been prejudiced because the
Adzinistrative findings, conclusions, decisions,
or orders ares

(2) tn violation of conststutional or
statutory provisions; oF
(2) Invexcese Sf the statutory authority or

jurledietion of the agency: oF

(3) Rede spon unlawful preceaurey or

(4) Affected by other error of law; oF

(5) Clearly erroneous in view of ‘the reliable,
probative, and substantial evidence on the
Whole record) oF

(6) Arbitrary or capricicus, or characterized
by abuse of discretion or clearly
unwarranted exercise of discretion.

Under HRS § 91-14(g), conclusions of law (coLe) are
reviewable under subsectiose (1), (2), and (4); questions
Fegarding procedural defects are reviewable under subsection
a)

 

A COL 1s not binding on an appellate court and ie
freely reviewable for ite correctness. ‘Thus, the court
reviews Cols 8 hove, under the right/wrong standard.

Tamv. Kaiser Permanente, 94 Hawai'i 487, 494, 17 P.3d 219, 226

(2002) (citations,

  

 

original brackets, and ellipsis omitted)

(format altered) .
B. Statutory Interpretation
“The interpretation of a statute is a question of law

reviewable de novo." Flor v. Holouin, 94 Hawai'i 70, 76, 9 P.3d

382, 388 (2000) (original bracket:

 

internal citations, and
ellipses omitted). Further, “thie court has accorded persuasive

weight to the construction of statutes by administrative agencies

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charged with overseeing and implementing a particular statutory
schene.* Sam Teague, Ltd. v. Hawaii Civil Rishts Conm’n,
Hawai'i 269, 276 n.2, 971 P.2d 1104, 1111 n.2 (1999).
Nonetheless, “an interpretation by an agency of a statute it
administers is not entitled to deference if the interpretation is
plainly erroneous and inconsistent with both the letter and
intent of the statutory mandate.” Haole v. State, 111 Hawai'i
144, 150, 170 P.34 377, 383 (2006) (citation omitted) .
IIT. DISCUSSION

As previously stated, Capua contends that the ICA erred
in affirming the LIRAB’s decision and order, which denied Capua’e.
request for VR services. Specifically, Capua argues that the ICA

erred:

 

18 ignoring the central legal ‘eave that

icapia’s} Fight fo VR benefits le waives by relying on
an invalid administrative rule, HAR § 12-14-36, which
is wholly inconsistent and contradicts HRS [elhapter.
386, a social legislation requiring broad Liberal and
Beneficent interpretation and where there is 0
yeference anywhere in HRS [clhapter 386 or HRS
§386-25(b) that precludes an injured worker 1ike
{capual from aeserting her statutory right to VR
benefite(;)

2 by misapplying or misapprehending the fact that
icepia’s} "award of (PPD], which precludes
finding gainful employment, ie the very 1
she should be granted VE benefits ang that HAR
5 12-14-36 should be declared an invalid rule and
totally disregarded{; and]

3 Ey deciding as a tatter of law chat HAR
§ izta4'se ie valid by creating » reasonable deadline
fo accept vR benefits when in reality it is patently
arbitrary and violates (capua'a) right to equal’
protection of lawl.)

 

    

 

Inasmuch as (1) and (2) above relate to the sole issue whether

the ICA erred in relying -- as did the director and LIRAB -- upon

oe
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the allegedly invalid HAR § 12-14-36 to conclude that Capua
waived her right to VR services, we address them together.

On appeal, as well as on application, Capua argued,
Anter alia, that HAR § 12-14-36 wae invalid and, thus,
inapplicable because it is inconsistent with, and directly
contradicted, HRS § 386-25. In rejecting Capua’s arguments, the
TCA majority stated:

HAR § 12-24-36 establien
@eadline =" measured

 

the employee's acceptance of
Compensation for PPD -- for an employee who hes suffered @
Pro to obtain [VR] services. The regulation filled the void
lett by the statute's silence on the time by which a
employee with a PPD would have to obtain (Vk) services. The
Fequirenent that an erployee secure [VR] services before
accepting a PPD vara ia rationally relates to the statutory
purpeses of {VR}, which is to restore the employee's earning
Espacity Snd retin the employee to work in an expeditious
and a cost-effective manner.

Especially ss applied to Capua, HAR § 12-14-36 was
consistent with Wns lelhapter 206. For Cepua to receive PPO
benefits, it wae necessary for ner medical condition to have
Btabilized to the point where no further seprovenent coule
Feascnably be expected so that her PPD impairment could be
Fated. Capua’s PPD award was iesued more than four years
tter she had been injured and had returned to work. Thue,
Capua had ample tine to seek [VE] services before obtaining
her PPD avard. By virtue of HAR § 12-46-36, she was algo oo
notice that by obtaining the PPD award, she wae waiving her
Fights to (VR

    

 

 

 

 

 

 

 

 

SDO at 3-4 (footnote omitted) .

To the contrary, the dissent opined that:

 

ypably related to carrying into
effect the purposes” of (HRS clhapter 366, and aa such, the
DLIR “may not enact rules and regulations which enlarge,
alter, oF restrict the provisions" contained theresa:
Sacober v. Sunn, € Maw. app. 160, 167, 715 P.2¢ 613, 039
GSee)- Az evinced by the text of HRS § 386-25 and’ ite
legislative history, HAR § 12-14-36 bears no reasonable
Felation{) to the (VR) statute. gaole v. seate, 111 Mawad"t
iss, 256, 240 P.3¢ 377, 389 (2006). Therefore, T conclude
that the DLIR exceeded ite statutcty authority when it
promulgated thig rule, which 1 fing to be inconsistent with
the purpose of [VR].

 

 

ICA Dissent at 7.

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Here, Capua argues that “the ICA disregarded the

consistent legacy concerning the construction of the workers’

 

compensation statute and (Capua’s} challenge that the HAR
§ 12-14-36 ie invalid.* Capua asserta that, although “the
[a}ixector ie charged with rule making to implement the
legislation,” it is “axiomatic that . . . the rule cannot
conflict with [the statute], nor contradict such a social
beneficent legislation.’ Specifically, Capua contends that HAR
§ 12-14-26 de invalid because “[nJowhere does [HRS § 286-25) or
[ite] legislative history limit an injured worker's right to VR
benefite.*

With regard to an agency's rule-making authority, this
court has announced that:

(A) public administrative agency possesses only such
role-naking authority as is delegated to it by the state
legislature and may Only exercise this power within the
Exanework of the eeatute Gnder which it’ se conferred

 

are invalid and must be-etruck dow, In other words. an
‘sdninietretive agency can oly wield povers expressly oF
inplicitly arated to it by statute. However, it is well
ertabiiened that an adninistrative agency's authority.
Includes those inplied powers that are reasonably necessary
to carry out the powers expressly granted. The reason for
implied powers is that, ae a practical matter, the
legislature cannot foresee ali the probleme incidental to
carrying out the duties and responsibilities of the agency

 

Haole, 121 Hawai'i at 152, 140 P.2d at 35 (enphasis added)
(citations and original emphasis omitted) (format altered).

In thie case, the director was authorized to promilgate
rules in accordance with HRS § 286-72 (1993), which provides that

“the director . . . shall make rules, not inconsistent with

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[chapter 386], which the director deems necessary for or
conducive to ite proper application and enforcement.”
Specifically, the director promilgated HAR § 12-14-36 in an

attempt to implement HRS § 366-25 (1993), which provided in

 

relevant par!

(a) The purpotes of vocational rehabilitation are to
restore an injured worker's earning capacity az nearly a8
possible to that level which the worker was earning at the
Eine of injury and to return the injured worker to suitable
work in the active labor force se quickly se possible in a
cot-effective manner.

(b) The divector shall refer enplovees ho may have or
have suffered permanent disability asa result of work
aniuties and who in the divector’s opinion can be hvaically
‘or _vocationaliy cehabilitated to the department of huran
services of to private providers of retabiliestion services

Bra_featibles A referral shall be nace upon recommendation
Gf the yehabilitetion unit eetablished unser section
346-73.5 and after the employes has been dened physically
able to participate in rehabilitation by the explovee's
attending physician.

 

% we note that the parties, ae well as the Attorney General -- on

direct appeal, =~ relied upon the 1998 vereion of HRS § 366-25, which vereion
provided in rélevant part that "(t]he director may refer exployees who may.
have or have guffered pernanent disability .. . for. . - [VR] services. that
are feasible.” HRS § S66-25(5) (emphasis added). However, thie coure has
Stated that “the general rule in workers’ compensation cases is that the date
Of disability decermines what year's version of the (wlorkere’ [clompensation
[Jaw is applicable.” Tan, 9¢ Hewal't at 495, 17 9.2g at 227 (citation
omitted) .""here, Capua was injured on July 6, 1992; Weyerhaeuser filed a ¥C-1
Report of Injury on vuly 24, 1992, Indleating that Capua bad injured herself
at work, and accepted 1iabsiity for Capua'e injury on August 12, 1992.
Acccraingly, we apply the statute that! was’ in effect when Capua sustained she
injury that causea her permanent disability. The statute that wae in effect
in toda ia the sone as the 1993 version, Aoresvers even If the caate of
Gleabilityr is the date that the director awarded Capua’e PPD rating —— Lue,
Decenber 4, 1996 -- the 1993 version would etill remain the appropriate
version to|apply in thie cage insemich ae the legislature aid not anend the
Statute until 1998. Thue, in our view, the version of HRS § 366-25(b)
applicable here was the 1583 version, as quotes more fully intra. Jt appears
from the ICA's SDO that the 1Ca applied the 1999 version of the statute
because, although the CA did not explicitly quote the atatutery language, it
stated that it uae applying the statute that vae in effect *{s]t the tine
Capua's injury became nanifest.* SD0 at 2

 

 

 

 

 

 

 

 

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(c) Earollment in a rehabilitation plan or progres
shail not be nandatory and the approval of « proposed
Fehabilitation plan of program by the injured exployee shall
be required. After securing such approval the director
shall select o certified provider of rehabilitation services
for the injured employee after consultation with the
employes and the employer:

(a) An injured employee's enrollment in &
yebabilitation plan or program shall not affect the
employee's entitlement to [77D] compensation If the employee

Fue no wages during the period of enrollment. If the
exployee receives wages for work performed under the plan or
progras, the employee shall be entitled co. (77D)
Roupensation in an snount equal to the difference between
the employee's average weekly wages at the tine of injury
find the wages received under the plan or program, subject to
the Lisitarions on weekly benefit’ rates prescrived in

jection 386-33(a)., The employee shall not be entitled to
Such compensation for any week during this period where the
Wages equal or exceed the average weekly wages at the tine
Of injury’

(e) The director shall adopt rules for additional
Living expenses necessitated by the rehabilitation program,
together with sll reasonable and necessary vocations]
training

UE) 1 the rehabilitation unit determines that
physical and vocational rehabilitation are not poreible or
feasible, it shall certify such determination to the
Airector

(gi The eligibility of anv iniured emplovee to receive
other benefita under this-chaster shall in no way be
affected by the employes’: entrance upon a cours of
physical or vesational rehabilssation as herein provides.

 

 

 

 

 

(Emphases added.) HAR § 12-14-36 provides in its entirety that.

(a) an
the director or an employee who has stipuleted away the
Fight to vocational rehabilitation with the approval of the
Girector is determined to bave waived the right to

(b) "the right to rehabilitation is preserved for any
enployee on [TTD] and any employee who ha been adjudged
Permanently and totally disabled by the director.

(Emphases added.)
It ie well-settled that thie court's foremost
obligation when construing a statute

is to ascertain and give effect to the intention of the
legislature, which is to be obtained primarily from the

Language contained in the statute itself. And we must read
statutory language in the context of the entire statute and
Construe it ina manner consistent with its purpo

 

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State v. Kalani, 108 Hawai‘i 279, 283, 118 P.3d 1222, 1226 (2005)
(citation omitted) (format altered). ERS § 386-25(b) expressly
stated that the director “shall refer employees who may have or
have suffered permanent disability as a result of work injuries
and who in the director’s opinion can be physically or
vocationally rehabilitated to . . . providers of rehabilitation
services for such physical and vocational rehabilitation services
as are feasible." (Emphasis added.) Thie court has stated that
the term “shall* ‘generally will be construed ae mandatory.”
Malahoff v, Saito, 111 Hawai'i 168, 191, 140 P.34 402, 424 (2006)
(citations omitted). Further, disability ie defined as the “loss
or impairment of a physical or mental function.” HRS § 386-1
(1993). Thus, by its plain reading, HRS § 386-25(b) mandated the
Girector to refer an employee who had been injured during the
course and scope of employment and who either may suffer or has
suffered permanent impairment of any physical (or mental)
function to VR services “as are feasible.” The existence of the
Phrase “have suffered permanent disability” within HRS § 386-25
appears to encompass employees who have been awarded PPD, such as

Capua.

 

M Likewise, we note that the 1996 version of HRS § 386-25 retains the

Phrase “have suffered permanent disabil: ‘Thus, although the 1998 vereion,
arguably, provides the director with greater discretion in referring Anjured
exployet fn 1952 Senate

that the director

 

     

 

  
 

 

 
 

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Additionally, HRS § 386-25(g) specifically declared
that an employee's participation in VR services “shall in no way
- affect {]* her eligibility to receive “other benefite under
[chapter 386].* Although benefits was not defined within chapter
386, HRS § 386-1 provided that “compensation” means “all
benefits,” including ‘medical and rehabilitation benefits, income
indemnity benefite in cases of disability or death, and the
allowance for funeral and burial expenses.” stated differently,

an employee's decision to participate in VR

 

vices would not

 

affect her eligibility to receive any “income indemnity
benefits,” such as PPD benefits. HRS § 386-25(g). Thue, HRS
§ 366-25 clearly sete forth an employee’s entitlement to VR
services upon the director's finding of feasibility

Having 80 interpreted HRS § 366-25, we now examine HAR
§ 12-14-36, which was promulgated to implement HRS § 386-25. HAR
§ 12-14-36 unambiguously and plainly provides that an employee
who hae been avarded PPD benefits is deemed to have waived VR
services. As stated above, the ICA believed that HAR § 12-14-26
was a proper exercise of the director's statutorily delegated
rule-making power because "the regulation filled the void left by
the statute’s silence on the time by which an employee with a PPD
would have to obtain [VR] services." sD0 at 3. However, the ICA
fails to explain how HAR § 12-14-36 “establishes a reasonable
deadline . . . for an employee who has suffered a PPD to obtain

[VR] services" and how it is “necessary for or conducive to," BRS

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§ 386-72, the proper application and enforcement of HRS § 386-25

(L.e., that it was reasonably necessary to carry out the powers

 

expressly granted).

 

Specifically, the ICA failed to point
to where in the statute the director was ranted the authority to
waive an injured employee's right to VR services. Indeed,

HRS § 386-72 grants the director the power to “make rules, not
Anconsistent with this chapter, which the director deems
necessary for . . . its proper application and enforcenent..”

(Smphasis added.) HAR § 12-14-36's waiver of VR services

 

however, cannot be consistent with HRS § 386-25, when the statute

established an entitlement to VR servict

 

and specifically
provided that an employee's entrance into a course of VR shall
not affect his or her other benefits. Nowhere in the language of
HRS § 386-25 does it provide -- expressly or impliedly -- that
the director has the power to waive an employee's right to VR

services or that, once a PPD award is i

 

jued the right to VR is

ext inguis!

 

Moreover, contrary to the ICA’s assertion that HAR

 

§ 12-14-36 merely

 

abliohe[é] a reasonable deadline,* it is
clear that HAR § 12-14-36 does more than establish a “deadline*;
it creates a total bar to VR services when an employee receives a
PPD award, We, therefore, hold that the director exceeded the
bounds of the “rule-making authority [that was] delegated to
Inim) by the state legielature,« Hale, 111 Hawai'i at 152, 140
P.ad at 385, in promulgating HAR § 12-14-36. Consequently,

imasmich as HAR § 12-14-36 exceeds the scope of ERS § 286-25, it

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is “invalid and must be struck down." Id. Accordingly, we also
hold that the ICA erred in relying on an invalid administrative
regulation to affirm the LIRAB‘s December 30, 2003 decision and
order.
IV. coNcLustoN

Based on the foregoing, we hold that the ICA erred in
affirming the LIRAB’s December 30, 2003 decision and order
inasmuch as the director exceeded his statutorily designated
authority in promulgating HAR § 12-46-36. Accordingly, we vacate
the ICA's October 26, 2007 judgment on appeal and the LIRAB’s
Decenber 30, 2003 decision and order and remand this case to the

Girector with instructions to provide Capua with VR services, if

 

she eo desiree at this time.

Dennis W. S. Chang, for Go
petitioner/claimant- .
appellant Bi Mlenee

Ronald ¥. K. Leong (Dan Ko ‘ 1 Oe
Obuhanych, with him on the Mem «ath.
briefs) (Of Watanabe Ing
Kawashima & Komeiji), for
respondent /employer-
appellee

Dorothy Sellers, State
Solicitor General, for
amicus curiae State of
Hawai'i

  

Based vpon the above ary to examine
capus’s remaining contention on app! feo wit, that HAR § 12-14-36 is
Spatently arbitrary and violates [capsa’e] right to equal protection of Law.

 

   

 

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