Case Title: Jou v. Dai-Tokyo Royal State Insurance Company. J. Acoba concurring in the results only.

Citation: 116 Haw. 159

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2007-11-16T00:00:00Z

Document:
* FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER +

IN THE SUPREME COURT OF THE STATE OF HAWAT'I

 

00.

 

EMERSON M.F. JOU, M.D., and as to Some Claims, on Behalf of the
Class of Others Similarly Situated, Plaintiff-Appeliant,

 

DAI~TOKYO ROYAL STATE INSURANCE COMPANY, LIMITED and LAWRENCE M.
REIFURTH', as the Director, State of Hawai'i Department of
Commerce and Consumer Affairs, Defendants-Appellees,

and
JOHN DOES 1-50, DOE ATTORNEYS 1-50, DOE CORPORATIONS 1-10; DOE

PARTNERSHIPS 1-10, and DOE GOVERNMENTAL ENTITIES 1-10,
Defendants.

NO. 26310 ; ™
APPEAL FROM THE FIRST CIRCUIT coURT |; c
(crv, No, 03-1-1227) &

 

NOVEMBER 16, 2007

 

MOON, C.J., LEVINSON, NAKAYAMA, AND DUFFY, JJ.
AND ACOBA, J., CONCURRING IN THE RESULT ONLY

OPINION OF THE COURT BY NAKAYAMA, J.
Plaintiff-Appellant, Emerson M.F. Jou, M.D. (*Jou"),
appeals from the first circuit court's! December 17, 2003
judgnent in favor of Defendant~Appellants, Dai-Tokyo Royal State
Insurance Company, Limited (“DTRIC") and Lawrence E. Reifurth in
his capacity as the director of the Department of Connerce and

Consuner Affaire (“DCCA”), State of Hawai'i (“the director”). On

 

44 Roles of Appellate Frocesure ("HRAF*) Rule
en cubetivures
fark E, hecktenueie, an hie offieses cepacsty,

Pursuant
43(c) (2000), Lawrence Ms Fs
inetant appeai in place of

    

   

‘The Henereble Eden Elizabeth Hite presiced
   

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appeal, Jou presents the following points of error: (1) the
circuit court reversibly erred by denying his motion for recusal;
(2) the circuit court reversibly erred by denying his oral motion
1 from the denial of his motion for

 

for an interlocutory app
recusal; (3) the circuit court reversibly erred by denying his
request to amend the complaint; (4) the circuit court erroneously
granted sunmary judgment in favor of the director inasmuch as his
Geclaration in support of summary judgnent was insufficient; (5)
the circuit court erred by granting DIRIC’s motion to dismiss, or
for summary judgment, inasmuch as “[t]he court was violating
state law [sic] of equitable tolling, the right to sue insurers
in tort notwithstanding administrative proceedings, and settled
law of third party beneficiaries{]": (6) the foregoing errors

violated his constitutional rights to equal protection and due

 

process of law uncer the state and federal constitutions; and (7)
“[t}he first circuit, by repeatedly assigning {Jludge Hifo to
pppellant's cases is creating @ ‘conduit court’ bent on damaging
Dr. Jou as much as possible on his way to the appellate courts.”
Also before this court is a motion for damages and costs filed by
the director, pursvant to Hawai's Rules of Appellate Procedure
(CHRAPY) Rule 38, asserting that Jou filed a frivolous eppeal.
For the following reasons, we conclude that Jou’ s
points of error are without merit. However, we disagree with the
Girector thet Jou's appeal is frivolous. Accordingly, we affirm
the judonent appealed from and deny the director's motion for
Genages and costs.
1. BACKGROUND

On May 30, 2003, Jou filed a “Complaint In Tort For
 

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Insurer Bad Faith” in the first circuit court against DIRIC and
the dixector. The case was assigned to the Honorable Judge Eden
Elizabeth Hifo on June 4, 2003.

Jou filed a first amended complaint on June 12, 2003.
Therein, he asserted four causes of action. Jou first claimed
that DTRIC breached a duty of good faith and fair dealing oved to
him as an intended third-party beneficiary by engaging in the

following unfair and deceptive business practices:

[DIRIC] . . . (a) failed to adequately address concerns stated in
[3eu's] communications about the balance due; (b) failed to
provide [Seu] with a Feasenable explanation for delays on claine
Unresolved for thirty cays; (c) die not attempt in geod faith to
effectuate settienentes (6) made payments to. [Jou) not accompanied
hy s etstenent setting ferth the coversge onder which the payments
Mere nade; (e] reqeired duplicetive proofe of loss from [Jou], &
physician (2) failed to prenptly provice an explanation of the
Batis in the ingurance pelicy fer the Genial or partial payment,
end (g) sent the equivalent ef “final” er "paid in full" partial
Beymente te [Joe]

 

 

 

  

 

Second, Jou requested declarstory relief, asserting that the
Gizector’s staff utilized “‘old boy’, ‘back door’, and other
corrupt procedures which deprive[d] [Jou] and others siniiarly
situated of adequate notice and a meaningful opportunity te be
heard a to their liberty and property rights... .” Jou
asserted further that the DCCA's “administrative hearing system,
in its entirety, on the face of its statutes rules and
procedures; and, as this schene is applied to [Jou], and others
ly situated, violates [Jou's] property and liberty rights

 

. and is completely unworthy of public confidence.” Jou's
third cleim requested injunctive relief against the DCCA and its
erting that “ell administrative remedies

 

hearings officers,
for [Jou) and others similarly situated, . . . are futile, void

and inadequate, and should be enjoined. . . .” Finally, Jou’s
   

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fourth claim alleged the existence of a numerous Class of
individuals who suffered similar injuries.

on July 3, 2003, the director filed a “Motion For
Summary Judgment Or Dismissal” asserting that (1) the Hawai'i
related

 

Administrative Procedures Act ("HAPA”) and the DCCA
procedural rules are not unconstitutional, (2) Jou’s complaint
contains only conclusory accusations of corruption, and fails to
state specific facts and circumstances that, if true, would
support a due process violation, (3) Jou may not attempt to
circumvent the contested case hearing procedure by declaring ‘
corrupt or unconstitutienal, and (4) the court lacks subject
matter jurisdiction over Jou's clains for declaratory and
injunctive relief.’

on July 10, 2003, Jou filed @ “Motion To Recuse Or
Disquality The Honorable Eden Elizabeth Hifo[.]” Jou asserted
that Judge Hifo rendered several “questionable” and adverse
rulings against him in prior civil cases in which she presided
that cumulatively demonstrate her bias against him end his
counsel.‘

on August 1, 2003, the circuit court filed an order
denying Jou's motion for recusal or disqualification. The order
additionally denied an oral motion for interlocutory appeal,
apparently raised st @ hearing on the motion for recusal or
disqualification. Also on August 1, 2003, the circuit court

filed an order granting the director’s motion for summary

 

cee filed & menorendun in epposition cn July 14, 2003.

 

«the dizecter filed 2 mencrancun in oppesition en July 16, 2003
DIRIC filed # sencrencun in oppesitien on duly 15, 20

  

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judgment.

On August 14, 2003, DTRIC filed a motion to dismiss
Jou’s first amended complaint, or for summary judgment.

Therein, DTRIC asserted that (1) Jou elected to pursue
administrative remedies for his bill disputes with DTRIC and has
not exhausted those remedies; (2) certain claims are barred by
the statute of limitations; and (3) Jou is not DIRIC’s insured
and therefore has no standing to assert a claim for bad faith
against DTRIC.*

on September 28, 2003, Jou filed a motion for leave to
amend his first amended complaint in order to assert an
additional claim based upon United States v, Allstate, €9 Hawai's
290, 740 P.2d $50 (1987).

On Novenber 13, 2003, the circuit court filed an order
denying Jou’s moticn to amend his first amended complaint.

On November 16, 2003, the circuit court filed an order
granting DTRIC's motion for dismissal or summary judgment. In
its order, the circuit court provided the following conclusions:

1. _DPRIC's Motion to Disniss First Anended

Complaint or, in the Alternative, Motion for Summary deagnent is

GRANTED ae tO the clains arising from Dr. cute treatnent of Ny

Agbeyens, A. Agbayent end Kivem! Dixon by virtue of the starute of

Linitarione

2. DTRIC's Motion to Dismies First Anenced

Conplaint cr, in the Alternative, Motion for Scmmary Josgment ie

GRANTED as to those claine regarding payment of bills under the

no-fault eatute se Or. Jov elected admnistrstive renecies.

Se “SoRIc'® Notion to Dismiss First. Anensed

Conpleint cr, in the Alternative, Motion for Summary Jucgnent is

GRANTED ae t6 the cleins of bod faith or tortious relief ae the

Frovicer, Dr. los, a¢ en incidental beneficiary to the snsurance

Eentract fer ne-fault benefite, lacks standing te bring a claim
fer bad faith cr tortious relict  BERIC.

 

 

 

 

 

     

 

* 00 £53e6 & menorendum in cppeeitson on Oeteber 3, 20:

 

«DTIC #iled  mencrandun in opposition en Ceteber 8, 7003)
   

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The circuit court filed its judgnent in favor of the
director and DIRIC on December 17, 2003. Jou filed @ timely
notice of appeal on Decenber 30, 2003.

TT, STANDARDS OF REVIEW

Motion for Recusal or Disqualification

 

“this court has adopted the abuse of discretion
standard for reviewing a judge's denial of a notion for recusal
or disqualification.” State v. Ortiz, 91 Hawai'i 181, 188, 981
P.2d 1127, 1134 (1999) (citing State v. Ross, &9 Hawai'i 371,
376, 974 P.2d 11, 16 (2998)) (internal quotation marks omitted)

(brackets omitted).

 

Interlocutory Appeal

According to Hawai'i Revised Statutes (“HRS”) § 641-
1(b) (1993), interlocutory appeals “may be allowed by @ circuit
court in its discretion from an order denying a motion to dismiss
or from any interlocutory judgment, order, or decree whenever the
cirevit court may think the same advisable for the speedy
termination of litigation before it.” (Emphasis added.) Because
the circuit court is vested with discretion over the matter, our
review is appropriately limited to the question whether the
circuit court abused that discretion. Cf, Tri-S Corp. v. Western
orld ins. Co., 110 Hawai'i 473, 489, 135 P.3d 82, 98 (2006)
("[T]he circuit court has discretion to grant extensions of tine,
and thus we review its orders in this regard for abuse of that
discretion.”).

¢. Motion for Lea

 

to Amend the Complaint
“orders denying motions for leave to amend @ complaint

are reviewed for en abuse of discretion.” offi aweiian

é
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Affairs v. State, 110 Hawai'i 338, 351, 133 P.3d 767, 780 (2006).
D. Summary Judgment
In Kau v. City & County of Honolulu, 104 Hawai'i 468,

92 P.3d 477 (2004), we explained that the following principles

guide our review of a circuit court’s grant of sunmary judgment:

 

Me review the circuit court’s grant or densel of summary
judgnent de nove. #swai ld) Community Federal Credit Union
Keka, 9¢ Hevar't 213, 221, 11 Psa 1, 9 (2000). The etancard for
Grenting @ motion for summary judgnent is setled
[S)inesry juconent ie appropriate if the plescing
Gepositicns, answers to interrogatories, end admissions on
Eile, together with the affidavits, if any, show that there
is no gensine issue as to any material fact and that the
moving perty se entitied to Judgment as a aatter of law. A
fect as naterial if proof of thet fact wovld have the effect
of eetebisshing or refoting one of the cesential elenents of
Scouse cf action or defense asserted by the parties. The
evidence must be viewed in the light most favorable to the
noneneving party. Invether words, we must view 611 of the
evigence end the inferences drawn’ therefrom in the Light
ost favorable to the party opposing the neticn
Ta, (citetions snd internal gueteticn marks emitted)
Soon v-City 4 County of Woneluly, $6 Hewas's 233, 246-48,
34e, 385-60 12002) (second elteration in ericinel).

      

   

 

 

 

 

 

Pas

 

Ad, at 473-74, 92 P.3d at 482-83 (some brackets added, some in

original). Subsequently, in French v. Hawaii Pizza Hut, Ince,
105 Hawai'i 462, 99 P.3d 1046 (2004), we discussed the particular

 

burdens of production and persuasion as follows:

‘The burden 18 on the party moving for sunmary judgment
(moving party) to show the sbeence of any genuine isgue ee to all
material fecte, which, under epplicable principles of substentive
Tau, entities the noving party to judgment oss matter of lew.
hit Borden nae two componente

First, the moving party has the burden of producing support
for ite claim that: (1) no genuine issue of materiel facte exists
with sespect te the essential elenente cf the clain or defense
“nich the motion seeks to establish or which the motion questions;
and (2) Eosed cn the unéiepoted facts, it is entitled te sumary
judgment ac a matter of law. Only when the moving party satisfies
ite initial burden of production does the burden shift to the nen
moving party te respond te the netien fer summary Judgment and

te specific fects, se cppesed to general ellegetions,

ent Sesue worthy ef trial.

   

     

 

 

   

 

 

pertvseion.. This burden siveye renaine with ©
Feguires the neving perty te convince the court tha
ieeve ef S that the roving

he meving party and

 

         
   

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entitied to sumery judgnent as a aatter of Law:
Ide at 470, 99 P.3d at 1054 (citing GECC Fin. Corp. v. Jaffarian,
79 Hawai'i $16, 521, 904 P.2é 530, $35 (App. 1995) (citations
emitted)).
E. Motion te Dismiss

This court has recentiy applied the following standard

when reviewing a circuit court's order denying a motion to

 

dismis:

 

A conplaint choulé net be disniesed for failure to state = claim
Golers it appears beyend coubt thet the plaintiff can prove ne set
ef fecte sn cuppert of his or her claim that would entécie him or
her to relief. We must therefore view @ plaintiff's ccmplaine in
2 light nest favorable te him or her in ofer to devernine whether
the sllegetions contained therein could warrant relief uncer any
alternative theory. For this reason, in reviewing « circuit

nt our coneiderstion ie strictly
Complaint, and we Must deem

 

  

   

 

 

    

In_re Estate of Rovers, 103 Hawai'i 275, 280-81, 61 P.3d 1190,
1195-96 (2003) (citations omitted) (brackets omitted) (ellip:

 

omitted).
F. Constitutional Law

“We review questions of constitutional law de nove,
under the right/wrong standard.” naka v, Onaka, 112 Hewai‘i
374, 378, 146 P.36 89, 93 (2006).

III. Discussion

A. Motion for Recusal or Disqualification

Jou''s first point of error asserts that Judge Hifo is
biased against him and his counsel and that her refusal to recuse

herself vicleted his right to due process in violation of the

 

state and federal constitutions. Jou specifically refers this

 

court to his motion for recusal, filed in the circuit court on
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July 10, 2003, in which he presented @ sunmary of multiple
adverse rulings rendered by Judge Hifo. Jou characterizes those
rulings 28 exhibitions of “extrene bias” and “unseemly
favoratiem.” Jou’s point of error is without merit.

It ds well-settled that mere adverse rulings are
insufficient to establish bias. See Bose, 89 Hawai'i at 380, 974
P.2d at 20 (“We have long recognized, however, that petitioners
may not predicate their clains of disqualifying bias on adverse
rulings, even if the rulings are erroneous."); James W. Gl

td. v. Fone, 39 Hew. 308, 316 (1952) (stating that “mere adverse

 

rulings, even if erroneous[,)” would not constitute @ “basis for
disqualificetion|]”). To the extent that Jou's motion for
recuse] is supported only by examples of adverse rulings in prior
proceedings before Judge Hifo, it did not sufficiently
demonstrate “a bent of mind that may prevent or impede
impartiality of judgment.” Ross, 89 Hawai‘i at 377, 974 P.2d at
17 (citing Wittemore v. Farrington, 41 Haw. 52, $7 (1955)].7 The
record is otherwise devoid of any indicia of bias or prejudice on
the part of Judge Hifo, and Jou’s characterizations of Judge
Hifo!
B.  Interlecutory Appeal.

Jou''s second point of error asserts that the circuit

 

rolings appear to have no basis in fact.

court reversibly erred by denying Jou’s oral motion for an
interlocutory appeal from the denial of his motion for recvsal.

However, the conclusion, supra -- that the record lacks evidence

Although OTRIC asserts other Frecedsral defects in Jev'e motion

for recosei, we de net adcrees then te we have sirescy coneluced thet S00"
point of error i without merit

   

 

 
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of any bias or prejudice on the part of Judge Hifo -- renders
Jou's present point of error moot.
C. Motion for Leave to Anend the Complaint

Jou's third point of error asserts that the circuit
court erred by denying his notion for leave to anend his first
anended complaint. More particularly, Jou claims that this
jurisdiction follows federal interpretations of Federal Rules of
Civil Procedure (“FRCP”) Rule 15 and that a motion to amend the
complaint in response to @ noticn to dismiss cannot be denied if
the amendment can state legally cognizable claims. DTRIC, on the

other hand, argues that Jou’s propesed second amended complaint

 

added “nothing substantial to the issues{.]”
A fair reading of Jou's proposed second amended
complaint indicates that Jou desired to supplement a previously

thet he is an intended thirc-party beneficiary

 

asserted claim
with additional legal authority. To wit, Jou desired to
assert “new” claim under Allstate. However, inasmuch as
Allstate does not support Jou’s assertion of a bad faith tort
claim against DTRIC, see discussion infra, we consequently
conclude that Jou’s proposed amendment would have been futile.
‘See Hiresa v. Burtner, 68 Haw. 22, 26, 702 P.2d 772, 778 (1985)

 

("in the absence of any apparent or declared reason . . . such as
1. futalsty of the amendment . . . the leave should, as the
roles require, be “freely given.'") (Some ellipses in original
and come added.) (Citations omitted.)

D. The Director’s Motion for Summary Judgment

 

Jou's fourth point of error asserts that the circuit

 

court reversibly erred by granting the director's motion for

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summary judgment. He argues that he desixed @ declaration that
“procedures in the DCCA and its rules are corrupted and violate
the state and federal constitutions.” Jou further requested an
injunction against the use of such “corrupt and unconstitutional

procedures.” Jou avers that the director did not meet his burden

 

of denonstrating the absence of genuine issues of material fact
inasmuch as the director supported his motion for summary
judgment with xerox copies of certain administrative rules. The
dizector counters that Jou hes asserted no specific facts
supporting an “ss-epplied” constitutional challenge, and that his
argunent must be construed as a facial attack on the DCCA's
administrative rules. The director contends that Jou has failed
to dencnstrate that the DCCA’s administrative hearing system is
facially unconstitutional.

We agree with the director. Jou's claim against the
dizector is franed as 2 facial constitutional attack. His first
amended complaint states: “The Director's administrative hearing
system, in ite entir he ¢ rules an
procedures; and, as this schene is applied to Plaintiff, and
others similarly situated, vielates the Plaintiff's property and
Liberty rights as aforesaid and is completely unworthy of public
confidence!.)" (Emphasis added.) Jou did not assert any
specific acts or omissions that limit his claim to an as-applied
challenge. & facial challenge, by nature, implicates no facts in
particular as it is purely @ question of law. See Am. Falls
Reservoir Dist. N Idaho Dep't of i s., 184 P36 433,

 

441 (Idaho 2007) (
‘purely @ question of law.'") (Citing State v. Cobb, 969 F.2d

® facial challenge to a statute or rule is

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244, 246 (1998).); Shuser v. State, @59 N.E.2¢ 1226, 1231 (Ind.
Ct. App. 2007) ("Whether a statute is unconstitutional on its

face is a question of law.”); United States v. Quinones, 313 F.3d

49, $9 (2d Cir. 2002) (A challenge to the facial

 

constitutionality of @ criminal statute is a pure question of
law."). There being no genuine issue of material fact, the
director was only required to persvade the circuit court that the
adninistrative hearing system was not facially unconstitutional
as a matter of law. See Stanford Carr Dev, Co, v. Unity House,
Inca, 111 Hawai's 286, 295, 141 P.34 459, 468 (2006) ("{S)unmary
judgnent is appropriate if the pleadings, depositions, anewers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there ie no genuine issue as to any
material fact and that the moving party is entitled to judgnent
as a netter of law.") (Brackets in original.) (Block quote
formatting omitted.) (Citation omitted.). We therefore disagree
with Jou that the director was required to “demonstrate that if
the case went to trial there was no competent evidence to support
2 judgment for the DCCA Director.” To the extent that Jou offers
no further appellate argunent, he has failed to demonstrate that
the circuit court reversibly erred by granting sunnary judgnent
in favor of the director.
E. DTRIC’s Motion to Disniss or for Sunmary Judgment

Jou's fifth point of error asserts that the circuit
court erred by granting DIRIC’s motion for dismissal, or for
summary judonent, inasmuch as “[t]he court wes violating state
law of equitable tolling, the right to sue insurers in tort

notwithstanding administrative proceedings, and settled lew of

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third party beneficiaries.”
1 1 es

For purposes of clarity, we first address Jou's third
sub-argument -- that the circuit court erred by concluding that
he was not an intended third-party beneficiary to the insurance
policy agreements between DTRIC and its insureds.

For support, Jou relies heavily on Allstate. However,
that reliance is misplaced.

In Allstate, Thomas L. Stratham ("Stratham"), an
enlisted member of the United States Navy, was injured in a
motorcycle accident on August 21, 1982, 69 Haw. at 291, 740 P.2d
at $51. The injured servicenan was initially treated at Castle
Memorial Hospitel, a civilian medical facility, then transferred
to Tripler Army Medical Center. Id, The United States
reimbursed Castle Memorial Hospital for the cost of the
servicemen’s medical care and subsequently made 2 claim against
Stratham’s no-fault insurer, Allstate Insurance Company
(walistate”). Id, at 292, 740 P.2d at $51. Allstate tendered a
check in the amount of the reimbursement that the United States
paid to Castie Memorial Hospital but refused to pay the
government for the expenses incurred in connection with the
serviceman's treatment at Tripler Army Nedical Center. Id, The
United States then filed @ complaint in the United States
Id. The district
court granted judgment in favor of Allstate. Id, On appeal, the

 

District Court for the District of Hawa:

United States Court of Appeals for the Ninth Circuit certified

the question “whether the United States may recover from 5

serviceman’s no-fault insurance cerrier the costs of medical care

 

 
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furnished in @ government hospital to the serviceman who was
injured in a motor vehicle accident.” Id. at 291, 740 F.2¢ at
ssi.

The United States argued before this court that (1)
“the Hawaii no-fault laws provide @ statutory basis for

recovery”? (2) it is “entitled to recover as 2 third-party

 

beneficiary of the insurance contract; and (3) Allstate “has
received a windfall and [has] been unjustly enriched and is,
therefore, . . . liable . . . for the costs of (the) health care
provided.” Id. at 294, 740 P.2¢ at $52 (brackets in original)
(ellipses in original).

Initially, we noted that the certified question was
Limited to whether the United States had # stetutory basie for
recovery, and we therefore stated that “we [would] not address
the government's contract and equity argunents separately.” Id.
at 294 n.7, 740 P.2d at $52 n.7. Reviewing the Hawai'i Motor
Vehicle Accident Reparations Act, then codified as HRS chapter
284, we concluded that the United States may recover the costs of
medical care received by Stratham. Id. at 294, 740 P.2¢ at $82.

Under HRS chapter 294, recovery was limited to a
“person, insured” who suffered @ “loss from accidental harm.”
Id, at 296, 740 P.2d at 553-54. Nevertheless, we opined that
denying the United States’ claim was inconsistent with (1)
“chapter 294's declared purpose to create a no-fault system of
reparations,” (2) “ite limitetion of tort lisbility,” (3) “ite
esteblishnent of right te ‘no-fault benefits’ for loss from
accidental harm arising out of the operation of a motor

vehicle[,)" and (4) “the comprehensive scheme designed to provide

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‘a speedy, adequate and equitable reparation for those injured or
otherwise victimized’ by motor vehicle accidents.” Id. at 296-
97, 740 P.2d at S54 (citations omitted). We thus interpreted the
term “person, insured” to include the United States and the term
“loss from accidental harn” to include the expenses incurred by
the United States in connection with Stratham's treatment at
‘Tripler Army Medical Center:
IWle read the terme “person, insured” and “loss from accidental
harm” in HRE § 296-3(6) [{1985)] expancively to effectuate the
bvoned legislative purpose of the Hotor Vehicle Accident
Reparations Act “eo creste s system of reparations for sccicentel
huis and lege arieing from moter vehicle accidents, to compensate
these cenages without regera te fauit, snd co limit tert 1iebility.
for these accigents.”

Ida at 299, 740 P.2d at $56 (citing HRS § 294-1(a) (1985)

 

 

    

 

(emphasis in original). We added that:

 

ham) the

[tio atlow [Alletete) to cenand and receive from [str

sme insurance grensun which it receives from al) other

       
  
  
 

 

   

wereely, snc then to Giselei= lisbility for the
Berefite sy Because fuch benefite have been paid

pdatory requirenents of 1am, wou

(@ bring about an
‘Ida at 300, 740 P.2d at $96 (citing United Servs, Auto, Ass'n ve

Dist. Ct. App. 1973) (brackets

 

Holland, 283 So.2d 381, 386 (FI
in original).

We therefore answered the certified question in the
affirmative. Ide

Jou is, to some extent, correct that his position as a
nedicel services provider is analogous to the United states’
position in Allstate. However, he mischaracterizes the import of

 

that similarity. As mentioned, the sole question in Alistate wes

 

whether the United States could recover under the no-fault

insurance statutory scheme then in effect. Indeed, HRS chapter

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294 did not expressly afford medical service providers with a
statutory right of action against insurers. See HRS § 294-3(a)
(1985) (“IE the accident causing accidental harm occurs in this
State, every person, insured under this chapter, and the person's
survivors, suffering loss from accidental harm arising out of the
operation, maintenance or use of a motor vehicle has @ right to

no-fault benefits.”); HRS § 294-4(1) (A) (1985) (cbligating

 

insurers to pay benefits for accidental harm to “any person .
who sustains accidentel harm as a result of the operation,

maintenance, or use of the vehicle. . - ‘This explains the

 

need to expansively construe the terms “person, insured” and
“loss from accidental harm.” As such, this court pointed to the
inequity that would result from precluding the United states to
recover its expenses from Allstate in tote.

Here, however, there is no question as to Jou’s
statute: ver. See HRS § 431:10C-304 (obligating
the insurer to pay “the provider of services” on behalf of the
injured insured).' Rather, Jou ergues thet Allstate also
authorizes recovery in tort. In that regard, Jou appeal
suggest that Allstate supports his assertion that medical

providers are intended third-party beneficiaries in the no-fault

 

automobile insurance context. Jou's reading of Allstate is
incorrect. In Allstate, this court did not address the United

States’ claim that it wes an intended third-party beneficiary,

 

instead deciding the matter on statutory and equitable groun

 

    
 

Sees. Li, Act 186, $2
e1 Li, Ret

+ uns chapter 286
ar 186, HFS c
i's 2 aut

cd by 1966
ehacted by 1867
ive duly 3, 1966.

  
 

   
 

 

ne
 

‘OR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

 

We also disagree with Jou’s subsequent assertion that
HRS § 431:10C~304 establishes his status as an intended third
party beneficiary.

ordinarily, third-party beneficiary status is a
question of fact as to whether the terms of the insurance policy
reflect an intent to benefit the provider. See Elsner v. Farmers
Ins. Group, Inc., 220 $.W.3d 633, 636 (Ark. 2005) (holding that
the trial court properly granted defendant-appellee’s motion to
dismiss inasmuch as “there [was] nothing in the contract to

indicate that [plaintiff-appellant] was an intended third-party

 

beneficiary « + United States v. United Servs. Auto.
Ass'n, 431 F.2d 735, 736 (Sth Cir. 1970), cert. denied by 400

  

U.S. 992 (1971) (concluding that, under the terms of the policy,
the United States was clearly an intended third-party
beneficiery); United States v. State Farm Mut, Auto, Ins. Cou,
485 F.2d 789, 792 (10th Cir. 1972) ("We hold that the United
States qualifies as a third-party beneficiary under the policy .

 

(Bmphasis added.) ; o . Inc. v. Great Am.

 

Ins. Cos., 720 F.24 805, 807 (Wash. 1986) (“In order to be 2
third-party beneficiary entitled to recover on an insurance
contract, it is not enough that it be intended by one of the
parties to the contract and the third person that the latter
should be a beneficiary. Both parties must so intend and must
(Emphasis added.); Eercerud v. Progressive Cas. Inga, 453 F.
Supp. 26 1241, 1247 (D. Nev. 2006) ("Whether 2 party is

(Citation omitted.)

 

considered a specific intended third-party beneficiary must be

gleaned from reading the contract as a whole in light of the

Vv
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

 

circumstances under which it was entered.) (Citing Canfora v.
Coast Hotels & Casinos, Inc., 121 P.3d 599, 605 (Nev. 2005).)
(Internal quotation marks omitted.); Cal. Bmeraency Physicians
Med. Group v, PacifiCare of Cal,, 111 Cal. App. 4th 1127, 1138, 4
cal. Rptr. 3d 583, 595 (Cal. Ct. App. 2003) (“Third party
beneficiary status is a matter of contract interpretation.”); 17
Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d § 241:25
at 241-34 (2000) (“In order for a third party to maintain an
action against an insurer, an intent to make the obligation inure
to the benefit of such person must clearly appear in the contract
of insurance, and, if any doubt exists, the contract should be
construed against such intent.”) (Footnotes omitted.).

In resolving the foregcing factual inquiry, this
jurisdiction follows the framework set forth by the Restatenent

{second) of Contracts $ 302 (1981), as follows:

(2) Unless otherwise egreed between pronisor snd promisee, &
beneficiary of @ premise is an intended beneficiary if recognition
of s right te perfermence in the beneficiary 1s appropriste to
effectuate the intention of the parties and either

(a) ‘the performance of the promise will satisty an
cbligation of the promisee to pey money to the Beneficiary: oF

{bl the circonstences ingicate that the promises intends to
give the benesicisry the benefit of the promised performance:
(2) An incidental beneficisry is 9 beneficiary who if not an
intended beneficiary.

See also Hovsh v. Pac. Ins. Co., Ltd., @3 Hawai'i 457, 468 n.15,
927 P.2d 858, E69 n.18 (1996) (quoting Restatement (Second) of

Contracts § 302).
Here, Jou dees not argue that the insurance policy

 

 

 

 

 

agreenents in the present case recognize him as @ third-party

0C-304 creates

  

beneficiary. Rather, he claims that HRS § 43
the alleged quasi-centractual relationship by operation cf law.

BRS § 43

 

0C-304 states, in relevant part, the

18
 

“OR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

   

following:

Every personal injury protection insurer shall provide personal
InSury protection benefits for accidental harm as follows
ar Exeepe a ‘ise provides in section 431:10C~
205 (8) ing out of a notor
Vented ‘the  witnose
Yecard te fault, ‘to the provider of services on behalf
EL the foljewing persona who sustain sccidental hare
See result of the cperation, neintenance, cr use of
the venscle, an ancunt equs) te the personel inary
protection benefits as defined in section ¢31:10C>
Sie) payable for expences to thet person as
Feeult of the snjury:
Ta). Any person, including the owner, operetor,
Sccupant, cr user of the insured acter vehicles
(B) Any pedestrian (ineluging a bicyclist): or
{e) Any ser or cperstor of © moped ee defines in
secesen 245-3
provides thst this paragraph shall not apply in the
Ease of iniory to cr death of ony operator or
patsenger ef 2 sotercycie or meter scocter ss defined
in section 286-2 arising out of a notor vehicle
accident, expressly provides for in the motor
Yeniele peliey = = =

 

     

   

 

 

  

(Emphases added.) Reletedly, HRS § 431:10C-308.5(f) precludes 2
provider from billing en insured directly or from recovering from
the insured the difference between the provider's full charge and
:10c-

 

the amount actually paid by the insurer. See HRS § 43
308.5(£) ("The provider of services . . . shall not bill the

 

insured directly for those services but shall bill the insurer
a2

 

for a determination of the amount payable. The provider sh
not bill or otherwise attenpt to collect from the insured the
difference between the provider's full charge and the amount paid
by the insurer.”)

Adnittedly, these statutory sections impose an
obligation on the insurer to pay the provider directly. However,
they Go not esteblish Jou’s status as an intended third-party
beneficiary under the Sestatenent (Second) as 2 matter of lew.

The Restatement (Second) eppreach contemplates two

 

19
   

FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTE}

types of intended third-party beneficiaries: creditor
beneficiaries and donee beneficiaries. See Restatement (Second)
of Contracts § 302 cnt. b, c.

According to the Restatenent (Second), a third party is
an intended creditor beneficiary under § 302(1) (a) if
“recognition of a right to performance in the beneficiary is
appropriate to effectuate the intention of the parties and. .
the performance of the promise will satisfy an obligation of the
promisee to pay money to the beneficiary... .” At first
glance, it may appear thet DIRIC’s payment to Jou (performance of
the promise) would satisfy an obligation of the insured (the
promisee) to pay money to Jou (the beneficiary) in exchange for

medical services rendered. However, there is persuasive

 

authority that the “obligation” referred to must pre-exist the
contract. See Sher v. Cella, 2007 WL 1064163, *6 (App. April 11,

2007) (stating, in relevant part, that a broker was an intended

 

third-party beneficiary of an acquisition agreement inasmuch as

“the benefit was intended in satisfaction of 2 pre-existing

gblication to that party (the requirement . . . that the Seller
pay 2 commission to the brokers in the event of @ sale). . .”);
E.l. DuPont de Nemoure & Co, v, Rhone Poulenc Fiber & Resin

Intermediates, S.A.S., 269 F.3d 187, 196-97 (34 Cir. 2001)

(under Deleware law, which is the law the parties discuss, to
qualify as @ third party beneficiary or a contract, . . . the

benefit must have been intended ss @ gift or in satisfaction of a
pre-existing obligation to that person .
added.) ; Guardian Constr, Co. v. Tetra Tech Richardson, Inc., $83

A.2d 1378, 1387 (Del. Super. Ct. 1990) (“It is abundantly clear

(Emphasis

 

 

20
 

“OR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER *

 

to the Court that Plaintiffs were not creditors . . . at the time
the . . . contract was made... ."), Here, the obligation of
the insured to compensate Jou for medical services rendered did
not pre-exist the insurance contract. Thus, Jou does not quality
as an intended creditor beneficiary under § 302(1) (a).

Jou alse does not qualify as a donee beneficiary under
'§ 302(1) (b), which states thet @ third party is an intended
beneficiery if “recognition of @ right to performance in the
beneficiary is appropriate to effectuate the intention of the
parties and . . . the circumstances indicate that the promisee
intends to give the beneficiary the benefit of the promised
it is clear

 

performance.” We need not delve too deep inasmuch
that. payment to Jou was not 2 gift. See Restatement (Second) of
Contracts § 302 emt. c (stating that § 302(1) (b) pertains to

situations involving @ “gift promise” or @ “donee beneficiary”):

Guardian Constr. Co., 583 A.2d at 1387 ("It is abundantly clear

to the Court that Plaintiffs were not creditors . . . at the tine
the . . . contract was made nor were thev the subject of (a
party's] generosity.”) (Emphasis added.) .

Accordingly, inasmuch es (1) this jurisdiction's no-
feult legislative scheme does not establish his status as a
third-party beneficiary as a matter of law, and (2) Jou does not
assert that the insurance contract establishes him as a third

party beneficiary, we conclude that his present point of error is

without merit.*

 
 
  

rounent in Jey ¥ tet

7 P. 36 961 (App. 2007),
Therein, the Intermediate
continued.

  

detente,

 
 

‘+++ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

 

*(, . .continved)
court of Appeals ("ICA") rejected Jou's assertion that he was an intended
third-party beneficiary of a worker's conpensstion insurance policy as =
matter of lew. [dy st 134, 157 P.ad st S13. The ICh relied, in large party
on other Jurisdictions that have rejected similar claiss from health care
Providers. For exemple, in McFadden v. Liberty Mut. Ins. Cou, 603 F. Supp.
Tie (W.b. Miss, 1992), the District Court for the Northern District of
Mississippi reascred, inter alia, thet "[e]lthcugh they may directly benefit,
be a class, treating’ paysscians re not intended beneficiaries of the Wich
[Messseippi Workers’ Compensation Act].”” Jou, 11¢ Hawai't at 132, 187 8.36
at 871 (citing McFadden, €03 F. Supp. At 1284)’ (brackets in original).
Sinilerly, in UAins. Co, v. Scheffey, 626 5.M.26 765 (Tex. Ce- App. 1992),
the Texas Court of Appeals stated that

when a person contracts with an insurer for the benefit of
Ancthax, beth the perscn contracting and the thire party may
Expect thet the inesrer wovld we the sane duty te the deeignated
third party as it would to the person making the contract.
Scheftey centencs that, as 2 physician ef choice to [the ineurence
cerrier'e) shira-party insurede--the enployese of the companies
Insured by [the insurence carrier]-rhe 1s entitled te the sane
status as 2 third-party beneficiary te the insurance contract. No
Texas court hes extenced the insurer's duty of goos fasth end falr
dealing te persone in Scheffey's position. Scheffey dia not heve
any special relaticnship with [the insurance carrier], and he was
ot & person to whem [the insurance cezricr] ewed © duty of good
Feith and £257 dealing.

30g, 114 Hawes"s et 135, 187 P.30 at $72 (citing Scheffev, €2€ S.K.20 at 790-
S51" cemphesie in criginal) (brackets in original). ‘The ICA agrees with the
bebadsen anc’ Scheftey courts that “there ie ncthing inherent in Dr. Jou"
Etats ars physician who provided trestnent to the, insured employee that
tntities hin te sve Netionel in tore fer bad faith:” dd, the Jeh explained
that, even though this jursedictien’e worker'e conpensation schene regulates
physiciane by, among ether things, precluding them fren Billing the insured
employee snd’ requiring then to evgest billing e:eputes to the cirector of the
Department of Leber ond Industrial Relations for resolution, dda, the worker's
Cespensaticn schene is decigned te “eenpensate employees for work-related
Injuries, not to compensate physicians.” id, Ultimately, the ICA concluded
a0 follow

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

In the context of the Hawai's workers’ compensation schene,
4 physicion is an incisentsl beneficiary Tether then an intended
third-party beneficiory of the employer's workers’ compensation
Insurance policy. In providing workers’ cespensation insurance
coverage, the inturer pronises the employer that the inevrer will
fay benefits cued by the enployer to the injures employees: This
Fronise incidentally benefits the physician to the extent that the
Physician provides trestnent for which the employer 1 required te
Bey. We concluse that Dr. Joy is not an intenced thirc-rerty

cicnal's sneurance pelsey and sees net have 8
couse of setien in tort for eed faith ageine’ Neticne!

 

 

 

    

 

 

 

Je. ot 156, 187 Fed at $73.
(contsnved.

 
 

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

 

Statute of Limitations
Jou also contends that the statutes of Limitations,
codified as HRS §§ 657-7 and 431:10C-315, were subject to the
tolling rule applied in State Farm Mut. Auto, Ins. Co. v, Murata,
88 Hewes’ 264, 965 P.2d 1284 (1998) and Wright v, State Farm
Mut. Auto, Ins, Cos, 86 Hawai‘ 357, 949 P.2d 197 (App. 1997).
However, because Jou has failed to establish his standing as a
third-party beneficiary to assert a bad faith tort claim, the
statute of limitations issue is moot.

3. Concurvent sdministrative proceedines

Jou's final sub-argument asserts that “Judge Hifo

reversibly ruled that [Jou] forvent his suit for insurer bad
faith by requesting administrative relief under HRS § 431:10C-

The circuit court

 

212." Jou misreads the circuit court's ordi

sserting hie statutory claims regarding his

 

precluded Jou from r
pili payment dispute with DTRIC in the court proceedings because
he elected administrative renedies. The circuit court did not
preclude his tort clain.

Rather, as discussed supra, the circuit court rejected
Jou's bad faith tort claim because he lacked standing as an
incidental, rather than intended, third-party beneficiary. DIRIC
conceded below that the DCCA di¢ not have jurisdiction over tort
clains and thet the election of remedies defense, set forth in

 

ss -continved)
fection of dcu's third-party beneficiery claim in the
Ue consistent with the ICR's treatment
ation context
ting ebligetsen, st ie clear
te Jeu cid net preenist the worker's compensaticn
seeve

       
 
  
   

 

Insurence pelicy

23
{++ FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER ***

Moss v. Am. Int’] Adjustment Co., Inc., 86 Hawai'i'S9, 947 P.2d

371 (1997), did not preclude the filing of a tort claim for bad
faith in the circuit court. The circuit court’s holding was not
to the contrary.
F. The Cumulative Effect on Jou’s Constitutional Rights

Jou's sixth point of error contends that the errors
asserted in his foregoing points of error violated his
constitutional rights to equal protection and due process of law
under the state and federal constitutions. However, to the
extent that Jou has failed to prevail on any of his points of
error, the basis for his constitutional azgunent is defeated.
G. Failure to Argue

Jou's seventh point of error alleges that “[t)he first
circuit, by repeatedly assigning [J]udge Hifo to Appellant's
cases is creating @ ‘conduit court’ bent on damaging Dr. Jou as
much as possible on his way to the appellate courts.” However,
Jou’s opening brief does not contain a related argunent section.
Accordingly, the point of error is waived. See HRAP Rule
28 (b) (7) (“Points not argued may be deened waived.”).
Jou's Remaining Argunents Need Not Be Addressed.

 

Jou's opening brief also asserts the following
arguments: (1) the circuit court, by failing to acknowledge

Allstate and otherwise remaining unfaithful to the common law,

 

has left him without an adequate remedy; (2) the state, through

 

its judiciary, is causing judicial and administrative remedies to
be inadequate to address the cleimed wrongs and is thereby
violating his constitutional rights and access to the courts;

ate, through its judiciary, deprived him of his

 

) the

 

24
> FOR PUBLICATION IN WEST'S HAWAI REPORTS AND PACIFIC REPORTER ***

 

property without due process of law; and (4) the circuit court
“exceeded its jurisdiction knowing injury would be compounded

 

during appellate delay”; However, these arguments have not been
preserved as they have not been presented as points of error.
See HRAP Rule 28(b) (4) ("Points not presented in accordence with
this section will be disregarded . . . ."). Accordingly, we do
not address then.
I. the Director’
Also before this court is a motion, filed by the

RAP Rule 38 Motion

 

director pursuant to HRAP Rule 3€,! requesting damages and costs
Anasmuch as Jou’s appeal as to him was frivolous. For the
following reasons, we deny the directors motion.

It is important to note that Jou does not argue on
appeal that the DCCA administrative hearing system is facially
unconstitutionel. Rather, as mentioned supra, his appellate
argument is thet the circuit court failed to hold the director to
his burden of production on summery judgment. Although Jou has
thereby mistaken the movant’s burdens on a motion for summary
judgment against a facial constitutional attack, his argument is
not akin to arguments that we have held to be frivolous in the
past. See, £.0., Child Support Enforcement Agency v, Doe, 109
4 240, 253-54, 125 P.3d 461, 474-75 (2005) (hereinafter

 

“CSEA") (finding father’s argument that the Hewes‘ Uniform
Parentage Act violates his rights to privacy end equel

protection, and his right to be free from compulsory service, to

 

   
 

 

WRAP Role nerszes an auard cf danages

determines to bef

an oppeal is

2s
 

'+__FOR PUBLICATION IN WEST'S HAWAN REPORTS AND PACIFIC REPORTER ***

be “palpably without merit). Accordingly, we deny the
director's motion for damages and costs under HRAP Rule 38.
IV. concLusroN

Based upon the foregoing analysis, we affirm the
judgment appealed from and deny the director's HRAP Rule 38
motion for damages and costs.
on the brief G
stephen M. Shaw, Yi
for Plaintiff-Appel lent :

Beeson Hes oeur M.be Wie WLeinee

 

J. Patrick Gallagher, x .
Joelle Segawa Kane, and Reta CN ne
Leah M. Reyes, for

Defendant Appellee Ure duty

Dai-Tokyo Royal State
Insurance Company, Limited

David A. Weber and Deborah
Day Emerson, Deputy Attorneys
General, for Defendant-Appellee
Lawrence M. Reifurth, Director,
Department of Commerce and
Consumer Affairs, State of Hawai'i

CONCURRING OPINION BY ACOBA, J.

I concur in the result only.

an.

 

 

pathevgh Jeu'e facial constitution ck on the Occ)
igs eysten more Closely rerenbles the arguent found te be
wae net reasserted on eppe

   

   
    

26