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### IN THE SUPREME COURT OF THE STATE OF HAWAI # I ---o0o---

HAWAIIAN DREDGING CONSTRUCTION COMPANY, INC.,

Respondent/Plaintiff-Appellant,

vs. FUJIKAWA ASSOCIATES, INC., dba Continental Mechanical of the Pacific, Petitioner/Defendant-Appellee.

SCWC-14-0000842

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-14-0000842; CIV. NO. 13-1-0900-03)

JUNE 8, 2018 RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

OPINION OF THE COURT BY RECKTENWALD, C.J. This case arises from a worksite accident in which an employee of Hawaiian Dredging Construction Company, Inc. (HDCC) was injured, allegedly due to the actions of HDCC’s subcontractor, Fujikawa Associates, Inc., dba Continental Mechanical of the Pacific (Fujikawa). After paying workers’ Electronically Filed Supreme Court SCWC-14-0000842 08-JUN-2018 08:30 AM** * F OR PUBLICATION IN WEST’S HAWAI # I REPORTS AND PACIFIC REPORTER ** *



### compensation benefits to its injured employee, HDCC sought reimbursement from Fujikawa based on a breach of contract theory, claiming that workers’ compensation benefits were within the scope of their subcontract’s indemnity clause. The circuit court granted summary judgment in favor of Fujikawa based on its interpretation of the subcontract’s indemnity clause.

While we affirm the grant of summary judgment, we do so based on our interpretation of Hawai # i Revised Statutes (HRS) § 386-8, which governs a third party’s liability for workers’ compensation. As set forth below, we conclude that this statute provides the exclusive remedy for an employer to recover workers’ compensation benefits from a third-party tortfeasor. Because HDCC did not avail itself of that exclusive remedy, summary judgment for Fujikawa was appropriate. I. Background

A. The Subcontract and Accident

HDCC hired Fujikawa to perform repairs to Edmonson Hall at the University of Hawai # i at M â noa. On May 1, 2012, HDCC and Fujikawa entered into a subcontract agreement (Subcontract). 1 

### The Subcontract’s indemnity clause provided:

The S ubcon tract was attac hed a s an exhib it to a de clara tion of 1 HDCC’ s cou nsel, whic h was prov ided in su pport of H DCC’s moti on fo r par tial summa ry ju dgmen t in the c ircui t cou rt. The e xpres s lan guage of t he Subco ntrac t is undis puted

. 

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12.4 To the f ulles t ext ent p ermit ted b y law , Subco ntrac tor s hall indem nify, and save harml ess Contr actorand Owner , andthei r age nts a nd employe es, from and a gains t all Liab iliti es onacco unt o f: .

. . (B) t he fi ling of an y cla ims b y per sons or en titie s furni shinglabo r, ma teria ls, e quipm ent o r oth er servi ces o r fac iliti es inconn ectio n wit h the Work ; (C) a ny br each or de fault by S ubcon tract or ofits oblig ation s und er th is Ag reeme nt; o r (D) any and a ll damag e or injur y to perso n or prope rty a risin g direc tly o r ind irect ly fr om th e per forma nce o f the Work and/o r the oper ation s of Subco ntrac tor t o the exten t anysuchdama ge orinju ry is attr ibuta ble i n whole or i n par t to the a cts o r omi ssion s of Subco ntrac tor, anyon e dir ectlyor i ndire ctly emplo yed by Su bcont racto r or anyon e forwhos e act s Subco ntrac tor m ay be liab le; a nd, w hen r eques ted b y Contr actor , Sub contr actorshal l def end a ny an d all actio ns an d payall charg es ofatto rneys and other expen ses a risin g the refro m. 

### The Subcontract defines “Liabilities” as: “Separately and collectively, any loss, injury, damage, fine, penalty, cost and expense (including legal fees and costs) and other liability whatsoever, and any action, suit, proceeding or claims, relating to such liability.”

HDCC alleges that, in the course of performing repairs at the University of Hawai # i, HDCC employee Gabriel Balon was injured. HDCC sent Fujikawa a “Notice of Claim and Demand for Indemnification,” which asserted the following: 2

On Ju ne 26 , 201 2,[] one o f HDC C’s e mploy ees, Mr. Gabri el Ba lon, a 55- year old l abore r, su stain ed injur ies a t the Proj ect s ite w hen h e was stru ck bya piece of a n airduct bein g ins talle d by [Fuji kawa]

. As a resul t of this accid ent, Mr. B alon suffe red a concu ssionand contu sions of h is ba ck an d leg , andhas not r eturn ed to work . Mo reove r, he has fileda cl aim

This notic e was atta ched as anexhi bit t o a d eclar ationof H DCC’s 2 couns el, w hich was p rovid ed insupp ort o f HDC C’s m otionfor parti al su mmary judgm ent i n the circ uit c ourt. Fuj ikawa ’s re ceipt of t his n otice is undis puted

. 

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for i ndemn ity a nd me dical /reha bilit ationbene fits underHawa ii’s Worke rs’ C ompen satio n Law , H.R .S. Chapt er 38 6, an d HDC C is curre ntly makin g payments there under

. 

### HDCC demanded that Fujikawa indemnify it “and its insurer(s) from and against any and all liability, costs and expenses . . . incurred in connection with the subject accident and the resolution thereof.”

B. Circuit Court Proceedings 3



### HDCC subsequently filed a complaint in the circuit court. HDCC alleged that Fujikawa breached the Subcontract by refusing to indemnify HDCC for the amounts it paid “on account of the bodily injury to Gabriel Balon.”

Fujikawa filed an answer, denying that it caused Balon’s injury and denying that it breached the Subcontract. Fujikawa asserted affirmative defenses related to comparative negligence, estoppel, unclean hands, failure to mitigate damages, waiver, and failure to join indispensable parties.

HDCC filed a motion for partial summary judgment, requesting judgment in its favor on the issue of Fujikawa’s assumption of liability under the Subcontract for Balon’s accident. HDCC argued that summary judgment was appropriate because the “Subcontract ‘clearly and unequivocally’ assigns Fujikawa a responsibility to indemnify HDCC.”

The H onora ble RhondaA. N ishimura p resid ed. 3 

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### Fujikawa opposed HDCC’s motion, and requested the court to instead enter summary judgment in its favor. Fujikawa argued that workers’ compensation benefits were outside the scope of the Subcontract’s indemnity clause, and that summary judgment for HDCC would violate Fujikawa’s due process rights and contravene public policy by “attempt[ing] to use an ambiguous, equivocal contractual indemnity to shift and evade [HDCC’s] liability for compensation.” Fujikawa also argued that HDCC’s action “conflicts with the procedure for reimbursement mandated by the Legislature” in HRS § 386-8.

The circuit court held a hearing, and granted summary judgment in favor of Fujikawa based on its interpretation of the Subcontract. The circuit court found no clear and unequivocal assumption of liability to pay workers’ compensation benefits for a work-related injury under the terms of the Subcontract. The court denied HDCC’s motion for partial summary judgment and granted summary judgment in favor of Fujikawa. The court subsequently entered judgment in favor of Fujikawa.
C. ICA Proceedings

HDCC timely appealed, arguing that the circuit court erred in failing to find Fujikawa liable for workers’ compensation payments under the plain language of the Subcontract. HDCC contended that Hawai # i law allows “risks of

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### liabilities in construction” to be allocated by contract, and that such an allocation between contractor and subcontractor has no bearing on an injured worker’s ability to secure workers’ compensation benefits. HDCC argued that Fujikawa’s broad promise in the Subcontract to indemnify HDCC for “Liabilities” attributable to Fujikawa should be interpreted to include workers’ compensation costs, and that partial summary judgment should have been granted in its favor.

In its answering brief, Fujikawa characterized HDCC’s appeal as an attempt to pass on its statutory workers’ compensation obligations through a vague contractual term. Fujikawa argued that the circuit court correctly interpreted the Subcontract, as “HDCC’s definition of ‘Liabilities’ did not include any reference to ‘benefits,’ statutory obligations, ‘compensation,’ disability payments or benefits – any term that would clearly and unequivocally indicate that Fujikawa agreed to indemnify HDCC for payments made for Gabriel Balon’s workers’ compensation benefits.”

Fujikawa also argued that HDCC’s claim attempted to avoid the process specified by HRS § 386-8 (1993) (“Liability 4

HRS § 386- 8 (19 93) p rovid ed, i n rel evant part : 4 [1] W hen aworkinju ry fo r whi ch co mpens ationis payab le un der t his c hapte r has beensust ainedunde r circu mstan ces c reati ng insome pers on ot her t han t he (cont inued ...) 

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(...c ontin ued) 4 emplo yer o r ano ther emplo yee o f the empl oyer actin g in the c ourse of e mployment a leg al li abili ty to pay damag es onacco unt t hereo f, th e inj ured emplo yee o r his d epend ents (here inaft er re ferre d to colle ctive ly as th e emp loyee ) mayclai m compensa tion underthis chapt er an d rec over damag es fr om su ch th ird p erson . [2] I f the empl oyee comme nces an ac tion again st su ch thirdpers on he shal l wit hout delaygive the emplo yer writt en no tice of th e act ion a nd th e nam e andloca tion of th e cou rt inwhic h the acti on is brou ght b y perso nal s ervic e or regis teredmail . The empl oyer, at any t ime b efore tria l on the f acts, may join as pa rty plain tiff. [3] I f wit hin n ine m onths afte r the date of t he perso nal i njurythe emplo yee h as no t commence d an actio n aga inst such thirdpers on, t he employe r, ha ving paid or be ing l iable for compe nsati on un der t his chapt er, s hall be su broga ted t o the righ ts ofthe injur ed employe e. Ex cept as li mitedby c hapte r 657 , the e mploy ee ma y at any t ime c ommen ce anacti on or join in an y act ion c ommen ced b y the empl oyer again st such thirdpers on. [4] N o rel ease or se ttlem ent o f anyclai m or actio n underthis sect ion i s val id wi thout the writt en conse nt ofbothempl oyer and e mploy ee. T he en tire amoun t of the s ettle ment afterdedu ction s for attor ney's fees and costs as h erein afterprov ided, is subje ct to the emplo yer’s righ t of reimb ursem ent f or his c ompen satio n payments unde r thi s cha pter and h is expen ses a nd co sts o f act ion. [5] I f the acti on is pros ecute d by the e mploy er al one, the e mploy er sh all b e ent itledto b e pai d fro m the proce eds r eceiv ed as a re sult of an y jud gment for damag es, o r set tleme nt incase the actio n is compr omise d bef ore j udgme nt, t he re asona ble l itiga tion expen ses i ncurr ed inprep arati on an d pro secut ion o f such actio n, to gethe r wit h a r eason able attor ney's fee, whichshal l be basedsole ly up on th e ser vices rende red b y the empl oyer' s att orneyin e ffect ing recov ery b oth f or th e ben efit of th e emp loyerand the emplo yee. Afterthe payme nt ofthe expen ses a nd attor ney's fee, the emplo yer s hall applyout of th e amoun t of the j udgme nt orsett lemen t pro ceeds an amoun t suf ficie nt to reimburse the emplo yer f or th e amoun t of his e xpend iture for compe nsati on an d sha ll pay a ny ex cess to th e inj ured emplo yee o r oth er pe rson entit led t heret o. (cont inued ...) 

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(...c ontin ued) 4 [6] I f the acti on is pros ecute d by the e mploy ee al one, the e mploy ee sh all b e ent itledto a pply out o f the amoun t of the j udgme nt fo r dam ages, or s ettle ment in case the a ctionis c ompro misedbefo re ju dgmen t, th e reaso nable liti gatio n exp enses incu rred in pr epara tion and p rosec utionof t he ac tion, toge ther with a reaso nable atto rney' s fee whic h sha ll be base d sol ely upon the s ervic es re ndere d by the e mploy ee's attor ney in ef fecti ng re cover y bot h forthe benef it ofthe emplo yee a nd th e emp loyer . Aft er th e payment of su ch expen ses a nd at torne y's f ee, t here shall be a pplie d out o f the amou nt ofthe judgm ent o r set tleme nt proce eds, the a mount of t he employe r's e xpend iture for compe nsati on, l ess h is sh are o f the expe nses and attor ney's fee. On a pplic ationof t he employe r, th e court shal l all ow as a fi rst l ien a gains t the amou nt of th e jud gment for damag es orsett lemen t pro ceeds , the a mount of t he employe r's e xpend iture for compe nsati on, l ess h is sh are o f suc h exp enses and attor ney's fee. [7] I f the acti on is pros ecute d bot h by the e mploy ee and t he employe r, ina si ngle actio n or in conso lidat ed ac tions , andtheyare repre sente d by the same agree d att orneyor b y sep arate atto rneys , the re shall firs t be paid from any j udgme nt fo r dam ages recov ered, or s ettle ment proce eds i n cas e the acti on or ac tions are settl ed be fore judgm ent, the r eason able litig ationexpe nses incur red i n pre parat ion a nd prose cutio n of such actio n or actio ns, t ogeth er wi th reaso nable atto rney' s fee s bas ed so lely on th e servi ces r ender ed fo r the bene fit o f bot h par ties where theyare repre sente d by the s ame a ttorn ey, a nd where theyare repre sente d by separ ate a ttorn eys, basedsole ly up on th e ser vice rende red i n eac h insta nce b y the atto rney in ef fecti ng re cover y forthe benef it ofthe partyrepr esent ed. A fter the p aymen t of the e xpens es an d att orney s' fe es th ere s hall be appli ed ou t of the a mount of t he ju dgmen t fordama ges, or se ttlem ent p rocee ds anamou nt su ffici ent t o reimb urse the e mploy er fo r the amou nt ofhis expen ditur e forcomp ensat ion a nd an y exc ess s hall be paid to th e inj ured emplo yee o r oth er pe rson entit led there to.

. . . . [10] The a mount of c ompen satio n pai d by the e mploy er or th e amo unt o f compensa tion to wh ich t he in jured emplo yee i s ent itledshal l not be a dmiss ible in evide nce i n anyacti on br ought to r ecove r dam ages. (cont inued ...) 

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### of third person”), which establishes the procedure by which an employer may seek to recover the workers’ compensation payments that it made to its injured employee when a third party is allegedly liable for the employee’s work-related injury. Fujikawa also argued that HDCC’s request for damages conflicted with HRS § 386-8’s provision that the “amount of [workers’] compensation paid by the employer . . . shall not be admissible in evidence in any action brought to recover damages.”

The ICA vacated the circuit court’s judgment, concluding that the Subcontract’s indemnification clause encompassed workers’ compensation benefits. The ICA held that “the Subcontract includes the clear and unequivocal agreement of Fujikawa to assume all Liabilities arising from its acts or omissions, including costs and expenses related to Balon’s workers compensation claim.” The ICA rejected Fujikawa’s arguments that HDCC was attempting to evade its statutory workers’ compensation obligations, relying on Iddings v. Mee-Lee, 82 Hawai # i 1, 16, 919 P.2d 263, 278 (1996), which held that contractual indemnification agreements “are valid in the workers’ compensation context and do not contravene or undermine the purposes underlying workers’ compensation in general.”

(...c ontin ued) 4

. . . . 

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### II. Standards of Review

A. Statutory Interpretation

“Statutory interpretation is a question of law reviewable de novo.” State v. Wheeler, 121 Hawai # i 383, 390, 219 P.3d 1170, 1177 (2009) (internal quotation marks omitted). This court’s construction of statutes is guided by the following
rules:

First , the fund ament al st artin g poi nt fo r sta tutor y

inter preta tion is th e lan guage of t he st atute itse lf. Secon d, wh ere t he st atuto ry la nguag e is plainand unamb iguou s, ou r sol e dut y is to gi ve ef fect to it s plainand obvio us me aning . Th ird, impli cit i n the task of st atuto ry co nstru ctionis o ur fo remos t oblig ationto a scert ain a nd gi ve ef fect to th e inten tion of th e leg islat ure, whichis t o be obtai ned prima rily from the l angua ge co ntain ed inthe statu te itsel f. F ourth , whe n the re is doub t, do ublen ess o f meani ng, o r ind istin ctive ness or un certa inty of an expre ssionusedin astat ute, an ambigui ty ex ists.



### Id. (quoting Citizens Against Reckless Dev. v. Zoning Bd. of Appeals of the City & Cnty. of Honolulu, 114 Hawai # i 184, 193, 159 P.3d 143, 152 (2007)).

B. Summary Judgment

[An a ppell ate c ourt] revi ews t he ci rcuit cour t’s g rant of su mmaryjudgment de no vo. Price v. A IG Ha wai # i Ins. Co., 107 H awai # i 106 , 110 , 111 P.3d1, 5 (200 5). Summa ry ju dgmen t is appro priat e “ifthe plead ings, depos ition s, an swers to i nterr ogato ries, and admis sions on f ile, toget her w ith t he af fidav its, if any, show that there is n o gen uine issue as t o any mater ial f act a nd th at th e mov ing p arty is en title d to a jud gment as amatt er oflaw. ” HR CP Ru le 56 (c). 

### Gillan v. Gov’t Emps. Ins. Co., 119 Hawai # i 109, 114, 194 P.3d 1071, 1076 (2008).

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### III. Discussion

A. Introduction

Fujikawa presents several questions challenging the ICA’s ruling. We focus on one question, as we find it 5 

### determinative: whether an employer may recover workers’ compensation payments under a contractual indemnification provision between the employer and the third-party tortfeasor who causes injury to the employee. We answer that question in the negative, since HRS § 386-8 provides employers an exclusive statutory reimbursement remedy under Hawaii’s workers’ compensation law (WCL).

Fujikawa argues that such an indemnity clause violates the WCL by shifting an employer’s responsibility for workers’ compensation to a subcontractor. In response, HDCC argues that “HRS § 386-8 neither requires an employer to assert its subrogation interests nor does it limit an employer to this statutorily-provided remedy.” HDCC argues that it complied with Hawaii’s WCL by accepting Balon’s claim and providing Balon workers’ compensation benefits, and that its claim for indemnity

Fujik awa p resen ts fo ur qu estio ns to this cour t. F ujika wa’s first 5 two q uesti ons a ddres s whe ther the I CA mi sappl ied c ontra ct la w whe n it inter prete d the Subc ontra ct, a nd Fu jikaw a’s r emain ing t wo qu estio ns ad dress wheth er th e ICA ’s ru ling contr avene s Haw aii’s work ers’ compe nsati on sc heme and publi c pol icy e ncour agingsett lemen t of an in juredwork ers’ claim , whi ch we const rue a s a s ingle rela ted q uesti on. In li ght o f ourdisp ositi on ofthis case, we n eed n ot ad dress Fuji kawa’ s con tract ual i nterp retat ion q uesti ons. 

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### “is based on an independent duty created by the indemnification provision in the Subcontract.”

Fujikawa filed a Reply to HDCC’s Response, arguing that Yukumoto v. Tawarahara, 140 Hawai # i 285, 400 P.3d 486 (2017) supports its position. In Yukumoto, we held that a health insurer’s contractual provision granting a right of subrogation against third-party torteasors was invalid because it conflicted with statutes that provided a health insurer’s exclusive right of subrogation. Yukumoto, 140 Hawai # i at 299, 400 P.3d at 500 (citing HRS §§ 663-10 (Supp. 2002) and 431-13:103(a)(10) (Supp. 2002)). Fujikawa asserts that HDCC’s position similarly “would jeopardize the comprehensive and exclusive workers’ compensation scheme established by the legislature.”

We conclude that the comprehensive workers’ compensation reimbursement scheme established by HRS § 386-8 provides the exclusive remedy for an employer’s recovery of workers’ compensation benefits paid for its employee where injury is allegedly attributable to a third party. Thus, any contractual provision that conflicts with this statutory remedy is invalid. HDCC is therefore not entitled to contractual indemnity for workers’ compensation payments made as a result of Balon’s injury, and summary judgment in favor of Fujikawa was proper. Although the circuit court erroneously granted

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### Fujikawa’s cross-motion for summary judgment based on its interpretation of the Subcontract, we affirm the circuit court’s judgment based on our interpretation of HRS § 386-8. See Reyes v. Kuboyama, 76 Hawai # i 137, 140, 870 P.2d 1281, 1284 (1994) (“This court may affirm a grant of summary judgment on any ground appearing in the record, even if the circuit court did not rely on it.”).

B. Statutory Interpretation of HRS § 386-8

Whether HRS § 386-8 provides the exclusive remedy for an employer’s reimbursement of workers’ compensation benefits paid for its employee due to the fault of a third party is a question of first impression before this court. When construing a statute, our foremost obligation is to “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 in a manner consistent with its purpose.” Morgan v. Planning Dep’t, Cnty. of Kauai, 104 Hawai # i 173, 179-80, 86 P.3d 982, 988-89 (2004) (citation omitted). As set forth below, the language, legislative history, and purpose of the statutory framework governing workers’ compensation lead us to conclude that the legislature intended to limit an employer’s right of

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### recovery for workers’ compensation payments to the manner prescribed by HRS § 386-8. 1. The Plain Language and Legislative History of HRS § 386-8 The plain language and legislative history of HRS § 386-8 show that the legislature has created a uniform and comprehensive procedure for the recovery of workers’ compensation benefits paid as a result of a third party’s tortious conduct. The comprehensive nature of this statutory scheme supports the conclusion that the legislature intended HRS § 386-8 to provide the employer’s exclusive remedy in these circumstances.

Under the first paragraph of HRS § 386-8, when an employee has sustained a work-related injury due to a third party, the injured employee “may claim compensation under this chapter and recover damages from such third person.” The second paragraph of HRS § 386-8 provides that “[i]f the employee commences an action against such third person, the employee shall without delay give the employer written notice of the action.” As such, “[u]nder HRS § 386-8, the employee has the first opportunity to bring suit, which promotes the efficient resolution of his or her claims.” First Ins. Co. of Hawaii v. A&B Properties, 126 Hawai # i 406, 418, 271 P.3d 1165, 1177 (2012). The third paragraph of HRS § 386-8 provides that “[i]f within nine months after the date of the personal injury the employee

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### has not commenced an action against such third person, the employer, having paid or being liable for compensation under this chapter, shall be subrogated to the rights of the injured employee.” (Emphasis added). The fourth paragraph of HRS § 386-8 ensures that both the employee and employer have an opportunity to protect their interests by providing that “[n]o release or settlement of any claim or action under this section is valid without the written consent of both employer and employee.”

Paragraphs five, six, and seven of HRS § 386-8 list the types of actions that may be brought against a third party, explain how litigation expenses and attorney’s fees are apportioned, and specify how an employer may recover its workers’ compensation payments under each action. Whether the action against the third party is commenced by the employer alone, by the employee alone, or by both the employee and employer, the employer shall be reimbursed for the amount of its expenditure for workers’ compensation from the judgment for damages or from the amount of settlement. HRS § 386-8.

Accordingly, “HRS § 386–8 establishes a framework for the employee, employer, and third party to attempt to resolve their dispute at one time and in a single proceeding.” First Ins. Co., 126 Hawai # i at 418, 271 P.3d at 1177. The

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### comprehensive scope of HRS § 386–8, by detailing specific methods for compensation reimbursement, suggests that the legislature’s intent was to provide an exclusive method for recovering workers’ compensation payments from a third party.

Consistent with this plain language interpretation, the legislative history of HRS § 386–8 supports the conclusion that an employer’s exclusive right to reimbursement is provided for in the statute. HRS § 386–8 can be traced to Hawaii’s first Workers’ Compensation Act, which was enacted in 1915. 1915 Haw. 6 

### Sess. Laws Act 221, § 5 at 324. However, the original version was quite different from the current provision. Indeed, from the time of its initial enactment, the statute has been progressively amended, with each successive amendment providing a more comprehensive framework. Prior to 1951, an injured employee was

In 19 15, A ct 22 1, § 5, “L iabil ity o f Thi rd Pe rsons ,” pr ovide d: 6

When any i njuryfor whichcomp ensat ion i s pay able underthis Act shall have beensust ainedunde r circu mstan ces c reati ng insome othe r per son t han t he emplo yer alega l lia bilit y to pay d amage s in respe ct there to, t he in juredempl oyee may, at hi s opt ion, eithe r cla im co mpens ationunde r thi s Act or o btain damag es fr om orproc eed a t lawagai nst s uch o ther perso n to recov er da mages ; andif c ompen satio n is claim ed an d awa rded underthis Act any e mploy er ha ving paid the c ompen satio n or havin g bec ome l iable ther efor shall be s ubrog ated to th e rig hts o f the inju red emplo yee t o rec over again st th at pe rson, prov ided, if the e mploy er sh all r ecove r fro m suc h oth er pe rson damag es inexce ss ofthe compe nsati on al readypaidor award ed to be p aid u nder this Act, then any s uch exces s sha ll be paido th e inj ured emplo yee l ess t he emplo yer’s expe nses and c osts of ac tion. 

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### required to “elect whether to claim compensation [from his employer] or claim his damages [from the third-party tortfeasor], and if he claims one, he loses the other.” H. Stand. Comm. Rep. No. 722, in 1951 House Journal, at 579. In 1951, the legislature amended the statute to allow the employee to claim workers’ compensation benefits and proceed against a third person without waiving his rights to either. 1951 Haw. Sess. Laws Act 194, § 1 at 229; S. Stand. Comm. Rep. No. 195, in 1951 Senate Journal, at 589. However, the amendment provided that if the employee recovered damages from the tort suit, the employer would have the right to reimbursement out of those damages for the workers’ compensation benefits it paid. 1951 Haw. Sess. Laws Act 194, § 1 at 229–30; S. Stand. Comm. Rep. No. 195, in 1951 Senate Journal, at 589. Subsequent legislative amendments provided additional detail regarding the employer’s rights and remedies, including procedures for an employer’s recovery of workers’ compensation benefits, litigation expenses, and attorney’s fees in suits against third-party tortfeasors. In 1967, the legislature amended the WCL “to provide a method for fixing and paying reasonable litigation expenses and attorney’s fees in third party actions and for the apportionment of such expenses and fees.” S. Stand. Comm. Rep. No. 163, in 1967 Senate Journal, at 904; 1967

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### Haw. Sess. Laws Act 53, § 1 at 39-40. In 1970, the legislature amended the WCL to provide for litigation costs and attorney’s fees where a third-party claim results in settlement. 1970 Haw. Sess. Laws Act 58, § 1 at 106-07; H. Stand. Comm. Rep. No. 638- 70, in 1970 House Journal, at 1111. In 1973, the legislature amended the WCL to “require an employer or his insurance carrier to pay a proportionate share of the attorney’s fees and costs on sums recovered by an injured employee from a third party which are reimbursable to the employer or his carrier.” H. Stand. Comm. Rep. No. 375, in 1973 House Journal, at 911; 1973 Haw. Sess. Laws Act 144, § 1 at 225-26.

In sum, the history of the statute reflects the legislature’s intent to address an ever-wider range of scenarios, and to provide a clear set of rules for each to ensure that both the employer and the employee are treated fairly. It would be inconsistent with that carefully crafted scheme to allow the employer to unilaterally vary those rules through agreements with its subcontractors. By providing a specific reimbursement remedy and continuing to provide further specificity to the contours of that remedy, the legislature intended to exclude other forms of remedy for an employer’s payment of workers’ compensation benefits. Accordingly, the legislative history suggests that the comprehensive workers’ compensation scheme is the whole source of

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### rights and remedies for third-party tortfeasor actions under the

WCL. This conclusion is supported by our interpretation of statutes governing reimbursement and subrogation rights in the health insurance context. See Yukumoto v. Tawarahara, 140 Hawai # i 285, 400 P.3d 486 (2017). In Yukumoto, the Hawai # i Medical Service Association (HMSA) argued that it was not limited to the statutory procedure for reimbursement of the amounts it paid for medical expenses associated with Yukumoto’s injuries in an accident, but could recover those amounts through independent contractual rights. Id. at 288, 400 P.3d at 489. Based on the plain language and legislative history of the statutes at issue, we held that the legislature had created a uniform and comprehensive procedure for lienholders’ reimbursement and subrogation recovery. Id. at 294-98, 400 P.3d at 495-99. Accordingly, any contractual provision in conflict with the statutory procedure was invalid, and HMSA could not recover its medical expense payments through contract instead of following the procedure prescribed by the legislature. Id. at 299, 400 P.3d at 500; see also Vinson v. Thomas, 288 F.3d 1145, 1156 (9th Cir. 2002) (holding that the specificity and comprehensiveness of the remedies provided by Title II of the Americans with Disabilities Act suggested that Congress intended that remedial

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### scheme to be the exclusive means by which a party could vindicate his rights, and therefore plaintiff’s § 1983 claims were barred).

Similarly here, HRS § 386-8 sets forth a comprehensive scheme which reflects an intent to establish uniform and exclusive remedies. Accordingly, the plain language and legislative history of HRS § 386–8 support the conclusion that HDCC’s manner of compensation reimbursement is exclusively provided for in the statute. 2. The Purpose of Workers’ Compensation Law Our conclusion that the plain language and legislative history of HRS § 386-8 provides an employer’s exclusive remedy for reimbursement is also consistent with the purpose of WCL. In Estate of Coates v. Pac. Engineering, a Div. of Pac. Lining Co., Inc., 71 Haw. 358, 364, 791 P.2d 1257, 1261 (1990), we noted that WCL is “designed to obtain for the injured workman or his dependents an assured, certain and prompt compensation to replace the doubtful right accorded by common law, and to secure for the employer freedom from vexatious, delaying and uncertain litigation with its possibilities of heavy penalties in the way of verdicts and high costs.”

In accord with this purpose, we have said that HRS § 386–8 establishes a framework for dispute resolution “at one time and in a single proceeding,” thereby promoting the efficient

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### resolution of an employee’s claims. First Ins. Co., 126 Hawai # i at 418, 271 P.3d at 1177. In First Ins. Co., we considered the narrow question of whether an employee can intervene in his or her employer’s timely lawsuit against a third party after the two-year limitations period established by HRS § 657-7 (1993) has passed. Id. at 408, 271 P.3d at 1167. We construed HRS § 386–8 consistent with WCL’s purpose of facilitating a fair and prompt resolution, noting that HRS § 386–8 requires written consent by both the employee and employer to a settlement or release of claims in order to provide an opportunity for each party to protect their respective interests. Id. at 418, 271 P.3d at 1177. Because it would be inconsistent to allow an injured employee to object to a proposed settlement of claim but not intervene in an employer’s suit to resolve that claim, we held that “the structure of the workers’ compensation statute, which encourages resolution of the dispute in a single action, suggests an intent to allow intervention by both the employer and the employee at any time prior to trial in the other’s timely filed suit.” Id. Thus, while First Ins. Co. did not directly answer the question here, it held that HRS § 386–8 should be construed in order to accomplish the purpose of encouraging resolution of disputes in a single action. Id.

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### Interpreting HRS § 386-8 as providing an exclusive remedy is consistent with WCL’s purpose because it “encourages resolution of the dispute in a single action” and discourages“vexatious, delaying and uncertain litigation” through contractbased actions to recover workers’ compensation payments. Id.; Estate of Coates, 71 Haw. at 364, 791 P.2d at 1261. Such actions conflict with the statute’s goal of efficiently resolving an injured employee’s claims in a single proceeding and assuring prompt compensation for the injured employee. 7



### Accordingly, based on the statute’s plain language, legislative history, and purpose, we conclude that HRS § 386-8 provides HDCC’s exclusive remedy for reimbursement of workers’ compensation payments.
C. Application to this Case

In light of our conclusion that HRS § 386-8 provides an employer’s exclusive remedy for reimbursement of workers’ compensation payments, HDCC’s breach of contract claim fails. Even if the parties intended the Subcontract’s indemnity clause to encompass workers’ compensation payments, that agreement would

Furth ermor e, pe rmitt ing a n emp loyerto r equir e its subc ontra ctor 7 to in demni fy it for worke rs’ c ompen satio n ben efits coul d rai se si gnifi cant publi c pol icy c oncer ns. For e xampl e, al lowin g thi s con tract ual s hifti ng of respo nsibi litie s cou ld di scour age a n emp loyerfromprov idinga sa fe wo rk envir onmen t forits emplo yees, beca use a n acc ident to w hich a sub contr actoris only margi nallyattr ibuta ble c ould still fall with in th e sco pe ofthe indemnity claus e. 

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### be invalid. An employer cannot contractually require a thirdparty tortfeasor to indemnify it for workers’ compensation payments. Rather, the employer must follow the procedure provided by HRS § 386-8. Therefore, summary judgment in favor of Fujikawa was proper.

Respectfully, we disagree with the ICA’s conclusion that Iddings, 82 Hawai # i 1, 919 P.2d 263, supports a contrary result. The ICA determined that contractual indemnification agreements are valid in the workers’ compensation context and do not undermine the purposes of WCL, quoting Iddings, 82 Hawai # i at 8, 919 P.2d at 270. The ICA then interpreted the Subcontract, and concluded that the Subcontract’s indemnity clause encompassed expenses stemming from workers’ compensation benefits. Iddings, however, is distinguishable.

In Iddings, the plaintiff nurse was injured while subduing a violent patient. Id. at 4, 919 P.2d at 266. The nurse applied for, and received, workers’ compensation benefits from her employer, the hospital. Id. The nurse brought a separate action in tort against her supervisory co-employee, physician Mee-Lee, contending that Mee-Lee, by allowing the hospital to become overcrowded, acted wilfully and wantonly in creating an unsafe work environment. Id. The circuit court granted Mee-Lee’s motion for summary judgment, finding that: (1)

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### an actual intent to injure is required for a co-employee’s conduct to satisfy the “wilful and wanton misconduct” exceptionto co-employee immunity; and (2) the nurse’s contention that MeeLee intentionally allowed her to work in an unsafe working environment did not constitute willful and wanton misconduct. Id. at 5, 919 P.2d at 267.

We vacated and remanded, holding that an actual intent to injure is not required in order for the injury-causing conduct of a co-employee to fall within the scope of the wilful and wanton misconduct exception, and that there were genuine issues of material fact as to whether Mee-Lee engaged in willful and wanton misconduct. Id. at 4, 919 P.2d at 266.

We discussed contractual indemnity agreements only in the context of responding to the dissent. Id. at 15-17, 919 P.2d at 277-79. The dissent contended that allowing tort claims against supervisory co-employees would create an absurd result, since the employer would provide benefits to the injured employee through workers’ compensation, and, at the same time, indemnity coverage to the supervisory employee. Id. at 28 n. 11, 919 P.2d at 290 n. 11 (Ramil, J., dissenting). The dissent argued that a typical situation where this absurd result would occur is the following: (1) the employee would seek workers’ compensation benefits, and damages from the supervisory employee tortfeasor;

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### (2) the supervisor would then seek indemnity from its employer; (3) and the employer would then seek reimbursement for its workers’ compensation benefits from the injured employee’s recovery against the supervisor. Id.; see also id. at 17, 919 P.2d at 279 (Ramil, J., dissenting).

The majority responded that it failed to see the absurdity of this result. Id. at 17, 919 P.2d at 279. We stated that it is “well settled that contractual indemnification agreements and ‘hold harmless’ clauses are valid in the workers’ compensation context and do not contravene or undermine the purposes underlying workers’ compensation in general.” Id. at 16, 919 P.2d at 278. This statement related to a third-party tortfeasor’s right to seek indemnity from an employer based on an indemnity agreement. See id. We relied on previous cases: Kamali v. Hawaiian Elec. Co., Inc., 54 Haw. 153, 504 P.2d 861 (1972), Messier v. Ass’n of Apartment Owners of Mt. Terrace, 6 Haw. App. 525, 735 P.2d 939 (1987), and Keawe v. Hawaiian Elec. Co., Inc., 65 Haw. 232, 649 P.2d 1149 (1982), which all held that a third-party tortfeasor may seek indemnification from an employer based on a contractual indemnity agreement. Iddings, 82 Hawai # i at 17, 919 P.2d at 279. We stated that just as any other third-party tortfeasor may seek indemnity from an employer for the tort damages it paid to the injured employee, a co-employee

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### liable in tort to the injured employee may seek indemnification from his or her employer. Id. Finally, we stated that the dissent’s third proposition “simply reiterates the employer’s right of reimbursement for workers’ compensation benefits paid out by the employer mandated by HRS § 386–8.” Id.

Thus, the reference to indemnity agreements in Iddings involved only agreements in which a third party seeks indemnification from the employer for damages the third party has paid to an injured employee. See id. at 15-17, 919 P.2d at 277- 79. Iddings, and the earlier cases on which it relied, did not address the wholly separate issue of whether an employer may circumvent the statutory procedure provided in HRS § 386-8 by using an indemnity agreement to recover workers’ compensation benefits from a third-party tortfeasor. 8



### In fact, Iddings stated that an employer, after indemnifying a third-party tortfeasor, could seek reimbursement for workers’ compensation benefits from the employee through the statutory procedure mandated by HRS § 386-8. Id. at 17, 919 P.2d at 279. Thus, Iddings did not contemplate an employer using an

We al so no te th at, a lthou gh no t at issue here , anyagre ement in a 8 const ructi on co ntrac t req uirin g the prom isor to in demni fy ordefe nd “t he promi see a gains t lia bilit y forbodi ly in jury to pe rsons or d amage to p roper ty cause d by or re sulti ng fr om th e sol e neg ligen ce orwilf ul mi scond uct o f the promi see, the p romis ee’s agent s or emplo yees, or i ndemn itee, is i nvali d as again st pu blic polic y, an d is void and u nenfo rceab le.” HRS § 431 :10-2 22; Arthu r v. State , Dep t. ofHawa iian Home Lands , 138 Hawa i # i 85, 93-9 5, 37 7 P.3 d 26, 3 4-36 (2016 ). 

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### indemnification agreement to recover workers’ compensation benefits from a third-party tortfeasor.

An agreement by an employer to indemnify a potential third-party tortfeasor for tort damages does not implicate the policies of WCL, because it does not alter the procedure by which employers provide or receive reimbursement for workers’ compensation benefits. In contrast, the indemnity agreement here attempted to supplant the procedure mandated by HRS § 386-8.

Accordingly, the ICA erred when it relied on Iddings to conclude that the Subcontract’s indemnity provision was valid. IV. Conclusion For the foregoing reasons, we conclude that HRS § 386-8 provides the exclusive remedy for an employer seekingreimbursement for workers’ compensation benefits from a thirdparty tortfeasor, and accordingly, that summary judgment in favor of Fujikawa was proper. We therefore vacate the ICA’s March 29, 2017 Judgment on Appeal, and affirm the circuit court’s May 2, 2014 Judgment.
Sheree Kon-Herrera for petitioner James Shin (Jodie D. Roeca on the briefs) for respondent /s/ Mark E. Recktenwald /s/ Paula A. Nakayama /s/ Sabrina S. McKenna /s/ Richard W. Pollack /s/ Michael D. Wilson

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