Source: https://case-law.vlex.com/vid/298-P-3d-1034-Hawai-lsquo-i-2013-SCWC-29868-Jou-v-Schmidt-612242454
Timestamp: 2019-04-23 07:51:34+00:00

Document:
Opinion Judge: NAKAYAMA, Acting C.J.
Party Name: Emerson M.F. JOU, M.D., Petitioner/Provider-Appellant, v. J.P. SCHMIDT, Insurance Commissioner, Department of Commerce and Consumer Affairs, State of Hawai‘i, Respondent/Respondent-Appellee, and Dai-Tokyo Royal Insurance Company, Respondent/Respondent-Appellee.
Judge Panel: NAKAYAMA, Acting C.J., ACOBA, McKENNA, and POLLACK, JJ., and Circuit Judge KIM, In Place of RECKTENWALD, C.J., Recused.
Dai-Tokyo Royal Insurance Company, Respondent/Respondent-Appellee.
Stephen M. Shaw, Del Mar, for petitioner/provider-appellant.
J. Patrick Gallagher, for respondent/respondent-appellee Dai-Tokyo Royal Insurance Company.
Elmira K.L. Tsang, Honolulu, for respondent/respondent-appellee J.P. Schmidt, Insurance Commissioner, Department of Commerce and Consumer Affairs, State of Hawai‘i.
NAKAYAMA, Acting C.J., ACOBA, McKENNA, and POLLACK,1 JJ., and Circuit Judge KIM, In Place of RECKTENWALD, C.J., Recused.
When a medical provider has challenged a reduction or denial of payment from an insurer prior to exhaustion of benefits under an insured's policy, the provider's pursuit of his or her claim for those benefits, even if ultimately unsuccessful, is not unreasonable for the purpose of seeking attorney's fees and costs pursuant to Hawai‘i Revised Statutes (HRS) § 431:10C-211 (a).
In this case, Petitioner/Provider-Appellant Emerson M.F. Jou, M.D. challenged the partial denial of personal injury protection benefits after treating a patient insured by Respondent/Respondent-Appellee Dai-Tokyo Royal Insurance Company (DTRIC). While Jou's request for an administrative hearing was pending in the Insurance Division of the State Department of Commerce and Consumer Affairs (DCCA), the insured's available benefits under her policy were exhausted on account of payments to Jou and other medical providers. Due to the exhaustion, the Insurance Division dismissed Jou's claim, and the Circuit Court of the First Circuit 2 and the ICA affirmed that decision.
Jou also requested attorney's fees and costs under HRS § 431:10C-211(a), which allows fees and costs to be awarded even when a party does not prevail on its claim for benefits; pursuant to a remand order of the ICA, the circuit court denied the request because it found Jou's pursuit of the benefits to be unreasonable given that DTRIC's obligation to pay benefits to the insured's medical providers was satisfied once the insured's policy limits had been reached. The ICA also affirmed that decision; consequently, only the issue of fees and costs is before us in this case.
Because we disagree with the circuit court and the ICA that Jou's claim was unreasonable for the purpose of awarding attorney's fees and costs under HRS § 431:10C-211(a), we vacate the judgments of both the ICA and the circuit court and remand this case to the circuit court for further proceedings.
Norma Agbayani was injured in a motor vehicle accident on November 27, 1995; she was insured by DTRIC and treated by Jou and other doctors. After treatment, Jou sent a total of three separate bills to DTRIC requesting payment; DTRIC paid Jou, but based on reductions in payments made after the billing statements were reviewed by DTRIC, Jou claimed that DTRIC wrongly withheld payment in a total amount of $1,189.65 between December 1995 and May 1996.
Thereafter, on February 10, 2003, DTRIC notified Jou that Agabayani's no-fault benefits in the amount of $20,000.00 had been exhausted as of February 3, 1999.
On January 27, 2005, after the matter had been restored to the calendar, the administrative hearings officer held a hearing on DTRIC's motion for summary judgment. The hearings officer held that because Agbayani's no-fault benefits had been exhausted, Jou's request for payment of the withheld $1,189.65 amount was moot; accordingly, the hearings officer recommended on April 13, 2005 that DTRIC's motion for summary judgment be granted and that the matter be dismissed. On May 12, 2005, Insurance Commissioner J.P. Schmidt adopted the hearings officer's findings and recommended order, granted DTRIC's motion, and dismissed the matter. As the hearings officer recommended, Schmidt also ordered that the parties bear their own attorney's fees and costs.
On June 13, 2005, Jou filed his notice of agency appeal to circuit court pursuant to Hawai‘i Revised Statutes (HRS) § 91-14.4 In his agency appeal, Jou primarily argued that Schmidt erred by deciding that the case was moot, due to the exhaustion of Agbayani's no-fault benefits, in lieu of reaching the merits of the case regarding the billing dispute between Jou and DTRIC. Jou also argued that DTRIC was required, but failed, to issue a formal notice of denial after it reduced his payments. In response, both Schmidt and DTRIC pointed out that Jou never challenged the hearing officer's finding of fact that Agbayani's no-fault benefits were exhausted as of February 3, 1999. However, they maintained that even if Jou had challenged the finding, his claim for payment would still fail because DTRIC's contractual obligation to pay no-fault benefits ceased once DTRIC had paid all of the $20,000 in benefits provided for in Agbayani's policy. DTRIC also argued in its brief that Jou's claims were barred because, pursuant to HRS § 431:10C-212,5 Jou was required to request a hearing regarding DTRIC's denial of his claim for payment within sixty days of the denial; however, he did so on December 9, 1998, more than two years after the last challenged denial dated June 13, 1996. In an order dated July 18, 2006, the circuit court affirmed Schmidt's decision, concluding that the Insurance Division's findings of fact were not erroneous and conclusions of law were correct. Final judgment was also entered on July 18, 2006.
(1) erred in finding DTRIC was not required to issue a Notice of Denial after it made reduced and partial payments on his claims; (2) erred in finding his claim against DTRIC was moot on the grounds that [Agbayani]'s no-fault benefits had already been exhausted; (3) erred in failing to order DTRIC to pay interest, attorney's fees and costs; (4) erred in affirming erroneous Findings of Fact and Conclusions of Law; and (5) violated his due process and equal protection rights, and made a "regulatory taking" of his interest in balances, in violation of the Hawai‘i and U.S. constitutions.

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