Title: Government Employees Ins. Co. v. Dang
Citation: 967 P.2d 1066
Docket Number: 21026
State: Hawaii
Issuer: Hawaii Supreme Court
Date: November 19, 1998

967 P.2d 1066 (1998) 89 Hawai`i 8 GOVERNMENT EMPLOYEES INSURANCE COMPANY, Respondent-Appellant/Appellant, v. Joseph DANG, Claimant-Appellee/Appellee, and State of Hawai`i Department of Commerce and Consumer Affairs, Appellee-Appellee. No. 21026. Supreme Court of Hawai`i. November 19, 1998. J. Patrick Gallagher, Gallagher &amp; Sakamoto, Honolulu (Wayne S. Sakamoto, Joelle Segawa Kane, Leonard R. Gouveia, Jr., Lili A. Young and Ryan K. Harimoto with him on the briefs), for respondent-appellant. Russell K.L. Leu, Leu &amp; Okuda, on the briefs, Honolulu, for claimant-appellee. David A. Webber and Deborah Day Emerson, Deputy Attorneys General, on the briefs, for appellee-appellee. Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA, and RAMIL, JJ. RAMIL, Justice. Respondent-Appellant/Appellant Government Employees Insurance Company (GEICO) appeals the first circuit court's order and judgment affirming the decision of the Appellee-Appellee Reynaldo Graulty, Insurance Commissioner of the State of Hawai`i, granting summary judgment in favor of *1067 Claimant-Appellee/Appellee Joseph Dang and ruling that GEICO improperly denied him no-fault benefits. GEICO argues four points of error on appeal; however, the crux of all four points, and the dispositive issue on appeal, concerns the statutory interpretation of Hawai`i Revised Statutes (HRS) § 431:10C-308.6 (repealed 1998). GEICO argues that the plain language of subsection 308.6(c) permits the denial of future treatment plans as a denial of continuing treatment or service at any time. Dang essentially argues that GEICO's plain language argument fails because the terms "continued services or treatment" and "treatment plan" are not synonymous. Dang argues that the Insurance Commissioner's original decisioni.e., that prospective denials of benefits are improper per seshould be upheld. Finally, the Insurance Commissioner revisits his office's interpretation of section 308.6 and has decided that it would be more cost-efficient to permit prospective denials of treatment under this provision (if the insurer has a specified reason), rather than to require the insurer to challenge and deny each treatment plan. Thus, the Insurance Commissioner asks for reversal. Effective January 1, 1998, the Hawai`i legislature reformed Hawaii's no-fault system[1] and repealed HRS § 431:10C308.6, the peer review provisions of the former no-fault law. See 1997 Haw.Sess.L. Act 251, § 308.6 at 1262; Sen.Conf.Comm.Rep. No. 171, in 1997 House Journal, at 925. This renders our interpretation of the statute for future cases next to pointless. The parties in this and other pending cases, however, have a viable interest in the interpretation of section 308.6 as it was applied by the Insurance Commissioner. Because HRS § 431:10C-308.6(c) permitted a challenge at any time to continuing treatment or services, because HRS § 431:10C-308.6(j) mandated that a provider shall not collect payment from either the insurer or insured if a Peer Review Organization (PRO) determines that future treatment is inappropriate or unreasonable, and because we agree with the current arguments of the Insurance Commissioner, GEICO's challenge and denial in this case should have been sustained. We therefore reverse the Insurance Commissioner's final order dated May 15, 1996 and the first circuit court's order and judgment dated September 22, 1997. The facts below are largely uncontroverted. Dang was in a motor vehicle accident on August 2, 1993. At the time, Dang was insured by GEICO. Dang sought treatment from a number of physicians for his injuries sustained in the accident. He complained of cervical strain and neck pain. On December 6, 1993, Dang's chiropractor, B.J. Williams, D.C., submitted a treatment plan requesting an authorization for treatment in excess of the No-Fault Administrative Rules (fee schedule) that went into effect on June 1, 1993. Dr. Williams sought approval for specific manual chiropractic manipulations and physical therapy to be rendered beginning December 31, 1993 and ending approximately May 6, 1994. Because Dang had received treatment from a number of physicians, on December 10, 1993, GEICO challenged the treatment plan's reasonableness and appropriateness, under the "continuing treatment or services" provision of *1068 HRS § 431:10C-308.6(c). The challenge was forwarded by the Insurance Division of the Department of Commerce and Consumer Affairs (DCCA) to a PRO. Sometime thereafter, GEICO received an undated treatment plan by Eve Gate, dba Rainbow Bodyworks, requesting approval for Swedish massage every other week for Dang, starting February 23, 1994 and ending April 20, 1994. According to GEICO, this plan was also forwarded to the PRO. On April 4, 1994, Stephen Becker, D.C., of the PRO issued a report rejecting Williams' plan. Dr. Becker's report stated that: (Emphases and brackets added.) Relying upon the PRO report, GEICO issued a denial on April 20, 1994, denying further chiropractic treatment from January 10, 1994 and further massage treatment from February 27, 1994 and quoting the PRO report's statement that, "[i]n the absence of further objective evidence of injury, care beyond 1/10/94 should not be considered a reasonable accident-related expense." On June 17, 1994, Dang requested an administrative review of the denial of no-fault benefits by the DCCA's Office of Administrative Hearings pursuant to HRS § 91-14 and § 431:10C-212. On June 18, 1994, Dang moved for summary judgment. After an August 10, 1995 hearing, the hearings officer granted Dang's motion on February 8, 1996, finding GEICO's prospective denial of future benefits improper. The hearings officer concluded: (Emphases and brackets added.) (Footnote omitted.) On February 26, 1996, GEICO filed written exceptions to the hearings officer's findings of fact, conclusions of law, and recommended order. The Insurance Commissioner, nonetheless, issued his final order granting Dang's motion on May 15, 1997. GEICO appealed to the circuit court. The first circuit court heard arguments on July 28, 1997. On September 22, 1997, the circuit court affirmed the Commissioner's final order, dated May 15, 1996, and denied GEICO's appeal. GEICO timely appealed to this court. When reviewing a circuit court's review of an administrative agency's decision, the appellate court essentially conducts a secondary appeal. See Korean Buddhist Dae Won Sa Temple of Hawaii v. Sullivan, 87 Hawai`i 217, 229, 953 P.2d 1315, 1327 (1998). This court must determine whether the circuit court was right or wrong in its decision, pursuant to the standards set forth in HRS § 91-14(g).[2] The agency's decision carries a presumption of validity, and the appellant carries the heavy burden of convincing the court that the decision is invalid because it is unjust and unreasonable in its consequences. See Hardin v. Akiba, 84 Hawai`i 305, 309-310, 933 P.2d 1339, 1343-344 (1997). Findings of fact will not be disturbed unless clearly erroneous. See Furukawa v. Honolulu Zoological Society, 85 Hawai`i 7, 12, 936 P.2d 643, 648, reconsideration denied, 85 Hawai`i 196, 940 P.2d 403 (1997) (citation omitted). "A finding of fact is clearly erroneous when, despite evidence to support the finding, the appellate court is left with the definite and firm conviction in reviewing the entire evidence that a mistake has been committed." State v. Kane, 87 Hawai`i 71, 74, 951 P.2d 934, 937 (1998); see also Britt v. United States Auto. Ass'n, 86 Hawai`i 511, 516, 950 P.2d 695, 700 (1998). The interpretation of a statute is a question of law reviewable de novo, under the right/wrong standard. See Gray v. Administrative Dir. of Court, 84 Hawai`i 138, 144, 931 P.2d 580, 586 (1997). "Under the right/ wrong standard, we examine the facts and answer the question without being required to give any weight to the trial court's answer to it." State v. Timoteo, 87 Hawai`i 108, 113, 952 P.2d 865, 870 (1997) (quoting State v. Naeole, 80 Hawai`i 419, 422, 910 P.2d 732, 735 (1996) (citations omitted)). Indeed, this court, in In re Claim of Maldonado, 67 Haw. 347, 351, 687 P.2d 1, 4 (1984), addressed the Insurance Commissioner's interpretation of a statute, stating (Emphases added.) The primary issue before this court is whether HRS § 431:10C-308.6 (repealed 1998) permitted an insurer to respond to an insured's specific treatment plan with a challenge to "continuing treatment or services." Our discussion, therefore, is one of statutory construction. "The starting point in statutory construction is to determine the legislative intent from the language of the statute itself." State v. Kaakimaka, 84 Hawai`i 280, 289, 933 P.2d 617, 626, reconsideration denied 84 Hawai`i 496, 936 P.2d 191 (1997) (quoting State v. Ortiz, 74 Haw. 343, 351-52, 845 P.2d 547, 551-52 (citations omitted), reconsideration denied, 74 Haw. 650, 849 P.2d 81 (1993)). When construing a statute, our foremost obligation is to ascertain and give effect to the intention of the legislature, which is to be obtained primarily from the language contained in the statute itself. And we must read statutory language in the context of the entire statute and construe it in a manner consistent with its purpose. Korean Buddhist Dae Won Sa Temple of Hawaii, 87 Hawai`i at 229-30, 953 P.2d at 1327-28 (quoting State v. Cullen, 86 Hawai`i 1, 8-9, 946 P.2d 955, 963-64 (1997) (some brackets in original and some added)). "[A] statute is ambiguous if it is capable of being understood by reasonably well-informed people in two or more different senses." State v. Toyomura, 80 Hawai`i 8, 19, 904 P.2d 893, 904 (1995) (citing 2A N. Singer, Sutherland Statutory Construction, § 45.02, at 6 (5th ed. 1992)) (internal quotation marks omitted). "[A] rational, sensible and practicable interpretation of a statute is preferred to one which is unreasonable or impracticable[.]" State v. Jumila, 87 Hawai`i 1, 9, 950 P.2d 1201, 1209 (1998) (quoting Keliipuleole v. Wilson, 85 Hawai`i 217, 221-22, 941 P.2d 300, 304-05 (1997) (brackets, internal quotation marks, and citations omitted)). "The legislature is presumed not to intend an absurd result, and legislation will be construed to avoid, if possible, inconsistency, contradiction[,] and illogicality." State v. Arceo, 84 Hawai`i 1, 19, 928 P.2d 843, 861 (1996) (citation and internal quotation marks omitted). Turning to the statutory provision in question, HRS § 431:10C-308.6 provided in relevant part: (Emphases added.) In deciding to grant Dang's summary judgment motion, the hearings officer relied upon the Insurance Commissioner's previous decisions of Butuyan v. State Farm Mutual Insurance Co., MVI-93-257-C and Pecson v. Government Employees Insurance Company, MVI-94-254-C. In Butuyan, the insurer issued a challenge to a specific treatment plan, not to continuing treatment or services. Unlike the instant case, the PRO report provided that, although the PRO doctor did "not believe any further treatment is necessary beyond perhaps home therapies such as simple exercises and mild heat from time to time[, ... t]his question calls for sweeping answers, and also is an inappropriate question for a physician who has not seen and examined the patient." Notwithstanding the *1072 fact that the Butuyan challenge only addressed a specific treatment plan, and notwithstanding the PRO report's qualification, the insurer denied all "[f]uture benefits except home therapies...." The hearings officer, first, concluded that the insurer's denial was overbroad because it denied benefits not yet claimed or accrued, and, second, ruled the denial improper because it was without a valid basis in light of the PRO report's qualification. Similarly to the instant case, the insurer in Pecson received a specific treatment plan and issued a challenge to "continuing treatment or services." The responsive PRO report stated that Pecson's current treatment of massage, acupuncture, heat, and electrical stimulation would provide little additional benefit and that further health care dollars would be better spent on an MRI or CAT scan. The hearings officer concluded that Pecson, MVI-94-254-C, at 13-14 (emphases added). Although the hearings officer made the above comments regarding the procedural nature of HRS § 431:10C-308.6, he based his decision primarily upon (1) the lack of evidence supporting the insurer's blanket denial, (2) the lack of information regarding the PRO doctor's qualifications to reach a determination that Pecson's current treatment would provide little additional benefit, and (3) the PRO's failure to determine, in accordance with the statute, whether the treatment proposed was "appropriate and reasonable." Therefore, the Insurance Commissioner's longstanding interpretation of HRS § 431:10C-308.6 was that an insurer procedurally could not challenge a treatment plan, submitted under subsection 308.6(d), as "continuing treatment or services" under subsection 308.6(c). This rationale rested with the language in subsection 308.6(d) requiring the insurer to respond "within five working days of mailing of the request, giving authorization or stating in writing the reasons for refusal to the provider and the insured.... Failure by the insurer to respond within five working days shall constitute approval of the treatment." The Insurance Commissioner previously interpreted this to mean that each and every treatment plan must be challenged and that a blanket challenge to prospective treatment was impermissible. The Insurance Commissioner, therefore, deemed a challenge to a treatment plan under the "continuing treatment or services" provision procedurally improper. Both GEICO and the Insurance Commissioner now argue that the automatic disallowance of an insurer's denial of no-fault benefits for future treatment or services is not mandated by the language of section 308.6, and that an insurer's prospective denial of continuing treatment benefits on the basis of specific reasons is not improper per se. The Insurance Commissioner argues, and has ruled in recent decisions, see Redmond v. State Farm Mutual Automobile Insurance Co., MVI-94-287-P and Swords v. Commercial Union Insurance Co., MVI-95-126, that an insurer should be permitted to challenge either future treatment or services of the same nature after the completion of a particular plan or a newly proposed treatment plan, as well any future treatment of the same nature. The Insurance Commissioner argues that this will reduce costs and encourage the resolution of disputed benefits on the merits, rather than on procedural grounds. GEICO argues that this interpretation is supported by the legislative intent of HRS § 431:10C-308.6 (repealed 1998). Sen.Stand.Comm.Rep. No. 2201, in 1992 Senate House Journal, at 1018. In short, we agree with GEICO and the Insurance Commissioner's current interpretation. Subsections 308.6(c) and (d) do not expressly prohibit an insurer from challenging and denying a proposed treatment plan as a part of continuing treatment or services. Although the Insurance Commissioner previously interpreted these sections to mean that a challenge to "continuing treatment or services" had to be a challenge to currently provided treatment and that a prospective denial of treatment was per se improper, we hold that, indeed, HRS § 431:10C-308.6 permitted a challenge to a proposed treatment plan under the continuing treatment or services provision. Although we generally defer to an administrative agency's decision because of its expertise in the field, we do not defer to the agency's interpretation of a statute, particularly when it is wrong. See Maldonado, 67 Haw. at 351, 687 P.2d at 4. Correctly, GEICO pointed out that HRS § 431:10C-308.6(c) permitted a challenge to continuing treatment or services at any time. Surprisingly, however, none of the parties cited to HRS § 431:10C-308.6(j), which provided: (Emphases added.) Reading the plain language of Subsection 308.6(j), the legislature allowed nonpayment of treatment or services when a PRO determines that "future provision of such treatment will not be appropriate or reasonable." Therefore, if a provider ignores the challenge or denial of proposed treatment and provides the treatment, he or she will be unable to collect payment. Reading the plain language of Subsection 308.6(c), the legislature also allowed an insurer's challenge to continuing treatment or services at any time. Therefore, an insurer may challenge a proposed treatment plan for injuries received in a particular accident as a part of continuing treatment or services if the insured has already received treatment or services for injuries emanating from the same accident. Reading Section 308.6 in its entirety, in addition to recognizing its legislative history, it seems absurd and illogical that the legislature wanted "to reduce and stabilize the cost of motor vehicle insurance" and yet, at the same time, intended for insurers to expend money challenging and denying each and every treatment plan for the same nature of treatment when a PRO has determined that future treatment of that same nature, or future treatment of any nature, is unreasonable or inappropriate. See Jumila, 87 Hawai`i at 9, 950 P.2d at 1209; Arceo, 84 Hawai`i at 19, 928 P.2d at 861. Even the hearings officer in Pecson noted that there are a "few exceptions" to the general prohibition against blanket denials. MVI-94-254-C, at 13-14. We hold that one exception arises when a PRO determines that future treatment of any nature is unreasonable or inappropriate. Here, GEICO challenged the treatment plan within five days of its mailing and forwarded the challenge to a PRO, pursuant to HRS § 431:10C-308.6(d). Because GEICO submitted the challenge pursuant to HRS § 431:10C-308.6(c), this does not negate the fact that it was challenged in a timely manner *1074 for its reasonableness and appropriateness. Furthermore, the hearings officer focused upon the technicalities of GEICO's challenge. Unlike Pecson, the instant PRO report determined that any future treatment, other than selfdirected exercises, would be unreasonable. Thus, GEICO properly denied the proposed treatment plan based upon the PRO report and properly denied all future treatment for injuries emanating from the same accident.[3] Based upon the foregoing, we reverse the Insurance Commissioner's final order dated May 15, 1996 and the circuit court's order and final judgment dated September 22, 1997. We hold that GEICO properly challenged the proposed treatment plan as "continuing services or treatment" and properly denied future services and treatment based upon the PRO report that stated any future treatment and services, with the exception of self-directed home exercises, was unreasonable. [1] The legislative history of the new reform, Act 251, provides in part: The purpose of this bill is to reduce no-fault insurance premiums and to preserve adequate protection of the rights of drivers. . . . . Your committee desires to maintain a system of immediate compensation through personal injury protection benefits without regard to fault, similar to the workers' compensation system, while maintaining tort liability to compensate accident victims above what they are compensated for by personal injury protection benefits. In this manner, persons with serious and permanent injuries are protected and negligent drivers pay for causing those injuries. Such a system must weed out the lesser injuries, such as softtissue and whiplash, in order to achieve its objectives. Sen.Conf.Comm.Rep. No. 171, in 1997 Senate Journal, at 924 (emphasis added). [2] The applicable standards of review for decisions issued by administrative agencies are supplied by HRS § 91-14(g) (1993), providing in relevant part: Upon review of the record the court may affirm the decision of the agency or remand the case with instructions for further proceedings; or it may reverse or modify the decision and order if the substantial rights of the petitioners may have been prejudiced because the administrative findings, conclusions, decisions, or orders are: (1) In violation of constitutional or statutory provisions; or (2) In excess of the statutory authority or jurisdiction of this agency; or (3) Made upon unlawful procedure; or (4) Affected by other error of law; or (5) Clearly erroneous in view of the reliable, probative and substantial evidence on the whole record; or (6) Arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion. [3] Because it was not presented in this appeal, we do not address the issue of submission of a treatment plan based upon the exacerbation of an injury after a PRO report determines future treatment is unreasonable or inappropriate.