Opinion ID: 1187678
Heading Depth: 2
Heading Rank: 2

Heading: The Director of Labor Retains Original Jurisdiction over all Controversies and Disputes arising under HRS Chapter 386.

Text: On May 2, 1996, through aid of counsel, Amantiad agreed, on the record before the circuit court, to wash his future workers' compensation benefits in return for $25,000, in a global settlement with Defendant Odum and OTS. Relying upon that promise, Odum paid $25,000 to Amantiad and $13,000 to OTS, extinguishing OTS's existing workers' compensation lien rights under HRS § 386-8. All parties thereafter stipulated to dismiss the action with prejudice. Amantiad's promise or agreement to wash his future workers' compensation benefits in exchange for the global settlement of his civil tort action implicates a dangerous commingling of and glaring conflict between the Director of Labor's original jurisdiction under HRS § 386-73 (1993) and this court's well-established support and fostering of settlement. We therefore must turn to HRS Chapter 386 to determine whether a compromise or wash of future workers' compensation benefits falls within the Director of Labor's original jurisdiction under HRS § 386-73 and, consequently, assuming that the circuit court otherwise has jurisdiction, to determine whether the circuit court can enforce a settlement regarding such benefits, absent the Director's prior consent or approval.
The interpretation of a statute is a question of law reviewable de novo. [] Franks v. City & County of Honolulu, 74 Haw. 328, 334, 843 P.2d 668, 671 (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. When there is doubt, doubleness of meaning, or indistinctiveness or uncertainty of an expression used in a statute, an ambiguity exists. In construing an ambiguous statute, the meaning of the ambiguous words may be sought by examining the context, with which the ambiguous words, phrases, and sentences may be compared, in order to ascertain their true meaning. HRS § 1-15(1)(1993). Moreover, the courts may resort to extrinsic aids in determining the legislative intent. One avenue is the use of legislative history as an interpretive tool. Gray v. Administrative Dir. of the Court, 84 Hawai`i 138, 148, 931 P.2d 580, 590 (1997) (internal citations, quotation marks, brackets, ellipses, and footnote omitted). This court may also consider the reason and spirit of the law, and the cause which induced the legislature to enact it[] ... to discover its true meaning. Id. at 148 n. 15, 931 P.2d at 590 n. 15; HRS § 1-15(2) (1993). Also, this court is bound to construe statutes so as to avoid absurd results. Keliipuleole v. Wilson, 85 Hawai`i 217, 222, 941 P.2d 300, 305 (1997). A rational, sensible and practicable interpretation of a statute is preferred to one which is unreasonable[,] impracticable ... inconsisten[t], contradict[ory], and illogical[]. Id. at 221-22, 941 P.2d at 304-05 (original brackets and citation omitted) (brackets added). Frank v. Hawaii Planing Mill Found., 88 Hawai`i 140, 144, 963 P.2d 349, 353 (1998) (some brackets added and some in original). We must further note that [o]ur reporters are replete with cases holding that Hawai`i's workers' compensation statute is remedial in nature. See, e.g., Locations, Inc. v. Hawai`i Dept. of Labor & Indus. Relations, 79 Hawai`i 208, 210, 900 P.2d 784, 786 (1995); Treloar v. Swinerton & Walberg Co., 65 Haw. 415, 425, 653 P.2d 420, 427 (1982); Evanson v. University of Hawaii, 52 Haw. 595, 483 P.2d 187 (1971). An equal number of cases have recognized that our workers' compensation statute has a beneficent purpose and should be afforded liberal construction in favor of the employee, to fulfill the humanitarian purposes for which it was enacted. Respicio v. Waialua Sugar Co., 67 Haw. 16, 18, 675 P.2d 770, 772 (1984). Indeed, since the supreme court's first look at Hawai`i's then new workers' compensation statute in 1916, analyses in these kinds of cases have been grounded on the humanitarian purposes premise. See, e.g., Lawhead v. United Air Lines, 59 Haw. 551, 559-60, 584 P.2d 119, 124-25 (1978); DeFries v. Association of Owners, 57 Haw. 296, 303-04, 555 P.2d 855, 860 (1976); Ichijiro Ikoma v. Oahu Sugar Co., 23 Haw. 291, 295-96 (1916). Nevertheless, we acknowledge that the rule of liberal construction in workers' compensation cases has boundaries. In a caveat on this point, the supreme court explained that `[t]he rule of liberal construction cannot be strained to the point of extending it to employments [or employment benefits] not within its scope or intent.' Locations, Inc., 79 Hawai`i at 211, 900 P.2d at 787 (quoting Florida Indus. Comm'n v. Schoenberg, 117 So.2d 538, 541 (Fla.Dist.Ct.App.1960)). Survivors of Iida v. Oriental Imports, Inc., 84 Hawai`i 390, 397, 935 P.2d 105, 112 (App. 1997) (footnote omitted). Finally, this court has also stated that `statutes abrogating common law rights must be strictly construed[.]' Hough v. Pacific Ins. Co., Ltd., 83 Hawai`i 457, 463, 927 P.2d 858, 864 (1996) (citing Fonseca v. Pacific Constr., 54 Haw. 578, 585, 513 P.2d 156, 160 (1973); Burns Int'l Sec. Services v. Department of Transp., 66 Haw. 607, 611, 671 P.2d 446, 449 (1983) (explaining that [w]here it does not appear there was a legislative purpose in superseding the common law, the common law will be followed).
We particularly note our long-standing support of compromise and settlement. As a general rule, a properly executed settlement precludes future litigation for its parties. See AIG Hawaii Ins. Co. v. Bateman, 82 Hawai`i 453, 458-59, 923 P.2d 395, 400-01, amended in part, 83 Hawai`i 203, 925 P.2d 373 (1996). Indeed, a settlement agreement is an agreement to terminate, by means of mutual concessions, a claim which is disputed in good faith or unliquidated. It is an amicable method of settling or resolving bona fide differences or uncertainties and is designed to prevent or put an end to litigation. 15A Am.Jur.2d Compromise and Settlement § 1 (1976). We acknowledge the well-settled rule that the law favors the resolution of controversies through compromise or settlement rather than by litigation. Dowsett v. Cashman, 2 Haw.App. 77, 82-83, 625 P.2d 1064, 1068 (1981). Such alternative to court litigation not only brings finality to the uncertainties of the parties, but is consistent with this court's policy to foster amicable, efficient, and inexpensive resolutions of disputes. In turn, it is advantageous to judicial administration and thus to government and its citizens as a whole. We agree with the policy and law of settlements which the Supreme Court of Arkansas succinctly sets forth in Ragland v. Davis, 301 Ark. 102, 106-107, 782 S.W.2d 560, 562 (1990) (citation omitted, emphasis added): Courts should, and do, so far as they can do so legally and properly, support agreements which have for their object the amicable settlement of doubtful rights by parties; the consideration for such agreements is not only valuable, but highly meritorious. Because they promote peace, voluntary settlements... must stand and be enforced if intended by the parties to be final, notwithstanding the settlement made might not be that which the court would have decreed if the controversy had been brought before it for decision. Such agreements are binding without regard to which party gets the best of the bargain or whether all the gain is in fact on one side and all the sacrifice on the other. .... A compromise or settlement agreement disposes of all issues the parties intended to settle. In re Estate of Engels, 10 Kan. App.2d 103, 692 P.2d 400 (1984).... .... Having found the settlement to be valid and enforceable, the terms of the settlement would control.... Sylvester v. Animal Emergency Clinic of Oahu, 72 Haw. 560, 565-71, 825 P.2d 1053, 1056-59 (1992) (emphases added); see also Gossinger v. Association of Apartment Owners of the Regency of Ala Wai, 73 Haw. 412, 423-24, 835 P.2d 627, 633-34 (1992); Han v. Yang, 84 Hawai`i 162, 167-68, 931 P.2d 604, 609-10 (App.1997). With respect to a judgment by consent or an oral settlement entered on the record, the ICA has explained that courts have the general power of entering judgment by consent of the parties for the purpose of executing a compromise and settlement of the action. 47 Am.Jur.2d Judgments § 1080 (1969). Although there is no case on point in Hawaii, the law of compromise and settlement and of judgment by consent is well-settled in other jurisdictions. For example, the Kansas Supreme Court has stated:  It is an elemental rule that the law favors compromise and settlement of disputes and generally, in the absence of bad faith or fraud, when parties enter into an agreement settling and adjusting a dispute, neither party is permitted to repudiate it.  Matter of Estates of Thompson, 226 Kan. 437, 440, 601 P.2d 1105, 1108 (1979). The Washington Supreme Court said it even more tersely: The law favors settlements and consequently it must favor their finality. Haller v. Wallis, 89 Wash.2d 539, 544, 573 P.2d 1302, 1305 (1978). A compromise agreement, like other contracts, requires an offer and acceptance, consideration, and parties who have the capacity and authority to agree as they do. 15A Am.Jur.2d Compromise and Settlement § 7 (1976). A judgment or decree entered by consent of the parties is in the nature of a contract, approved by the court, and cannot be set aside except on grounds adequate to justify the rescission of a contract. Nieminen v. Pitzer, 281 Or. 53, 57, 573 P.2d 1227, 1228 (1978). .... The Supreme Court of Colorado, quoting with approval from the case of Hansen v. Ryan, 186 S.W.2d 595 (Mo.1945), held: In the administration of justice and the prompt dispatch of business, courts must and do act upon the statements of counsel and upon the stipulations of parties to pending causes. Where the parties have voluntarily entered into a stipulation which appears fair and reasonable for the compromise and settlement of the issues of a pending cause and where the stipulation is spread upon the record with the consent and approval of the court, as here, the parties are bound thereby and the court may, thereafter, properly proceed to dispose of the case on the basis of the pleadings, the stipulations and the admitted facts.  Goltl v. Cummings, 152 Colo. 57, 380 P.2d 556, 559 (1963). Dowsett v. Cashman, 2 Haw.App. 77, 82-83, 625 P.2d 1064, 1068 (1981) (emphases added); accord Sylvester, 72 Haw. at 566, 825 P.2d at 1056.
HRS Chapter 386 endows the Director of Labor with original jurisdiction over all controversies and disputes arising thereunder. In particular, HRS § 386-73 (1993) provides: Unless otherwise provided, the director of labor and industrial relations shall have original jurisdiction over all controversies and disputes arising under this chapter. The decisions of the director shall be enforceable by the circuit court as provided in section 386-91. There shall be a right of appeal from the decisions of the director to the appellate board and thence to the supreme court subject to chapter 602 as provided in sections 386-87 and 386-88, but in no case shall an appeal operate as a supersedeas or stay unless the appellate board or the supreme court so orders. When interpreting HRS § 386-73, this court has stated that, [t]aken at face value, the foregoing would preclude original court action to settle controversies involving the workers' compensation law. It relegates the circuit court to a secondary role where workers' compensation is concernedthe enforcement of the Director's decisions. Travelers Ins. Co. v. Hawaii Roofing, Inc., 64 Haw. 380, 384, 641 P.2d 1333, 1336 (1982). Furthermore, [a] statute which provides for a thing to be done in a particular manner or by a prescribed person or tribunal implies that it shall not be done otherwise or by a different person or tribunal.... Id. at 387, 641 P.2d at 1338 (citing State ex rel. Battle v. Hereford, 148 W.Va. 97, 103, 133 S.E.2d 86, 90 (1963)). In contrast to the Director of Labor's jurisdiction under HRS § 386-73, Hawai`i circuit courts retain jurisdiction over an employee's claims against third-party tortfeasors, [8] pursuant to HRS § 386-8 (1993), which provides in pertinent part: Liability of third person. When a work injury for which compensation is payable under this chapter has been sustained under circumstances creating in some person other than the employer or another employee of the employer acting in the course of his employment a legal liability to pay damages on account thereof, the injured employee or his dependents (hereinafter referred to collectively as the employee) may claim compensation under this chapter and recover damages from such third person. If the employee commences an action against such third person he shall without delay give the employer written notice of the action and the name and location of the court in which the action is brought by personal service or registered mail. The employer may, at any time before trial on the facts, join as party plaintiff. If within nine months after the date of the personal injury the employee 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. Except as limited by chapter 657, the employee may at any time commence an action or join in any action commenced by the employer against such third person. No release or settlement of any claim or action under this section is valid without the written consent of both employer and employee. The entire amount of the settlement after deductions for attorney's fees and costs as hereinafter provided, is subject to the employer's right of reimbursement for his compensation payments under this chapter and his expenses and costs of action. If the action is prosecuted by the employer alone, the employer shall be entitled to be paid from the proceeds received as a result of any judgment for damages, or settlement in case the action is compromised before judgment, the reasonable litigation expenses incurred in preparation and prosecution of such action, together with a reasonable attorney's fee which shall be based solely upon the services rendered by the employer's attorney in effecting recovery both for the benefit of the employer and the employee. After the payment of such expenses and attorney's fee, the employer shall apply out of the amount of the judgment or settlement proceeds an amount sufficient to reimburse the employer for the amount of his expenditure for compensation and shall pay any excess to the injured employee or other person entitled thereto. If the action is prosecuted by the employee alone, the employee shall be entitled to apply out of the amount of the judgment for damages, or settlement in case the action is compromised before judgment, the reasonable litigation expenses incurred in preparation and prosecution of such action, together with a reasonable attorney's fee which shall be based solely upon the services rendered by the employee's attorney in effecting recovery both for the benefit of the employee and the employer. After the payment of such expenses and attorney's fee there shall be applied out of the amount of the judgment or settlement proceeds, the amount of the employer's expenditure for compensation, less his share of such expenses and attorney's fee. On application of the employer, the court shall allow as a first lien against the amount of the judgment for damages or settlement proceeds, the amount of the employer's expenditure for compensation, less his share of such expenses and attorney's fee. If the action is prosecuted both by the employee and the employer, in a single action or in consolidated actions, and they are represented by the same agreed attorney or by separate attorneys, there shall first be paid from any judgment for damages recovered, or settlement proceeds in case the action or actions be settled before judgment, the reasonable litigation expenses incurred in preparation and prosecution of such action or actions, together with reasonable attorney's fees based solely on the services rendered for the benefit of both parties where they are represented by the same attorney, and where they are represented by separate attorneys, based solely upon the service rendered in each instance by the attorney in effecting recovery for the benefit of the party represented. After the payment of such expenses and attorneys' fees there shall be applied out of the amount of the judgment for damages, or settlement proceeds an amount sufficient to reimburse the employer for the amount of his expenditure for compensation and any excess shall be paid to the injured employee or other person entitled thereto. In the event that the parties are unable to agree upon the amount of reasonable litigation expenses and the amount of attorneys' fees under this section then the same shall be fixed by the court. After reimbursement for his compensation payments the employer shall be relieved from the obligation to make further compensation payments to the employee under this chapter up to the entire amount of the balance of the settlement or the judgment, if satisfied, as the case may be, after deducting the cost and expenses, including attorneys' fees. .... If the special compensation fund has paid or is liable for any compensation under this chapter, the fund shall be entitled to all the rights and remedies granted an employer under this section; provided that the employer' right to reimbursement for compensation payments and expenses under this chapter shall have priority. (Emphases added.) First, the plain language of HRS § 386-73 places all controversies or disputes arising under HRS Chapter 386 within the original jurisdiction of the Director of Labor. A claim for workers' compensation benefits, whether present or future, [9] arises under HRS Chapter 386 and is, therefore, within the original jurisdiction of the Director of Labor. Second, all references to an employer's right to payment under HRS § 386-8 are explained as reimbursement or payment for expenditure for compensation. Therefore, HRS § 386-8 provides an employer with the right of intervention for existing lien rightsnot future or potential lien rights. [10] Further, in order to implement HRS Chapter 386, the Director of Labor has adopted administrative rules, pursuant to HRS § 386-72 (1993). [11] The rule corresponding to HRS § 386-8 is Hawai`i Administrative Rule (HAR) § 12-10-31 (1995), which provides: Liability of third person. (a) Should any action be filed, arbitration commenced, or claim be made to recover damages pursuant to section 386-8, HRS, the party or parties in interest shall within ten calendar days notify the director in writing and all other parties of interest with pertinent details as the action, arbitration, or claim continues. (b) The party or parties of interest shall obtain written consent of both employer and employee and file with the director within thirty calendar days of execution a final copy of the claim-dispositive document, release, settlement, court order, waiver, dismissal, arbitration award, or judgment. (c) The director may hold a hearing at the director's discretion or on application of a party of interest to determine whether or not the employer has an obligation to make further compensation payments including reimbursements and credits against sums recovered from any third party. (Emphasis added.) Pursuant to HAR § 12-10-31, the Director of Labor retains the discretion, and necessarily the jurisdiction, to determine whether or not the employer has an obligation to make further or future compensation payments to the employee. In light of this provision, it necessarily follows that a compromise or settlement of further or future workers' compensation benefits may be nullified or voided by the Director of Labor, irrespective of what the parties have agreed. Therefore, in construing HRS §§ 386-8 and 386-73 with HAR § 12-10-31, we hold that it would be illogical and absurd to permit parties to compromise such future obligations, without the Director of Labor's prior consent or approval. Our conclusion today finds further support in HRS § 386-151 (1993), [12] which bestows upon the Director of Labor the fiduciary obligation of administering and maintaining the special compensation fund. [13] For example, the instant record reveals that Amantiad's injury has been deemed a permanent partial disability (in light of OTS's payment of $24,873.60 in permanent partial disability benefits), implicating a potential need for future reliance upon the special compensation fund under HRS § 386-33. In light of the Director of Labor's original jurisdiction under HRS § 386-73, the Director's discretion under HAR § 12-10-31, and the Director's fiduciary obligations under various provisions of Chapter 386, we hold that a settlement or compromise of future workers' compensation benefits constitutes a controversy or dispute within the original jurisdiction of the Director of Labor, under section 386-73. Furthermore, we hold that a settlement or compromise of future workers' compensation benefits cannot be valid or binding without the consent or approval of the Director of Labor. Therefore, assuming that the circuit court otherwise has jurisdiction to enforce the terms of a settlement agreement, the circuit court lacks jurisdiction to enforce a compromise or settlement of future workers' compensation benefits, absent the prior consent or approval of the Director of Labor. [14]