Opinion ID: 2654147
Heading Depth: 2
Heading Rank: 2

Heading: LIRAB Proceedings

Text: Before the LIRAB, on December 13, 2010, McLaren submitted a Prehearing Memorandum arguing that the DCD violated various provisions of the Hawai#i Administrative Procedures Act (“HAPA”) and Hawaii’s Workers’ Compensation Laws when it: (1) acted “arbitrarily and capriciously” and “ultra vires, i.e., 5 HRS § 386-73 (as amended in 2004) grants the Director original jurisdiction over all controversies and disputes arising under HRS chapter 386. 7  FOR PUBLICATION IN WEST’S HAWAI #I REPORTS AND PACIFIC REPORTER  beyond the scope of its authority” by reducing the $7,105.52 requested in attorney’s fees and costs by 48% to $3,729.63; and (2) refused to hold a hearing upon McLaren’s timely Application for Hearing. In addition, McLaren argued that the DCD should have approved the requested $7,105.52 in attorney’s fees and costs or a substantially similar amount. McLaren argued that the DCD had no substantive information from McLaren, his file, or from the claimant; therefore, the DCD had “engaged in a perfunctory, arbitrary[,] and capricious ex post facto determination” of whether McLaren’s time and cost expenditures were necessary, and had “made no reasonable determination of ‘whether, at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures.’” McLaren asserted that the LIRAB should conduct its own analysis of his fee request and “not give the DCD’s perfunctory review any weight.”
The LIRAB dismissed McLaren’s September 7, 2010 appeal as untimely. The LIRAB concluded that pursuant to HRS § 38687(a) (1985), “[a] decision of the director shall be final and conclusive between the parties . . . unless within twenty days after a copy has been sent to each party, either party appeals 8  FOR PUBLICATION IN WEST’S HAWAI #I REPORTS AND PACIFIC REPORTER  therefrom to the appellate board by filing a written notice of appeal with the appellate board of the department.” The LIRAB pointed out that this court in Kissell v. Labor and Industrial Relations Appeal Board, 57 Haw. 37, 38, 549 P.2d 470 (1976) held that the time for filing a written notice of appeal is mandatory. Therefore, according to the LIRAB, it did not and could not construe McLaren’s: (1) June 14, 2010 letter objecting to the DCD’s approval and reduction of his attorney’s fees, or (2) June 28, 2010 request for a hearing as an appeal to the LIRAB of the Director’s June 10, 2010 decision. In addition, the LIRAB found that McLaren’s August 4, 2010 letter expressed his recognition that an appeal had yet to be taken. The LIRAB concluded that the only filing which it could construe as an appeal was McLaren’s September 17, 2010 “Appeal and Notice of Appeal” because it appealed the Director’s decision with explicit citation to the statutory provision, HRS § 386-87, governing appeals. The LIRAB found McLaren’s failure to use the words, “appeal” or “notice of appeal” in his numerous prior filings conscious, deliberate and intentional. The LIRAB dismissed the appeal pursuant to the “mandatory nature of Section 386-87(a)” and concluded, “[g]iven the dismissal of the appeal, the Board does not reach the issue of the reasonableness of the 9  FOR PUBLICATION IN WEST’S HAWAI #I REPORTS AND PACIFIC REPORTER  amount of attorney’s fees approved by the Director on June 8, 2010.”
McLaren filed a “Motion for Reconsideration” and a Memorandum in Support of the Motion (“Memorandum”) with the LIRAB requesting reconsideration of its decision to dismiss McLaren’s appeal. In the Memorandum, McLaren first argued that the Director, through the DCD, had broad authority under various provisions of HRS Chapter 386 and corresponding administrative rules to schedule hearings in response to reasonable requests based on its quasi-judicial, adjudicatory authority. McLaren maintained that any reference to the contrary on any of the DCD’s forms is “gratuitous and is ultra vires, and not a lawfully promulgated administrative rule or practice pursuant to [HAPA], and is accordingly, not lawful or binding upon anyone for any purpose.” McLaren further argued that because a claimant’s attorney’s fees and costs approved by the DCD or the LIRAB are subtracted from compensation otherwise payable to the claimant, and because the approved amount is valuable income to the claimant’s attorney, an HRS § 386-86 contested case hearing at the DCD “is warranted in every attorney fee dispute or fee 10  FOR PUBLICATION IN WEST’S HAWAI #I REPORTS AND PACIFIC REPORTER  reduction, because the claimant’s attorney automatically becomes a party to the claim for the purpose of the appropriate fee determination.” McLaren argued that the DCD Administrator had not provided any statute or rule prohibiting attorney’s fee approvals from being addressed in the hearings process. McLaren asserted that the August 30, 2010 letter from the DCD was an unconditional waiver of the DCD’s original jurisdiction and statutory right to convene a hearing; therefore, his September 7, 2010 appeal was timely filed following the waiver. McLaren next argued that while many provisions in HRS Chapter 386 contain no explicit procedural due process right to a hearing, the DCD has the authority to convene hearings. He asserted that “any arbitrary, drastic reduction by DCD in the amount of a fee request without first holding a hearing and conducting a competent, objective, fair[,] and honest review of all of the evidence supporting the requested fee” was the “equivalent of unlawfully assessing a significant penalty or fine against the claimant’s attorney.” McLaren alleged that he had no opportunity to investigate DCD’s rationale for its fee reduction. He also argued that if a hearing was not warranted to review reductions in attorney’s fees to provide reasonable explanations of how and why the fee was reduced, the appeal process would add 11  FOR PUBLICATION IN WEST’S HAWAI #I REPORTS AND PACIFIC REPORTER  unnecessary time and expense when an appropriate, direct, and fair resolution could be provided by the entity responsible for creating the dispute. Furthermore, McLaren asserted that the DCD convened hearings for other parties under HRS Chapter 386, such as health care providers, who can be sanctioned under Hawaii’s Workers’ Compensation Law only after a hearing is held. McLaren argued that “it was plainly inconsistent and irrational” for the DCD to “ignore long established and constitutionally protected concepts of fundamental fairness and procedural due process” by denying a hearing for attorney’s fees, while providing a hearing for health care providers. McLaren maintained that the opportunity at a hearing to review a fee determination and present evidence and arguments against a fee reduction was a crucial and indispensable procedural due process protection because DCD’s decision to approve or reduce an attorney’s fees dictated the result of the LIRAB’s decision. McLaren asserted that despite the LIRAB’s de novo authority over the DCD’s fee determinations, the LIRAB did not provide independent, objective, fair, reasonable, or honest reviews of attorney’s fee requests. McLaren also alleged that the LIRAB routinely upheld 12  FOR PUBLICATION IN WEST’S HAWAI #I REPORTS AND PACIFIC REPORTER  DCD’s determination of attorney’s fees, which reinforces arbitrary, capricious, dishonest, and punitive decisions on fee requests, “rather than fostering objective, fair, reasonable[,] and honest reviews of these requests based on the actual quality and quantity of the work performed and the results obtained.” McLaren maintained that this system was therefore, “deficient, defective, and dysfunctional.” Finally, McLaren argued that it was impossible for anyone at DCD to satisfy the evaluation required by HRS § 386-94 and HAR § 12-10-69 without first convening a hearing to review the entire claim, including the attorney’s skill, experience, and particulars of the case. McLaren asserted that the DCD lacked access to information that would have allowed the DCD to make a rational conclusion regarding the reasonableness of his requested fees and costs. He argued that the DCD therefore acted arbitrarily and capriciously, and that its refusal to schedule a hearing was a manifest abuse of discretion.
Reconsideration The LIRAB concluded that the “purpose of a motion for reconsideration is to allow the parties to present new evidence and/or arguments that could not have been presented earlier.” 13  FOR PUBLICATION IN WEST’S HAWAI #I REPORTS AND PACIFIC REPORTER  (Citing Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 114, 839 P.2d 10, 27 (1992)). In addition, the LIRAB concluded, “a motion for reconsideration is not the time to relitigate old matters.” (Citing Briggs v. Hotel Corp. of the Pac., Inc., 73 Haw. 276, 287 n.7, 831 P.2d 1335, 1342, n.7 (1992)] The LIRAB found that McLaren’s arguments failed to present new evidence and/or arguments that could not have been presented earlier. In addition, the LIRAB concluded that McLaren failed to demonstrate that HRS Chapter 91’s requirements were applicable to the DCD. The LIRAB reiterated that McLaren’s argument regarding timeliness of his appeal was without merit because it required a conclusion that the Director had issued a decision after the June 8, 2010 approval of attorney’s fees, or in the alternative, that McLaren filed an appeal before his actual September 7, 2010 appeal to the LIRAB. The LIRAB concluded that neither scenario was supported by the record, and denied McLaren’s Motion for Reconsideration.