Court Opinion

ID: 946774
Source: CourtListenerOpinion
Date Created: 2013-06-27 21:44:14.815398+00
Date Added: 2024-06-11T13:21:33.543613
License: Public Domain

***FOR PUBLICATION IN WEST’S HAWAI#I REPORTS AND PACIFIC REPORTER***

                                                          Electronically Filed
                                                          Supreme Court
                                                          SCAP-12-0000018
                                                          27-JUN-2013
                                                          09:23 AM

       IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                            ---o0o---

              LIBERTY DIALYSIS-HAWAII, LLC,
          a Delaware limited liability company,
      Petitioner/Appellant-Appellant/Cross-Appellee,

                                vs.

                  RAINBOW DIALYSIS, LLC,
          a Delaware limited liability company,
      Respondent/Appellee-Appellee/Cross-Appellant,

                                and

      STATE HEALTH PLANNING & DEVELOPMENT AGENCY,
         DEPARTMENT OF HEALTH, STATE OF HAWAI#I,
    an administrative agency of the State of Hawai#i,
              Respondent/Appellee-Appellee.

                        SCAP-12-0000018

   APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
        (CAAP-12-0000018; CIV. NO. 11-1-0532-03)

                          JUNE 27, 2013

     RECKTENWALD, C.J., NAKAYAMA, AND McKENNA, JJ.,
WITH ACOBA, J., DISSENTING, WITH WHOM POLLACK, J., JOINS
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             OPINION OF THE COURT BY RECKTENWALD, C.J.

          This appeal requires us to consider whether the

Department of Health’s general administrative rules concerning

disqualification apply to State Health Planning & Development

Agency (SHPDA) committees that are established to reconsider the

agency’s approval of a Certificate of Need.          Briefly stated,

SHPDA granted Rainbow Dialysis, LLC a conditional Certificate of

Need to establish two outpatient dialysis facilities at Kaiser

Foundation Health Plan, Inc., facilities on Maui.           Another Maui

dialysis provider, Liberty Dialysis-Hawaii, LLC, sought

reconsideration of SHPDA’s decision.        Thereafter, a five-member

Reconsideration Committee unanimously approved Rainbow’s

conditional Certificate of Need.

          Liberty appealed the Reconsideration Decision to the

circuit court, arguing that SHPDA Administrator Ronald E. Terry

and another Reconsideration Committee member, Anne Trygstad,

should have been disqualified from participating in the

Reconsideration Decision under the Department of Health rules.

Liberty also argued that the Reconsideration Committee failed to

review Rainbow’s application de novo, and thereby improperly

placed the burden of proof on Liberty.         The circuit court

affirmed, holding that the SHPDA Administrator should have been

disqualified, but that his participation in the Reconsideration

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Decision was harmless.1      The circuit court rejected Liberty’s

remaining points of error.

            On appeal to this court, Liberty argues that

Administrator Terry’s participation was not harmless and, in any

event, Rainbow did not timely raise this argument.           Liberty also

argues that the Reconsideration Committee erred in refusing to

disqualify Trygstad.      Finally, Liberty argues that, if this court

remands for a new reconsideration hearing based on Liberty’s

disqualification arguments, it also should advise the

Reconsideration Committee that Rainbow bears the burden of proof

on remand.    Rainbow cross-appealed, and argues that the circuit

court erred in determining that Administrator Terry should have

been disqualified.

            We hold that neither Administrator Terry nor Trygstad

was disqualified from participating in the Reconsideration

Decision.    With regard to Administrator Terry, Liberty relies on

Hawai#i Administrative Rules (HAR) § 11-1-25(a)(4), a Department

of Health rule that prohibits a hearings officer from hearing or

deciding a contested case in which he or she “substantially

participated in making the decision or action contested[.]”

However, in crafting the reconsideration statute, Hawai#i Revised

Statutes § 323D-47, the legislature clearly intended that the

SHPDA administrator participate in both the initial decision on a

     1
            The Honorable Karl K. Sakamoto presided.

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Certificate of Need, and in any reconsideration of that decision.

Because HAR § 11-1-25(a)(4) conflicts with this intent, it would

be invalid if applied in the circumstances here.           Accordingly, we

hold that HAR § 11-1-25(a)(4) is inapplicable.

          With regard to Trygstad, Liberty relies on HAR § 11-1-

25(a)(2), a Department of Health rule that provides for

disqualification where a hearings officer, director or member is

“related within the third degree by blood or marriage to any

party to the proceeding or any party’s representative or

attorney[.]”   Liberty alleges that Trygstad’s brother-in-law is

the “Kaiser Permanente physician-in-charge for Maui,” and

testified as a Kaiser representative in three SHPDA advisory

panel hearings prior to the initial decision on Rainbow’s

application, and that, accordingly, Trygstad should have been

disqualified from the Reconsideration Committee.           We hold that

HAR § 11-1-25 is inapplicable to the SHPDA reconsideration

proceedings.   SHPDA’s more specific rule, HAR § 11-185-32,

governs disqualification practices and procedures in these

proceedings, and does not require that Trygstad be disqualified.

          Because our resolution of these issues is dispositive,

we do not address Liberty’s remaining points of error.            Based on

the foregoing, we affirm the circuit court’s judgment, which

affirmed the Reconsideration Decision.

                             I.   Background

          The following factual background is taken from the

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record on appeal.

A.    Rainbow’s Certificate of Need application

            Rainbow filed a Certificate of Need (CON) application2

with SHPDA for the establishment of two outpatient dialysis

facilities on Maui.      Rainbow is and was a wholly owned affiliate

of Kaiser Foundation Health Plan, Inc. (Kaiser).            Rainbow’s two

facilities would be located in or near existing Kaiser clinics in

Wailuku and Lahaina.      Rainbow asserted that internalizing

dialysis services within Kaiser’s health care system would

improve management of patient care, provide benefits to patients

in isolated parts of West Maui, bring competition to the dialysis

market and lower prices, create savings over the dialysis

services then being provided by Liberty, allow for more robust

provision of services for QUEST patients, and allow Kaiser to

pass savings on to the community in the form of financial and in-

kind donations to community partners.

            Liberty opposed Rainbow’s CON application, asserting

that the application failed to meet several criteria for the

grant of a CON.     Additionally, Liberty asserted that it has

provided dialysis services on Maui since 2006, and that there

were several reasons that Kaiser’s dialysis expenditures had

increased, including an increase in the number of Kaiser patients

      2
            “‘Certificate of need’ means an authorization, when required
pursuant to section 323D-43, to construct, expand, alter, or convert a health
care facility or to initiate, expand, develop, or modify a health care
service.” Hawai#i Revised Statutes (HRS) § 323D-2 (2010).

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receiving dialysis, regulatory changes, and inflation.             Liberty

also asserted that its mission “includes providing a safety

net[,]” and that its ability to continue to provide services was

dependent on its ability “to spread the real costs across a broad

base of commercial patients[.]”        Liberty asserted that Rainbow’s

proposal would jeopardize Liberty’s “ability to maintain its

current scope of services for persons who are not insured by

Kaiser.”    Specifically, “[i]f the small percentage of patients

with commercial insurance declines or disappears, Liberty [] will

be unable to continue to subsidize operations in more remote

regions or care for a substantial portion of the underinsured or

uninsured patients who currently receive care from Liberty [].”

            As required under HRS § 323D-44(a),3 three separate

SHPDA advisory panels considered Rainbow’s CON application: the

Tri-Isle Subarea Health Planning Council, the CON Review Panel,

and the Statewide Health Coordinating Council (SHCC).             Each

advisory panel held public meetings in which they received

extensive testimony both for and against the proposal, and each

issued non-binding recommendations.         By a 4-1 vote, the Tri-Isle

Subarea Health Planning Council recommended approval of the

application.    By a 5-0 vote (with one abstention), the CON Review

Panel recommended denial of the application.           By a 7-4 vote, the

      3
            Pursuant to HRS § 323D-44(a) (2010), SHPDA “shall transmit the
completed [CON] application to the appropriate subarea councils, the review
panel, the statewide council, appropriate individuals, and appropriate public
agencies.”

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SHCC recommended denial of the application.

          On May 3, 2010, SHPDA, through Administrator Terry,

filed a Decision on the Merits, approving Rainbow’s application

and issuing a conditional CON.       In so doing, SHPDA imposed three

conditions on Rainbow.     First, Rainbow was required to submit a

“detailed long-term implementation plan” regarding how it and

Kaiser would allocate cost reductions to the public and

community.   Second, Rainbow was required to provide a written

acknowledgment that failure to fulfill the implementation plan

would constitute a breach of the HAR and could result in

withdrawal of the CON.     Finally, Rainbow was required to enter

into a joint and several written undertaking with Kaiser to

provide chronic renal dialysis services to Hana and Molokai,

should Liberty cease providing services in those communities

within 10 years of the Decision on the Merits.          Rainbow

subsequently informed SHPDA by letter that it accepted the

conditions set forth in the conditional CON and modified its

application accordingly.

          Liberty sought reconsideration of the Decision on the

Merits pursuant to HRS § 323D-47(5)4 and HAR § 11-186-82.5

     4
          HRS § 323D-47 (Supp. 2009) provides in relevant part:

          The state agency may provide by rules adopted in
          conformity with chapter 91 for a procedure by which
          any person may, for good cause shown, request in
          writing a public hearing before a reconsideration
          committee for purposes of reconsideration of the
          agency’s decision. The reconsideration committee
          shall consist of the administrator of the state agency
                                                              (continued...)

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Liberty argued that there was good cause for reconsideration

because SHPDA’s decision differed from the recommendation of the

SHCC.

             Pursuant to HRS § 323D-47, a five-member

Reconsideration Committee was convened, composed of Administrator

Terry, and the chairpersons of the SHCC, the CON review panel,

the plan development committee of the SHCC, and the Tri-Isle

Subarea Health Planning Council.         On June 14, 2010, four of the

five Reconsideration Committee members convened a public meeting

and voted to convene a public hearing for reconsideration of the

Decision on the Merits.6       SHPDA appointed Andrew Tseu as Hearings

Officer “to facilitate pre-hearing conferences and hearing

procedures for the Reconsideration Committee.”

             Prior to the hearing on Liberty’s reconsideration

request, Liberty filed a motion to disqualify Administrator Terry

      4
        (...continued)
             and the chairpersons of the statewide council, the
             review panel, the plan development committee of the
             statewide council, and the appropriate subarea health
             planning council. The administrator shall be the
             chairperson of the reconsideration committee. A
             request for a public hearing shall be deemed by the
             reconsideration committee to have shown good cause,
             if:
                   . . . .
                   (5)   The decision of the administrator differs
                         from the recommendation of the statewide
                         council.
      5
            HAR § 11-186-82(a) (1988) provides procedures for requesting
reconsideration, and for the reconsideration process.
      6
            Elaine Slavinsky, chairperson of the Tri-Isle Subarea Health
Planning Council, participated in the June 14, 2010 meeting, but later recused
herself and was replaced by Anne Trygstad.

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from the Reconsideration Committee pursuant to HAR § 11-1-

25(a)(4) and (5),7 on the ground that he could not sit in review

of his own decision and had a personal bias or prejudice that

would prevent him from rendering a fair and impartial decision.

Specifically, Liberty argued:
                  In the present matter, HAR § 11-1-25 mandates
            Terry’s disqualification from the reconsideration
            hearing because, not only did Terry substantially
            participate in the certificate of need review process
            but, as the SHPDA administrator, he was the ultimate
            decision-maker on the Application. Moreover, Terry
            unilaterally approved the Application despite the
            recommended rejections by the CON Review Panel and
            Statewide Council, without providing a written
            explanation as required by agency rule. Terry further
            has a personal bias or prejudice which will prevent a
            fair and impartial decision on this contested case.[8]

            Rainbow opposed Liberty’s motion.         Rainbow argued that

HRS § 323D-47 mandates that the SHPDA administrator serve as a

member of the Reconsideration Committee, even if the

administrator is reviewing his or her own decision.            Rainbow also

argued that, to the extent HAR § 11-1-25 conflicts with HRS

§ 323D-47, HRS § 323D-47 governs.          Additionally, Rainbow argued

      7
            HAR § 11-1-25 (2005) provides in pertinent part:

            Disqualification. (a) A hearings officer, director, or
            member of an attached entity is disqualified from
            hearing or deciding a contested case if the hearings
            officer, director, or member of the attached entity:
                  . . . .
                  (4)   Has substantially participated in making
                        the decision or action contested; or
                  (5)   Has a personal bias or prejudice
                        concerning a party or matter that will
                        prevent a fair and impartial decision
                        involving that party or matter.
      8
            Liberty argued, inter alia, that Administrator Terry exhibited
personal bias or prejudice by approving the CON application despite the votes
to reject the application by the CON Review Panel and the SHCC.

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that the SHPDA disqualification rules set forth in HAR chapters

11-185 and 11-186 applied, rather than HAR § 11-1-25.                Finally,

Rainbow argued that Liberty’s allegation of Administrator Terry’s

personal bias was “unfounded and frivolous.”

            Liberty also filed a motion to disqualify a second

Reconsideration Committee member, Anne Trygstad, pursuant to HAR

§ 11-1-25(a)(2).9     Liberty alleged that Trygstad is the sister-

in-law of Dr. George Talbot, who Liberty described as Kaiser’s

“physician-in-charge of Maui[.]”        Liberty argued that Kaiser was

a party to the proceeding and/or a party’s representative, and

that Dr. Talbot offered testimony in favor of Rainbow’s CON

application at the hearings before each of the three review

panels.   Liberty also argued that Trygstad should be disqualified

pursuant to HAR § 11-1-25(a)(5) because she had a personal bias

or prejudice due to her relationship to Dr. Talbot.

            Rainbow opposed Liberty’s motion to disqualify

Trygstad.    Along with its motion, Rainbow submitted a declaration

from Dr. Talbot in which he stated:
                  1. I am employed by the Hawaii Permanente
            Medical Group (“HPMG”), a Hawaii corporation that
            contracts with [Kaiser] to provide physician services
            for members of [Kaiser] and other patients seen at
            Kaiser’s medical facilities in Hawai#i.
                  2. I am currently the HPMG physician in charge
            of Maui and in that role, I oversee the physician
            services for Kaiser’s Maui clinics, which includes the
            Kaiser Wailuku Medical Clinic. I am not in charge of
            the administrative oversight of the Wailuku Medical

      9
            HAR § 11-1-25(a)(2) (2005) requires disqualification if a person
is “related within the third degree by blood or marriage to any party to the
proceeding or any party’s representative or attorney[.]”

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            Clinic, nor am I in charge of the affiliated health
            care services provided by non-physicians at the
            Wailuku Medical Clinic. The administrative operation
            of the Wailuku Clinic is overseen by employees of the
            Kaiser Foundation Hospitals, Inc., a separate
            corporation that owns and/or manages Kaiser’s
            hospital and clinic facilities and employs certain
            affiliated care providers for those facilities.
                  3. I am the brother-in-law of Anne Trygstad.
            Other than testimony I presented to the Tri-Isle
            Subarea Council at its December 3, 2009 public meeting
            on [Rainbow’s CON] Application, at which Ms. Trygstad
            was present, I have had no communication with Ms.
            Trygstad in the past two or three years.
                  4. I own a home in the same subdivision as Ms.
            Trygstad owns a home. The subdivision consists of over
            20 separate houses. My house is at the opposite end
            of the subdivision from the house owned by Ms.
            Trygstad.
                  5. I did not participate in the preparation of
            the Rainbow CON Application. My only involvement in
            the CON proceedings has been as a witness, not as a
            party. I am not an employee or representative of
            Rainbow.

            The Reconsideration Committee denied Liberty’s

disqualification motions.       The Reconsideration Committee did not

state its reasoning on the record.

            Following a reconsideration hearing,10 the

Reconsideration Committee issued its Decision unanimously

approving the conditional certification of Rainbow’s application.

The Reconsideration Committee found that “[i]t was unconstested

that Liberty had the burden of proof in this Reconsideration

      10
            Thirty-one individuals presented testimony at the hearing. Each
individual was afforded a maximum of two and a half minutes to testify. Ten
individuals testified against the CON. One individual testified as a neutral.
Twenty individuals testified in favor of the CON, including Dr. Talbot and six
other individuals who identified themselves as being professionally affiliated
with a Kaiser entity.
            In addition, several parties were afforded five minutes to
testify. First, representatives of Liberty and of Unite Here! Local 5, which
also sought reconsideration of the Decision on the Merits, testified against
the CON for five minutes each. Subsequently, the President and Executive
Medical Director of Hawaii Permanente Medical Group testified in favor of the
CON on behalf of Rainbow, also for five minutes.

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proceeding pursuant to HRS § 91-10(5) because Liberty initiated

the Reconsideration proceeding and acknowledged in writing its

burden of proof.”     The Reconsideration Committee also made

detailed findings and conclusions regarding the ways in which

Rainbow’s CON application either met the CON criteria, or would

meet the criteria if modified by the conditions set forth in the

Committee’s decision.      Accordingly, the Reconsideration Committee

ordered that a conditional CON be approved and issued, with

Rainbow to modify its proposal to incorporate the following

conditions: that (1) Kaiser members be permitted to receive

dialysis services from Liberty “for as long as they wish”; (2)

Rainbow accept all dialysis patients regardless of ability to

pay; and (3) Rainbow and Kaiser provide chronic renal dialysis

services to Hana and Molokai, should Liberty cease providing

services to those communities within 10 years of the Decision on

the Merits.

B.   Circuit court appeal

           Liberty appealed the Reconsideration Decision to the

circuit court, raising numerous points of error.            Relevant to the

issues on appeal, Liberty argued in its opening brief that the

Reconsideration Committee erred in denying its motions to

disqualify Administrator Terry and Trygstad.           Liberty also argued

that the Reconsideration Committee failed to review Rainbow’s

application de novo, and “thereby improperly placed the burden of

proof on Appellant Liberty in contradiction of HAR § 11-186-

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42[.]”

            The circuit court held a hearing on Liberty’s appeal

and orally ruled that “Administrator Terry should have

automatically disqualified himself from sitting on the

reconsideration committee and his failure to do so was error.”

Accordingly, the circuit court stated that it would remand to

SHPDA with instructions to hear the reconsideration request with

an acting SHPDA administrator other than Terry.

            Rainbow subsequently filed an ex parte motion for an

expedited status conference to address this court’s holding in

Waikiki Resort Hotel, Inc. v. City and County of Honolulu, 63

Haw. 222, 624 P.2d 1353 (1981), and the ICA’s holding in Hui

Malama Aina O Ko#olau v. Pacarro, 4 Haw. App. 304, 666 P.2d 177

(1983).    Rainbow argued that, pursuant to these cases, an

agency’s decision will not be invalidated on the ground that a

disqualified official participated in the decision, so long as

the decision was passed by a majority of legally competent

members.    Accordingly, Rainbow argued, Liberty failed to meet its

burden of establishing a legal basis for remand.           Liberty opposed

the motion, arguing, inter alia, that Rainbow’s arguments were

untimely, the motion was procedurally improper, and Waikiki

Resort Hotel was distinguishable.

            The circuit court construed Rainbow’s motion as a

motion for reconsideration, and denied it without a hearing on

the ground that Rainbow “waived its right to assert those cases

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and make related arguments due to failure to cite those cases in

its answering brief.”     The circuit court subsequently issued a

written order granting Liberty’s appeal on the ground that

Administrator Terry should have been disqualified, and remanding

to SHPDA with instructions to hold the reconsideration hearing

with an acting SHPDA administrator other than Administrator

Terry.

            Liberty thereafter attempted to draft a proposed final

judgment.    Rainbow objected to Liberty’s proposed final judgment

because, inter alia, the circuit court had not resolved all of

the issues and claims raised in Liberty’s appeal.           SHPDA also

objected to Liberty’s proposed final judgment and submitted its

own proposed final judgment, which would have granted judgment in

favor of Liberty on its first claim for relief relating to

Administrator Terry and dismissed all other claims.           Liberty

subsequently submitted a revised proposed final judgment.

            While Liberty’s revised proposed final judgment was

pending, the circuit court sua sponte requested supplemental

briefing on, inter alia, “whether all remaining issues should be

decided on the merits, including issues related to Waikiki Resort

Hotel . . . and/or Hui Malama Aina O Ko#olau[.]”          Following the

receipt of supplemental briefing and a hearing, the circuit court

issued an order affirming the Reconsideration Decision in its

entirety.    The circuit court reiterated its conclusion that the

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Reconsideration Committee erred in failing to disqualify

Administrator Terry, but held that the error was harmless

pursuant to Waikiki Resort Hotel.          The circuit court also

affirmed the Reconsideration Committee’s retention of Anne

Trygstad on the ground that the Reconsideration Committee’s

determination that Dr. Talbot was not a party or a party’s

representative was not clearly erroneous.          Finally, the circuit

court concluded that Liberty was judicially estopped from

contesting its burden of proof because it had represented to the

Reconsideration Committee that Liberty bore the burden of proof.

The circuit court also affirmed on other issues unrelated to this

appeal.

            The circuit court filed its Final Judgment on

December 13, 2011, entering judgment in favor of SHPDA and

Rainbow and against Liberty.        Liberty timely filed a notice of

appeal on January 10, 2012.

C.    Appeal to this court11

            Liberty raises four points of error in its appeal:
            (1)   The Circuit Court abused its discretion by
                  reconsidering three of its prior orders and
                  entertaining Rainbow’s belated argument that the
                  Reconsideration Committee’s failure to
                  disqualify Terry should be excused as harmless
                  error under Waikiki.
            . . . .
            (2)   The Circuit Court erred in concluding that the
                  Reconsideration Committee’s error in failing to

      11
            This court granted Liberty’s application to transfer its appeal
from the Intermediate Court of Appeals (ICA) to this court.

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                  disqualify Ronald Terry was harmless.[12]
            . . . .
            (3)   The Reconsideration Committee erred in refusing
                  to disqualify Anne Trygstad from serving on the
                  Reconsideration Committee, and the Circuit Court
                  erred in upholding this decision.
            . . . .
            (4)   The Reconsideration Committee erroneously placed
                  the burden of proof on Liberty rather than
                  Rainbow.[13]

            Rainbow raises a single point of error in its appeal:

“The circuit court erred when it determined in its December 13,

2011 Order that Administrator Terry should have been disqualified

due to the application of HAR § 11-1-25 and based its Final

Judgment on that portion of the December 13, 2011 Order.”

(Record citations omitted).       Rainbow argues that “HRS [c]hapter

323D, and HRS § 323D-47 in particular, make clear that the SHPDA

Administrator can and should participate in the Decision on the

Merits and serve on the Reconsideration Committee that reviews

such decisions.”     (Emphasis in original).

            Although “Rainbow agrees with the ultimate ruling of

the circuit court in entering Final Judgment in favor of

Rainbow,” it nonetheless seeks review of its point of error to

      12
            Because we conclude that neither Administrator Terry nor Trygstad
was disqualified, we do not reach Liberty’s points of error regarding the
harmlessness of Administrator Terry’s participation.
      13
            Liberty acknowledges that, before the Reconsideration Committee,
it “erroneously took the position that, because it had requested
reconsideration, it bore the burden of proof.” Liberty also acknowledges that
it is estopped from taking a contrary position on appeal, and from raising
this issue as an independent ground for reversal. Nevertheless, Liberty
argues that, if this court remands for reconsideration before a new
Reconsideration Committee based on Liberty’s disqualification arguments, we
should also order the Reconsideration Committee to apply the “proper
allocation of the burden of proof[.]” Because we affirm the Reconsideration
Decision, we do not reach this point of error.

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ensure that “Liberty (and others) cannot use the circuit court’s

erroneous holding regarding HAR § 11-1-25 and the Administrator’s

‘disqualification’ from the Reconsideration Committee as law of

the case here or through offensive use of collateral estoppel in

any other proceedings.”

           SHPDA did not file an appeal or cross-appeal, but did

file a unified answering brief in response to both Liberty’s and

Rainbow’s appeals.      SHPDA’s answering brief generally supported

Rainbow’s arguments in both the appeal and the cross-appeal.

                        II.    Standards of Review

A.   Review of agency decisions

           Review of a decision made by the circuit court upon its

review of an administrative decision is a secondary appeal.                 Ahn

v. Liberty Mut. Fire Ins. Co., 126 Hawai#i 1, 9, 265 P.3d 470,

478 (2011) (citation omitted).        The circuit court’s decision is

reviewed de novo.      Id.    The agency’s decision is reviewed under

the standards set forth in HRS § 91-14(g).          Id.   HRS § 91-14(g)

(1993) provides:
           (g) 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 the agency; or
                 (3)    Made upon unlawful procedure; or
                 (4)    Affected by other error of law; or
                 (5)    Clearly erroneous in view of the reliable,

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                       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.

            “Under HRS § 91-14(g), conclusions of law are

reviewable under subsections (1), (2), and (4); questions

regarding procedural defects under subsection (3); findings of

fact under subsection (5); and an agency’s exercise of discretion

under subsection (6).”      Sierra Club v. Office of Planning, 109

Hawai#i 411, 414, 126 P.3d 1098, 1101 (2006) (citation, internal

quotation marks and brackets omitted).

B.   Statutory interpretation

            “Statutory interpretation is a question of law

reviewable de novo.”      Kaleikini v. Yoshioka, 128 Hawai#i 53, 67,

283 P.3d 60, 74 (2012) (citation omitted).

C.   Interpretation of agency rules

            General principles of statutory construction apply in

interpreting administrative rules.         Id.   “As in statutory

construction, courts look first at an administrative rule’s

language.    If an administrative rule’s language is unambiguous,

and its literal application is neither inconsistent with the

policies of the statute the rule implements nor produces an

absurd or unjust result, courts enforce the rule’s plain

meaning.”    Id. (citation omitted).       While an agency’s

interpretation of its own rules is generally entitled to

deference, this court “does not defer to agency interpretations

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that are plainly erroneous or inconsistent with the underlying

legislative purpose.”      Id. (citation and internal quotation marks

omitted).

                             III.   Discussion

A.    Administrator Terry was not disqualified from participating
      in the Reconsideration Decision

            In order to determine whether Administrator Terry was

disqualified from participating in the Reconsideration Decision,

this court must consider whether the Department of Health (DOH)

rule regarding disqualification, HAR § 11-1-25(a)(4), is

applicable to the Reconsideration Committee members.14            As

explained in detail below, HAR § 11-1-25(a)(4) prevents a

hearings officer from hearing or deciding a contested case in

which he or she “substantially participated in making the

decision or action contested[.]”        Because Administrator Terry

made the initial decision to approve Rainbow’s CON application,

Liberty argues that he was disqualified from the reconsideration

hearing.

            Rainbow argues that this rule is inapplicable here

because it would conflict with HRS § 323D-47, which, Rainbow

argues, requires the Administrator to issue the initial decision

on a CON application, chair any resulting reconsideration

committee, and participate in the reconsideration decision.

      14
            It is undisputed that HAR § 11-1-25, if applicable, would require
disqualification of Administrator Terry in the circumstances presented here.

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Rainbow also argues that the more specific SHPDA disqualification

rule, HAR § 11-185-32, applies in lieu of the DOH

disqualification rule, and would not require Administrator

Terry’s disqualification in the circumstances of the instant

case.

          Liberty argues that there is no conflict between the

DOH rule and HRS § 323D-47 because nothing in HRS § 323D-47

requires the SHPDA Administrator to personally issue a decision

on a CON application.     In addition, Liberty argues that the SHPDA

disqualification rule does not displace the DOH rule because it

covers only a narrow category of disqualifications and does not

conflict with the DOH rule.

          As set forth below, the legislature, in enacting HRS

§ 323D-47, envisioned that the SHPDA Administrator would

participate in both the initial decision on a CON application and

any subsequent reconsideration decision.         However, HAR § 11-1-

25(a)(4) would preclude the SHPDA Administrator from

participating in both of these decisions.         Accordingly, HAR § 11-

1-25(a)(4) conflicts with HRS § 323D-47, and would be invalid if

applied in the circumstances presented here.          Moreover, HAR § 11-

1-25(a)(4) is inapplicable because the more specific

disqualification rule contained in HAR § 11-185-32 governs SHPDA

hearings officers in CON proceedings.        Liberty does not argue

that Administrator Terry should have been disqualified pursuant

to HAR § 11-185-32, and nothing in this rule would appear to

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require Administrator Terry’s disqualification.          Accordingly,

Administrator Terry was not disqualified from participating in

the Reconsideration Decision.

     1.   The legislature envisioned that the SHPDA administrator
          would issue the initial decision on a CON application
          and participate in any reconsideration of that decision

          HRS § 323D-47 governs requests for reconsideration of

SHPDA’s decision on a CON application, and provides in relevant

part:
          The state agency may provide by rules adopted in
          conformity with chapter 91 for a procedure by which
          any person may, for good cause shown, request in
          writing a public hearing before a reconsideration
          committee for purposes of reconsideration of the
          agency’s decision. The reconsideration committee
          shall consist of the administrator of the state agency
          and the chairpersons of the statewide council, the
          review panel, the plan development committee of the
          statewide council, and the appropriate subarea health
          planning council. The administrator shall be the
          chairperson of the reconsideration committee. A
          request for a public hearing shall be deemed by the
          reconsideration committee to have shown good cause,
          if:
                . . . .
                (5) The decision of the administrator differs
                from the recommendation of the statewide
                council.

(Emphasis added).

          Rainbow argues that this provision requires the SHPDA

administrator to sit in reconsideration of his or her own

decision because it requires that the administrator issue the

initial decision on a CON application, as well as “be a member

of, [and] also serve as the chairperson of, any Reconsideration

Committee tasked with deciding a challenge to a decision by the

Administrator which differs from the recommendation of the SHCC.”

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Liberty argues that this provision does not require the

administrator to personally issue the initial decision on a CON

application and, thus, does not require that the administrator

sit in reconsideration of his or her own decision.15

            Liberty is correct that nothing in HRS § 323D-47, nor

any other provision of chapter 323D, explicitly states that the

administrator must personally issue the initial decision on a CON

application.    See HRS chapter 323D.       Rather, HRS chapter 323D

repeatedly references the CON being issued by the “state agency,”

see, e.g., HRS § 323D-43(a); HRS § 323D-44(b), meaning SHPDA, see

HRS § 323D-2.     Similarly, the relevant administrative rules state

that the decision on the merits will be issued by “the agency,”

and do not specify that the agency must act through its

administrator.     HAR § 11-186-70.

            Nevertheless, the plain language of HRS § 323D-47

reflects the legislature’s understanding that the administrator

is responsible for issuing the decision on a CON application on

behalf of the agency.      Pursuant to HRS § 323D-47, a person may

request a hearing “for purposes of reconsideration of the

agency’s decision” on a CON application where, inter alia, “[t]he

      15
            Liberty does not dispute that the administrator has the power to
issue a decision on a CON application, but rather argues that the
administrator is not required to personally issue such a decision. For
example, Liberty argues that the administrator may delegate any such decision
making authority to another, in order to preserve his or her ability to sit on
the reconsideration committee. However, as set forth below, the statute
reflects the legislature’s intent that the administrator participate in both
decisions.

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decision of the administrator differs from the recommendation of

the statewide council.”       (Emphasis added).      Thus, HRS § 323D-47

appears to view the decision of the agency and the decision of

the administrator as being one and the same.

            Moreover, even assuming there is an ambiguity as to

whether the legislature understood that the administrator was

responsible for the initial decision on a CON application, this

interpretation is supported by legislative history.             HRS § 323D-

47 was enacted along with the rest of chapter 323D in 1977.                  1977

Haw. Sess. Laws Act 178, § 2 at 366-67.           Under the 1977 version

of the statute, the decision on a reconsideration request was

made by the agency itself, rather than by a reconsideration

committee.     Id.   At that time, the statute did not provide that a

disagreement between the administrator’s decision and the SHCC’s

recommendation provided a good cause basis for reconsideration.

Id.

            HRS chapter 323D was substantially amended in 1987.

1987 Haw. Sess. Laws Act 270, §§ 1-18 at 825-33.             Two bills to

amend HRS chapter 323D were introduced during the 1987

legislative session: Senate Bill 749, and House Bill 1025.16

S.B. 749, 14th Leg., Reg. Sess. (1987); H.B. 1025, 14th Leg.,

      16
            Senate Bill 213 also was introduced during the 1987 session, and
would have repealed HRS chapter 323D and abolished SHPDA and the CON process
on the ground that it “inhibits, rather than promotes, health care cost
containment.” S.B. 213, 14th Leg., Reg. Sess., § 1 at 1, § 7 at 8 (1987).
Senate Bill 213 favored “a policy of increased, relatively unfettered
competition in the health care industry[.]” Id., § 1 at 2.

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Reg. Sess. (1987).    Senate Bill 749, which ultimately did not

become law, would have amended the reconsideration process to

require that the decision on a reconsideration request be made by

the CON Review Panel, rather than the agency.          S.B. 749, S.D. 1,

§ 10 at 12-14.    In addition, Senate Bill 749 would have added as

a ground for reconsideration that “[t]he decision of the

administrator differs from the decision of the [SHCC].”            Id.,

§ 10 at 13 (emphasis added).

          The Senate Health Committee noted that the initial

proposal would “[a]uthorize the review panel to veto a decision

by the state agency regarding a certificate of need

application[.]”    S. Stand. Comm. Rep. No. 574, in 1987 Senate

Journal, at 1132.    However, testimony was received in opposition

to this proposal.    SHPDA testified, “We do not agree with giving

the Review Panel veto authority over the administrator’s CON

decisions[.]”    SHPDA, Testimony to the Senate Health Committee on

S.B. 749, 14th Leg., Reg. Sess. (Feb. 23, 1987) (emphasis added).

The Department of Health also testified, “While we are

sympathetic to the idea of some appeals mechanism over the SHPDA

Administrator’s decision, we believe that use of the review panel

may build unnecessary conflict into the Agency’s operation.”

Department of Health, Testimony to the Senate Health Committee on

S.B. 749, 14th Leg., Reg. Sess. (Feb. 23, 1987) (emphasis added).

Accordingly, the Senate Health Committee amended the bill to

delete “the review board veto power but granted the review board

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the authority to hear and rule on requests for reconsideration of

a state agency decision[.]”       S. Stand. Comm. Rep. No. 574, in

1987 Senate Journal, at 1132.

            Meanwhile, House Bill 1025, as initially introduced,

did not contain any amendments that would have affected the CON

reconsideration process.17      See H.B. 1025, 14th Leg., Reg. Sess.

(1987).    However, when the bill crossed over to the Senate, the

Senate Health Committee received testimony from SHPDA regarding

the reconsideration process:
            As the law now stands, the only appeal (short of
            court) of an Agency’s decision is to request the
            Agency itself to reconsider. The Senate version would
            give the reconsideration authority to the Review
            Panel. The Agency does not believe that the Review
            Panel should have the ultimate authority. We suggest
            the reconsideration authority rest with a small
            committee made up of the administrator, and the
            chairpersons of the Statewide Council, the Review
            Panel, the Plan Development Committee, and the
            appropriate Subarea Health Planning Council. This
            would provide a check and balance system with the
            administrator retaining a strong position but with the
            possibility of having his decision changed under
            limited circumstances.

SHPDA, Testimony to the Senate Health Committee on H.B. 1025,

H.D. 1, 14th Leg., Reg. Sess., at 3 (Mar. 27, 1987) (emphasis

added).

            Along with its testimony, SHPDA submitted proposed

amendments to HRS § 323D-47, which would have provided for a

      17
            The purposes of the bill included removing parts of the law that
were no longer pertinent due to the repeal of related federal legislation;
reforming the CON process by allowing some proposals to bypass the full review
process; increasing data gathering, analysis, and reporting; tasking SHPDA
with looking at emerging health issues; and extending the subarea councils’
authority. H. Stand. Comm. Rep. No. 63, in 1987 House Journal, at 1111; see
also H. Stand. Comm. Rep. No. 703, in 1987 House Journal, at 1439.

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reconsideration committee consisting of “the administrator and

the chairpersons of the statewide council, the review panel, the

plan development committee of the statewide council and the

appropriate subarea health planning council.”           Id., attachment,

§ 13 at 20.    Under SHPDA’s proposal, the administrator would be

the chairperson of the reconsideration committee.            Id.,

attachment, § 13 at 20-21.       In addition, SHPDA proposed adding as

a ground for reconsideration that “[t]he decision of the

administrator differs from the recommendation of the statewide

council.”    Id., attachment, § 13 at 21.

            The Healthcare Association of Hawaii (HAH) testified

regarding SHPDA’s proposed amendments:
            With respect to a reconsideration committee under
            section 13 of the agency’s proposed draft, this is
            clearly the best proposal we have seen seeking to
            address the controversy surrounding some past
            decisions by the agency. HAH does, however, believe
            that the ultimate responsibility for a decision of the
            agency should rest with the administrator, as it
            currently does.

HAH, Testimony to the Senate Health Committee on H.B. 1025, H.D.

1, 14th Leg., Reg. Sess., at 2 (Mar. 30, 1987) (emphasis added).

            The Senate Health Committee amended the bill,

consistent with SHPDA’s proposal, to “[p]rovide[] for a

reconsideration panel for CON’s consisting of the administrator

of the statewide agency, the chairperson of the statewide

council, the appropriate subarea councils, the review panel, and

the plan development committee of the statewide council, with the

SHPDA administrator as chairperson of the panel[.]”            S. Stand.

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Comm. Rep. No. 1089, in 1987 Senate Journal, at 1365.            The final

bill enacted into law is in all relevant respects substantively

identical to that proposed by SHPDA.        Compare SHPDA, Testimony to

the Senate Health Committee on H.B. 1025, H.D. 1, 14th Leg., Reg.

Sess., attachment, § 13 at 20-21 with HRS § 323D-47.

Accordingly, with these amendments, the legislature added the

provision that required the good cause determination to be made

by a reconsideration committee, rather than solely by the agency.

1987 Haw. Sess. Laws Act 270, § 13 at 832.         In addition, the

legislature added the provision that specified that a person may

request a hearing “for purposes of reconsideration of the

agency’s decision” where “[t]he decision of the administrator

differs from the recommendation of the statewide council.”             Id.

(emphasis added).

          At the time the legislature amended the statute, the

CON review process had been in place for approximately ten years.

The testimony in support of the 1987 amendments indicates that

the legislature was aware that the SHPDA administrator was

responsible for the agency’s decisions on a CON application prior

to these amendments.     See HAH, Testimony to the 1987 Legislature

on H.B. 1025, H.D. 1, 14th Leg., Reg. Sess., at 2 (Mar. 30, 1987)

(“[T]he ultimate responsibility for a decision of the agency

should rest with the administrator, as it currently does.”);

SHPDA, Testimony to the Senate Health Committee on H.B. 1025,

H.D. 1, 14th Leg., Reg. Sess., at 3 (Mar. 27, 1987) (“This would

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provide a check and balance system with the administrator

retaining a strong position but with the possibility of having

his decision changed under limited circumstances.”).

            Accordingly, the legislative history reflects that the

legislature was aware of the administrator’s participation in the

initial CON decision, but nonetheless deliberately included the

administrator in the reconsideration committee to maintain the

administrator’s “strong position” with regard to CON

applications.     Accordingly, HRS § 323D-47 reflects the

legislature’s intent that the administrator participate in both

the initial decision on the merits and the reconsideration

decision.

     2.     HAR § 11-1-25(a)(4) conflicts with HRS § 323D-47

            Despite the clear legislative intent for the

administrator to participate in both the decision on the merits

and the reconsideration decision, application of HAR § 11-1-

25(a)(4) to the Reconsideration Committee would prohibit the

administrator from carrying out both of these duties.            HAR § 11-

1-25 provides in relevant part:
            (a) A hearings officer, director, or member of an
            attached entity is disqualified from hearing or
            deciding a contested case if the hearings officer,
            director, or member of the attached entity:
            . . . .
            (4)   Has substantially participated in making the
                  decision or action contested[.]

            An agency’s authority “is limited to enacting rules

which carry out and further the purposes of the legislation[.]”

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Puana v. Sunn, 69 Haw. 187, 189, 737 P.2d 867, 870 (1987).              “It

is axiomatic that an administrative rule cannot contradict or

conflict with the statute it attempts to implement.”             Agsalud v.

Blalack, 67 Haw. 588, 591, 699 P.2d 17, 19 (1985) (citations

omitted); see also Tamashiro v. Dep’t of Human Servs., 112

Hawai#i 388, 427, 146 P.3d 103, 142 (2006).          As applied here, HAR

§ 11-1-25(a)(4) would prohibit the SHPDA administrator from

carrying out his or her duties as intended by the legislature and

as reflected in HRS § 323D-47.        Because, HAR § 11-1-25(a)(4)

conflicts with HRS § 323D-47, it would be invalid if applied to

CON reconsideration proceedings.18

            Nevertheless, Liberty argues that this interpretation

of the statute would lead to the absurd requirement that no one

other than the administrator could make the initial CON decision

and participate on behalf of SHPDA in the reconsideration

proceedings.    However, nothing in the statute would require the

SHPDA administrator to personally issue the decision on a CON

application and a reconsideration in all cases.           The SHPDA rules

indicate that a decision may be made by the administrator or the

acting administrator.      HAR § 11-185-2 (1981) (“‘Administrator’

means the administrator or the acting administrator of the state

health planning and development agency.”).          Accordingly, it would

      18
            HAR § 11-1-25(a)(4) is a general DOH rule that presumably applies
to various types of proceedings. Neither party suggests that the rule would
be invalid if applied to other proceedings where the legislature has not
expressed its intent for a hearings officer, director, or member to review a
decision in which he or she substantially participated.

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appear that the agency’s decision making authority rests with the

office, rather than the individual office holder.            Thus, for

example, if the administrator issued the decision on the merits,

but then left his or her position, the acting administrator or a

new administrator would participate in the reconsideration

decision.    HAR § 11-185-2; HRS § 323D-47.

            In addition, as discussed in detail below, SHPDA’s own

disqualification rule, HAR § 11-185-32 (1981), provides that a

hearings officer may be disqualified for certain conflicts of

interest:
            Disqualification of hearing officer. (a) No hearing
            officer shall preside at any public hearing relating
            to any matter in which the hearing officer, the
            hearing officer’s spouse, or the hearing officer’s
            child has (or within the twelve months preceding the
            hearing, had) any substantial ownership, directorship,
            officership, employment, prospective employment for
            which negotiations have begun, medical staff,
            fiduciary, contractual, creditor, debtor,
            consultative, pecuniary, or business interest.
                  (b) Where any other conflict of interest exists,
            the hearing officer shall be disqualified from
            presiding at the public hearing. The provisions of
            chapter 84, Hawaii Revised Statutes, and the
            decisions, advisory opinions, and informal advisory
            opinions of the state ethics commission shall serve as
            guidelines in determining whether a conflict of
            interest exists.

            Thus, if the administrator were disqualified from the

initial decision on the merits pursuant to HAR § 11-185-32, an

acting administrator could participate in both the decision on

the merits and the reconsideration decision.           HAR § 11-185-2; HRS

§ 323D-47.

            Moreover, unlike HAR § 11-1-25(a)(4), HAR § 11-185-32

does not conflict with the legislature’s intent behind the

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reconsideration process set forth in HRS § 323D-47.               Although the

legislature generally intended the administrator to participate

in both the decision on the merits and the reconsideration

decision, it also presumably was aware of prohibitions against

conflicts of interest for public officers and employees, see HRS

§ 84-14(a),19 and would not have intended that the administrator

participate in a decision where such a conflict existed.20              HAR §

11-185-32 is consistent with HRS § 84-14.          Compare HAR § 11-185-

32 with HRS § 84-14.

            Significantly, these conflict of interest provisions

      19
            HRS § 84-14(a) (1993) provides:

            No employee shall take any official action directly
            affecting:

            (1) A business or other undertaking in which he has a
            substantial financial interest; or

            (2) A private undertaking in which he is engaged as
            legal counsel, advisor, consultant, representative, or
            other agency capacity.

            A department head who is unable to disqualify himself
            on any matter described in items (1) and (2) above
            will not be in violation of this subsection if he has
            complied with the disclosure requirements of section
            84-17; and

            A person whose position on a board, commission, or
            committee is mandated by statute, resolution, or
            executive order to have particular qualifications
            shall only be prohibited from taking official action
            that directly and specifically affects a business or
            undertaking in which he has a substantial financial
            interest; provided that the substantial financial
            interest is related to the member’s particular
            qualifications.
      20
            In addition, as discussed in detail below, SHPDA hearings officers
would also be subject to disqualification where they exhibit bias or
prejudice, or there is an appearance of impropriety or partiality. Cf. State
v. Ross, 89 Hawai#i 371, 377, 974 P.2d 11, 17 (1998).

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are much more limited than those set out in HAR § 11-1-25.              Under

HAR § 11-185-32 and HRS § 84-14, the administrator is able to

participate in both the decision on the merits and the

reconsideration decision, so long as he or she is not

disqualified by a limited category of personal interests.              In

contrast, application of HAR § 11-1-25, as Liberty urges, would

turn this limited exception into the rule, disqualifying the

administrator from participation in all reconsideration decisions

in which he or she has made the initial decision on behalf of

SHPDA on the CON application.        Such a blanket rule is contrary to

the legislature’s intent, and HAR § 11-1-25(a)(4) therefore

cannot be applied in the instant case.          See Agsalud, 67 Haw. at

591, 699 P.2d at 19.

            In sum, HAR § 11-1-25(a)(4) would conflict with HRS

§ 323D-47 if applied in the instant case.          Instead, the SHPDA

disqualification rule contained in HAR § 11-185-32 applies in

lieu of HAR § 11-1-25.      Liberty has not asserted that

Administrator Terry should have been disqualified pursuant HAR

§ 11-185-32, and we find no basis for his disqualification under

this provision.21    Accordingly, the circuit court erred in

      21
            Liberty argued below that Administrator Terry should be
disqualified pursuant to HAR § 11-1-25(a)(5) based on personal bias or
prejudice because he approved Rainbow’s CON application despite votes against
the application by the CON Review Panel and the SHCC. However, these
allegations are not sufficient to cause a reasonable person to question
Administrator Terry’s impartiality. See Ross, 89 Hawai#i at 380, 974 P.2d at
20. First, the recommendations of the CON Review Panel and the SHCC were not
binding on Administrator Terry. HAR § 11-186-45(e) (1981). Second, another
review panel, the Tri-Isle Subarea Health Planning Council, recommended
                                                                (continued...)

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concluding that Administrator Terry was disqualified from

participating in the Reconsideration Decision.

B.    Trygstad was not disqualified from participating in the
      Reconsideration Decision

            Liberty argues that Trygstad should have been

disqualified from sitting on the Reconsideration Committee

pursuant to HAR § 11-1-25(a)(2).22          Liberty alleges that Trygstad

should be disqualified because her brother-in-law, Dr. George

Talbot, is the “Kaiser Permanente physician-in-charge for Maui”

and testified on behalf of Rainbow in support of its CON

application.     Accordingly, Liberty argues, Dr. Talbot was a

“party’s representative” and, therefore, Trygstad’s

disqualification was mandatory.

            Rainbow argues that HAR § 11-1-25 is inapplicable to

SHPDA proceedings, and that the more specific SHPDA

disqualification rule, HAR § 11-185-32, should apply instead.23

      21
       (...continued)
approval of the application. Third, the conditions that Administrator Terry
imposed on Rainbow’s application address some of the concerns that led the CON
Review Panel and SHCC to recommend denying the application. Finally, four
other independent members of the Reconsideration Committee agreed to approve
Rainbow’s CON application, despite the recommendations of the CON Review Panel
and the SHCC.
      22
             HAR 11-1-25(a)(2) provides for disqualification where a hearings
officer, director or member “[i]s related within the third degree by blood
or marriage to any party to the proceeding or any party’s representative or
attorney[.]”
      23
            HAR § 11-185-32(a) also addresses disqualification based on family
relationships, but to a more limited degree, providing for disqualification
where:

            the hearing officer, the hearing officer’s spouse, or
            the hearing officer’s child has (or within the twelve
                                                                (continued...)

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Rainbow also argues that Dr. Talbot was not a representative of

Kaiser as envisioned under HAR § 11-1-25 because Dr. Talbot’s

employer (Hawaii Permanente Medical Group (HPMG)), and Kaiser are

“separate corporate entities.”

          We conclude that HAR § 11-1-25 is inapplicable here

because the more specific SHPDA disqualification rule contained

in HAR § 11-185-32 governs SHPDA hearings officers.

          The DOH rules of practice and procedure are contained

in HAR chapter 11-1.     HAR § 11-1-1 (2005) provides a “Statement

of scope and purpose” for HAR chapter 11-1, and provides in

relevant part:
          (a) This chapter governs the practice and procedure
          before the department of health, State of Hawaii,
          provided that an attached entity may adopt and shall
          be governed by its own specific rules of practice and
          procedure if it has rulemaking authority, and provided
          that the director may adopt more specific rules of
          practice and procedure for any specific program, and
          those more specific rules shall govern the practice
          and procedure in proceedings for that program. Where
          such specific rules fail to cover particular practices
          and procedures, then these rules shall apply.

(Emphasis added).

          Here, SHPDA is an “attached entity” of the DOH with

rulemaking authority.     HAR § 11-1-3 (2005); HRS § 323D-44(b).

Accordingly, SHPDA has authority pursuant to HAR § 11-1-1 to

adopt its own specific rules of practice and procedure.             SHPDA

     23
      (...continued)
           months preceding the hearing, had) any substantial
           ownership, directorship, officership, employment,
           prospective employment for which negotiations have
           begun, medical staff, fiduciary, contractual,
           creditor, debtor, consultative, pecuniary, or business
           interest.

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exercised this authority by adopting HAR chapter 11-185.

Accordingly, chapter 11-185 “shall govern the practice and

procedure” in SHPDA proceedings, unless it “fail[s] to cover

particular practices and procedures[.]”          HAR § 11-1-1.

            As discussed above, HAR § 11-185-32 is SHPDA’s general

disqualification rule, and provides in relevant part:
                  (a) No hearing officer shall preside at any
            public hearing relating to any matter in which the
            hearing officer, the hearing officer’s spouse, or the
            hearing officer’s child has (or within the twelve
            months preceding the hearing, had) any substantial
            ownership, directorship, officership, employment,
            prospective employment for which negotiations have
            begun, medical staff, fiduciary, contractual,
            creditor, debtor, consultative, pecuniary, or business
            interest.
                  (b) Where any other conflict of interest exists,
            the hearing officer shall be disqualified from
            presiding at the public hearing. The provisions of
            chapter 84, Hawaii Revised Statutes, and the
            decisions, advisory opinions, and informal advisory
            opinions of the state ethics commission shall serve as
            guidelines in determining whether a conflict of
            interest exists.[24]

      24
             HAR chapter 11-186 governs the CON process, and also contains a
separate conflict of interest provision that is substantially similar to HAR
§ 11-185-32:

            (a)   No member of a subarea council, a countywide
            review committee, the review panel, or the statewide
            council shall vote on any matter respecting an
            applicant with which the member, the member’s spouse,
            the member’s child, or the member’s parent has (or
            within the twelve months preceding the vote, had) any
            substantial ownership, directorship, officership,
            employment, prospective employment for which
            negotiations have begun, medical staff, fiduciary,
            contractual, creditor, debtor, or consultative
            relationship.

            (b)    If such a relationship exists or has existed,
            the member shall make a written disclosure of the
            relationship before any action is taken with respect
            to the applicant by the subarea council, countywide
            review committee, review panel, or statewide council
            to which the member belongs and the member shall make
            the relationship public in any meeting in which action
            is to be taken with respect to the applicant.
                                                    (continued...)

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            Liberty argues that this rule does not displace “the

more comprehensive provisions” of HAR § 11-1-25 because HAR

§§ 11-1-25 and 11-185-32 do not conflict.          However, Liberty’s

argument is misplaced.      In general, where rules overlap in their

application but do not irreconcilably conflict, effect will be

given to both, if possible.       See Cnty. of Hawai#i v. C&J Coupe

Family Ltd. P’ship, 120 Hawai#i 400, 405, 208 P.3d 713, 718

(2009).    However, HAR § 11-1-1 qualifies this general rule by

stating that, “specific rules of practice and procedure for any

specific program . . . shall govern the practice and procedure in

proceedings for that program.”        Thus, HAR § 11-1-1 applies only

where “such specific rules fail to cover particular practices and

procedures[.]”     (Emphasis added).       As a result, the relevant

question is not whether HAR §§ 11-185-32 and 11-1-25 conflict,

      24
       (...continued)
            (c)    Where any other conflict of interest exists, a
            member of a subarea council, countywide review
            committee, review panel, or statewide council shall be
            disqualified from voting in the review of an
            application. The provisions of chapter 84, Hawaii
            Revised Statutes, and the decisions, advisory
            opinions, and informal advisory opinions of the state
            ethics commission shall serve as guidelines in
            determining whether a conflict of interest exists.

HAR § 11-186-51.
            Because Trygstad participated in the Reconsideration Committee as
a representative of the Tri-Isle Subarea Health Planning Council, this
provision also could be read to apply to her disqualification. See HAR § 11-
186-51(a) (providing that a member of a subarea council shall not vote “on any
matter respecting an applicant” where the member has a conflict of interest).
However, HAR § 11-186-51 also could be read as applying solely to actions
taken “by the subarea council, countywide review committee, review panel, or
statewide council[,]” but not the Reconsideration Committee. See HAR § 11-
186-51(b). Because HAR §§ 11-186-51 and 11-185-32 do not differ materially,
and because SHPDA’s and Rainbow’s arguments rely on HAR § 11-185-32, we need
not resolve whether HAR § 11-186-51 also applies.

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but rather whether HAR § 11-185-32 “fail[s] to cover”

disqualification practices and procedures, such that HAR chapter

11-1 applies.    Because HAR § 11-185-32 does cover

disqualification practices and procedures for SHPDA hearings

officers, it applies in lieu of HAR § 11-1-25.

            Nevertheless, Liberty argues that HAR § 11-1-25 applies

because it covers a broader range of disqualifications than HAR

§ 11-185-32.    However, this argument is not supported by HAR

§ 11-1-1.   HAR chapter 11-1 is not intended to fill every gap in

an attached entity’s more specific rules.         Rather, it applies

only where an attached entity’s rules do not “cover particular

practices and procedures[.]”      Here, SHPDA’s rules cover

disqualification practices and procedures.         Accordingly, DOH’s

general disqualification rule does not apply, even though it

would provide for disqualification under a broader range of

circumstances.    This is logical given that, in certain

circumstances, such as those presented here, the general DOH

rules may conflict with the legislature’s intent that certain

practices or procedures be performed by specific administrative

authorities.

            Liberty also argues that, because HAR § 11-185-32

contains no express prohibition against a biased or prejudiced

hearings officer, application of only HAR § 11-185-32 would allow

a hearings officer who harbored a bias or prejudice against a

party to sit on the Reconsideration Committee.          Liberty further

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argues that, if the phrase “any other conflict of interest” in

HAR § 11-185-32(b) is read broadly to include bias or prejudice,

it must also be read to include all of the bases for

disqualification contained in HAR § 11-1-25.

          These arguments are unpersuasive.          First, bias or

prejudice is a form of conflict of interest.          See, e.g., Daiichi

Hawaii Real Estate Corp. v. Lichter, 103 Hawai#i 325, 339-40, 82

P.3d 411, 425-26 (2003) (“Under Hawai#i law, ‘evident partiality’

sufficient to vacate an arbitration award may be demonstrated

when a conflict of interest exists with the arbitrator. . . .

Hawai#i courts have explained that evident partiality not only

exists when there is actual bias on the part of the arbitrator,

but also when undisclosed facts demonstrate a ‘reasonable

impression of partiality.’”) (citation omitted) (emphasis added).

Accordingly, it is not necessary to resort to HAR § 11-1-25 to

conclude that “conflict of interest” includes “bias or

prejudice.”

          Second, bias or prejudice would be a basis for

disqualification even if the Department of Health and SHPDA

failed to promulgate any rules regarding disqualification.             This

is because due process requires disqualification where

“circumstances fairly give rise to an appearance of impropriety

and reasonably cast suspicion on [the adjudicator’s]

impartiality.”    Ross, 89 Hawai#i at 377, 974 P.2d at 17 (citation

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and ellipses omitted).25      Otherwise, the multitude of agency

disqualification rules that fail to directly address bias or

prejudice would absurdly allow for participation by biased or

prejudiced adjudicators.26      Accordingly, Liberty is incorrect in

arguing that HAR § 11-185-32 is inadequate because it does not

directly address bias or prejudice.

            Finally, although Liberty argued in the circuit court

that the Reconsideration Committee members were not hearings

officers and that HAR § 11-185-32 was therefore inapplicable, it

has abandoned this argument on appeal.          Indeed, Liberty now

asserts that both rules “must be given effect.”           Accordingly,

Liberty has waived any argument that HAR § 11-185-32 is

inapplicable to the Reconsideration Committee members.             Hawai#i

       25
             In Ross, the applicable statute expressly provided for
disqualification where a judge had a “personal bias or prejudice[.]” 89
Hawai#i at 376, 974 P.2d at 16. However, this court looked beyond the statute
to due process to determine, not actual bias or prejudice, but “whether
circumstances fairly give rise to an appearance of impropriety and reasonably
cast suspicion on the judge’s impartiality.” Id. at 377, 974 P.2d at 17
(internal quotation marks, ellipses, and brackets omitted). Because of the
statutory disqualification requirement, this court was not required to
determine whether a judge’s actual bias or prejudice would also implicate due
process. However, it would be incongruous to conclude that an appearance of
impropriety or partiality violates due process, but actual impropriety or
partiality does not.
      26
            See, e.g., HAR §§ 3-90-3 (1987) (conflicts of interest for State
Foundation of Culture and the Arts), 6-23-45 (2009) (disqualification in
contested case proceedings before Department of Budget and Finance), 6-61-28
(1992) (disqualification in hearings before the Public Utilities Commission),
11-62-58 (2004) (conflicts of interest in review of wastewater management
permits), 11-175-4(c) (1988) (conflicts of interest for State Council on
Mental Health and Substance Abuse), 11-271-104 (1994) (disqualification in
contested case proceedings relating to hazardous waste management), 13-167-61
(1988) (disqualification in contested case proceedings before Commission on
Water Resource Management), 13-197-20 (1989) (disqualification in contested
case proceedings before Hawai#i Historic Places Review Board), 13-300-62
(1996) (disqualification in administrative appeals relating to burial sites
and human remains).

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Rules of Appellate Procedure Rule 28(b)(7) (“Points not argued

may be deemed waived.”).      Although this issue was not addressed

in the parties’ appellate briefing, the dissent nevertheless

concludes that HAR § 11-185-32 is inapplicable because the

Reconsideration Committee members are not hearings officers.

Dissenting opinion at 18-19.       We respectfully disagree.

             Before the Reconsideration Committee and on appeal,

SHPDA has consistently argued that HAR § 11-185-32 governs the

disqualification of Reconsideration Committee members.              As SHPDA

explained in the circuit court, the SHPDA rules preceded the DOH

rules by many years.     SHPDA stated,
                 So for years, the two chapters, 11-185 and 11-
           186 specifically in the certificate of need matters
           governed. Perhaps Rule No. 11-185-32 is not as
           comprehensive or as eloquent as it could be if revised
           today, but it is a clear disqualification of hearing
           officer rule. And in this instance in the
           reconsideration committee situation it is the
           reconsideration committee who is the hearing officer
           of the reconsideration.
                 . . . . And these rules were promulgated with
           the understanding that the public hearing that would
           follow the grant of a reconsideration would be heard
           by the reconsideration committee.

(Emphasis added).

           SHPDA’s interpretation of its own rules is entitled to

deference unless it is clearly erroneous or inconsistent with the

underlying legislative purpose.       See Kaleikini, 128 Hawai#i at

67, 283 P.3d at 74.

           HAR § 11-185-32 must be construed in pari materia with

HRS § 323D-47 and the other rules governing SHPDA and the CON

process.   HRS § 1-16 (1993) (“Laws in pari materia, or upon the

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same subject matter, shall be construed with reference to each

other.”).    HRS § 323D-47 and HAR § 11-186-82(d) make clear that,

where there is good cause for reconsideration, the

Reconsideration Committee must hold a public hearing and then

issue a decision on behalf of SHPDA.27         It is beyond dispute that

the hearing conducted by the Reconsideration Committee in the

instant case constituted a public hearing.          See HAR § 11-185-30

(“At any public hearing held by the agency, any person shall have

the right to present oral or written arguments and evidence

relevant to the matter which is the subject of the hearing.”).

The Reconsideration Committee members presided at this hearing,

ruling on evidentiary objections and motions, and issuing the

Reconsideration Decision.       Accordingly, it was not clearly

erroneous for SHPDA to conclude that the Reconsideration

Committee members are hearings officers whose disqualification is

governed by HAR § 11-185-32.

            Moreover, although HAR § 11-185-31 indicates that a

separate hearings officer may be appointed for the purpose of

ensuring the “orderly and just conduct of the hearing,” nothing

in HAR § 11-185-31 indicates that the Reconsideration Committee

members are thereby excluded from the disqualification provisions

of HAR § 11-185-32.      In other words, the fact that SHPDA

      27
            HAR § 11-186-82(d) states that “the committee shall schedule a
public hearing for reconsideration of the decision” and “[t]he committee shall
file a decision on the reconsideration within forty-five days after the
conclusion of the hearing.” (Emphasis added). Here, the Reconsideration
Decision was filed by all five Reconsideration Committee members.

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designated Andrew Tseu as a hearings officer to assist the

Reconsideration Committee in conducting the hearing did not

render HAR § 11-185-32 inapplicable to the Reconsideration

Committee members.

            Lastly, the dissent argues that, prior to the adoption

of the DOH rules, SHPDA’s rules “did not explicitly provide

disqualification rules for reconsideration committee members,”

and, therefore, the DOH rule should apply.           Dissenting opinion at

23.   However, this argument is unpersuasive.           Under the dissent’s

analysis, no disqualification rules would have governed the

Reconsideration Committee members from the establishment of the

Reconsideration Committee procedure in 1987 until the

promulgation of the DOH rule in 2005.           Thus, according to the

dissent, during that almost 20-year period, SHPDA had conflict of

interest rules governing non-binding advisory committee members

and hearings officers who preside over non-substantive matters,

but neglected to provide any disqualification rules governing the

persons responsible for the agency’s final action on a CON

application.     We decline to adopt an interpretation of the rules

that would lead to such a result.           See Sierra Club v. Dep’t of

Transp., 120 Hawai#i 181, 227, 202 P.3d 1226, 1272 (2009) (“[I]t

is well-settled that statutory construction dictates that an

interpreting court should not fashion a construction of statutory

text that . . . creates an absurd or unjust result.” (internal

quotation marks and citation omitted)).

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            In sum, HAR § 11-185-32 applies in the instant case.

Because Liberty has not raised any arguments to suggest that

Trygstad should have been disqualified pursuant to HAR § 11-185-

32, its arguments are without merit.

                             IV. Conclusion

            Although we do not adopt the circuit court’s reasoning,

we affirm its December 13, 2011 final judgment, which affirmed

the Reconsideration Committee’s February 17, 2011 Reconsideration

Decision.

Daniel P. Collins for                 /s/ Mark E. Recktenwald
petitioner
                                      /s/ Paula A. Nakayama
Ellen Godbey Carson for
respondent Rainbow                    /s/ Sabrina S. McKenna
Dialysis, LLC

Ann V. Andreas for
respondent State of Hawaii

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