Court Opinion

ID: 9404663
Source: CourtListenerOpinion
Date Created: 2023-06-23 19:04:20.150493+00
Date Added: 2024-06-11T17:20:16.104282
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                                      Electronically Filed
                                                      Intermediate Court of Appeals
                                                      CAAP-XX-XXXXXXX
                                                      23-JUN-2023
                                                      07:52 AM
                                                      Dkt. 89 SO

                               NO. CAAP-XX-XXXXXXX

                     IN THE INTERMEDIATE COURT OF APPEALS

                             OF THE STATE OF HAWAI#I

           ADAM L. JOSIAH, Claimant-Appellee/Appellee,
                                v.
         TARGET CORPORATION, Employer-Appellee/Appellee,
 and SEDGWICK CMS-HAWAII, Insurance Adjuster-Appellee/Appellee,
       and SPECIAL COMPENSATION FUND, Appellant-Appellant

                LABOR AND INDUSTRIAL RELATIONS APPEALS BOARD
                 (CASE NO. AB 2017-211 (DCD NO. 2-09-10098))

                          SUMMARY DISPOSITION ORDER
         (By:     Ginoza, Chief Judge, Hiraoka and Nakasone, JJ.)

          This case arises from a workers' compensation claim
asserted by Claimant-Appellee-Appellee Adam L. Josiah (Claimant
Josiah) due to a work injury that occurred on September 10, 2009.
The issue before us is whether the Labor and Industrial Relations
Appeals Board (LIRAB) properly determined that Appellant-
Appellant Special Compensation Fund (SCF) must pay a portion of
Claimant Josiah's permanent partial disability (PPD) benefits
under Hawaii Revised Statutes (HRS) § 386-33 (2015).1                SCF

     1
          HRS § 386-33 provides, in relevant part:
                (a) Where prior to any injury an employee suffers from a
                previous permanent partial disability already existing prior
                to the injury for which compensation is claimed, and the
                disability resulting from the injury combines with the
                previous disability, whether the previous permanent partial
                disability was incurred during past or present periods of
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contends it is not liable under HRS § 386-33, and that
Employer-Appellee-Appellee Target Corporation (Employer Target)
and Insurance Adjuster-Appellee Sedgwick CMS - Hawaii (Insurer
Sedgwick) must pay the full amount of the PPD benefits.2
            SCF appeals from LIRAB's Decision and Order (Decision
and Order) filed on January 30, 2019, which affirmed a decision
by the Director of Labor and Industrial Relations (Director)
apportioning liability for Claimant Josiah's PPD benefits between
SCF and Employer Target/Insurer Sedgwick.
          The key issue in this appeal is whether Claimant Josiah
suffered from a "previous permanent partial disability" before
the subject work accident in this case, such that HRS § 386-33
requires SCF to pay a portion of Claimant Josiah's PPD benefits.
          As discussed below, the record does not contain
evidence that Claimant Josiah suffered from a "disability" prior

(...continued)
            employment, to result in a greater permanent partial
            disability or in permanent total disability or in death, then
            weekly benefits shall be paid as follows:

                    (1) In cases where the disability resulting from the
                    injury combines with the previous disability to result
                    in greater permanent partial disability the employer
                    shall pay the employee compensation for the employee's
                    actual permanent partial disability but for not more
                    than one hundred four weeks; the balance if any of
                    compensation payable to the employee for the employee's
                    actual permanent partial disability shall thereafter be
                    paid out of the special compensation fund . . . ;
                                . . . .

            (b) Notwithstanding subsection (a), where the director or the
            appellate board determines that the previous permanent partial
            disability amounted to less than that necessary to support an
            award of thirty-two weeks of compensation for permanent
            partial disability, there shall be no liability on the special
            compensation fund and the employer shall pay the employee or
            the employee's dependents full compensation for the employee's
            permanent partial or total disability or death.
(Emphases added.)
      2
         Claimant Josiah is not a party to the appeal, having been dismissed
from the case pursuant to a stipulation for dismissal filed in LIRAB on April
6, 2018.

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to the subject work injury. Accordingly, we reverse the Decision
and Order.
                       I. Brief Background
          On September 10, 2009, Claimant Josiah sustained an
injury to his left knee while working for Employer Target. In a
report dated May 27, 2011 (2011 Report), Employer Target's
medical expert, Vern K. Sasaki, M.D. (Dr. Sasaki), issued his
"diagnostic impression" based on his examination of Claimant
Josiah and review of imaging studies, opining that Claimant
Josiah suffered from an acute medial meniscal tear to the left
knee and preexisting bilateral knee osteoarthritis.3 Dr. Sasaki
determined that the osteoarthritis existed prior to the work
injury and that it was probably aggravated by the injury. Dr.
Sasaki opined that Claimant Josiah had a 9% lower extremity (left
knee) impairment, and that 30% of that impairment was attributed
to the preexisting osteoarthritis. This assessment was not
sufficient to meet the threshold requirement for SCF liability.
          In February 2012, Claimant Josiah, Employer Target, and
Insurer Sedgwick entered into a Stipulation and Settlement
Agreement and Order (2012 Agreement) stipulating, inter alia,
that SCF did not have to pay Claimant Josiah any disability
benefits. The Director approved the 2012 Agreement.
          On September 18, 2015, Dr. Sasaki produced another
report, stating that Claimant Josiah's condition had
"significantly deteriorated" since the 2011 Report. Dr. Sasaki
recommended that Claimant Josiah receive a total knee
replacement. Following the total knee replacement surgery in
2015, Dr. Sasaki produced a report dated August 9, 2016 (2016
Report) with an amended assessment that Claimant Josiah had a 50%

      3
         "Osteoarthritis occurs when the cartilage that cushions the ends of
bones in your joints gradually deteriorates." Osteoarthritis, Mayo Clinic
(last visited June 19, 2023)
https://www.mayoclinic.org/diseases-conditions/osteoarthritis/symptoms-causes/
syc-20351925.

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left knee impairment. Dr. Sasaki attributed 30% of Claimant
Josiah's impairment to the preexisting osteoarthritis.
          After a hearing, the Director found that Claimant
Josiah suffered 55% PPD of the left leg for the left knee.4 The
Director ordered, inter alia, that SCF be joined for the work
injury claim and that pursuant to HRS §§ 386-32(a) (2015) and
386-33, Employer Target and SCF had to pay their respective
portion of Claimant Josiah's compensation for 55% PPD.
          On September 15, 2017, SCF appealed the case to LIRAB
on the issue of apportionment with Employer Target/Insurer
Sedgwick. LIRAB affirmed the Director's decision on January 30,
2019. This timely appeal followed.
          On appeal, SCF asserts that: LIRAB clearly erred in its
findings of fact (FOF) 15 through 19; and LIRAB was incorrect in
its conclusion of law (COL) 1, concluding that Claimant Josiah's
PPD benefits should be apportioned between Employer
Target/Insurer Sedgwick and SCF.
                          II. Discussion
          "Appellate review of a LIRAB decision is governed by
the provisions of the Hawai#i Administrative Procedure Act
[(HAPA)] relating to judicial review of agency action." Ihara,
141 Hawai#i at 41, 404 P.3d at 307 (citing HRS § 91-14(g) (1993))
(additional citation omitted).5 "Findings of fact are reviewed

      4
         A PPD rating determined by the Director may differ from a physician's
recommendation because it is "ultimately the director . . . or the [LIRAB],
and not the physician, that decides the final PPD rating." Ihara v. State
Dep't of Land & Nat. Res., 141 Hawai#i 36, 43, 404 P.3d 302, 309 (2017)
(citation omitted).
      5
          HAPA provides, in relevant part:
             (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;
             (2)   In   excess   of  the   statutory   authority or
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under the clearly erroneous standard." Pave v. Prod. Processing,
Inc., 152 Hawai#i 164, 172, 524 P.3d 355, 363 (Ct. App. 2022), as
corrected (May 23, 2023), reconsideration denied, No.
CAAP-XX-XXXXXXX, No. CAAP-XX-XXXXXXX, 2023 WL 127865 (Haw. Ct.
App. Jan. 9, 2023), cert. denied, 2023 WL 3533518 (Haw. May 18,
2023) (citing HRS § 91-14(g)(5)) (additional citations omitted).
"A finding of fact is clearly erroneous when the record lacks
substantial evidence to support the finding . . . ." Id.
(citation omitted). "Conclusions of law are reviewed de novo
under the right/wrong standard." Id. (citing HRS § 91-14(g)(1),
(2), (4)) (additional citation omitted).

            The FOFs and COL that SCF challenges state:
                        15. The Board finds that Dr. Sasaki's August
            9, 2016 report is the initial rating report indicating
            evidence of preexisting disability for which the SCF
            could be liable.

                        16. There being no other medical opinion
            regarding apportionment between the work injury and
            Claimant's pre-existing condition, the Board credits
            Dr. Sasaki's 30% apportionment to pre-existing
            conditions.

                        17. 30% apportionment of 55% PPD of the
            leg is equal to 133.6126 weeks (55% permanent
            impairment x 288 weeks x $725 maximum weekly
            compensation rate x 30% apportionment = $34,452.00 ÷
            $257.85 weekly benefit rate = 133.6126 weeks).

                        18. 55% PPD of the leg is equal to
            445.3752 weeks (55% permanent impairment x 288 weeks x
            $725 maximum weekly compensation rate = $114,840.00 ÷
            $257.85 weekly benefit rate = 445.3752 weeks).

                        19. The Board finds that Employer has met
            its burden of providing, by a preponderance of the

            (...continued)
                  jurisdiction of the agency;
            (3)   Made upon unlawful procedure;
            (4)   Affected by other error of law;
            (5)   Clearly erroneous in view of the reliable,
                  probative, and substantial evidence on the whole
                  record; or
            (6)   Arbitrary, or capricious, or characterized by
                  abuse of discretion or clearly unwarranted
                  exercise of discretion.

HRS § 91-14(g) (Supp. 2021).

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           evidence, its entitlement to apportionment of PPD
           benefits with the SCF.[6]
           . . . .
                             CONCLUSIONS OF LAW

                       1. The Board concludes that permanent
           disability should be apportioned between Employer/
           Insurance Carrier and the Special Compensation Fund.

(Emphases added.)

           SCF challenges FOFs 15, 16, and 19 for erroneously
relying on the worsening of Claimant Josiah's condition after the
work accident, as set out in Dr. Sasaki's 2016 Report, which SCF
contends is not pertinent to whether Claimant Josiah had a
preexisting disability, i.e., disability before the work
incident. SCF also challenges FOF 17 as erroneous for relying on
an improperly inflated disability rating to apportion liability
for Claimant Josiah's PPD award to SCF. Employer Target/Insurer
Sedgwick argue that Dr. Sasaki's 30% PPD apportionment in the
2016 Report was to Claimant Josiah's "pre-existing condition, not
to the worsening of his condition from the work injury."
           HRS § 386-1 (2015) defines "disability" as "loss or
impairment of a physical or mental function." A "finding that a
claimant had a preexisting disability must be based upon some
evidence in the record showing that the claimant had an actual
loss or impairment of a physical or mental function before the
work accident." Pave, 152 Hawai#i at 176, 524 P.3d at 367; see
also Agasiva v. Realty Laua, LLC, No. CAAP-XX-XXXXXXX, 2023 WL
2943018, at *6 (Haw. Ct. App. Apr. 14, 2023) (citing Pave, 152
Hawai#i at 169, 524 P.3d at 360; HRS § 386-1). Moreover,
"[t]here must . . . be substantial evidence in the record
supporting LIRAB's determination that SCF is obligated to pay PPD
benefits because of a preexisting disability capable of

      6
         We view FOF 19 as a mixed finding of fact and conclusion of law,
which we review for clear error. AIG Haw. Ins. Co. v. Est. of Caraang, 74
Haw. 620, 629, 851 P.2d 321, 326 (1993) (citation omitted).

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supporting at least 32 weeks of compensation." Pave, 152 Hawai#i
at 180, 524 P.3d at 371.
          In Pave, a consolidated appeal, this court ruled that
"LIRAB [had] incorrectly equated a preexisting 'condition' with a
preexisting 'disability.'" Id. There, the issue in each appeal
was whether there was evidence that the claimant's asymptomatic
preexisting physical condition had caused any disability, i.e.,
loss or impairment of a physical or mental function, before the
work accident. See id. at 169, 524 P.3d at 360. This court
reversed LIRAB's decision and orders in both appeals, concluding
that:
          In each of these cases, there was no expert opinion or
          other evidence that the injured person's asymptomatic
          preexisting condition had caused any actual "disability"
          — that is, "loss or impairment of a physical or mental
          function" — before the person's work accident. Under
          those circumstances, it was error for LIRAB to apportion
          liability for the person's PPD award to SCF.

Id. at 185, 524 P.3d at 376.

          In this case, LIRAB incorrectly equated a preexisting
"condition" and "factors" with a preexisting "disability." LIRAB
made the following unchallenged findings:
                       9. After the [2012 Agreement], Claimant's
          knee condition worsened, and he underwent a total knee
          replacement.

                      10. Because of the total knee replacement,
          Claimant's permanent impairment increased.
          . . . .

                      12. In his August 9, 2016 report, Dr. Sasaki
          apportioned 30% of Claimant's permanent impairment after
          the total knee replacement to pre-existing factors.

                      13. Dr. Sasaki also opined that Claimant's
          work injury resulted in progressive posttraumatic
          arthritis and end-stage osteoarthritis, that had
          significantly deteriorated since his first report.

                      14. [LIRAB] finds that Dr. Sasaki's ratings
          were consistent with the [American Medical Association]
          Guides to the Evaluation of Permanent Impairment, Fifth
          Edition. Accordingly, his ratings were, in part, based
          upon the extent of Claimant's surgical treatment.
          . . . .

                      20. There being no evidence to the
          contrary, [LIRAB] credits Dr. Sasaki's opinion and finds
          that   Claimant's    pre-existing   condition    further

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            deteriorated after his September 10, 2009 work injury,
            thus requiring a total knee replacement.
(Emphases added.)
          Further, the 2016 Report's findings and recommendations
are, in relevant part, as follows:
            Based on the history, physical examination, and review
            of medical records, there is evidence of bilateral knee
            arthritis.   A   bone  study   on   12/01/15   revealed
            degenerative disease in both knees. This is an
            indication of some underlying, pre-existing bilateral
            knee osteoarthritis. Therefore, apportionment would be
            indicated in this claim.
            In my best judgment, 70% of the current impairment can
            be attributed to the injury of record which permanently
            aggravated an intermittently symptomatic, preexisting,
            degenerative joint disease of the left knee, and 30% can
            be attributed to preexisting osteoarthritic changes. My
            rationale for this apportionment is that the claimant,
            based on the available medical records of Dr. Lawler,
            his primary care physician, did not complain of left
            knee pain between 2007 and the time of the current
            injury.

            There was a recorded history of left knee pain in the
            past; however, medical records prior to 2007 were not
            available for review.

(Emphases added) (other emphasis omitted).

          Dr. Sasaki opined that Claimant Josiah's preexisting
osteoarthritis deteriorated after the work accident, thus
requiring a total knee replacement. However, Dr. Sasaki's 2016
Report did not analyze whether the preexisting condition had
caused a preexisting disability, i.e., loss or impairment of
Claimant Josiah's physical function, prior to the work injury.
Instead, LIRAB found that Dr. Sasaki's ratings were based, at
least in part, on the extent of Claimant Josiah's impairment
following surgical treatment after the work injury. Dr. Sasaki
noted the records indicated no complaint of left knee pain
between 2007 and the work injury in September 2009. There were
no other medical records available for review. Additionally,
Claimant Josiah denied any prior knee injuries.7 The record here

      7
         The 2016 Report noted that Claimant Josiah's pertinent history was
unchanged. Thus, the 2016 Report relates back to the "Pertinent Past History"
                                                                (continued...)

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does not contain any evidence that Claimant Josiah had a
preexisting disability capable of supporting at least 32 weeks of
compensation. Thus, FOFs 15, 16 and 19 were clearly erroneous
and COL 1 was wrong.
          SCF also challenges FOF 15 as erroneous for ignoring
the 2011 report. SCF argues that the clear language and purpose
of the thirty-two week threshold in HRS § 386-33 is a one-time
determination that reduces litigation as intended by the
Legislature, which Dr. Sasaki made in the 2011 Report.8 We need
not address this issue because none of Dr. Sasaki's reports
render opinions that Claimant Josiah had a preexisting
"disability." Given this record, there is no evidence that the
requirements under HRS § 386-33 were met to trigger SCF's
liability to pay a portion of the PPD benefits.
          We conclude that: FOF 15 was clearly erroneous in
finding that the 2016 Report indicated evidence of "preexisting
disability for which the SCF could be liable[;]" FOFs 16 through
19 are clearly erroneous in relying on Dr. Sasaki's 2016 Report
and determining that Employer Target/Insurer Sedgwick established
an entitlement to apportion PPD benefits with SCF; and COL 1 is
wrong that PPD benefits should be apportioned between Employer
Target/Insurer Sedgwick and SCF.

      7
       (...continued)
section in the 2011 Report, in which Claimant Josiah denied any prior knee
injuries.
      8
         SCF also argues that the 2012 Agreement was a final judgment under
HRS § 386-87(a) (2015), which provides that a "decision of the director shall
be final and conclusive between the parties, except as provided in section
386-89, unless within twenty days . . . either party appeals therefrom to the
appellate board[.]" Although no appeal was taken from the 2012 Agreement, HRS
§ 386-87(a) is subject to HRS § 386-89 (2015), which permits reopening of
cases under specified circumstances. Given our determination that the record
lacks evidence of a preexisting disability, we need not address SCF's argument
regarding the 2012 Agreement.

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                            III. Conclusion
          For the foregoing reasons, we reverse the January 30,
2019 Decision and Order filed by the Labor and Industrial
Relations Appeals Board.
          DATED: Honolulu, Hawai#i, June 23, 2023.
On the briefs:                         /s/ Lisa M. Ginoza
                                       Chief Judge
Li-Ann Yamashiro,
Carissa A. Goto,                       /s/ Keith K. Hiraoka
(Staci I. Teruya on the                Associate Judge
briefs),
Deputy Attorneys General,              /s/ Karen T. Nakasone
for Appellant-Appellant                Associate Judge
Leighton K. Oshima,
Darlene Y.F. Itomura,
for Employer-Appellee/Appellee
and Insurance Adjuster-
Appellee/Appellee

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