Court Opinion

ID: 2654147
Source: CourtListenerOpinion
Date Created: 2014-02-22 01:01:53.494656+00
Date Added: 2024-06-11T12:17:48.948470
License: Public Domain

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                                                               Electronically Filed
                                                               Supreme Court
                                                               SCWC-11-0000460
                                                               21-FEB-2014
                                                               08:34 AM

           IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                                 ---o0o---

          In the Matter of Attorney’s Fees Pertaining to
               JOHN C. MCLAREN, Petitioner/Appellant,
             in the case of ETSUKO FURUKAWA, Claimant,

                                    vs.

                 PARADISE INN HAWAI#I LLC, Employer,

                                    and

       FIRST SECURITY INSURANCE COMPANY OF HAWAI#I, INC.,
                       Insurance Carrier.

                             SCWC-11-0000460

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
      (CAAP-11-0000460; CASE NO. AB 2010-341 (2-07-45923))

                            FEBRUARY 21, 2014

   RECKTENWALD, C.J., NAKAYAMA, ACOBA, McKENNA, AND POLLACK, JJ.

                  OPINION OF THE COURT BY McKENNA, J.

                            I.   Introduction

          This case concerns John C. McLaren’s attorney’s fee

request to the Director of the Department of Labor and Industrial
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Relations (“Director”) through the Disability Compensation

Division of the Department of Labor and Industrial Relations

(“DCD”), for his representation of a claimant in a workers’

compensation case.     John C. McLaren (“McLaren”) presents the

following questions on certiorari:

          A. Did the ICA gravely err in concluding that the September
          7, 2010 appeal to the Labor and Industrial Relations Appeals
          Board was untimely made?
          B. Did the ICA gravely err in concluding that I have no
          fundamental due process rights of notice and an opportunity
          to be heard at the Disability Compensation Division (DCD) to
          review and present evidence against its fee reduction?
          C. Did the ICA gravely err in concluding that my three
          requests to DCD for reconsideration were insufficiently
          supported?
          D. Did ICA gravely err in concluding that DCD does not have
          to convene a contested case type hearing pursuant to my
          three requests to review and explain its drastic reduction
          in my attorney’s fees and costs?

          As to questions (A) and (C), we hold that the ICA erred

in concluding that McLaren’s September 7, 2010 appeal to the

Labor and Industrial Relations Appeals Board (“LIRAB”) was

untimely made and that his requests to DCD for reconsideration

were insufficiently supported.       As to questions (B) and (D), we

conclude that (1) McLaren did not have a right to have a

contested case hearing before the DCD, but (2) the DCD was

required to provide its reasons for reducing McLaren’s attorney’s

fees and costs request.
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                               II.   Background

A.   Facts

             McLaren represented a claimant in a workers’

compensation case before the DCD that resulted in a stipulation

and settlement agreement order awarding the claimant $60,468.89

in benefits for disability and disfigurement.             On March 1, 2010,

pursuant to Hawai#i Revised Statutes (“HRS”) § 386-94,1 McLaren

requested approval of $4,414.08 in attorney’s fees and $2,691.44

in costs for a total of $7,105.52.           McLaren attached a fee

itemization listing the dates, services, hours, and charges for

his work on the claimant’s case.            On June 10, 2010, in a document

titled, “Approval of Attorney’s Fees,” the Director2 approved

McLaren’s request, but reduced the amount to $3,729.63.                The

decision informed McLaren that he could appeal by filing a

      1
             HRS § 386-94 (as amended in 2005) states in relevant part:

             Claims for services shall not be valid unless approved by the
             director or, if an appeal is had, by the appellate board or
             court deciding the appeal. Any claim so approved shall be a
             lien upon the compensation in the manner and to the extent
             fixed by the director, the appellate board, or the court.
             In approving fee requests, the director, appeals board, or
             court may consider factors such as the attorney’s skill and
             experience in state workers’ compensation matters, the amount
             of time and effort required by the complexity of the case, the
             novelty and difficulty of issues involved, the amount of fees
             awarded in similar cases, benefits obtained for the claimant,
             and the hourly rate customarily awarded attorneys possessing
             similar skills and experience. In all cases, reasonable
             attorney’s fees shall be awarded.

      2
             The decision was signed by the DCD Administrator.

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written notice of appeal within twenty days after the decision

had been sent.

            Four days later, McLaren sent the DCD a letter

objecting to the reduction and requesting a written explanation

and/or a hearing on his attorney’s fees and costs request.

McLaren asserted that the fees approved were substantially less

than what he requested and did not appear to include any of the

$2,729.63 in costs he requested.          On June 28, 2010, McLaren

submitted “Form WC-77 Application for Hearing” with the DCD

requesting a hearing on the reduction of his request for approval

of attorney’s fees because the reduction was not based on any:

(1) reasonable, meaningful review of the work actually performed;

(2) review of the actual records and files; (3) reasonable,

written, publicly available standards for reviewing requests for

approval of attorney’s fees; and (4) reasonable or written

factual findings.     On July 19, 2010, McLaren requested access to

any DCD documents related to the review and approval of his

attorney’s fees request, pursuant to HRS §§ 92-113 and 92F-12.4

      3
            “Any final action taken in violation of [HRS] sections 92-3 and
92-7 may be voidable upon proof of violation. A suit to void any final action
shall be commenced within ninety days of the action.” HRS § 92-11 (as amended
in 2005).
            HRS § 92-3 provides:
            Every meeting of all boards shall be open to the public and
            all persons shall be permitted to attend any meeting unless
                                                                (continued...)

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               On August 4, 2010, McLaren sent the DCD a letter

stating that pursuant to Hawai#i Administrative Rules (“HAR”)

§ 2-71-13, agencies were required to respond to requests for

records within ten business days, and this period had expired on

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    (...continued)
               otherwise provided in the constitution or as closed pursuant
               to sections 92-4 and 92-5; provided that the removal of any
               person or persons who wilfully disrupts a meeting to prevent
               and compromise the conduct of the meeting shall not be
               prohibited. The boards shall afford all interested persons
               an opportunity to submit data, views, or arguments, in
               writing, on any agenda item. The boards shall also afford
               all interested persons an opportunity to present oral
               testimony on any agenda item. The boards may provide for
               reasonable administration of oral testimony by rule.

HRS § 92-7 is a notice statute requiring any state agency, board, commission,
authority, or committee to give written public notice of any regular, special,
or rescheduled meeting, including an agenda of the items to be considered at
the meeting, the date, time, and place of the meeting.

         4
               In relevant part, HRS § 92F-12 (2007) states:

               [E]ach agency shall make available for public inspection and
               duplication during regular business hours:
               (1) Rules of procedure, substantive rules of general
               applicability, statements of general policy, and interpretations
               of general applicability adopted by the agency;
               (2) Final opinions, including concurring and dissenting opinions,
               as well as orders made in the adjudication of cases, except to the
               extent protected by section 92F-13(1); . . .
               (7) Minutes of all agency meetings required by law to be public;
               . . .
               (15) Information collected and maintained for the purpose of
               making information available to the general public; and
               (16) Information contained in or compiled from a transcript,
               minutes, report, or summary of a proceeding open to the public.

               (b) Any provision to the contrary notwithstanding, each agency
               shall also disclose:
               (1) Any government record, if the requesting person has the prior
               written consent of all individuals to whom the record refers;
               (2) Government records which, pursuant to federal law or a statute
               of this State, are expressly authorized to be disclosed to the
               person requesting access[.]

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August 2, 2010.    McLaren requested a response to his July 19,

2010 request to access the DCD’s records, and a Notice of Hearing

in response to his June 14, 2010 request for a hearing, so that

if necessary, McLaren could thereafter appeal to the LIRAB.

          On August 17, 2010, a DCD staff member informed McLaren

that the DCD claim file was available for review.            The only

record regarding McLaren’s fees and costs request in the DCD file

was apparently the fee itemization submitted by McLaren with

various hours and charges either slashed out or reduced, and a

paper adding machine tape.

          On August 30, 2010, the DCD Administrator responded to

McLaren’s August 4, 2010 letter, stating that the DCD made

records available upon receipt of form WC-42, “Requests for

Information or Photo Copies,” at which time he would be advised

of the DCD’s procedures and arrangements for review of his file.

The DCD Administrator also responded that attorneys’ fee

approvals were generally not addressed via the hearings process

and that an appeal should be filed if there were any objections

to an approval.    Based on McLaren’s August 4, 2010 letter, the

DCD Administrator informed McLaren that his claim would be

forwarded to the LIRAB for further action.

          On September 7, 2010, McLaren sent a letter to the DCD

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Administrator stating that he used form WC-77 “Request to Access

Government Record” because unlike WC-42 “Request for Information

or Photocopies,” form W-77 imposed a time limit on the agency for

a response.     McLaren also stated that he interpreted the DCD

Administrator’s letter to mean that the Director had waived his

right to exercise his authority pursuant to HRS § 386-735 over

McLaren’s request for a hearing and that there would be no

hearing scheduled in response to his request.             Therefore, McLaren

requested that the instant correspondence and his June 14, 2010

objection to the approval be considered a timely appeal to the

LIRAB.     On the same day, McLaren also filed an appeal with the

LIRAB appealing the Director’s June 8, 2010 reduced approval of

his attorney’s fees and costs request.

B.   LIRAB Proceedings

      1.    McLaren’s Prehearing Memorandum

             Before the LIRAB, on December 13, 2010, McLaren

submitted a Prehearing Memorandum arguing that the DCD violated

various provisions of the Hawai#i Administrative Procedures Act

(“HAPA”) and Hawaii’s Workers’ Compensation Laws when it: (1)

acted “arbitrarily and capriciously” and “ultra vires, i.e.,

      5
            HRS § 386-73 (as amended in 2004) grants the Director original
jurisdiction over all controversies and disputes arising under HRS chapter
386.

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beyond the scope of its authority” by reducing the $7,105.52

requested in attorney’s fees and costs by 48% to $3,729.63; and

(2) refused to hold a hearing upon McLaren’s timely Application

for Hearing.

           In addition, McLaren argued that the DCD should have

approved the requested $7,105.52 in attorney’s fees and costs or

a substantially similar amount.        McLaren argued that the DCD had

no substantive information from McLaren, his file, or from the

claimant; therefore, the DCD had “engaged in a perfunctory,

arbitrary[,] and capricious ex post facto determination” of

whether McLaren’s time and cost expenditures were necessary, and

had “made no reasonable determination of ‘whether, at the time

the work was performed, a reasonable attorney would have engaged

in similar time expenditures.’”        McLaren asserted that the LIRAB

should conduct its own analysis of his fee request and “not give

the DCD’s perfunctory review any weight.”

     2.   The LIRAB’s Decision and Order

           The LIRAB dismissed McLaren’s September 7, 2010 appeal

as untimely.   The LIRAB concluded that pursuant to HRS § 386-

87(a) (1985), “[a] decision of the director shall be final and

conclusive between the parties . . . unless within twenty days

after a copy has been sent to each party, either party appeals

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therefrom to the appellate board by filing a written notice of

appeal with the appellate board of the department.”            The LIRAB

pointed out that this court in Kissell v. Labor and Industrial

Relations Appeal Board, 57 Haw. 37, 38, 549 P.2d 470 (1976) held

that the time for filing a written notice of appeal is mandatory.

Therefore, according to the LIRAB, it did not and could not

construe McLaren’s: (1) June 14, 2010 letter objecting to the

DCD’s approval and reduction of his attorney’s fees, or (2) June

28, 2010 request for a hearing as an appeal to the LIRAB of the

Director’s June 10, 2010 decision.        In addition, the LIRAB found

that McLaren’s August 4, 2010 letter expressed his recognition

that an appeal had yet to be taken.

          The LIRAB concluded that the only filing which it could

construe as an appeal was McLaren’s September 17, 2010 “Appeal

and Notice of Appeal” because it appealed the Director’s decision

with explicit citation to the statutory provision, HRS § 386-87,

governing appeals.     The LIRAB found McLaren’s failure to use the

words, “appeal” or “notice of appeal” in his numerous prior

filings conscious, deliberate and intentional.           The LIRAB

dismissed the appeal pursuant to the “mandatory nature of Section

386-87(a)” and concluded, “[g]iven the dismissal of the appeal,

the Board does not reach the issue of the reasonableness of the

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amount of attorney’s fees approved by the Director on June 8,

2010.”

     3.   Motion for Reconsideration

            McLaren filed a “Motion for Reconsideration” and a

Memorandum in Support of the Motion (“Memorandum”) with the LIRAB

requesting reconsideration of its decision to dismiss McLaren’s

appeal.   In the Memorandum, McLaren first argued that the

Director, through the DCD, had broad authority under various

provisions of HRS Chapter 386 and corresponding administrative

rules to schedule hearings in response to          reasonable requests

based on its quasi-judicial, adjudicatory authority.            McLaren

maintained that any reference to the contrary on any of the DCD’s

forms is “gratuitous and is ultra vires, and not a lawfully

promulgated administrative rule or practice pursuant to [HAPA],

and is accordingly, not lawful or binding upon anyone for any

purpose.”

            McLaren further argued that because a claimant’s

attorney’s fees and costs approved by the DCD or the LIRAB are

subtracted from compensation otherwise payable to the claimant,

and because the approved amount is valuable income to the

claimant’s attorney, an HRS § 386-86 contested case hearing at

the DCD “is warranted in every attorney fee dispute or fee

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reduction, because the claimant’s attorney automatically becomes

a party to the claim for the purpose of the appropriate fee

determination.”    McLaren argued that the DCD Administrator had

not provided any statute or rule prohibiting attorney’s fee

approvals from being addressed in the hearings process.             McLaren

asserted that the August 30, 2010 letter from the DCD was an

unconditional waiver of the DCD’s original jurisdiction and

statutory right to convene a hearing; therefore, his September 7,

2010 appeal was timely filed following the waiver.

          McLaren next argued that while many provisions in HRS

Chapter 386 contain no explicit procedural due process right to a

hearing, the DCD has the authority to convene hearings.             He

asserted that “any arbitrary, drastic reduction by DCD in the

amount of a fee request without first holding a hearing and

conducting a competent, objective, fair[,] and honest review of

all of the evidence supporting the requested fee” was the

“equivalent of unlawfully assessing a significant penalty or fine

against the claimant’s attorney.”         McLaren alleged that he had no

opportunity to investigate DCD’s rationale for its fee reduction.

He also argued that if a hearing was not warranted to review

reductions in attorney’s fees to provide reasonable explanations

of how and why the fee was reduced, the appeal process would add

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unnecessary time and expense when an appropriate, direct, and

fair resolution could be provided by the entity responsible for

creating the dispute.

          Furthermore, McLaren asserted that the DCD convened

hearings for other parties under HRS Chapter 386, such as health

care providers, who can be sanctioned under Hawaii’s Workers’

Compensation Law only after a hearing is held.           McLaren argued

that “it was plainly inconsistent and irrational” for the DCD to

“ignore long established and constitutionally protected concepts

of fundamental fairness and procedural due process” by denying a

hearing for attorney’s fees, while providing a hearing for health

care providers.

          McLaren maintained that the opportunity at a hearing to

review a fee determination and present evidence and arguments

against a fee reduction was a crucial and indispensable

procedural due process protection because DCD’s decision to

approve or reduce an attorney’s fees dictated the result of the

LIRAB’s decision.    McLaren asserted that despite the LIRAB’s de

novo authority over the DCD’s fee determinations, the LIRAB did

not provide independent, objective, fair, reasonable, or honest

reviews of attorney’s fee requests.

          McLaren also alleged that the LIRAB routinely upheld

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DCD’s determination of attorney’s fees, which reinforces

arbitrary, capricious, dishonest, and punitive decisions on fee

requests, “rather than fostering objective, fair, reasonable[,]

and honest reviews of these requests based on the actual quality

and quantity of the work performed and the results obtained.”

McLaren maintained that this system was therefore, “deficient,

defective, and dysfunctional.”

          Finally, McLaren argued that it was impossible for

anyone at DCD to satisfy the evaluation required by HRS § 386-94

and HAR § 12-10-69 without first convening a hearing to review

the entire claim, including the attorney’s skill, experience, and

particulars of the case.      McLaren asserted that the DCD lacked

access to information that would have allowed the DCD to make a

rational conclusion regarding the reasonableness of his requested

fees and costs.    He argued that the DCD therefore acted

arbitrarily and capriciously, and that its refusal to schedule a

hearing was a manifest abuse of discretion.

          4. The LIRAB’s Order Denying McLaren’s Motion for
          Reconsideration

          The LIRAB concluded that the “purpose of a motion for

reconsideration is to allow the parties to present new evidence

and/or arguments that could not have been presented earlier.”

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(Citing Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85,

114, 839 P.2d 10, 27 (1992)).         In addition, the LIRAB concluded,

“a motion for reconsideration is not the time to relitigate old

matters.”     (Citing Briggs v. Hotel Corp. of the Pac., Inc., 73

Haw. 276, 287 n.7, 831 P.2d 1335, 1342, n.7 (1992)]

            The LIRAB found that McLaren’s arguments failed to

present new evidence and/or arguments that could not have been

presented earlier.       In addition, the LIRAB concluded that McLaren

failed to demonstrate that HRS Chapter 91’s requirements were

applicable to the DCD.        The LIRAB reiterated that McLaren’s

argument regarding timeliness of his appeal was without merit

because it required a conclusion that the Director had issued a

decision after the June 8, 2010 approval of attorney’s fees, or

in the alternative, that McLaren filed an appeal before his

actual September 7, 2010 appeal to the LIRAB.             The LIRAB

concluded that neither scenario was supported by the record, and

denied McLaren’s Motion for Reconsideration.

C.   The ICA’s Memorandum Opinion

            McLaren basically reiterated his arguments to the LIRAB

on appeal to the ICA, but additionally argued that his letters to

the DCD should be construed as an application to reopen his case

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pursuant to HRS § 386-89.6      The ICA concluded that an order

awarding or denying attorney’s fees and costs pursuant to HRS §

     6
          HRS § 386-89 (1993) provides as follows:
          (a) In the absence of an appeal and within twenty days
          after a copy of the decision has been sent to each party,
          the director of labor and industrial relations may upon the
          director’s own motion or upon the application of any party
          reopen a case to permit the introduction of newly discovered
          evidence, and may render a revised decision.

          (b) The director may at any time, either of the director’s
          own motion or upon the application of any party, reopen any
          case on the ground that fraud has been practiced on the
          director or on any party and render such decision as is
          proper under the circumstances.

          (c) On the application of any party in interest, supported
          by a showing of substantial evidence, on the ground of a
          change in or of a mistake in a determination of fact related
          to the physical condition of the injured employee, the
          director may, at any time prior to eight years after date of
          the last payment of compensation, whether or not a decision
          awarding compensation has been issued, or at any time prior
          to eight years after the rejection of a claim, review a
          compensation case and issue a decision which may award,
          terminate, continue, reinstate, increase, or decrease
          compensation. No compensation case may be reviewed oftener
          than once in six months and no case in which a claim has
          been rejected shall be reviewed more than once if on such
          review the claim is again rejected. The decision shall not
          affect any compensation previously paid, except that an
          increase of the compensation may be made effective from the
          date of the injury, and if any part of the compensation due
          or to become due is unpaid, a decrease of the compensation
          may be made effective from the date of the injury, and any
          payment made prior thereto in excess of such decreased
          compensation shall be deducted from any unpaid compensation
          in such manner and by such method as may be determined by
          the director. In the event any such decision increases the
          compensation in a case where the employee has received
          damages from a third party pursuant to section 386-8 in
          excess of compensation previously awarded, the amount of
          such excess shall constitute a pro tanto satisfaction of the
          amount of the additional compensation awarded. This
          subsection shall not apply when the employer’s liability for
          compensation has been discharged in whole by the payment of
          a lump sum in accordance with section 386-54.

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386-94 is a final order for the purposes of appeal in workers’

compensation cases.     In Re Furukawa, (“Furukawa”) No. CAAP-11-460

(App. June 27, 2013) (mem.) at 3-4 (citing Lindinha v. Hilo Coast

Processing Co., 104 Hawai#i 164, 169, 86 P.3d 973, 978 (2004)).

The ICA found that McLaren did not dispute that his September 7,

2010 appeal to the LIRAB was an appeal of the Director’s June 8,

2010 decision.    Furukawa, mem. op. at 4.        The ICA concluded that

the time for filing a notice of appeal to the LIRAB is mandatory

and that the LIRAB had therefore correctly concluded that

McLaren’s appeal was untimely.       Id.    The ICA held that McLaren’s

appeal of the Director’s decision was barred by HRS § 386-87(a),

which provides that a Director’s decision is final and

conclusive, except as provided by HRS § 389-89, unless a written

notice of appeal is filed with the appellate board of the

department.   Id.   The ICA rejected McLaren’s argument that “his

filings to the DLIR constituted applications to reopen the case

pursuant to HRS § 389-89[.]”       Id.    The ICA found that none of

McLaren’s filings asserted newly discovered evidence or fraud;

therefore, the time to appeal the Director’s decision was not

tolled.   Furukawa, mem. op. at 4-5.

           Lastly, in regard to McLaren’s argument that the DCD

was required to provide a contested case hearing, the ICA

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concluded that pursuant to HRS § 91-1, a “contested case” is “a

proceeding in which the legal rights, duties, or privileges of

specific parties are required by law to be determined after an

opportunity for agency hearing.”          Furukawa, mem. op. at 5 (citing

HRS § 91-1 (2012 Repl.) (emphasis in original)).            The ICA found

that McLaren had not cited to any legal authority that provided

that requests for attorney’s fees had to be determined after an

opportunity for an agency hearing.         Id.   The ICA concluded

McLaren’s due process rights had not been infringed because

McLaren had an opportunity to appeal the reduction of his

attorney’s fees request to LIRAB pursuant to HRS § 386-87,7 but

     7
          HRS § 386-87 provides:
          (a) A decision of the director shall be final and conclusive
          between the parties, except as provided in section 386-89,
          unless within twenty days after a copy has been sent to each
          party, either party appeals therefrom to the appellate board
          by filing a written notice of appeal with the appellate
          board or the department. In all cases of appeal filed with
          the department the appellate board shall be notified of the
          pendency thereof by the director. No compromise shall be
          effected in the appeal except in compliance with section
          386-78.
          (b) The appellate board shall hold a full hearing de novo on
          the appeal.
          (c) The appellate board shall have power to review the
          findings of fact, conclusions of law and exercise of
          discretion by the director in hearing, determining or
          otherwise handling of any compensation case and may affirm,
          reverse or modify any compensation case upon review, or
          remand the case to the director for further proceedings and
          action.
          (d) In the absence of an appeal and within thirty days after
          mailing of a certified copy of the appellate board’s
          decision or order, the appellate board may, upon the
                                                               (continued...)

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had failed to timely seek an appeal.              Id.   Accordingly, the ICA

affirmed the LIRAB’s Decision and Order dismissing McLaren’s

appeal as untimely and the LIRAB’s Order denying McLaren’s Motion

for Reconsideration.

                           III.   Standards of Review

A.       Statutory Interpretation

               The interpretation of a statute is a question of law

reviewable de novo.         Lindinha, 104 Hawai#i at 171, 86 P.3d at 980

(citation omitted).         When construing a statute, this court’s

foremost obligation is to be obtained primarily from the language

contained in the statute itself.              Id. (citation omitted).      Where

the statutory language is plain and unambiguous, this court’s

sole duty is to give effect to its plain and obvious meaning.•

Schmidt v. Bd. of Directors of Ass’n of Apartment Owners of Marco

Polo Apartments, 73 Haw. 526, 531-32, 836 P.2d 479, 482 (1992).

               Implicit in the task of statutory construction is our

foremost obligation to ascertain and give effect to the intention

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               application of the director or any other party, or upon its
               own motion, reopen the matter and thereupon may take further
               evidence or may modify its findings, conclusions or
               decisions. The time to initiate judicial review shall run
               from the date of mailing of the further decision if the
               matter has been reopened. If the application for reopening
               is denied, the time to initiate judicial review shall run
               from the date of mailing of the denial decision.

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of the legislature, which is to be obtained primarily from the

language contained in the statute itself; however, when there is

doubt, doubleness of meaning, or indistinctiveness or uncertainty

of an expression used in a statute, an ambiguity exists.                Awakuni

v. Awana, 115 Hawai#i 126, 133, 165 P.3d 1027, 1034 (2007)

(citation omitted).       Pursuant to HRS § 1-15 (1985):

            Where the words of a law are ambiguous:
            (1) The meaning of the ambiguous words may be sought by
            examining the context, with which the ambiguous words,
            phrases, and sentences may be compared, in order to
            ascertain their true meaning.
            (2) The reason and spirit of the law, and the cause which
            induced the legislature to enact it, may be considered to
            discover its true meaning.
            (3) Every construction which leads to an absurdity shall be
            rejected.

B.    Interpretation of Administrative Rules

            The general principles of construction which apply to statutes
            also apply to administrative rules. . . . 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.

Int’l Bhd. of Elec. Workers, Local 1357 v. Hawaiian Tel. Co., 68

Haw. 316, 323, 713 P.2d 943, 950 (1986) (citations omitted).

C.    Administrative Appeals

              “Review of a decision made by a court upon its review

of an administrative decision is a secondary appeal.              The

standard of review is one in which this court must determine

whether the court under review was right or wrong in its

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decision.”      Brescia v. N. Shore Ohana, 115 Hawai#i 477, 491, 168

P.3d 929, 943 (2007) (citations omitted).             The standards set

forth in HRS § 91-14(g) (1993) apply to the agency’s decision.

Id.

             HRS § 91–14(g) provides:

             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, 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 are reviewable under subsection (3); findings of fact are

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

discretion is reviewable under subsection (6).”              Alvarez v.

Liberty House, 85 Hawai#i 275, 277, 942 P.2d 539, 541 (1997).

                                IV.   Discussion

A.     McLaren’s Appeal Was Timely Because His Letters Constituted
       A Request To Reopen Under HRS § 386-89

             As to McLaren’s first and third questions on

certiorari, HRS § 386-87 provides, “[a] decision of the director

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shall be final and conclusive, except as provided in HRS § 386-

89, unless within twenty days after a copy has been sent to each

party, a party appeals to the appellate board by filing a written

notice of appeal.”     (Emphasis added).      Under HRS § 386-89, the

director may reopen the case on the following grounds: (1) to

permit the introduction of newly discovered evidence, (2) that

fraud has been practiced on the director or any party, or (3) a

change in or a mistake in a determination of fact related to the

physical condition of the injured employee that is supported by a

showing of substantial evidence.

          The ICA concluded that none of McLaren’s filings

asserted newly discovered evidence or fraud; therefore, none of

his filings constituted applications to reopen the case pursuant

to HRS § 386-89.

          HRS § 386-89, however, does not specify a format for an

application to reopen a case.       DLIR’s administrative rule

governing reopening of cases, HAR § 12-10-63, provides, “[a]n

application for reopening of a case pursuant to § 386-89, HRS,

shall be in writing, shall state specifically the grounds upon

which the application is based, and shall be served upon each

party at the time of filing with the director.”           “If an

administrative rule’s language is unambiguous, and its literal

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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.”            Hawaiian Tel.

Co., 68 Haw. at 323, 713 P.2d at 950 (citation omitted).

          McLaren argues that applications to reopen a final DCD

decision are typically submitted in letter format.            His June 14,

2010 letter objecting to the DCD’s approval of his attorney’s

fees is (1) clearly in writing; (2) specifically states the

grounds upon which the application is based, that the approved

amount was substantially less than what he requested; and (3) was

served on the necessary party, the DCD.         In addition, McLaren

submitted three additional requests with the DCD: (1) an

application for a hearing on June 28, 2010, which refers to his

June 14, 2010 letter, stating that the DCD’s reduction of his

request was without foundation, and not based on any reasonable

meaningful review of the work actually performed or the actual

records and files on the workers’ compensation claim; (2) a

“Request for Access to Government Records” on July 19, 2010,

requesting access to the DCD’s records on its review and approval

of McLaren’s attorney’s fee request; and (3) a letter following

up on his July 19, 2010 request to access DCD’s records on August

4, 2010, and informing the DCD that he would appreciate prompt

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notice of when he could review the documents, or a Notice of

Hearing so that if necessary, he could appeal to the LIRAB.

           Through these requests, McLaren sought to introduce new

information that was not previously available because the DCD had

not provided any information on the reasons for reducing his

attorney’s fees.    McLaren sought access to the DCD files in order

to present information he previously would have been unable to

provide -- the reasons for DCD’s reduction of his request for

fees and costs, and his responses to those revisions.             Therefore,

McLaren’s June 14, 2010 letter to the DCD, objecting to the

Director’s June 8, 2010 approval of his attorney’s fees and

requesting a hearing, followed by his subsequent letters, was an

application to reopen his case pursuant to HRS § 386-89(a) to

permit the introduction of newly discovered evidence.

           In Alvarez v. Liberty House, 85 Hawai#i 275, 942 P.2d

539 (1997), we held that an application to reopen a case pursuant

to HRS § 386-89 tolls the twenty day time limitation to file an

appeal.   We concluded that a “director’s decision obviously

cannot be ‘final and conclusive’ while the HRS § 386-89 motion to

reopen is pending because HRS § 386-89 clearly states that the

director’s decision is subject to revision in the event the

motion to reopen is granted.       Id. at 278, 942 P.2d at 542.

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Accordingly, we held that the twenty-day time limitation to

appeal does not commence until the Director formally denies an

HRS § 386-89 application to reopen.         Id.

          The DCD did not respond to McLaren’s letters until

August 30, 2010.    In its response, the DCD stated that McLaren

should have submitted the DCD form, WC-42 (Request for

Information or Photo Copies), and upon submission of the form, he

would be advised of the DCD’s procedures and arrangements for

review of his file.     The DCD then stated that attorney’s fees

approvals were not generally addressed via the hearings process,

and informed him that, based on the indications of his August 4,

2010 letter, his claim would be forwarded to the LIRAB for

further action.    Pursuant to Alvarez, the DCD’s August 30, 2010

letter was the Director’s final decision denying McLaren’s

application to reopen his case.        Therefore, McLaren’s September

7, 2010 appeal to the LIRAB was timely.

B.   The DCD Was Not Required To Hold A Contested Case Hearing On
McLaren’s Request To Reopen, But Was Required To Set Forth Its
Reasoning

          With respect to his second and fourth questions on

certiorari, McLaren argues that he has fundamental due process

rights of notice and an opportunity to be heard at the DCD to

review and present evidence against the DCD’s fee reduction;

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therefore, the DCD should have convened a formal hearing as a

simple procedural due process protection before imposing what

“clearly amounts to a penalty in the form of an attorney fee

reduction.”   Alternatively, McLaren argues that the DCD’s

decisions should include Findings of Fact and Conclusions of Law

with some form of review standard to facilitate hearing officers

in their decisions.

          HRS § 91-1 defines “contested case” to mean “a

proceeding in which the legal rights, duties, or privileges of

specific parties are required by law to be determined after an

opportunity for agency hearing.”          (Emphasis added).    An

“‘[a]gency hearing’ refers only to such hearing held by an agency

immediately prior to a judicial review of a contested case as

provided in section 91-14.”       HRS § 91-1 (emphasis added).

HRS § 386-87 provides that the LIRAB “shall hold a full hearing

de novo on appeal.”     HRS § 386-88 states that the “decision or

order of the appellate board [i.e. LIRAB] shall be final and

conclusive, except as provided in section 386-89, unless within

thirty days after mailing of a certified copy of the decision or

order, the director or any other party appeals to the

intermediate appellate court.       Here, the legislature expressly

decided to provide a hearing before the LIRAB, and not the DCD,

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because it is the hearing immediately before judicial review.

             Moreover, the legislature expressly decided to require

contested case hearings before the LIRAB to keep DCD proceedings

informal, and to allow claimants and adjusters to represent

themselves before the DCD.          In 2004, the legislature amended

various portions of the Hawaii’s Worker’s Compensation Law, HRS

Chapter 386, in response to proposed changes to the HAR on

workers’ compensation.         Conf. Comm. Rep. No. 130, in 2004 House

Journal, at 1792.       The Director sought, among other things, to

establish contested hearing type cases at the DCD level with

formal discovery and hearing procedures.             Id. at 1793.     The

legislature rejected this proposal stating:

             The Legislature intended that all processing of claims at
             the Disability Compensation Division (DCD) level and
             proceedings before the Director be informal, not contested
             case hearings under chapter 91, HRS. To the degree possible,
             this allows claimants and adjusters to represent themselves
             at the DCD level. For that reason, the Labor and Industrial
             Relations Appeals Board was given de novo review on any
             appeal. (Section 386-87, HRS). The administrative rules
             until now have been consistent with this intent by barring
             discovery procedures typically associated at the appeals
             board level and civil litigation and only allowing the
             discovery with approval by the Director upon showing of good
             cause. (Sections 12-10-65 to 12-10-67, HAR). . . . These
             proposed changes which seek to establish contested hearing
             type cases at the DCD level are in conflict with the
             legislative intent of an informal process at the DCD level.

Id.    Thus, the legislature expressly required the LIRAB to hold a

full hearing de novo on appeal, and rejected the proposal to

require such hearings at the DCD level.            We hold, therefore, that

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the ICA did not err in concluding that the DCD was not required

to hold a contested case hearing on McLaren’s request to reopen

his attorney’s fees and costs request.

            Although the DCD was not required to provide a

contested case hearing on McLaren’s request to reopen, it was

required to set forth its reasons for reducing McLaren’s

attorney’s fees and costs.        In In re Bettencourt, 126 Hawai#i 26,

32, 265 P.3d 1122, 1128 (2011), we vacated and remanded an

administrative judge’s order awarding fees under HRS § 802-5(b)8

because, while the trial court had certified the entire amount

requested by the attorney, the administrative judge reduced the

total amount of fees by 31% without providing any notations or

explanation for the reduction.        We rejected the State’s argument

that the administrative judge had unfettered discretion to grant

or deny excess attorney’s fees and was not required to set forth

reasons for reducing the attorney’s fees.           Id.   We concluded that

HRS § 802-5(b) granted the administrative judge the authority to

independently determine whether a fee award was “fair

compensation.”     Id. at 27, 265 P.3d at 1123.         Moreover, because

      8
         HRS § 802-5 (1993 & Supp. 2010) governs the appointment of counsel
and compensation for services provided to indigent criminal defendants. HRS
§ 802-5(b) provides that the court shall determine the amount of reasonable
compensation to appointed counsel, based on the rate of $90 an hour. In
addition, it provides a maximum allowable fee schedule for the different types
of criminal cases (e.g. felony cases, misdemeanor, and appeals).

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an order granting or denying attorney’s fees under HRS § 802-5

was an appealable final order, we held the following: (1) the

administrative judge’s order awarding fees was a judicial act

subject to appellate review under the abuse of discretion

standard; and (2) “to enable appellate review of excess fee

awards, if a fee request is reduced, it is necessary for the

judge reducing the request to set forth reasons for the

reduction.”   Id.

          Although Bettencourt is distinguishable because it

involved attorney’s fees for a court appointed attorney in a

criminal case before an administrative judge and involved an

award for “excess” fees, its rationale is relevant to the instant

case.   HRS § 386-94 provides:

           Claims for services shall not be valid unless approved by
           the director or, if an appeal is had, by the appellate board
           or court deciding the appeal. Any claim so approved shall be
           a lien upon the compensation in the manner and to the extent
           fixed by the director, the appellate board, or the court.

           In approving fee requests, the director, appeals board, or
           court may consider factors such as the attorney’s skill and
           experience in state workers’ compensation matters, the
           amount of time and effort required by the complexity of the
           case, the novelty and difficulty of issues involved, the
           amount of fees awarded in similar cases, benefits obtained
           for the claimant, and the hourly rate customarily awarded
           attorneys possessing similar skills and experience. In all
           cases, reasonable attorney’s fees shall be awarded. Any
           person who receives any fee, other consideration, or
           gratuity on account of services so rendered, without
           approval, in conformity with the preceding paragraph, shall
           be fined by the director not more than $10,000.

(Emphasis added).    Similar to the attorney’s fees request in

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Bettencourt, the DCD reviews an attorney’s fee request to

determine whether a fee request is “reasonable.”            Upon appeal,

pursuant to HRS § 386-87(b), “[t]he [LIRAB] shall hold a full

hearing de novo on the appeal[,]” and HRS § 386-87(c) provides:

          The appellate board shall have power to review the findings
          of fact, conclusions of law and exercise of discretion by
          the director in hearing, determining or otherwise handling
          of any compensation case and may affirm, reverse or modify
          any compensation case upon review, or remand the case to the
          director for further proceedings and action.

(Emphasis added).    Thus, the LIRAB reviews a DCD award of

attorney’s fees and costs for abuse of discretion, but does so

after a full hearing de novo, pursuant to HRS § 386-87.

          In the instant case, McLaren submitted a detailed

breakdown of his attorney’s fees and costs to the DCD.             The DCD

appears to have reduced or denied specific charges on his

detailed breakdown with various slash marks, but similar to

Bettencourt, failed to set forth any reasons for the 47%

reduction of McLaren’s attorney’s fee request.           Thus, the LIRAB

would have been unable to ascertain whether the DCD abused its

discretion in awarding “reasonable attorney’s fees” pursuant to

HRS § 386-94.

          We therefore hold that the DCD must set forth its

reasons for reducing an attorney’s fee request for appropriate

LIRAB and possible judicial review of the reduction pursuant to

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HRS § 91-14.   In so holding, however, we do not agree with

McLaren’s alternative assertion that DCD was required to prepare

formal findings of fact and conclusions of law to explain its

reduction.   Rather, the format of a DCD order reducing attorney’s

fees and/or costs need only be sufficient to enable appropriate

review for abuse of discretion.        In this case, no reasons were

provided for the reduction.

                             V.   Conclusion

          We hold that McLaren’s appeal to the LIRAB was timely

because his June 14, 2010 letter objecting to the DCD’s reduction

of his attorney’s fee request and requesting a hearing or an

explanation for his request, followed by his subsequent

correspondence, constituted an application to reopen his case

pursuant to HRS § 386-89.      Therefore, the ICA erred in holding

that McLaren’s appeal was untimely.

          In addition, we hold that the DCD’s exercise of its

discretion pursuant to HRS § 386-94 in awarding reasonable

attorney’s fees or costs is subject to LIRAB and judicial review

under the abuse of discretion standard; therefore, to enable

appropriate review of any reductions in such requests, the DCD

must appropriately set forth its reasons for the reductions.

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          Accordingly, we vacate the ICA’s Judgment on Appeal

affirming the LIRAB’s March 21, 2011 “Decision and Order” and May

11, 2011 “Order Denying John C. McLaren’s Motion For

Reconsideration of Decision and Order Filed March 21, 2011,” and

remand the case to the DCD for further proceedings consistent

with this opinion.

John C. McLaren,                   /s/ Mark E. Recktenwald
petitioner pro se
                                   /s/ Paula A. Nakayama
Frances E.H. Lum,
Deputy Attorney General            /s/ Simeon R. Acoba, Jr.
for respondent
                                   /s/ Sabrina S. McKenna

                                   /s/ Richard W. Pollack

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