Court Opinion

ID: 9390885
Source: CourtListenerOpinion
Date Created: 2023-04-28 20:03:33.735559+00
Date Added: 2024-06-11T17:18:37.850087
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                                     Electronically Filed
                                                     Intermediate Court of Appeals
                                                     CAAP-XX-XXXXXXX
                                                     28-APR-2023
                                                     09:03 AM
                                                     Dkt. 100 SO

                           NO. CAAP-XX-XXXXXXX

                 IN THE INTERMEDIATE COURT OF APPEALS

                         OF THE STATE OF HAWAI#I

                STEVE P. BERKOFF, Claimant-Appellant,
                                   v.
            IQ DESIGN LLC, Employer-Appellee-Appellant and
          HAWAI#I EMPLOYERS' MUTUAL INSURANCE COMPANY, INC.,
                 Insurance Carrier-Appellee-Appellant,
                                  and
             SPECIAL COMPENSATION FUND, Appellee-Appellee

  APPEAL FROM THE LABOR AND INDUSTRIAL RELATIONS APPEALS BOARD
          (CASE NO. AB 2015-273 and DCD NO. 9-05-01277)

                      SUMMARY DISPOSITION ORDER
   (By:    Hiraoka, Presiding Judge, Nakasone and McCullen, JJ.)

          Employer-Appellee-Appellant IQ Design LLC and Insurance
Carrier-Appellee-Appellant Hawai#i Employers' Mutual Insurance
Company, Inc. (collectively, Employer) appeal from the Decision
and Order entered by the Labor and Industrial Relations Appeals
Board (LIRAB or Board) on May 23, 2018, and the Order Denying
Motion for Reconsideration entered by the LIRAB on August 15,
2018. For the reasons explained below, we affirm.
          Claimant-Appellant Steve P. Berkoff1 worked for IQ
Design LLC. On August 17, 2005, Berkoff injured his back while
working. He made a claim for workers' compensation benefits.
Employer contested the claim.

     1
            Berkoff is not a party to this appeal.
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

          On March 16, 2007, the Director of the state Department
of Labor and Industrial Relations, through the Disability
Compensation Division, issued a decision on Berkoff's claim.
          On January 20, 2012, Stephen L. Demeter, M.D. reported
on his review of Berkoff's medical records. Dr. Demeter then
examined Berkoff and, by letter dated February 22, 2012, opined
that Berkoff had permanent impairment of his lower spine before
his work injury.
          On September 20, 2012, Employer requested joinder of
Appellee-Appellee Special Compensation Fund (SCF) for
apportionment of liability for permanent disability benefits.
The request was based upon Dr. Demeter's reports dated
January 20, 2012 and February 22, 2012.
          On June 12, 2015, the Director issued a supplemental
decision. The Director found that Employer's request for
apportionment with the SCF was untimely, and denied the request.
Employer appealed. The LIRAB affirmed.
          This secondary appeal followed. Employer challenges
these findings of fact:

                19.   Employer has provided no good cause for
          permitting a written notice after the 30-day period.
                20.   The Board finds that Employer has not met its
          burden to prove an entitlement to an apportionment of
          permanent disability benefits with the SCF because
          Employer's notice to the Director of possible SCF
          involvement was untimely.

          Employer challenges the LIRAB's analysis:

                Employer urges the Board to apply the analysis stated
          in Higuchi v. Otaka, Inc., AB 2012-019 (10/2/13). The Board
          finds such case distinguishable. In Higuchi, the SCF had
          been a party to the case for several years before the
          applicable rating reports were issued. Additionally, in
          Higuchi, the initial ratings were premature and speculative.

                In this case, the SCF was not previously a party to
          this case. Employer first provided notice to the Director
          of possible SCF involvement pursuant to HAR Section 12-10-33
          hundreds of days after the reports of Drs. Cupo and Demeter.
          Employer did not show any cause, let alone good cause, why
          the Director should permit filing the written notice after

                                    2
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

          the 30-day time period. Therefore, Employer alone is liable
          for payment of PTD benefits to [Berkoff].

          Employer challenges the LIRAB's conclusion of law:

                4.    The Board concludes that pursuant to Section
          386-33, HRS, and HAR Section 12-10-33, the payment of PTD
          benefits to [Berkoff] should not be apportioned between
          Employer/Insurance Carrier and the Special Compensation
          Fund.

          And Employer challenges the denial of its motion for
reconsideration.
          "Appellate review of a LIRAB decision is governed by
the provisions of the Hawai#i Administrative Procedure Act
relating to judicial review of agency action." Ihara v. State
Dep't of Land & Nat. Res., 141 Hawai#i 36, 41, 404 P.3d 302, 307
(2017) (citations omitted). The Act provides, in relevant part:

          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 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. 2016). Findings of fact are reviewed under
the clearly erroneous standard. HRS § 91-14(g)(5); Del Monte
Fresh Produce (Haw.), Inc. v. International Longshore & Warehouse
Union, Local 142, 128 Hawai#i 289, 302, 287 P.3d 190, 203 (2012).
Conclusions of law are reviewed de novo under the right/wrong

                                    3
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

standard. HRS § 91-14(g)(1), (2), (4); Ihara, 141 Hawai#i at 41,
404 P.3d at 307 (citation omitted).
          The LIRAB's decision was based upon Hawaii
Administrative Rules (HAR) § 12-10-33 (effective 2013). The rule
provides, in relevant part:

            (a)   In any case, including death, where an employer
            believes that section 386-33, HRS [Hawaii Revised
            Statutes],[2] applies, the employer shall give the director
            written notice no later than thirty calendar days after the
            date of the initial rating report indicating evidence of
            pre-existing disability. The notice shall state the reasons
            underlying the employer's belief that section 386-33, HRS,
            applies and shall include a copy of the rating report or the
            final decision of the director or the appellate board
            indicating evidence of the pre-existing disability. Upon
            good cause shown, the director may permit the employer to
            file the written notice after the expiration of the time
            period. Failure to file a notice in accordance with this
            section shall subject the employer to liability for all
            benefits.

(Emphasis added.) Employer doesn't dispute that its request to
join SCF was based on Dr. Demeter's reports dated January 20,
2012, and February 22, 2012, or that its September 20, 2012
request for apportionment with the SCF was made more than thirty
days after the date of Dr. Demeter's reports.
          The LIRAB's combined finding and conclusion that "the
payment of PTD benefits to [Berkoff] should not be apportioned
between Employer/Insurance Carrier and the Special Compensation
Fund" is supported by the undisputed facts and reflects a correct
application of the plain language of HAR § 12-10-33. See Est. of
Klink ex rel. Klink v. State, 113 Hawai#i 332, 351, 152 P.3d 504,
523 (2007) (noting that conclusion of law supported by trial
court's findings of fact and reflecting application of correct
rule of law will not be overturned).

      2
            An employer seeking to obtain contribution from SCF for PPD
benefits under HRS [Hawaii Revised Statutes] § 386-33 must prove that: (1) the
injured employee suffered from a preexisting permanent partial disability;
(2) the preexisting permanent partial disability would support an award of
thirty-two weeks of PPD benefits; and (3) the preexisting permanent partial
disability and the subsequent work-related injury combined to cause a greater
present permanent partial disability. Bumanglag v. Oahu Sugar Co., 78 Hawai #i
275, 280, 892 P.2d 468, 473 (1995).

                                      4
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

          Employer's reliance on Higuchi is misplaced. Higuchi
was injured in 1996. The employer paid PPD settlements in 1999
and 2003. A doctor's report dated November 5, 2010 apportioned
part of Higuchi's PPD to "pre-existing permanent disability."
The employer notified SCF of its potential liability on
November 10, 2010. The Director denied apportionment with the
SCF, "finding that Employer did not file a written notice of the
SCF's potential liability prior to entering into the" 1999 and
2003 settlements.
          The employer appealed. The LIRAB found that the
"November 5, 2010 report is the first rating report evidencing
pre-existing permanent disability" and concluded that the
November 10, 2010 notice was timely. In that context, the LIRAB
stated that the DCD "cannot effect a denial of apportionment by
denying joinder" of the SCF.3 By contrast, in this case
Employer's request for apportionment with SCF was made more than
thirty days after the dates of Dr. Demeter's reports. The LIRAB
did not err by applying the plain language of HAR § 12-10-33 and
denying the untimely request.
          Employer argues that the LIRAB "should not have
automatically 'rubber stamped' the . . . invalid application of
HAR § 12-10-33 . . . especially where the SCF demonstrated no
prejudice." It wasn't the SCF's burden to show prejudice because
of the late notice. HAR § 12-10-33 gives LIRAB discretion to
permit an employer to file late written notice of a claim against
the SCF "[u]pon good cause shown." Employer's opening brief
doesn't cite where in the record it proffered evidence of "good
cause" to the LIRAB. Employer's attempt to shift the burden of
persuasion to the SCF is contrary to the plain language of HAR
§ 12-10-33.

     3
            The Higuchi case was remanded for the DCD to determine the amount
of the SCF's liability. On remand, the DCD ruled that the SCF must pay PPD
benefits in excess of 104 weeks. Higuchi v. Otaka, Inc., No. CAAP-XX-XXXXXXX,
2021 WL 5754988 (Haw. App. Dec. 3, 2021) (SDO). The SCF appealed. The LIRAB
affirmed. The SCF filed a secondary appeal. We affirmed. Id.

                                      5
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

           Employer argues that the HAR § 12-10-33 deadline is
contrary to "the beneficent, humanitarian purpose" of HRS
§ 386-33. However, an injured employee will receive full PPD
benefits even if the employer misses the HAR § 12-10-33 deadline.
HAR § 12-10-33 ("Failure to file a notice in accordance with this
section shall subject the employer to liability for all
benefits.").
           Moreover, an employer missing the 30-day deadline isn't
the only situation in which the SCF wouldn't be liable for
apportionment of PPD benefits. Under HRS § 386-33, if the
injured employee's "preexisting loss or impairment of a physical
or mental function was not the subject of an award of PPD
benefits, and would not have supported an award of thirty-two
weeks of compensation for PPD, the employer is liable for the
full amount of PPD benefits." Pave v. Prod. Processing, Inc.,
152 Hawai#i 164, 170, 524 P.3d 355, 361 (App. 2022). Employer
cites no authority for the proposition that the legislature
intended that the SCF be strictly liable for apportionment of PPD
benefits whenever an injured employee had a preexisting loss or
impairment of a physical or mental function, or that the DLIR
exceeded its rule-making authority under HRS § 386-72 by
promulgating HAR § 12-10-33.
           Employer argues that the SCF waived, or should be
estopped from asserting, the 30-day deadline under HAR § 12-10-
33. Employer's briefs fail to cite the elements of waiver or
estoppel. "[W]aiver is defined as an intentional relinquishment
of a known right, a voluntary relinquishment of rights, and the
relinquishment or refusal to use a right." In re Yoneji
Revocable Tr., 147 Hawai#i 104, 111, 464 P.3d 892, 899 (App.
2020). "The elements of promissory estoppel include: (1) a
promise; (2) at the time the promisor made the promise, the
promisor must foresee that the promisee would rely upon the
promise (foreseeability); (3) the promisee does in fact rely upon
the promisor's promise; and (4) enforcement of the promise is
necessary to avoid injustice." Furuya v. Ass'n of Apt. Owners of

                                  6
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Pac. Monarch, Inc., 137 Hawai#i 371, 387, 375 P.3d 150, 166
(2016) (cleaned up). "Equitable estoppel is a defense requiring
proof that one person wilfully caused another person to
erroneously believe a certain state of things, and that person
reasonably relied on this erroneous belief to his or her
detriment." Herrmann v. Herrmann, 138 Hawai#i 144, 155 n.11, 378
P.3d 860, 871 n.11 (2016) (cleaned up). "Quasi-estoppel . . . is
a species of equitable estoppel precluding one from asserting to
another's disadvantage, a right inconsistent with a position
previously taken by him or her." Id. (cleaned up).
          Employer fails to cite any evidence in the record to
support its argument that the SCF waived, or should be estopped
from asserting, the 30-day deadline under HAR § 12-10-33.
Employer's waiver and estoppel argument is without merit.
          Employer argues that the LIRAB erred by denying the
motion for reconsideration. "An order granting or denying a
motion for reconsideration is reviewed for abuse of discretion.
An abuse of discretion occurs where the circuit court has clearly
exceeded the bounds of reason or has disregarded rules or
principles of law or practice to the substantial detriment of a
party litigant." Tax Appeal of Subway Real Est. Corp. v. Dir. of
Taxation, State of Haw., 110 Hawai#i 25, 30, 129 P.3d 528, 533
(2006) (cleaned up).
          The purpose of a motion for reconsideration is to allow
the parties to present arguments that could not have been
presented during the earlier adjudicated hearing.
Reconsideration is not a device to raise arguments that could and
should have been brought to the LIRAB's attention during the
earlier hearing. Cf. Sousaris v. Miller, 92 Hawai#i 505, 513,
993 P.2d 539, 547 (2000). Employer's motion for reconsideration
was filed on June 4, 2018. It again argued that HAR § 12-10-33
was "an invalid agency rule" that "impose[d] an arbitrary,
artificial 30-day deadline[.]" The LIRAB wasn't wrong to dismiss
that argument the first time it was made, and did not abuse its

                                  7
  NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

discretion by denying the motion for reconsideration, which
simply repeated the argument.
          Finally, Employer argues that a conflict of interest
existed because "[t]he SCF, the Special Compensation Fund [sic],
and the [D]irector are essentially one and the same entities
[sic]." According to the opening brief, Employer made this
argument during the hearing on its motion for reconsideration.
The conflict of interest issue could, and should, have been made
to the LIRAB during the appeal hearing. The LIRAB did not abuse
its discretion by denying Employer's motion for reconsideration
on that issue.
          For the foregoing reasons, the LIRAB's Decision and
Order entered on May 23, 2018, and Order Denying Motion for
Reconsideration entered on August 15, 2018, are affirmed.
          DATED: Honolulu, Hawai#i, April 28, 2023.

On the briefs:
                                      /s/ Keith K. Hiraoka
Brian G.S. Choy,                      Presiding Judge
Keith M. Yonamine,
for Employer-Appellee-                /s/ Karen T. Nakasone
Appellant and Insurance               Associate Judge
Carrier-Appellee-Appellant.
                                    /s/ Sonja M.P. McCullen
Li-Ann Yamashiro,                   Associate Judge
Robyn M. Kuwabe,
Deputy Attorneys General,
Department of the Attorney General,
State of Hawai#i,
for Appellee-Appellee
Special Compensation Fund,
Department of Labor and
Industrial Relations.

Andrew A. Cheng,
for Claimant-Appellant.

                                  8