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In re Cost Review Billing Dispute Regarding: Linogon

Intermediate Court of Appeals of Hawaii

December 30, 2013

In the Matter of Cost Review Billing Dispute Regarding: DARRELL D. LINOGON, Claimant-Appellee,
v.
CITY MILL, Employer-Appellee, and ARGONAUT INSURANCE COMPANY, Insurance Carrier-Appellee,
v.
EMERSON M.F. JOU, M.D., Appellant-Appellant. In the Matter of Cost Review Billing Dispute Regarding: CLARITA PINSON, Claimant-Appellee,
v.
WAIKIKI BEACH MARRIOTT RESORT, Employer-Appellee, and MARRIOTT CLAIMS SERVICE ASSOCIATION, Insurance Carrier-Appellee,
v.
EMERSON M.F. JOU, M.D., Appellant-Appellant.

NOT FOR PUBLICATION IN WEST'S HAWAI'I REPORTS AND PACIFIC REPORTER

APPEAL FROM THE LABOR AND INDUSTRIAL RELATIONS APPEALS BOARD. CASE NOS. AB 2009-230, 2-00-14173)), AB 2009-231 (2-01-06278))

Stephen M. Shaw, for Appellant-Appellant

Kenneth T. Goya, Steven L. Goto, Richard F. Nakamura, (Ayabe, Chong, Nishimoto, Sia & Nakamura, LLLP) for Employer/Insurance Carrier-Appellee

Nakamura, C.J., and Foley and Fujise, JJ.

SUMMARY DISPOSITION ORDER

These two appeals, which we consolidated for disposition, arise from a dispute over whether the Director of Labor and Industrial Relations (Director) should have required the payment of interest on disputed billings under Hawai'i Administrative Rules (HAR) § 12-15-94(c). At the time relevant to these appeals, HAR § 12-15-94(c) (1996) provided:

The employer, after accepting liability, shall pay all charges billed within sixty calendar days of receipt of such charges except for items where there is a reasonable disagreement. If more than sixty calendar days lapse between the employer's receipt of an undisputed billing and date of payment, payment of billing shall be increased by one per cent per month of the outstanding balance. In the event of disagreement, the employer shall pay for all acknowledged charges within sixty days of receipt and shall negotiate with the provider of service on items in disagreement.

(Emphasis added.)[1]

Appellant-Appellant Emerson M.F. Jou, M.D. (Dr. Jou) appeals from two decisions and orders issued by the Labor and Industrial Relations Appeals Board (LIRAB). In Appeal No. 30710, Dr. Jou appeals from the Decision and Order filed by the LIRAB on August 9, 2010, in Case No. AB 2009-230 in favor of Employer-Appellee City Mill (City Mill) and Insurance Carrier-Appellee Argonaut Insurance Company (Argonaut) (collectively, "Employer 1"). In Appeal No. 30711, Dr. Jou appeals from the Decision and Order filed by the LIRAB on August 2, 2010, in Case No. AB 2009-231 in favor of Employer-Appellee Waikiki Beach Marriott Resort (Waikiki Marriott) and Insurance Carrier-Appellee Marriott Claims Service Association (Marriott) (collectively, "Employer 2").

The LIRAB granted the motions for summary judgment filed by Employer 1 and Employer 2, and thereby affirmed the Director's determinations that Dr. Jou was not entitled to interest on billings which Employer 1 and Employer 2 had disputed. As explained below, we affirm the LIRAB's Decision and Order in both cases.

I.

Much of the relevant background facts and the procedural history in these consolidated appeals is set forth in our decision in Jou v. Hamada, 120 Hawai'i 101, 201 P.3d 614 (App. 2009), and will not be repeated here.[2] in Jou, we held that the provision of HAR § 12-15-94(d) that prohibited any appeal of the Director's decisions in billing disputes between employers and medical service providers in workers' compensation cases was invalid as beyond the Director's rulemaking power. Id. at 104, 201 P.3d at 617. We further held that Dr. Jou shall be permitted to file appeals of the Director's decisions in these two cases with the LIRAB within twenty days of the effective date of our judgment on appeal. Id. at 114, 201 P.3d at 627. We expressed no opinion on the merits of Dr. Jou's challenges to the Director's decisions. Id.

Dr. Jou thereafter appealed the Director's decisions, which had denied his requests for interest, to the LIRAB. Employer 1 and Employer 2 both moved for summary judgment, arguing, among other things, that (1) HAR § 12-15-94(c) only authorized the imposition of a one percent interest penalty on undisputed unpaid invoices, and (2) because there was no factual dispute that Employer 1 and Employer 2 had disputed Dr. Jou's invoices, Employer 1 and Employer 2 were entitled to a decision in their favor as a matter of law. Dr. Jou filed oppositions to the motions of Employer 1 and Employer 2.

In August 2010, the LIRAB issued its decisions and orders granting the motions for summary judgment filed by Employer 1 and Employer 2. In granting Employer l's motion for summary judgment in Case No. AB 2009-230, the LIRAB concluded: "There is no factual disagreement that [Employer 1] disputed Dr. Jou's November 9, 2000 bill for massage services rendered from October 2, 2000 through October 23, 2000. Said dispute was reasonable, and, therefore, the interest provisions of [HAR] § 12-15-94(c) . . . do 'not apply."

In granting Employer 2's motion for summary judgment in Case No. AB 2009-231, the LIRAB determined that Dr. Jou's appeal only raised the issue of whether Dr. Jou was entitled to interest on his billings for office visits on June 2, 2001, and June 18, 2001, and did not raise the issue of his entitlement to interest on the billings for massage services for the period May 10, 2001, to June 21, 2001. The LIRAB agreed with Employer 2!s argument that the interest provisions of HAR § 12-15-94(c) did not apply to disputed billings. The LIRAB stated:

[Employer 2] argues that because there was no factual dispute that [Employer 2] disputed Dr. Jou's invoices, and because only "undisputed" unpaid invoices are subject to the 1% interest penalty under [HAR] § 12-15-94(c) . . ., [Employer 2] is entitled to a decision as a matter of law. The [LIRRB1 finds [Employer 2's] is position to be correct; because ["Employer 21 timely disputed Dr. Jou's bills for office visits on June 2, 2001 and June 18, 2001, the interest provisions of THAR1 § 12-15-94(c) ... do not apply.

(Emphasis added.) The LIRAB concluded: "There is no factual disagreement that [Employer 2] disputed Dr. Jou's bill for office visits on June 2, 2001 and June 18, 2001. Said dispute was reasonable, and, therefore, the interest provisions of [HAR] § 12-15-94(c) ... do not apply."

II.

On appeal. Dr. Jou argues in both Appeal No. 30710 and Appeal No. 30711 that: (1) the LIRAB erred in granting summary judgment on reasonableness as a matter of law; (2) the LIRAB erred in overlooking the record which showed that the employer's dispute was unreasonable; (3) "decisions, including subsequent cost-branch review letters[, ] did not support . . . [the] LIRAB's conclusion of reasonableness" (initial capitalization omitted); (4) the LIRAB's decision to uphold the Director's decision violated Dr. Jou's due process rights; and (5) the LIRAB misconstrued HAR § 12-15-94(c) in denying Dr. Jou's request for interest.[3]

A.

The decision in these two appeals turns on the interpretation of HAR § 12-15-94(c).[4] Namely, (1) whether HAR § 12-15-94(c) mandates the imposition of the one percent per month interest penalty only on an employer who does not dispute the billings and fails to pay for more than sixty days or (2) whether HAR § 12-15-94(c) also requires the Director to determine the reasonableness of an employer's billing dispute and to impose the one percent per month interest penalty if the Director determines the employer's dispute was unreasonable.

As noted, at the time relevant to these appeals, HAR § 12-15-94(c) provided:

The employer/ after accepting liability, shall pay all charges billed within sixty calendar days of receipt of such charges except for items where there is a reasonable disagreement. If more than sixty calendar days lapse between the employer's receipt of an undisputed billing and date of payment, payment of billing shall be increased by one per cent per month of the outstanding balance. In the event of disagreement, the employer shall pay for all acknowledged charges within sixty days of receipt and shall negotiate with the provider of service on items in disagreement.

(Emphasis added.)

Employer 1 and Employer 2 argue that HAR § 12-15-94(c) clearly provides that the one percent per month interest penalty is to be imposed only when an employer fails to pay an undisputed bill within sixty days. We agree. We conclude that under the plain language of HAR § 12-15-94(c), the imposition of the one percent per month interest penalty only applies to undisputed billings that remain unpaid for more than sixty calendar days. See Kaleikini v. Yoshioka, 128 Hawai'i 53, 67, 283 P.3d 60, 74 (2012) (applying general principles of statutory construction to the interpretation of administrative rules).

Our interpretation of HAR § 12-15-94(c) also appears to be consistent with how the LIRAB and the Director have interpreted the rule. See id. ("An agency's interpretation of its own rules is generally entitled to deference.") As noted, in granting Employer 2's motion for summary judgment, the LIRAB stated that Employer 2's position that the one percent interest penalty under HAR § 12-15-94(c) only applies to undisputed billings was correct. The record also reflects that in denying Dr. Jou's request that Employer 1 be required to pay the interest penalty, the Administrator of the Disability Compensation Division of the Department of Labor and Industrial Relations stated:

Pursuant to Section 12-15-94 (c), Hawaii Administrative Rules, a one per cent per month simple interest is invoked for late payment of fees with no just cause, i.e., involves no dispute over a fee.
Therefore, with employer's payment of the disputed fees, we deem this bill complaint resolved and employer shall not be liable for an assessment of one per cent per month simple interest.

HAR § 12-15-94 (c) was implemented pursuant to Hawaii Revised Statutes (HRS) § 386-21(c). HRS § 386-21(c) (Supp. 2012) provides in relevant part:

When a dispute exists between an insurer or self-insured employer and a medical services provider regarding the amount of a fee for medical services, the, director may resolve the dispute in a summary manner as the director may prescribe; provided that a provider shall not charge more than the provider's private patient charge for the service rendered.

(Emphasis added.) HRS § 386-21(c) authorizes the Director to resolve disputes over billings for medical services in an summary manner; it does not require the Director to determine the reasonableness of a billing dispute or to impose an interest penalty on a disputed billing if the Director determines the employer's dispute was unreasonable. Accordingly, HAR § 12-15-94(c)'s imposition of an interest penalty only on undisputed billings that remain unpaid for sixty calendar days does not conflict with, and is not inconsistent with, HRS § 386-21(c).

The Director could rationally have decided to limit the interest penalty to situations where the criteria for imposing the penalty was clear - the billing was not disputed - and to avoid creating additional issues, which would detract from resolving billing disputes in a summary manner, that would be generated by extending the interest penalty to disputed billings upon a determination by the Director that the employer's dispute was unreasonable. We note that HAR § 12-15-94 is not devoid of disincentives to an employer's disputing a billing unreasonably. HAR § 12-15-94(d) authorizes the Director to assess a service fee of up to $500 against a party who fails to negotiate a disputed billing in good faith. In addition, HRS 386-93 (a) (Supp. 2012) authorizes the Director and the LIRAB to impose attorney's fees and costs against a party who has without reasonable ground brought or defended a proceeding under the Hawai'i Workers' Compensation Law.[5]

B.

Because we construe HAR § 12-15-94(c) as authorizing the imposition of the interest penalty only on undisputed billings, and because it is uncontested that the billings on which Dr. Jou sought the imposition of the interest penalty were disputed by Employer 1 and Employer 2, we conclude that the LIRAB did not err in granting summary judgment in favor of Employer 1 and Employer 2. In light of our construction of HAR § 12-15-94(c), we need not address Dr. Jou's claims that the LIRAB erred in determining that the disputes by Employer 1 and Employer 2 over Dr. Jou's billings were reasonable. Dr. Jou does not cite any persuasive authority to support his claim that the LIRAB violated his due process rights, and we reject this claim. Based .on our analysis, we also reject Dr. Jou's claim that the LIRAB misconstrued HAR § 12-15-94(c) in denying his requests for interest.

III.

For the foregoing reasons, we affirm: (1) the August- 9, 2010, Decision and Order filed by the LIRAB in Case No. AB 2009. 230 and (2) the August 2, 2010, Decision and Order filed by the ' LIRAB in Case No. AB 2009-231.


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