In the Matter of Attorney's Fees Pertaining to JOHN C. MCLAREN, Petitioner/Appellant, in the case of ETSUKO FURUKAWA, Claimant,
PARADISE INN HAWAI'I LLC, Employer, and FIRST SECURITY INSURANCE COMPANY OF HAWAI'I, INC., Insurance Carrier
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS. CAAP-11-0000460; CASE NO. AB 2010-341 (2-07-45923).
John C. McLaren, petitioner, Pro se.
Frances E.H. Lum, Deputy Attorney General, for respondent.
RECKTENWALD, C.J., NAKAYAMA, ACOBA, McKENNA, AND POLLACK, JJ.
[132 Hawai'i 322]
This case concerns John C. McLaren's attorney's fee request to the Director of the Department of Labor and Industrial 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.
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, 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 Director  approved McLaren's request, but reduced the amount to $3,729.63. The decision informed McLaren that he could appeal by filing a 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.
[132 Hawai'i 323] 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 § § 92-11  and 92F-12.
On August 4, 2010, McLaren sent the DCD a letter stating that pursuant to Hawai'i Administrative Rules (" EAR" ) § 2-71-13, agencies were required to respond to requests for records within ten business days, and this period had expired on 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.
[132 Hawai'i 324] On September 7, 2010, McLaren sent a letter to the DCD 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 § 386-73  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., 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 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 ...