Jou v. Schmidt

• Decision Date: 29 April 2008
• Docket Number: No. 27369.,27369.
• Citation: 184 P.3d 792,117 Haw. 477
• Parties: Emerson M.F. JOU, M.D., Provider-Appellant, v. J.P. SCHMIDT, Insurance Commissioner, Department of Commerce and Consumer Affairs, State of Hawaii, Appellee-Appellee, and Island Insurance Company, Ltd., Respondent-Appellee.
• Court: Hawaii Court of Appeals

184 P.3d 792

117 Haw. 477

Emerson M.F. JOU, M.D., Provider-Appellant, v. J.P. SCHMIDT, Insurance Commissioner, Department of Commerce and Consumer Affairs, State of Hawaii, Appellee-Appellee, and Island Insurance Company, Ltd., Respondent-Appellee.

No. 27369.

Intermediate Court of Appeals of Hawai`i.

April 29, 2008.

As Corrected April 30, 2008.

Stephen M. Shaw, on the briefs, for Provider-Appellant.

Mark J. Bennett, Attorney General of Hawai`i, David A. Webber, Deborah Day Emerson, Deputy Attorneys General, on the briefs, for Appellee-Appellee.

Michael N. Tanoue, Patrick K. Kelly, Jeffrey S. Masatsugu (The Pacific Law Group), for Respondent-Appellee.

FOLEY, Presiding Judge, FUJISE, and LEONARD, JJ.

Opinion of the Court by LEONARD, J.

In this secondary appeal, Provider-Appellant Emerson M.F. Jou, M.D. (Jou) appeals from the Judgment filed in the Circuit Court of the First Circuit (Circuit Court) on May 23, 2005 (Judgment).¹ The Circuit Court ruled in favor of Insurance Commissioner J.P. Schmidt (Commissioner Schmidt), Department of Commerce and Consumer Affairs of the State of Hawai`i (DCCA), and Island Insurance Company, Ltd. (Island), affirming Commissioner Schmidt's Final Order Following Remand, which was filed on May 26, 2004. Jou filed a timely notice of appeal on June 21, 2005.

On appeal, Jou argues, inter alia, that the Circuit Court erred in: (1) denying his request that the presiding judge be disqualified based on the composition of the Hawai`i Judicial Selection Commission (JSC), which included an Island employee; (2) finding that the written notice of denial of benefits mandated by Hawaii Revised Statutes (HRS) § 431:10C-304(3)(B) is inapplicable to billing disputes, as opposed to treatment disputes; and (3) finding that the payment of interest mandated by HRS § 431:10C-304(4) is inapplicable when a payment is delayed in conjunction with a billing dispute. For the reasons discussed herein, we hold: (1) Jou failed to submit a disqualifying affidavit satisfying the statutory requirements of HRS § 601-7 and, in light of the rules governing the conduct of the JSC, there is no appearance of impropriety requiring the disqualification of the presiding judge in this case; (2) notice of denial was required; and (3) interest was due to Jou in this case.

BACKGROUND

On March 26, 1996, Evelyn Dereas (Dereas) suffered injuries in an automobile accident. Jou treated Dereas and subsequently billed Island for treatment rendered between April 24, 1996, and January 29, 1998. Island paid some claims, denied certain claims, "down-coded" several of Jou's claims,² and requested additional information from Jou regarding two of his billing statements. Island claimed that the information was necessary in order to determine the propriety of the amount and the coding of the charges in Jou's bills. At some point Jou responded to the information requests, although the record is unclear as to when, and there appeared to be a series of communications between Jou and Island on these and other bills. On April 20, 1998, for example, Jou sent to Island an "Analysis of Unpaid Bills," wherein he itemized the procedures and supplies denied or reduced by Island, and claimed a total unpaid balance due, excluding taxes, of $1,371.76.

On December 1, 1998, Jou requested an administrative hearing before the Insurance Division of the DCCA. Jou claimed, inter alia, that Island had improperly failed to issue a notice of denial of his bills and to pay him $697.05 in interest. Island paid in full Jou's bills in the amount of $1,371.76 on May 25, 1999, without interest.

On July 12, 2002, Jou moved in the agency proceeding for summary judgment against Island. He argued, inter alia, that: (1) Island failed to act on Jou's demands for payment within an applicable thirty-day deadline as mandated under HRS § 431:10C-304(3); (2) any denial of Jou's claims after the thirty-day deadline were void; and (3) Jou was entitled to the payment of interest in the amount of $697.05. Island filed a cross-motion for summary judgment against Jou on August 2, 2002, arguing: (1) Island was not required to issue a denial notice because the disputed claims did not involve a challenge to the reasonableness or appropriateness of the care rendered; (2) Jou was not entitled to interest on the balance withheld by Island while Island sought additional information from him; and, (3) Jou failed to comply with Island's requests for additional information. The motions were heard on August 20, 2002.

On September 17, 2002, the Hearings Officer made the following Findings of Fact (FOFs):

1. On March 26, 1996, Evelyn Dereas ("Dereas") was involved in a motor vehicle accident.

2. As a result of injuries sustained in the motor vehicle accident, Respondent made payments of no-fault benefits to and on behalf of Dereas, including payments to Provider.

3. In response to various bills [^{fn 2}] received from Provider for treatment rendered to Dereas, Respondent requested additional information and documentation from Provider to determine whether he had charged the correct amounts and had applied the appropriate CPT codes.

4. On or about May 25, 1999, Respondent made a payment of no-fault benefits to Provider for services provided to Dereas between April 24, 1996 and January 29, 1998 [^{fn 3}]. The payment totaled $1,371.76.

[fn 2] The record presented here did not include the specific bills in question.

[fn 3] There was very little in the record to determine when the requested information was provided to Respondent.

[RA 55-57]

The Hearings Officer also made Conclusions of Law (COLs), including:

[1.] There is no dispute here that the benefits in question were not denied as being inappropriate, unreasonable, or unnecessary; rather Respondent disputed the amount of the various charges and the procedure codes used. As such, the Hearings Officer concludes that Respondent was not required to issue a formal denial of no-fault benefits pursuant to the provisions of Hawaii Revised Statutes ("HRS") § 431:10C-304(3)(B).

[2.] As to Respondent's Cross-Motion for Summary Judgment, Provider does not point to and the Hearings Officer cannot find any authority allowing for the payment of interest allegedly accruing to Provider while Respondent disputed Provider's application of the CPT codes [^{fn 4}]. The Hearings Officer therefore concludes that Provider is not entitled to the claimed interest under the circumstances of this case.

[fn 4] There has been no showing that the requests for additional information were inappropriate or otherwise improper.

Based on these findings and conclusions, the Hearings Officer recommended denial of Jou's motion for summary judgment and the granting of Island's motion for summary judgment. On November 29, 2002, Insurance Commissioner Wayne Metcalf (Commissioner Metcalf) issued an order remanding the case for further proceedings, concluding that the issue in dispute was whether Jou was entitled to interest under HRS § 431:10C-304(4). Commissioner Metcalf's order further stated: "[T]he real issue is whether the insurer had received reasonable proof of the fact and amount of benefits accrued, and demand for payment thereof, and if so, when did the insurer receive such reasonable proof[.]"

On December 12, 2002, Island filed a motion for reconsideration, arguing that HRS § 431:10C-304(4) does not apply to billing disputes, and to the extent that it does apply, Jou did not provide "reasonable proof" of the fact and amount of benefits accrued.

On March 24, 2004, Commissioner Schmidt granted Island's motion for reconsideration and ordered the case remanded for further proceedings and the issuance of a recommended order consistent with the Commissioner's Final Order issued in Jou (Puaoi) v. First Ins. Co.; MVI-2002-6-P (Puaoi).³

On April 27, 2004, the Hearings Officer made a Recommended Order Upon Remand to adopt the September 17, 2002, Hearing Officer's Findings of Fact, Conclusions of Law, and Recommended Order Denying Provider's Motion for Summary Judgment and Granting Respondent's Cross-Motion for Summary Judgment, concluding that the recommended order was consistent with the Commissioner's Final Order in Puaoi.

On May 26, 2004, Commissioner Schmidt entered a Final Order Following Remand, adopting the Hearing Officer's Findings of Fact, Conclusions of Law, and Recommended Order, denied Jou's motion for summary judgment, and granted Island's motion for summary judgment.

On June 25, 2004, Jou appealed from the Commissioner's Final Order to the Circuit Court. Jou asserted that he was entitled to interest on Island's unpaid balance pursuant to HRS § 431:10C-304(4), and that affirming Commissioner Schmidt's order would result in various constitutional violations. Prior to the hearing on the matter, Jou sought to disqualify the presiding Circuit Court judge, Sabrina S. McKenna, by filing a Declaration of Stephen M. Shaw, his counsel, pursuant to HRS § 601-7.

At a hearing on January 24, 2005, Judge McKenna orally denied Jou's request for disqualification. On February 17, 2005, the Circuit Court entered an Order Affirming Commissioner Schmidt's Final Order Following Remand (Order). The Court held that Jou "has not met the burden of establishing that any finding of fact was clearly erroneous, and has not established the existence of any ground provided by HRS § 91-14(g) as a basis for remand, reversal, or modification of the Commissioner's Final Order." Judgment was entered on May 23, 2005.

POINTS ON APPEAL

On appeal, Jou argues that the Circuit Court:

(1) erred in denying his request for disqualification of Judge McKenna;

(2) erred in finding that Island was not required to issue a notice of denial after it made reduced and partial payments on his claims;

(3) erred in finding that Jou was not entitled to interest on the balance withheld by Island thirty days after he submitted billing statements and demand for payment;

(4) erred in affirming the September...