Flores v. Barretto, 23071.

• Decision Date: 24 September 2002
• Docket Number: No. 23071.,23071.
• Citation: 54 P.3d 441,99 Haw. 270
• Parties: Seagram FLORES, Plaintiff-Appellant, v. Renee BARRETTO, Defendant-Appellee. and John Does 1-10, Jane Does 1-10, Doe Partnerships, Corporations, and/or Other Entities 1-10, Defendants.
• Court: Hawaii Supreme Court

54 P.3d 441

99 Haw. 270

Seagram FLORES, Plaintiff-Appellant, v. Renee BARRETTO, Defendant-Appellee. and John Does 1-10, Jane Does 1-10, Doe Partnerships, Corporations, and/or Other Entities 1-10, Defendants.

No. 23071.

Supreme Court of Hawaii.

September 24, 2002.

Reconsideration Denied October 23, 2002.

Samuel R. Blair and Waiyee Carmen Wong, Koloa, on the briefs, for plaintiff-appellant.

Deborah S. Jackson, for defendant-appellee.

NAKAYAMA, RAMIL, and ACOBA, JJ.; ACOBA, J., concurring separately, with whom RAMIL, J., joins; and MOON, C.J., dissenting, with whom LEVINSON, J., joins.

Opinion of the Court by NAKAYAMA, J.

Plaintiff-appellant Seagram Flores appeals from the judgment of the fifth circuit court, the Honorable George M. Masuoka presiding, ordering Renee Barretto to pay Flores $8,239.15 in special damages and $7,500.00 in general damages, including court costs. On appeal, Flores asserts that the trial court erred when it concluded that a prior related arbitration finding was not binding upon it under the doctrine of collateral estoppel. For the reasons set forth below, we affirm the judgment of the trial court.

I. BACKGROUND

On October 20, 1993, Flores and Dominique Gonsalves were passengers in an automobile driven by Dennis Barretto (Dennis) when their vehicle was struck by an automobile driven by defendant-appellee Renee Barretto.¹ Both vehicles were insured by AIG Hawai`i Insurance Company (AIG).

On November 2, 1993, Flores submitted a claim for no-fault benefits to AIG, alleging that he suffered neck and back injuries as a result of the October 20, 1993 accident.² AIG began paying benefits on Flores's initial claim, which included chiropractic treatment by Scott Basto, D.C. and massage therapy provided by Aloha Island Clinic.

On December 28, 1993, Basto submitted a three-month extended treatment plan [hereinafter, "the December 1993 Plan"] to AIG, recommending exercise, chiropractic adjustments, and massage therapy. The December 1993 Plan proposed treatments from January 1, 1994 through March 31, 1994 at an estimated cost of $5,200.00. AIG challenged the December 1993 Plan, and the challenge was submitted to peer review.³ Despite AIG's challenge, Flores continued to receive chiropractic adjustments and massage therapy according to the December 1993 Plan.

On April 13, 1994, the peer review report disagreed with the December 1993 Plan, recommending no further chiropractic care be authorized for Flores, but recommended that massage therapy continue. The report further recommended that Flores be examined by an orthopedic surgeon or neurosurgeon for a second opinion regarding Flores's continued lower back pain. Based upon the peer review report, AIG denied coverage for the treatment proposed under the December 1993 Plan.

On May 18, 1994, Flores filed a request for arbitration regarding AIG's denial of coverage for the December 1993 Plan. On April 7, 1995, the arbitrator entered his decision and award. The arbitrator identified four issues:

1. Whether the provider's determination that the nature of Claimant's injuries and the process of recovery required a Treatment Plan resulting in fee schedules or treatment guidelines being exceeded was correct.

2. Whether the Treatment Plan for chiropractic care, and the proposed expenses for chiropractic care, were appropriate and reasonable.

3. Whether the Insurer's denial of no-fault benefits was correct.

4. Whether the Insurer may require the challenged Treatment Plan to be resubmitted to a Peer Review Organization.

In his legal analysis and conclusions, the arbitrator stated that "[t]he first two issues concern whether the injuries suffered by the Claimant required services and treatment beyond those nominally allowed in the treatment guidelines." His conclusion was that Flores met his burden of proof as to the reasonableness and appropriateness of the December 1993 Plan, and that Flores was entitled to have AIG pay for the chiropractic and other treatment specified in the December 1993 Plan. The arbitrator concluded, insofar as the denial of no-fault benefits, the insurer had no grounds for denying coverage. After a lengthy discussion, not applicable to the issues herein, the arbitrator finally concluded that there is no statute or procedure for resubmitting the denial of benefits to a peer review organization. The arbitrator ordered AIG to pay for the treatment prescribed in the December 1993 Plan. No motion to vacate, modify, or correct the arbitration award was made, and neither party moved to confirm the arbitrator's decision as provided by HRS § 658-8 (1993).⁴

On February 22, 1994, Flores and Gonsalves filed a complaint in the circuit court of the fifth circuit, alleging that Renee's negligence was the direct and proximate cause of their injuries. On June 21, 1996, Gonsalves and Renee filed a stipulated dismissal with prejudice of Gonsalves's complaint. On August 9, 1996, Flores filed a motion for partial summary judgment on liability. Flores requested the circuit court rule that: (1) Flores was not comparatively negligent; and (2) Renee was negligent as a matter of law in causing the collision. Renee, in her memorandum in opposition to Flores's motion for partial summary judgment, did not dispute the issue of liability, but contested the issues of causation, damages, and intent. Renee stated that there were genuine issues of material fact regarding whether Renee's action was intentional, issues not relevant to liability.

In a jury-waived bench trial, Flores argued that he sought compensation for his injuries, including the amount of medical expenses that exceeded the no-fault limits and damages for pain and suffering. Flores asserted that liability had already been established by the arbitrator's decision; therefore, AIG was required to pay the medical expenses previously determined reasonable and necessary and any pain and suffering damages. Conversely, AIG argued that the arbitrator was never called upon to determine the liability of Renee or AIG or the presence of pre-existing conditions. Rather, according to AIG, the arbitrator only determined whether the treatment plan complied with HRS chapter 431:10C (1993) as implemented pursuant to Hawai`i Administrative Rules (HAR) § 16-23-95.⁵

At the conclusion of the bench trial, the circuit court asked for written arguments. The court stated "I already ruled on negligence, so don't cover that at all. . . . It's only legal or proximate cause and substantial (inaudible). Okay? And the amount of damages." The circuit court entered its "Findings of Fact, Conclusions of Law [COL], Decision, and Order" on March 25, 1999. The circuit court's COL number 1, the subject of this appeal, provided that "[t]he arbitration award rendered in Special Proceeding No. 94-27, Flores v. American Int'l Adjustment, et al., by arbitrator Max Graham, Esq., finding that Flores's no-fault benefits of $15,626.21 were reasonably and necessarily incurred, is not binding on this court on the issue of Flores's medical expenses, in the form of special damages, were reasonably and necessarily incurred in this action." Based upon this conclusion, the circuit court also concluded that Flores was to be awarded his expenses for treatment through December 31, 1993 as a matter of law, but not awarded expenses for treatment thereafter. Flores timely appealed.

II. STANDARD OF REVIEW

We review the trial court's [conclusions of law] de novo under the right/wrong standard. Raines v. State, 79 Hawai`i 219, 222, 900 P.2d 1286, 1289 (1995). "Under this . . . standard, we examine the facts and answer the question without being required to give any weight to the trial court's answer to it." State v. Miller, 4 Haw.App. 603, 606, 671 P.2d 1037, 1040 (1983). See also Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 119, 839 P.2d 10, 28,

reconsideration denied, 74 Haw. 650, 843 P.2d 144 (1992). Thus, a [conclusion of law] "is not binding upon the appellate court and is freely reviewable for its correctness." State v. Bowe, 77 Hawai`i 51, 53, 881 P.2d 538, 540 (1994) (citation omitted).

Chun v. Board of Trustees of Employees Retirement Sys., 92 Hawai`i 432, 438-39, 992 P.2d 127, 133-34 (2000) (quoting State v. Medeiros, 89 Hawai`i 361, 364, 973 P.2d 736, 739 (1999)) (citation omitted).

III. DISCUSSION

Based on the arbitrator's decision that treatment under the December 1993 Plan was compensable, Flores argues that the doctrine of collateral estoppel barred the trial court from subsequently ruling that treatments by Basto and Aloha Island Clinic after December 31, 1993 were not reasonable and necessary expenses. In essence, Flores argues that if an arbitrator in a no-fault proceeding determines that a defendant is liable for no-fault benefits, he or she is precluded from arguing issues of causation and actual damages in subsequent personal injury litigation. Such reasoning, if adopted, would drastically alter the function of no-fault insurance.

Hawaii's no-fault law was initially introduced in 1973. The purpose the no-fault law serves is

to provide motor vehicle accident victims assured, adequate and prompt reparation for certain economic losses without regard to fault. The clear objectives of the law are to: (1) institute insurance reform in order to (a) expedite the settling of all claims, (b) create a system of reparations for injuries and loss arising from motor vehicle accidents, (c) compensate these damages without regard to fault, and (d) modify tort liability for these accidents; and (2) to reduce the cost of motor vehicle insurance by establishing a uniform system of motor vehicle insurance.

Parker v. Nakaoka, 68 Haw. 557, 559, 722 P.2d 1028, 1030 (1986) (citations omitted).

Hawaiian Ins. & Guar. Co., Ltd. v. Financial Sec. Ins. Co., 72 Haw. 80, 91, 807 P.2d 1256, 1262 (1991); see also Stand. Comm. Rep. No. 187, in 1973 House Journal, at 836; Del Rio v. Crake, 87 Hawai`i 297, 305, 955 P.2d 90, 98 (1998). Representative...