Gillan v. Government Employees Ins. Co.

Decision Date29 October 2008
Docket NumberNo. 28075.,28075.
PartiesMargret GILLAN and Howard Keller, M.D., Plaintiffs-Appellees-Petitioners, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant-Appellant-Respondent, and John Does 1-10; Jane Does 1-10; Doe Corporations 1-10; Doe Partnerships 1-10; Roe Non-Profit Corporations 1-10; and Roe Governmental Entities 1-10, Defendants.
CourtHawaii Supreme Court

Roy K.S. Chang, Honolulu (Harvey M. Demetrakopoulos on the briefs), for the plaintiffs-appellees-petitioners Margret Gillan and Howard Keller, M.D.

Kathy K. Higham, Honolulu, for the defendant-appellant-petitioner Government Employees Insurance Company.

J.P. Schmidt, Insurance Commissioner (Mark J. Bennett, Attorney General, David A. Webber, Deputy Attorney General (DAG), and Deborah Day Emerson, DAG, on the briefs), for the amicus curiae State of Hawai`i.

Katharine M. Nohr, Honolulu, on the briefs, for the amicus curiae Hawaii Insurers Council.

MOON, C.J., LEVINSON, NAKAYAMA, JJ., Circuit Judge LEE, in Place of DUFFY, J., Recused; and ACOBA, J., Concurring Separately.

Opinion of the Court by LEVINSON, J.

We accepted the application for a writ of certiorari filed by the plaintiffs-appellees-petitioners, a personal injury protection (PIP) claimant, Margret Gillan, and her treating physician, Howard Keller, M.D. (collectively, the Plaintiffs), on June 23, 2008 to review the published opinion of the Intermediate Court of Appeals (ICA) in Gillan v. Government Employees Insurance Co., 117 Hawai`i 465, 477, 184 P.3d 780, 792 (App.2008), which vacated the July 17, 2006 amended partial judgment of the first circuit court, the Honorable Sabrina S. McKenna presiding, in favor of the Plaintiffs and against the defendant-appellee-respondent Government Employees Insurance Company (GEICO). The circuit court concluded that GEICO violated the plain language of Hawai`i Revised Statutes (HRS) § 431:10C-308.5(b) (Supp.2002),1 because the insurer failed to seek Gillan's consent when it retained a doctor to conduct an "independent medical examination" to determine whether her treatment from Dr. Keller was appropriate, reasonable, and necessarily incurred as a result of her automobile accident, see HRS § 431:10C-103.5(a) (Supp. 2002).2 The ICA held to the contrary on the basis that GEICO's doctor did not, in fact, perform an independent medical examination in light of the statute's "clear" language, because, although he reviewed Gillan's medical records, he did not actually examine her, physically or otherwise. See Gillan, 117 Hawai`i at 475-77, 184 P.3d at 790-92. The Plaintiffs argue that the ICA erred in that regard.

Although we depart from the ICA's textual analysis of HRS § 431:10C-308(b), we ultimately arrive at the same conclusion that an actual examination, physical or otherwise, is an essential component of an "independent medical examination" within the meaning of the statute. Thus, the record review performed by the physician retained by GEICO did not constitute an independent medical examination, and, as such, GEICO did not violate the statute when it declined to seek Gillan's consent before hiring the doctor. We affirm the May 7, 2008 judgment of the ICA accordingly.

A. Factual Background

On December 15, 2002, Gillan was riding in the passenger seat of a Nissan truck owned and operated by her boyfriend, Frank Rainey, when the truck was struck from behind by another vehicle, which caused her to suffer injuries that required medical attention. The truck was covered by an automobile insurance policy issued by GEICO that was in full force and effect at the time of the collision. GEICO does not dispute that, as a passenger of the insured motor vehicle at the time of the collision, Gillan was and is entitled to PIP insurance coverage and benefits under Rainey's insurance policy and HRS § 431:10C-303(a) (Supp.2002).3 In fact, GEICO initially wrote Gillan a letter notifying her that she was entitled to PIP benefits. GEICO also transmitted a PIP application form, which she completed and returned to GEICO. Gillan received medical treatment from various health care providers, including Dr. Keller, through September 2003. Bills for the treatment were submitted to GEICO for payment under the PIP benefits provided by the insurance policy and as required under Hawaii's no-fault law.

In deciding whether to deny a PIP claim, GEICO's in-house staff, which is comprised of bill reviewers, adjusters, and nursing personnel, routinely perform record reviews, including evaluations of the claimant's medical treatment records. Through these reviews, GEICO assesses whether the benefit claimed has actually been prescribed by a physician, whether the allowed number of visits has been exceeded, whether the statute of limitations has lapsed, whether workers' compensation provides primary coverage, as well as whether the claimant has presented reasonable proof of the claim for benefits. In some cases, GEICO may request that a physician review records without examining the claimant to determine whether, from the physician's perspective, the claim is for treatment that was appropriate, reasonable, and necessarily incurred as a result of accidental harm sustained in a motor vehicle accident.

GEICO followed that procedure in response to certain claims Gillan made for PIP benefits. GEICO retained Bruce Hector, M.D., who was a physician licensed by the State of Hawai`i, a fellow of the American Back Society, and a certified independent medical evaluator. The doctor never saw or examined Gillan or consulted with her health care providers, but merely reviewed her medical records to determine whether she required medical treatment and care as a result of the injuries she sustained in the December 15, 2002 collision. In his report dated December 8, 2003, Dr. Hector opined that Gillan did not require medical care and treatment as a result of the collision once she had completed her first six physical therapy sessions. Relying on Dr. Hector's report, GEICO sent Gillan various denial of claim forms, the first of which was dated March 11, 2004. GEICO maintained that, pursuant to HRS § 431:10C-103.5(a), Gillan was not entitled to benefits for two of her visits with Dr. Keller and for magnetic resonance imaging services, because those services were not appropriate, reasonable, or necessary. GEICO also advised Gillan that, if she wished to contest its denial, she could bring an action in court.

B. Circuit Court Proceedings

The Plaintiffs filed a complaint against GEICO in circuit court on April 15, 2005, alleging that GEICO had hired an independent medical examiner, Dr. Hector, without first seeking Gillan's consent, in violation of HRS § 431:10C-308.5. On September 8, 2005, they moved for partial summary judgment on this claim, arguing, among other things, that, because GEICO had violated the statute, the circuit court should rule that GEICO's denials of Gillan's claims for benefits and Dr. Keller's bills were improper, null, and void. The Plaintiffs observed that, under the statute, an insurer must seek to obtain a PIP claimant's agreement in selecting an "independent medical examiner." Relying on a circuit court ruling by the Honorable Bert I. Ayabe in Sadoka v. AIG Hawaii, Civ. No. 04-1-0436-03 (Haw.Cir.Ct. July 25, 2005), the Plaintiffs asserted that Dr. Hector was an independent medical examiner under the plain language of HRS § 431:10C-308.5(b), because he performed a record review and because a record review is part of an independent medical examination. The Plaintiffs also cited the legislative history of HRS § 431:10C-308.5 to support their interpretation of the statute. Finally, they made the preemptive charge that, although the United States District Court for the District of Hawaii and the Insurance Commissioner of the State of Hawai`i had reached the opposite conclusion in Engle v. Liberty Mutual Fire Insurance Co., 402 F.Supp.2d 1157 (D.Haw.2005), and Weigel v. Liberty Mutual Fire Insurance Co., ATX-2002-134-P (Hawai`i Insurance Commissioner's Final Order Mar. 31, 2005), available at dcca/areas/oah/oah_decisions/INS/no-fault/ ATX-2002-134-P Weigel v Liberty.pdf (last visited Oct. 17, 2008), those decisions were unpersuasive, because their analyses were inconsistent with the statutory language and legislative intent. GEICO countered that Dr. Hector was not an independent medical examiner, because he had not actually examined Gillan in preparing his report. GEICO's position was premised on the statute's plain language, its legislative history, Engle, and Weigel.

The circuit court heard the motion on October 11, 2005. At the hearing, the circuit court expressed its hope "that both the consumer lawyers, as well as the insurance industry, [would] go[ ] back to the legislature because ... clarification would be helpful [with respect to the meaning of the term `independent medical examination']."4 After hearing the parties' arguments, the circuit court took the matter under advisement and, on October 20, 2005, the circuit court entered its order partially granting the motion. The circuit court concluded that GEICO was required by HRS § 431:10C-308.5 to seek Gillan's consent before hiring Dr. Hector and that GEICO had failed to meet that obligation. Consequently, pursuant to TIG Insurance Co. v. Kauhane, 101 Hawai`i 311, 67 P.3d 810 (App.2003), the circuit court prohibited GEICO from relying on Dr. Hector's report as a basis for its denial of PIP benefits to Gillan for treatment rendered by Dr. Keller. Still, the circuit court denied the Plaintiff's motion to the extent that it sought a ruling that GEICO's denials were improper, null, and void, because the Plaintiffs had failed to carry their burden of proof.

On November 21, 2005, GEICO filed a Hawai`i Rules of Civil Procedure (HRCP) Rule 54(b) motion for certification, seeking an order directing the entry of a final judgment in favor of the Plaintiffs and against...

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