Mortensen v. Board of Trustees of Employees' Retirement System

• Decision Date: 28 July 1970
• Docket Number: 4921,Nos. 4920,s. 4920
• Citation: 52 Haw. 212,473 P.2d 866
• Parties: Theodore P. K. MORTENSEN v. BOARD OF TRUSTEES OF the EMPLOYEES' RETIREMENT SYSTEM, State of Hawaii. Thomas I. FREEMAN v. BOARD OF TRUSTEES OF the EMPLOYEES' RETIREMENT SYSTEM, State of Hawaii.
• Court: Hawaii Supreme Court

Page 866

473 P.2d 866

52 Haw. 212

Theodore P. K. MORTENSEN v. BOARD OF TRUSTEES OF the EMPLOYEES' RETIREMENT SYSTEM, State

of Hawaii.

Thomas I. FREEMAN v. BOARD OF TRUSTEES OF the EMPLOYEES' RETIREMENT SYSTEM, State

of Hawaii.

Nos. 4920, 4921.

Supreme Court of Hawai'i.

July 28, 1970.

Syllabus by the Court

1. The Employees' Retirement System cannot deny accidental disability retirement benefits to State employees without following the applicable provisions of the Hawaii Administrative Procedure Act which afford employees their statutory and constitutional rights to procedural due process.

2. An applicant for accidental disability retirement benefits under the Employees' Retirement System is entitled to a trial-type hearing on contested issues of fact before the Board of Trustees decides upon his application, including, among other things, proper notice to the applicant and the opportunity for the applicant to be heard, to present evidence and argument and to cross-examine witnesses against him.

Edward H. Nakamura, Honolulu (Bouslog & Symonds, Honolulu, of counsel), for appellant.

Morton King, Senior Deputy Atty. Gen., (Bertram T. Kanbara, Atty. Gen. of Hawaii Honolulu, with him on the brief), for appellee.

Before RICHARDSON, C. J., and MARUMOTO, ABE, LEVINSON, JJ., and Circuit Judge VITOUSEK in place of KOBAYASHI, J., disqualified.

LEVINSON, Justice.

These cases involve the question whether the procedures utilized by the Employees' Retirement System, in denying accidental disability retirement benefits to the appellants, were in accord with the Hawaii Administrative Procedure Act (HRS §§ 91-1 to 91-18 (1968)) and comported with the requirements of procedural due process guaranteed by the state and federal constitutions. We think that the State did not follow the applicable provisions of the Hawaii Administrative Procedure Act which afford the appellants their statutory and constitutional rights to procedural due process. The cases must therefore be reversed and remanded for hearings consistent with the provisions of the Hawaii Administrative Procedure Act.

As there are two cases consolidated on appeal, the facts must be separately set out. In No. 4920 appellant Mortensen, while working for the Board of Water Supply of the City and County of Honolulu, felt pain in his back when he turned to his left to pick up a 14-inch pipe wrench. Three years later, after treatment by at least six doctors, an application was filed with the State for service-connected disability retirement benefits under HRS §§ 88-67 and 88-69 (1968) (now included in HRS §§ 88-77 and 88-79 (Supp.1969)). The Medical Board of the Retirement System examined the applicant, considered his doctors' reports, and certified that Mortensen was incapacitated for the further performance of duty and that the incapacity was likely to be permanent. The Medical Board further determined that there was insufficient evidence to determine that the accident caused the present disability.

The aforementioned conclusions were submitted to the Board of Trustees in a form report from the Medical Board. The Board of Trustees then referred that determination to the Medical Review Board for an advisory opinion. The Medical Review Board reported to the Board of Trustees that 'the 'accident' as claimed by the applicant did not in itself result in his disability.' An intervening rule promulgated by the Board of Trustees caused a second appeal from the Medical Board to the Medical Review Board on the issue of causation which again resulted in an unfavorable determination for Mortensen.

Judicial review was sought pursuant to HRS § 91-14 (1968), The circuit court held, among other things, that a proper hearing had been held before the Medical Board, that the proceeding was not a 'contested case' within HRS § 91-1(5), (6) (1968), and that the proceedings therefore comported with the Hawaii Administrative Procedure Act. The court further concluded that in view of the technical subject matter, due process had been afforded the appellant in the hearing before the Medical Board and no trial-type hearing was required.

In No. 4921 appellant Freeman suffered a neck injury in an automobile collision while serving as a liquor law inspector with the Finance Department of the City and County of Honolulu. Freeman later filed an application for accidental disability retirement benefits pursuant to HRS § 88-69 (1968) (now included in HRS § 88-79 (Supp.1969)). The Medical Board examined Freeman and certified that he was not incapacitated for the further performance of duty or for gainful employment and his disability was not the result of the automobile accident. This decision was appealed to the Board of Trustees pursuant to rules promulgated under HRS § 88-73 (1968) (now, as amended, included in HRS § 88-82 (Supp.1969)).

The Board of Trustees rejected the Medical Board's finding that the disability was not the result of an accident while in the actual performance of duty. The remaining question of the existence and extent of disability was referred to a Medical Review Board which determined that Freeman was not incapacited for further performance of duty. He was therefore denied any service-connected disability retirement benefits. Judicial review was sought and the circuit court held, among other things, that the procedures comported with the Hawaii Administrative Procedure Act. The decisions of the circuit court in both cases were appealed to this court and consolidated for argument and consideration.

I. APPLICABILITY OF THE HAWAII ADMINISTRATIVE PROCEDURE ACT.

The statutory scheme of the Pension and Retirement Systems embodied in HRS §§ 88-1 to 88-230 (1968) (now, as amended, included in HRS §§ 88-1 to 88-190 (Supp.1969)) is the focal point of these two cases. Briefly, a member of the Employees' Retirement System who feels he has suffered permanent disability or occupational disability which was the 'natural and proximate result of an accident occurring while in the actual performance of duty * * * or as the cumulative result of some occupational hazard' may apply to and be retired by the Board of Trustees of the system. HRS §§ 88-67, 88-69 (1968) (now included in HRS §§ 88-77, 88-79 (Supp.1969)). In order to be retired the Medical Board must certify that the member is incapacitated for gainful employment and his incapacity is likely to be permanent. There are therefore two primary conditions for retirement which could involve factual disputes: (1) whether there is permanent incapacity for gainful employment or duty and (2) whether the incapacity or disability is the result of an accident occurring while in the actual performance of duty. HRS §§ 88-67(a)(4), (c) and 88-69(a)(4), (c) (1968) (now included in HRS §§ 88-77(a)(4), (d) and 88-79(a)(4), (d) (Supp.1969)).

The initial resolution of these factual issues is divided between the Medical Board and the Board of Trustees. The Medical Board, as designated by the Board of Trustees under HRS § 88-31 (1968) (now included in HRS § 88-31 (Supp.1969)), determines the degree of incapacity while the Board of Trustees has the power to determine the causation issue under HRS §§ 88-67 and 88-69 (1968) (now HRS §§ 88-77 and 88-79 (Supp.1969)). The decision of the Medical Board on the extent of disability may be appealed to the Board of Tustees, however, under HRS § 88-73 (1968) (now, as amended, included in HRS § 88-82 (Supp.1969)), thus giving the Board of Trustees statutory jurisdiction at that point in the administrative process over both of these issues.

However, HRS § 88-73 (1968) (now, as amended, included in HRS § 88-82 (Supp.1969)) further provides that the Board of Trustees 'may' refer the case to a Medical Review Board whose decision shall be final and binding. The decision of the Medical Review Board is specifically exempted from the due process requirements of the Hawaii Administrative Procedure Act under HRS § 88-73 (1968) (now, as amended, included in HRS § 88-82 (Supp.1969)). In addition the Board of Trustees has promulgated certain procedural rules which require that the Medical Review Board hear any appeal to the Board of Trustees if the appeal is to be heard at all, thus eliminating any chance of a full trial-type hearing before the Board of Trustees. ¹

The appellee Board of Trustees argues that the statutory scheme forecloses any trial-type hearing under the Hawaii Administrative Procedure Act, and, furthermore, that the technical nature of the subject matter precludes an adversary trial- type hearing. The appellants argue that there must be a trial-type hearing at some point in this statutory scheme. They argue that it is statutorily mandated by the Hawaii Adminstative Procedure Act and, concomitantly, that procedural due process requires a trial-type hearing.

The Hawaii Administrative Procedure Act is applicable only if there is a 'contested case' as defined by HRS § 91-1(5) (1968) which states that:

'Contested case' means a proceeding in which the legal rights, duties, or privileges of specific parties are required by law to be determined after an opportunity for agency hearing.

We think the appeal to the Board of Trustees authorized by HRS § 88-73 (1968) (now, as amended, included in HRS 88-82 (Supp.1969)) envisions a proceeding in which there is a determination of the legal rights of the appellants. That section states in pertinent part that:

Any other provision herein to the contrary notwithstanding, an employee who is not satisfied with the decision of the medical board may appeal the decision to the board of trustees * * *. The board of trustees, after hearing the appeal, may appoint an independent review board of licensed physicians to review the matter and the decision of the medical review board shall be final and binding. * * * (emphasis added).

The appeal to the Board of Trustees is further held immediately prior to judicial review and is therefore an 'agency hearing' under HRS §...