Tauese v. State, Dlir

Decision Date20 November 2006
Docket NumberNos. 26389, 26899.,s. 26389, 26899.
Citation147 P.3d 785
PartiesSione TAUESE, Plaintiff-Appellant, v. STATE of HAWAI`I, DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS; Ritz-Carlton Kapalua; Marriott Claims Services Corporation, Defendants-Appellees. Sione A. Tauese, Claimant-Appellant, v. Ritz-Carlton Kapalua and Marriott Claims Services Corporation, Employer/Insurance Carrier-Appellee and Special Compensation Fund, Appellee.
CourtHawaii Supreme Court

Herbert R. Takahashi, Stanford H. Masui, Danny J. Vasconcellos, and Rebecca L. Covert (Takahashi, Masui, Vasconcellos & Covert), Honolulu, on the briefs, for Claimant-Appellant Sione Tauese.

Robert A. Chong and J. Thomas Weber (Ayabe, Chong, Nishimoto, Sia & Nakamura), Honolulu, on the briefs, for Defendants-Appellees Ritz-Carlton Kapalua and Marriott Claims Services Corp.

Robyn M. Kuwabe and Frances E. Lum (Deputy Attorneys General), on the briefs, for Defendants-Appellees Department of Labor and Industrial Relations and Special Compensation Fund.

NAKAYAMA, ACOBA, and DUFFY, JJ.; with MOON, C.J. and LEVINSON, J., Concurring Separately.

Opinion of the Court by ACOBA, J.

In this consolidated appeal Plaintiff/Claimant-Appellant Sione A. Tauese (Appellant) appeals from (1) the January 27, 2004 Judgment of the circuit court of the second circuit (the court), granting the motion to dismiss or in the alternative for summary judgment filed by Defendants/Employer/Insurance Carrier-Appellees Ritz-Carlton Kapalua (Ritz-Carlton) and Marriott Claims Services Corporation (Marriott) on Appellant's August 28, 2002 complaint for declaratory and injunctive relief against Ritz-Carlton, Marriott and Defendant-Appellee State of Hawai`i, Department of Labor and Industrial Relations (DLIR or Department) to halt proceedings against Appellant for a fraudulent insurance act under Hawai`i Revised Statutes (HRS) § 386-98(a)(8) (Supp.2005)1 in Civil No. 02-1-0414, and (2) the October 7, 2004 Decision and Order of the Labor and Industrial Relations Appeals Board (LIRAB) affirming the decision of the Director of the DLIR finding, inter alia, that Appellant committed a fraudulent insurance act under the aforesaid section in Case No. AB 2002-462(M) (8-00-03858), and ordering a total suspension of Appellant's workers' compensation benefits, that Appellant reimburse Ritz-Carlton for attorney's fees and costs incurred because of the fraud complaint, and that Appellant pay $5000.00 to the Special Compensation Fund.2 We hold that fraudulent insurance acts under HRS § 386-98(a)(8) must be proven by clear and convincing evidence. Inasmuch as the LIRAB found on the complaint of Ritz-Carlton and Marriott that Appellant violated HRS § 386-98(a)(8) by a preponderance of the evidence rather than by clear and convincing evidence, we vacate its October 7, 2004 decision and order and remand to the LIRAB for a rehearing in accordance with this opinion. Because we remand, we hold, further, that (1) Appellant has failed to show that HRS § 386-98 (Supp.2005) improperly delegates the police power of commencing a proceeding to a private entity when administrative penalties are involved; (2) a fraudulent insurance act under HRS § 386-98 requires proof that the logical result or purpose of a person's acts or omissions is to fraudulently obtain benefits, and does not require that benefits actually be received; (3) administrative penalties imposed pursuant to HRS § 386-98(e) are not criminal in nature; (4) misrepresentations before the DLIR are not constitutionally protected by the First Amendment; and (5) statements made to a physician during an independent medical examination (IME) are not subject to the physician-patient privilege. We conclude that Appellant has failed to establish reversible error as to other points he raises on appeal from the LIRAB decision.

We discern no reversible error committed by the court in Appellant's appeal from the court's January 27, 2004 judgment and affirm that judgment.


On November 2, 2000, Appellant suffered an on-the-job accident while employed as a housekeeper by Ritz-Carlton. Appellant fell while using a desk and chair as a ladder to clean the ceiling. On November 4, 2000, Appellant saw Helen Percy, M.D. (Dr. Percy) for treatment of his injuries. Dr. Percy diagnosed Appellant as having suffered a lumbosacral strain, a contusion on his right buttock and a contusion on his left knee. She certified that Appellant's accident resulted in disability for work, with the disability beginning on November 4, 2000.

On November 5, 2000, Appellant filed a workers' compensation claim for the injuries sustained in the accident. On November 13, 2000, he began physical therapy through Rehab Outpatient Services at the Rehabilitation Hospital of the Pacific (Rehab Outpatient Services). On December 4, 2000, Appellant had a follow-up visit with Dr. Percy. She concluded that Appellant was still unable to work, even on half-time light duty, and referred him to Darren Egami, M.D. (Dr. Egami), an orthopedic surgeon. Dr. Egami began treating Appellant on December 7, 2000.

Dr. Egami referred Appellant to George E. Powell, M.D. (Dr. Powell), a neurologist, for a magnetic resonance imaging (MRI)3 study of the lumbosacral spine. The MRI study was performed on February 6, 2001. In his report dated February 12, 2001, Dr. Powell diagnosed Appellant as suffering from "[l]umbar strain" and "[p]ossible bruise of the sciatic nerve area with persistent sciatica." In the "Recommendations" section of his report, Dr. Powell stated that "[f]urther physical therapy might be of benefit. One might also consider referral to a chronic pain clinic."

On February 15, 2001, Dr. Egami certified Appellant as unable to work until March 2, 2001, when he released Appellant to light duty work. On March 7, 2001, Dr. Egami certified Appellant as unable to work for three days due to pain in Appellant's lower back. Thereafter, Appellant was to return to light duty work.

Appellant met with Dr. Egami on March 29, 2001, at approximately 9:00 a.m. Dr. Egami noted that Appellant reported lower back pain with a severity of five-out-of-ten, on a scale of one to ten. Dr. Egami released Appellant for work beginning the next day, March 30, 2001. The release certification dated March 29, 2001 did not restrict Appellant's hours, but indicated no lifting greater than twenty pounds and no bending.

On that same day, March 29, 2001, Appellant was under surveillance by McCormack Investigations, Inc. for Ritz-Carlton. At approximately 11:26 a.m., Investigator Ivan Alatan (Alatan) videotaped Appellant, along with several other men, skinning and cutting the carcass of a cow near a ranch along Hana Highway. Alatan's "Synopsis Surveillance Report" summarizes observations of Appellant bending over while skinning the cow, cutting meat from the carcass, placing the meat into plastic bags, and moving the bags around the back of a pickup truck for approximately one hour:

11:26 a.m. — Videotaped [Appellant] over approximately the next 17 minutes as he stood on the right side of the cow's carcass, bent at the waist appearing to skin the cow with the unidentified males, walked around to the rear of the carcass, spread his feet and legs wider than shoulder width, bent at the waist, walked to his right, appearing to squat continuing to clean the carcass.


11:46 a.m. — Videotaped [Appellant] over the next 14 minutes as he stood, bent at the waist at the front of the carcass appearing to cut away the hide with his feet and legs spread wider than his shoulders, stood upright, bent at the waist appearing to cut away the left front leg of the carcass, stood while carrying the leg, placed the leg in a large trash bag that an unidentified female held.


12:04 p.m. — Videotape[d Appellant] over approximately the next 30 minutes as he stood with his feet and legs spread apart at shoulder width, bent at the waist, stretched to his right spreading his legs farther apart while bending at the right knee appearing to cut the ribs of the carcass, placed his right elbow on his right knee appearing to brace himself while reaching with his left arm ... bent at the waist with his feet and legs spread stood upright while carrying a piece of rib into large trash bag that an unidentified female held open, stood upright, bent at the waist continuing to cut pieces of the carcass, bent at both knees and squatted, stood upright, walked to the rear of a pick-up appearing to wash a piece of the carcass, walked to the rear of the Nissan, stood next to the pick-up, lifted his left leg onto the tailgate bending at the left knee, lifted himself into the bed of the pick-up, bent at the waist appearing to tie and lift the large trash bags containing the meat, arranged the bags in the bed of the pick-up, stood upright, bent at both knees to climb down off the bed of the pick-up, sit [sic] on the tailgate for a brief time.

On April 2, 2001, Appellant was discharged from physical therapy. On April 10, 2001, Appellant underwent a functional capacities evaluation (FCE) at Rehab Outpatient Services with occupational therapist John Mizoguchi (Mizoguchi). Appellant reported constant low back pain and being able to sit comfortably for only one hour at a time, being able to stand for only fifteen to thirty minutes at a time, and being able to walk for only thirty minutes at a time. The FCE concluded that Appellant "was able to safely demonstrate material handling up to the light to light-medium physical demand characteristic of work category," for an eight-hour work day. However, the FCE concluded that Appellant was not able to perform the housekeeping job as described.

By letter dated April 26, 2001, Appellant was informed by Marriott that it had scheduled an independent medical examination/rating examination (IME) for him with David Toeller, M.D. (Dr. Toeller) on May 9, 2001. Dr. Toeller...

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