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Claim of Dacanay v. Liberty Mutual Insurance Co.
Citations: 108 Haw. 393; 120 P.3d 1128; 2005 Haw. App. LEXIS 45Docket: No. 25424
Court: Hawaii Intermediate Court of Appeals; February 8, 2005; Hawaii; State Appellate Court
Liberty Mutual Insurance Co. (Liberty Mutual) is appealing a decision from the Insurance Commissioner of Hawaii regarding personal injury protection (PIP) benefits claims made by Flor Dacanay (Dacanay) after an automobile accident. The Commissioner had previously ruled in favor of Dacanay, awarding her $930.15 in attorney’s fees and costs. Liberty Mutual contends that Dacanay lacks standing as a real party in interest to claim the contested PIP benefits and thus should not receive attorney’s fees. However, the court determined that Liberty Mutual waived any objections to Dacanay's status and that the Commissioner did not abuse his discretion in awarding fees. The background details the accident on February 26, 2001, where Dacanay's vehicle was rear-ended, causing $509.00 in damages. Following the accident, Dacanay sought medical treatment from Dr. Gilbert P. Hager, who performed several diagnostic procedures and continued to treat her for weeks. Liberty Mutual did not challenge these initial medical costs. An independent medical evaluation by Dr. Kent Davenport concluded that Dacanay had no significant injuries requiring further treatment and noted a lack of significant pathology or permanent disability following the accident. Liberty Mutual issued denial letters to Dacanay on June 11, June 22, and July 5, 2001, declining payment for six claims from her health care providers. The denials were based on the Hawaii Motor Vehicle Insurance Law, indicating that the independent medical exam by Dr. Davenport and Dacanay's medical records did not substantiate the claims as appropriate or related to the motor vehicle accident per HRS 431:10C-103. The letters outlined options for contesting the denials: requesting a review by the Automobile Insurance Commissioner, opting for arbitration, or pursuing legal action. On July 19, 2001, Dacanay, through her attorney, requested a consolidated hearing with the Commissioner, leading to DCCA dockets ATX-2001-77 through ATX-2001-82. A status conference was scheduled for August 27, 2001. Subsequently, between August 22 and 29, 2001, Liberty Mutual reached settlement agreements with the health care providers. Dacanay ultimately exhausted her Personal Injury Protection (PIP) benefits, and on September 21, 2001, both parties filed a Stipulation with the DCCA, resolving the denials of the six claims and dismissing them with prejudice, while leaving the issue of attorney’s fees and costs open for further submission. On October 2, 2001, Dacanay's attorney submitted an affidavit to the DCCA seeking attorney’s fees and costs. Liberty Mutual responded on October 12, 2001, asserting, for the first time, that Dacanay was not the real party in interest, citing the Gamata case, and argued she should not have challenged the denials, thus incurring unnecessary legal fees. On November 9, 2001, a DCCA hearings officer issued findings and recommended Dacanay be awarded $930.15 in attorney’s fees and costs. The key issue was whether Dacanay had standing as a real party in interest in her hearings requests under HRS 431:100-212. The hearings officer noted that Liberty Mutual's argument could only apply if the denial was based solely on one reason, which was not the case; the denials cited multiple reasons, including a medical examination report and causation related to the accident. The absence of the examination report left uncertainty about its implications, and the inclusion of causation as a denial reason meant Dacanay had a vested interest in the outcome. Thus, Dacanay was deemed a real party in interest with a legitimate stake in the proceedings. On December 4, 2001, Liberty Mutual filed exceptions to the hearings officer's recommendation, asking the Commissioner to overturn the ruling on Dacanay's status and to assign attorney’s fees and costs to each party. On April 2, 2002, the Commissioner issued a Final Order adopting the Hearings Officer’s Recommended Order, which Liberty Mutual subsequently appealed to the circuit court. The circuit court ruled on October 7, 2002, in favor of Dacanay and the Commissioner, dismissing Liberty Mutual's appeal and awarding Dacanay attorney’s fees for 3.8 hours at $150.00 per hour plus tax. Liberty Mutual filed a secondary appeal on October 23, 2002. Liberty Mutual contended that the Commissioner’s Final Order was erroneous, claiming it conflicted with prior rulings in Wilson and Gamata regarding the real party in interest. The Hawai'i Supreme Court, in Wilson, determined that under DCRCP Rule 17(a), the health care provider, rather than the insured, is the real party in interest to claim payments from a no-fault insurer. This was supported by HRS 431:100-304(1)(A) and (B), which clarifies that the insured does not have a right to receive payments on behalf of the provider; thus, all disputes over payment are strictly between the insurer and the provider. In Gamata's case, after receiving treatment from Dr. Portner following a car accident, Allstate, his no-fault insurance carrier, denied ongoing benefits based on an IME report indicating his complaints were unrelated to the accident. Gamata was informed of his right to contest this denial and subsequently filed a complaint against Allstate, alleging violations of statutory and contractual duties related to no-fault benefits. Dr. Portner performed a nerve root block injection and an MRI on Gamata despite Allstate’s prior rejection of treatment plans, resulting in an outstanding balance of $1,658.80, which Gamata claimed to have paid directly. Following a trial, the circuit court ruled in favor of Allstate against Gamata. Gamata subsequently requested attorney's fees and costs, citing improvement from the treatments, while Allstate sought its own costs and opposed Gamata's request. The court denied both parties' cost requests but granted Gamata partial attorney's fees. On appeal, the court examined whether Gamata's payment to Dr. Portner granted him "real party in interest" status to pursue Allstate for the unpaid medical bill. The court concluded that only Dr. Portner had the right to seek payment from Allstate, as he was the party with an interest in the fees, and directed him to return any payments made by Gamata. The case was distinguished from a similar case involving Dacanay, where Liberty Mutual's denial included causation as a reason, which the Commissioner noted diverged from Gamata's circumstances. Ultimately, it was determined that Liberty Mutual waived any objections regarding Dacanay's standing as a real party in interest. This case distinguishes itself from previous cases, Wilson and Gamata, by being an appeal from an administrative proceeding before the Commissioner rather than a district court lawsuit, rendering DCRCP Rule 17 on real parties in interest inapplicable. Even if it were applicable, established case law on FRCP Rule 17 indicates that the real-party-in-interest defense is not jurisdictional and can be waived if not promptly asserted. Liberty Mutual’s communications directly to Dacanay allowed her to pursue an administrative review without objection to her status as a real party in interest. Liberty Mutual also settled claims with Dacanay’s health providers and stipulated to the resolution of disputes, only challenging her status after she sought attorney’s fees, which was deemed too late. Thus, Liberty Mutual waived its objection. Furthermore, under HRS 431:10C-211(a), the Commissioner did not abuse discretion in awarding Dacanay attorney's fees and costs, as the statute allows for such awards unless claims are found unreasonable, fraudulent, excessive, or frivolous. Reasonable fees are to be paid directly by the insurer to the attorney, separate from the claim. Liberty Mutual argues that while HRS 431:10C-211(a) permits the award of reasonable attorney's fees and costs in hearings over no-fault benefits denial, it does not mandate such awards. They contend that Dacanay, not being the real party in interest, should not have contested the denials and thus should not have incurred legal fees. However, the ruling indicates that Liberty Mutual waived any challenge to Dacanay's status, affirming that the Commissioner acted within discretion in awarding her attorney's fees and costs. The circuit court's judgment is noted to be confusing, as it denies Liberty Mutual's appeal of the Commissioner's final order but simultaneously awards judgment to Dacanay and the Commissioner against Liberty Mutual, leading to a dismissal of the appeal. The judgment in favor of Dacanay and the Commissioner necessitates affirmation of the Commissioner's final order, thus the appeal's dismissal is deemed erroneous. The court remands the case to the circuit court for amendment of the judgment in line with this opinion while affirming all other aspects of the judgment. The claims in question include billing statements for medical services from various providers, with specific amounts listed for each service. The document also references the repeal of HRS 431:10C-308.6 and legislative changes in 1997 that altered terminology related to motor vehicle insurance policies and benefits. DCRCP Rule 17(a) mandates that every legal action must be prosecuted in the name of the real party in interest, allowing certain parties such as executors, administrators, and trustees to sue in their own names without joining the party for whose benefit the action is brought. This rule also states that no action should be dismissed for not being in the name of the real party in interest, provided a reasonable time is given for ratification, joinder, or substitution, which would then retroactively validate the action. Additionally, HRS 431:10C-304(1) outlines the obligation of no-fault insurers to provide benefits for injuries from motor vehicle accidents, requiring payment without regard to fault to both injured individuals and service providers. The text notes that the DCRCP does not appear to be integrated into the rules governing proceedings before the Commissioner, while also comparing it to the Federal Rules of Civil Procedure Rule 17(a), which reflects similar provisions regarding the prosecution of actions in the name of the real party in interest.