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                                                               Electronically Filed
                                                               Supreme Court
                                                               SCWC-29868
                                                               16-APR-2013
                                                               08:27 AM




            IN THE SUPREME COURT OF THE STATE OF HAWAI#I

                                 ---o0o---


       EMERSON M.F. JOU, M.D., Petitioner/Provider-Appellant,

                                     vs.

              J.P. SCHMIDT, Insurance Commissioner,
  Department of Commerce and Consumer Affairs, State of Hawai#i,
                 Respondent/Respondent-Appellee,

                                     and

                  DAI-TOKYO ROYAL INSURANCE COMPANY,
                    Respondent/Respondent-Appellee.


                                 SCWC-29868

          CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
                (ICA NO. 29868; CIV. NO. 05-1-1053)

                              APRIL 16, 2013

    NAKAYAMA, ACTING C.J., ACOBA, MCKENNA, AND POLLACK,1 JJ.,
  AND CIRCUIT JUDGE KIM, IN PLACE OF RECKTENWALD, C.J., RECUSED




      1
            Associate Justice Pollack was initially assigned to this case as a
substitute justice by reason of vacancy while he was a judge of the Circuit
Court of the First Circuit. He subsequently became a member of this court on
August 6, 2012.
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           OPINION OF THE COURT BY NAKAYAMA, ACTING C.J.

           When a medical provider has challenged a reduction or

denial of payment from an insurer prior to exhaustion of benefits

under an insured’s policy, the provider’s pursuit of his or her

claim for those benefits, even if ultimately unsuccessful, is not

unreasonable for the purpose of seeking attorney’s fees and costs

pursuant to Hawai#i Revised Statutes (HRS) § 431:10C-211(a).

           In this case, Petitioner/Provider-Appellant Emerson

M.F. Jou, M.D. challenged the partial denial of personal injury

protection benefits after treating a patient insured by

Respondent/Respondent-Appellee Dai-Tokyo Royal Insurance Company

(DTRIC).   While Jou’s request for an administrative hearing was

pending in the Insurance Division of the State Department of

Commerce and Consumer Affairs (DCCA), the insured’s available

benefits under her policy were exhausted on account of payments

to Jou and other medical providers.        Due to the exhaustion, the

Insurance Division dismissed Jou’s claim, and the Circuit Court

of the First Circuit2 and the ICA affirmed that decision.

           Jou also requested attorney’s fees and costs under HRS

§ 431:10C-211(a), which allows fees and costs to be awarded even

when a party does not prevail on its claim for benefits; pursuant

to a remand order of the ICA, the circuit court denied the



     2
           The Honorable Eden Elizabeth Hifo presided.

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request because it found Jou’s pursuit of the benefits to be

unreasonable given that DTRIC’s obligation to pay benefits to the

insured’s medical providers was satisfied once the insured’s

policy limits had been reached.         The ICA also affirmed that

decision; consequently, only the issue of fees and costs is

before us in this case.

            Because we disagree with the circuit court and the ICA

that Jou’s claim was unreasonable for the purpose of awarding

attorney’s fees and costs under HRS § 431:10C-211(a), we vacate

the judgments of both the ICA and the circuit court and remand

this case to the circuit court for further proceedings.

                               I.   BACKGROUND

A.    Background in Appeal No. 28106

      1.    Factual Background and DCCA Hearing

            Norma Agbayani was injured in a motor vehicle accident

on November 27, 1995; she was insured by DTRIC and treated by Jou

and other doctors.      After treatment, Jou sent a total of three

separate bills to DTRIC requesting payment; DTRIC paid Jou, but

based on reductions in payments made after the billing statements

were reviewed by DTRIC, Jou claimed that DTRIC wrongly withheld

payment in a total amount of $1,189.65 between December 1995 and

May 1996.

            On December 9, 1998, Jou requested a hearing with



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DCCA’s Insurance Division to review the payment reductions.              On

May 2, 2002, the Insurance Division’s Office of Administrative

Hearings docketed Jou’s request for a hearing; however, on May

20, 2002, the status conference on the matter was taken off the

calendar due to Jou’s failure to file a prehearing statement.3

            Thereafter, on February 10, 2003, DTRIC notified Jou

that Agabayani’s no-fault benefits in the amount of $20,000.00

had been exhausted as of February 3, 1999.

            On January 27, 2005, after the matter had been restored

to the calendar, the administrative hearings officer held a

hearing on DTRIC’s motion for summary judgment.           The hearings

officer held that because Agbayani’s no-fault benefits had been

exhausted, Jou’s request for payment of the withheld $1,189.65

amount was moot; accordingly, the hearings officer recommended on

April 13, 2005 that DTRIC’s motion for summary judgment be

granted and that the matter be dismissed.          On May 12, 2005,

Insurance Commissioner J.P. Schmidt adopted the hearings

officer’s findings and recommended order, granted DTRIC’s motion,

and dismissed the matter.       As the hearings officer recommended,



      3
            The Office of Administrative Hearings notified Jou on June 18,
2004, over two years later, that it proposed to dismiss the matter because a
prehearing statement had not yet been filed. On June 23, 2004, Jou filed a
request for a hearing to contest the proposed dismissal. Although there is no
indication in the record that such a hearing was held or that a prehearing
statement was received from Jou, the administrative hearings officer dissolved
the notice of proposed dismissal and scheduled a new status conference on
June 29, 2004. Jou then filed his prehearing statement on July 29, 2004.

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Schmidt also ordered that the parties bear their own attorney’s

fees and costs.

        2.      Circuit Court Proceedings

                On June 13, 2005, Jou filed his notice of agency appeal

to circuit court pursuant to Hawai#i Revised Statutes (HRS) § 91-

14.4        In his agency appeal, Jou primarily argued that Schmidt

erred by deciding that the case was moot, due to the exhaustion

of Agbayani’s no-fault benefits, in lieu of reaching the merits

of the case regarding the billing dispute between Jou and DTRIC.

Jou also argued that DTRIC was required, but failed, to issue a

formal notice of denial after it reduced his payments.                 In

response, both Schmidt and DTRIC pointed out that Jou never

challenged the hearing officer’s finding of fact that Agbayani’s

no-fault benefits were exhausted as of February 3, 1999.

However, they maintained that even if Jou had challenged the

finding, his claim for payment would still fail because DTRIC’s



        4
            HRS § 91-14 (Supp. 2004) provided then, as it does now, in
pertinent part:

                (a) Any person aggrieved by a final decision and order in a
                contested case . . . is entitled to judicial review thereof
                under this chapter; but nothing in this section shall be
                deemed to prevent resort to other means of review, redress,
                relief, or trial de novo, including the right of trial by
                jury, provided by law. . . .
                (b) Except as otherwise provided herein, proceedings for
                review shall be instituted in the circuit court within
                thirty days after the preliminary ruling or within thirty
                days after service of the certified copy of the final
                decision and order of the agency pursuant to rule of court .
                . . .

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contractual obligation to pay no-fault benefits ceased once DTRIC

had paid all of the $20,000 in benefits provided for in

Agbayani’s policy.      DTRIC also argued in its brief that Jou’s

claims were barred because, pursuant to HRS § 431:10C-212,5 Jou

was required to request a hearing regarding DTRIC’s denial of his

claim for payment within sixty days of the denial; however, he

did so on December 9, 1998, more than two years after the last

challenged denial dated June 13, 1996.          In an order dated July

18, 2006, the circuit court affirmed Schmidt’s decision,

concluding that the Insurance Division’s findings of fact were

not erroneous and conclusions of law were correct.            Final

judgment was also entered on July 18, 2006.

      3.    The ICA’s August 27, 2008 Summary Disposition Order

            Jou timely appealed on August 16, 2006.          In the ICA,

Jou argued that the circuit court
            (1) erred in finding DTRIC was not required to issue a
            Notice of Denial after it made reduced and partial payments
            on his claims; (2) erred in finding his claim against DTRIC
            was moot on the grounds that [Agbayani]’s no-fault benefits
            had already been exhausted; (3) erred in failing to order


      5
            HRS § 431:10C-212 (1993) provided then, as it does now, in
pertinent part:

            (a) If a claimant or provider of services objects to the
            denial of benefits by an insurer or self-insurer pursuant to
            section 431:10C-304(3)(B) and desires an administrative
            hearing thereupon, the claimant or provider of services
            shall file with the commissioner, within sixty days after
            the date or denial of the claim, the following:
                  (1) Two copies of the denial;
                  (2) A written request for review; and
                  (3) A written statement setting forth specific reasons
                  for the objections. . . .

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              DTRIC to pay interest, attorney’s fees and costs; (4) erred
              in affirming erroneous Findings of Fact and Conclusions of
              Law; and (5) violated his due process and equal protection
              rights, and made a “regulatory taking” of his interest in
              balances, in violation of the Hawai#i and U.S.
              constitutions.

Jou v. Schmidt, No. 28106, 2008 WL 3919856, at *1 (Haw. App. Aug.

27, 2008) (SDO) (formatting altered).            Pursuant to a different

case also entitled Jou v. Schmidt, 117 Hawai#i 477, 486, 184 P.3d

792, 801 (App. 2008), the ICA agreed with Jou’s first point of

error that the circuit court “erred in finding that DTRIC was not

required to issue a formal notice of denial of benefits pursuant

to HRS § 431:10C-304(3)(B)[6] after it made both reduced and

partial payments on Jou’s claims.”           Id.   However, the ICA

rejected Jou’s other arguments or otherwise found them to be

without merit, noting that insurers may limit liability by the

terms of an insurance policy and agreeing with Schmidt and the

circuit court that Jou was not entitled to payment after Agbayani

reached the $20,000 limit of available no-fault benefits.                See

id. at *2 (citing Salviejo v. State Farm Fire & Cas. Co., 87

Hawai#i 430, 434-35, 958 P.2d 552, 556-57 (App. 1998); Crawley v.


        6
              HRS § 431:10C-304(3)(B) (Supp. 1998) provided then, as it does
now:

              If the insurer elects to deny a claim for benefits in whole
              or in part, the insurer shall, within thirty days, notify
              the claimant in writing of the denial and the reasons for
              the denial. The denial notice shall be prepared and mailed
              by the insurer in triplicate copies and be in a format
              approved by the commissioner. In the case of benefits for
              services specified in section 431:10C-103.5(a) the insurer
              shall also mail a copy of the denial to the provider[.]

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State Farm Mut. Auto. Ins. Co., 90 Hawai#i 478, 484, 979 P.2d 74,

80 (App. 1999); Foote v. Royal Ins. Co. of Am., 88 Hawai#i 122,

125, 962 P.2d 1004, 1007 (App. 1998); Hosp. for Joint Diseases v.

State Farm Mut. Auto. Ins. Co., 779 N.Y.S.2d 534, 535 (N.Y. App.

Div. 2004)).   The ICA so concluded based on a plain reading of

HRS § 431:10C-304(1) (Supp. 1998), which provided:
          Except as otherwise provided in section 431:10C-305(d), in
          the case of injury arising out of a motor vehicle accident,
          the insurer shall pay, without regard to fault, the provider
          of services on behalf of the following persons who sustain
          accidental harm as a result of the operation, maintenance,
          or use of the vehicle, an amount equal to the personal
          injury protection benefits as defined in section 431:10C-
          103.5(a) payable for expenses to that person as a result of
          the injury:
                (A) Any person, including the owner, operator,
          occupant, or user of the insured motor vehicle;
                (B) Any pedestrian (including a bicyclist); or
                (C) Any user or operator of a moped as defined in
          section 249-1[.]

Id. at *1 (emphasis in original).       Thus, “[o]nce DTRIC paid the

full amount of the policy limits, its obligation to pay any

additional outstanding bills due to the providers was

extinguished.”   Id. at *2.     The ICA specifically noted that Jou

never challenged that the policy limit was $20,000, but only the

conclusion that DTRIC “had no further responsibility for the

bills incurred by the insured.”       Id.   Because Jou did not appeal

the finding of fact that Agbayani’s benefits were exhausted, the

ICA concluded that “the [c]ircuit [c]ourt did not err in

rejecting Jou’s claim that he was entitled to additional payment

from DTRIC.”   Id.


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            The ICA also rejected Jou’s argument that he should

have been granted costs, attorney’s fees, and interest pursuant

to HRS § 431:10C-304(4) and (5).          HRS § 431:10C-304(4) provided:
            Amounts of benefits which are unpaid thirty days after the
            insurer has received reasonable proof of the fact and the
            amount of benefits accrued, and demand for payment thereof,
            after the expiration of the thirty days, shall bear interest
            at the rate of one and one-half per cent per month[.]

On this point, the ICA concluded that Jou did not “present any

discernible argument that DTRIC failed to pay interest on any

amounts that were determined to be due to him, but had remained

unpaid after the expiration of the thirty-day period specified in

the statute.”     Jou, 2008 WL 3919856, at *3.        HRS § 431:10C-304(5)

provided:
            No part of no-fault benefits paid shall be applied in any
            manner as attorney’s fees in the case of injury or death for
            which the benefits are paid. The insurer shall pay, subject
            to section 431:10C-211, in addition to the no-fault benefits
            due, all attorney’s fees and costs of settlement or suit
            necessary to effect the payment of any or all no-fault
            benefits found due under the contract. Any contract in
            violation of this provision shall be illegal and
            unenforceable. It shall constitute an unlawful and
            unethical act for any attorney to solicit, enter into, or
            knowingly accept benefits under any contract[.]

The ICA pointed out that according to this section, costs and

fees are available “only if a claimant prevails in a settlement

or suit for no-fault benefits.”        Jou, 2008 WL 3919856, at *3

(citing Iaea v. TIG Ins. Co., 104 Hawai#i 375, 380, 90 P.3d 267,

272 (App. 2004)).     Because Jou did not prevail on his claim for

no-fault benefits due to their exhaustion, the ICA concluded that

subsection (5) did not support his argument for fees and costs.

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Id.    Nevertheless, the ICA pointed to a section not cited by Jou,

HRS § 431:10C-211(a),7 to suggest that fees and costs may be

awarded even when a claimant is unsuccessful in seeking benefits.

Id.    The ICA thus affirmed the circuit court’s judgment.              Id.

             Subsequent to the filing of the SDO, Jou filed a

“Request for Attorney’s Fees and Costs on Appeal” on September 5,

2008, citing HRS § 431:10C-211(a).          On October 8, 2008, the ICA

issued an order remanding the case to the circuit court for the

determination of an award of appellate attorney’s fees, if any.

In the order, the ICA noted that although $8,760.00 of the

requested $9,172.77 in fees appeared to be reasonably incurred,

Jou was the non-prevailing party in both the circuit court and on

appeal, and therefore further proceedings in circuit court were

necessary pursuant to Kawaihae v. Hawaiian Insurance Cos., 1 Haw.

App. 355, 362, 619 P.2d 1086, 1092 (1980), to determine whether

Jou’s claim was “unreasonable, fraudulent, excessive, or

frivolous” under HRS § 431:10C-211(a) and Iaea.             The ICA then


       7
             HRS § 431:10C-211(a) (1993) provided, in pertinent part:

             A person making a claim for no-fault benefits may be allowed
             an award of a reasonable sum for attorney’s fees, and
             reasonable costs of suit in an action brought by or against
             an insurer who denies all or part of a claim for benefits
             under the policy, unless the court upon judicial proceeding
             or the commissioner upon administrative proceeding
             determines that the claim was unreasonable, fraudulent,
             excessive or frivolous. Reasonable attorney’s fees, based
             upon actual time expended, shall be treated separately from
             the claim and be paid directly by the insurer to the
             attorney.

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filed its judgment on appeal in No. 28106 on November 19, 2008.

B.    Background in Appeal No. 29868 (The Present Appeal)

      1.     Proceedings in Circuit Court on Remand

             On February 3, 2009, Jou filed his motion in circuit

court for appellate attorney’s fees and costs.            Schmidt and DTRIC

both opposed the motion, and the circuit court held a hearing on

March 18, 2009.     At that hearing, the circuit court made the

finding, pursuant to HRS § 431:10C-211(a), that Jou’s claim was

unreasonable and thus denied Jou’s motion.           Specifically, the

circuit court stated that “the insurance company had zero, none,

not any obligation to pay beyond the policy limit which it was

always agreed, understood and uncontested had been exhausted and,

therefore, I find the claim to be unreasonable and therefore deny

the motion.”     The circuit court subsequently filed a written

order on May 19, 2009.

             After the hearing, Jou filed a motion on March 30, 2009

“to amend/correct or reconsider” his original motion for fees and

costs.     In that motion, Jou essentially argued that although he

did not prevail due to the finding that benefits were exhausted,

the circuit court should not deny fees because his claim was not

unreasonable when originally made.         Only DTRIC opposed this

motion; its position was that all of the fees requested were

incurred by Jou starting in 2004, after the subject benefits were


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already exhausted, and therefore it was unreasonable for him to

incur those fees in pursuit of his claim.         On May 19, 2009, the

circuit court entered an order denying the motion.          Accordingly,

the circuit court also entered the Final Judgment on Remand on

May 19, 2009.

     2.   The ICA’s April 2, 2012 Summary Disposition Order

          Jou timely appealed on June 2, 2009.          On this second

appeal of the case, Jou argued that, in light of the ICA’s remand

order, the circuit court erred by not only declining to award him

appellate attorney’s fees but also his fees for pursuing his

claim before DCCA and the circuit court.        Jou also pointed out

that because Agbayani’s no-fault benefits were not exhausted at

the time he originally filed his claim with DCCA, his claim was

reasonable and the circuit court erred in concluding otherwise.

Jou also noted that he had prevailed with respect to the issue of

whether DTRIC was obliged to provide him formal notices of the

denial of payment.

          In response, DTRIC argued that the circuit court did

not abuse its discretion in denying Jou’s request for fees

because it “correctly applied HRS § 431:10C-211(a).”           In response

to Jou’s contention that he should be awarded fees because he was

the prevailing party on the first appeal, DTRIC noted that

although the ICA agreed with Jou that DTRIC had to issue formal


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notices of denial of benefits, it also rejected his argument that

he was entitled to payment after the available no-fault benefits

had been exhausted and therefore affirmed the circuit court’s

judgment in favor of DTRIC.      According to DTRIC, Jou was

therefore not the prevailing party on the first appeal and was

not entitled to an award of fees and costs.         Regarding an

insurance claimant who does not prevail, DTRIC noted that the

trial court has complete discretion in awarding fees and costs.

(Citing Wong v. Hawaiian Ins. Cos., 64 Haw. 189, 192, 637 P.2d

1144, 1146 (1981)).    Thus, DTRIC argued that it was within the

circuit court’s discretion to deny Jou’s request for fees and

costs based on its conclusion that pursuing the claim for

benefits was unreasonable where there was no dispute that the

benefits had long been exhausted.        Finally, DTRIC challenged

Jou’s argument that it was “‘exculpat[ing] itself’ from an extra-

contractual liability” it owed to him for the claimed benefits,

attorney’s fees, and costs because it did not send him the

required formal notice of denial of benefits pursuant to HRS §

431:10C-304(3)(B).    On that issue, DTRIC simply pointed out that

the only issue before the ICA on appeal from the circuit court’s

final judgment on remand was whether the circuit court properly

denied Jou’s request for appellate attorney’s fees and costs, not

whether DTRIC was otherwise liable to Jou.         Schmidt filed a short


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brief with the ICA in this second appeal largely echoing DTRIC’s

brief.   Nevertheless, he also emphasized that the only issue

within the scope of the ICA’s remand was Jou’s request for

appellate attorney’s fees and costs; consequently, the circuit

court did not have jurisdiction to consider any of Jou’s other

arguments seeking to have the circuit court change or modify its

previous rulings against him.

           In its SDO, the ICA first recognized that Jou’s points

of error addressing issues other than his request for appellate

attorney’s fees and costs were beyond the scope of remand and

thus without merit.     Jou v. Schmidt, No. 29868, 127 Hawai#i 3,

274 P.3d 1247, 2012 WL 1088713, at *2 (App. Apr. 2, 2012) (SDO).

As for the fees and costs issue, the ICA concluded that the

circuit court did not abuse its discretion in denying Jou’s

request.   Id. at *3.    The ICA acknowledged but rejected Jou’s

contention that the circuit court should have awarded attorney’s

fees and costs on the ground that his claim was reasonable when

first instituted.    Id.   While initial reasonableness was one

factor in considering the request, the ICA noted that because the

request was only for appellate fees, “it was also appropriate for

the court to consider . . . whether it was reasonable to continue

to pursue the claim through a secondary appeal, even though the

PIP [no-fault] benefits had long been exhausted and the claimant


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had, in effect, conceded that the benefits were exhausted.”                Id.

(citing Kawaihae, 1 Haw. App. at 362, 619 P.2d at 1092 (“[T]he

fact that appellee has been awarded attorney’s fees incurred with

respect to the trial does not require that she be awarded

attorney’s fees incurred with respect to the appeal . . . the

issue of fees on appeal should be decided by the trial court in

the exercise of its discretion[.]”)).         The ICA also rejected

Jou’s argument that he should be awarded fees because it agreed

with him in the previous appeal that DTRIC was required to issue

formal notices of denial of benefits pursuant to HRS § 431:10C-

304(3)(B).    Id.   On that issue, the ICA noted that DTRIC’s

failure to issue the notices only exposed it to potential civil

penalties under HRS § 431:10C-117(b) and (c).8           Id.   The ICA

specifically noted, however, that such failure did not

individually provide Jou a remedy against DTRIC.            Id.

Accordingly, the ICA entered its judgment on May 14, 2012

affirming the circuit court’s judgment on remand.

      8
            HRS § 431:10C-117 (2005) provided then, as it does now, in
pertinent part:

                  (b) Any person, in the capacity of a licensed or
            unlicensed motor vehicle insurer, self-insurer, producer, or
            other representative, who violates any provision of this
            article shall be assessed a civil penalty not to exceed
            $5,000 for each violation.
                  (c) Any person, in the capacity of a licensed or
            unlicensed motor vehicle insurer, self-insurer, producer, or
            other representative, who knowingly violates any provision
            of this article shall be assessed a civil penalty of not
            less than $3,000 and not to exceed $10,000 for each
            violation.

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            Jou then filed his application for writ of certiorari

on May 14, 2012.      Neither Schmidt nor DTRIC filed a response to

the application.

                         II.    STANDARD OF REVIEW

A.    Motion for Attorney’s Fees and Costs

            This court reviews the trial court’s grant or denial of
            attorney[’s] fees and costs under the abuse of discretion
            standard. Price[ v. AIG Haw. Ins. Co.], 107 Hawai#i [106,]
            110, 111 P.3d [1,] 5 [(2005)] (citations omitted).

            The trial court abuses its discretion if it bases its ruling
            on an erroneous view of the law or on a clearly erroneous
            assessment of the evidence. Stated differently, an abuse of
            discretion occurs where the trial court has clearly exceeded
            the bounds of reason or disregarded rules or principles of
            law or practice to the substantial detriment of a party
            litigant.

            Id. (citations omitted).

Enoka v. AIG Haw. Ins. Co., 109 Hawai#i 537, 544, 128 P.3d 850,

857 (2006).

                               III.    DISCUSSION

            The only issue in this case is whether Jou is entitled

to attorney’s fees and costs under HRS § 431:10C-211(a) on the

ground that it was reasonable for him to pursue the first appeal

in this case even though he acknowledged that the no-fault

benefits under the policy were already exhausted.            Although there

are no prior Hawai#i cases defining “unreasonable” for purposes

of HRS § 431:10C-211(a), we are guided by Black’s Law Dictionary,

which defines “unreasonable” as “[n]ot guided by reason;

irrational or capricious.”        Black’s Law Dictionary 1679 (9th ed.

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2009).    Based on the following, because Jou requested a hearing

to challenge the reduced billings long before the no-fault

benefits in Agbayani’s policy were exhausted, we disagree with

the conclusion of the circuit court and the ICA that Jou’s claim

was unreasonable under HRS § 431:10C-211(a).

            The ICA’s remand order in the first appeal, No. 28106,

specifically stated that “a further proceeding is necessary to

determine whether [Jou’s] claim was ‘unreasonable, fraudulent,

excessive, or frivolous[]’” because he was not the prevailing

party in that appeal with respect to the claim for the unpaid no-

fault benefits.    The ICA recognized that, pursuant to HRS §

431:10C-211(a), a party that does not prevail as to the benefits

can nevertheless be awarded attorney’s fees and costs.           (Citing

Iaea, 104 Hawai#i at 183, 90 P.3d at 274).        However, the ICA

remanded for further proceedings in circuit court on the

authority of Kawaihae, which stated that “the issue of fees on

appeal should be decided by the trial court in the exercise of

its discretion pursuant to HRS § 294-30.”         (Quoting Kawaihae, 1

Haw. App. at 362, 619 P.2d at 1092) (internal quotation marks

omitted).    HRS § 294-30 was the predecessor statute to HRS §

431:10C-211(a).    See, e.g., Enoka, 109 Hawai#i at 561, 128 P.3d

at 874.    On remand, as noted, the circuit court subsequently

found that Jou’s claim was unreasonable and thus denied the


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request for appellate fees and costs.

             In affirming the circuit court’s judgment on remand in

this second appeal, the ICA noted in particular that the no-fault

benefits at issue were exhausted long before any appeal was taken

and that Jou never challenged the factual finding that the

benefits were completely exhausted.          Jou, 2012 WL 1088713, at *2.

Accordingly, the ICA concluded that “therefore, further fees

incurred in pursuing [the no-fault] benefits on appeal from the

[c]ircuit [c]ourt to [the ICA] were not reasonably incurred.”

Id.    The ICA also further explained that the reasonableness

inquiry included questioning “whether it was reasonable to

continue to pursue the claim through a secondary appeal, even

though the [no-fault] benefits had long been exhausted and [Jou]

had, in effect, conceded that the benefits were exhausted.”                 Id.

at *3.

             The statutes that govern attorney’s fees and costs in

suits seeking payment of no-fault benefits pursuant to an

insurance contract are HRS §§ 431:10C-211(a) and 431:10C-304(5).

As the ICA has summarized these two related statutes:
             Construing HRS §§ 431:10C-211(a) and 431:10C-304(5)
             according to the foregoing principles of statutory
             construction, we conclude [. . .] that: (1) an award of
             attorney’s fees and costs is mandatory [under HRS § 431:10C-
             304(5)] if a claimant prevails in a settlement or suit for
             no-fault benefits; and (2) an award of attorney’s fees and
             costs may, in the exercise of a court’s or the [Insurance]
             Commissioner’s discretion, be awarded to a nonprevailing
             claimant [under HRS § 431:10C-211(a)], as long as the claim
             is not determined to be unreasonable, fraudulent, excessive,

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          or frivolous.

Iaea, 104 Hawai#i at 379, 90 P.3d at 271.        Thus, first, we

recognize that Jou is not entitled to fees and costs under HRS §

431:10C-304(5).   Under that section, an insurer “shall pay”

attorney’s fees and costs “in addition to[,]” and thus separately

from, personal injury protection benefits due to a medical

provider, but only when those fees and costs are “necessary to

effect the payment of any or all personal injury protection

benefits found due under the contract.”        (Emphases added).      Here,

fees and costs could not be awarded under HRS § 431:10C-304(5)

because Jou did not succeed in recovering the payments withheld

by DTRIC in the amount of $1,189.65.

          However, pursuant to HRS § 431:10C-211(a) and Iaea,

fees and costs may be allowed in the situation where a claimant

does not prevail “in an action brought by or against an insurer

who denies all or part of a claim for benefits under the

policy[.]”   Nevertheless, the claimant cannot be awarded fees and

costs under that section where “the court upon judicial

proceeding . . . determines that the claim was unreasonable,

fraudulent, excessive, or frivolous.”        HRS § 431:10C-211(a).

Here, the circuit court on remand entered a finding on the record

that Jou’s claim was unreasonable at the appellate level because

the benefits were already exhausted and there was no way Jou


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could effect payment of the disputed amount; the circuit court

thus denied Jou’s request for costs and fees.         Our review of the

circuit court’s decision is for an abuse of discretion.

A.   The circuit court and the ICA erred in concluding that Jou’s
claim was unreasonable due to exhaustion of benefits where Jou
had made his claim prior to that exhaustion

           Jou filed his agency appeal in circuit court on June

13, 2005, and he subsequently appealed to the ICA on August 16,

2006.   On December 7, 2005, this court decided Orthopedics

Associates of Hawai#i, Inc. v. Hawaiian Insurance & Guaranty Co.,

109 Hawai#i 185, 124 P.3d 930 (2005).       In that case, numerous

medical providers brought a complaint against several insurers

for the alleged underpayment of claims for services rendered

under the insurers’ respective no-fault insurance contracts.               Id.

at 191, 124 P.3d at 936.     The complaint sought injunctive and

declaratory relief against down-coding of the providers’ bills,

as well as damages for the underpaid amounts of the bills.            Id.

at 192, 124 P.3d at 937.     The circuit court had entered summary

judgment for the insurers.      Id. at 193, 124 P.3d at 938.

           This court reversed, beginning our analysis by

reaffirming an insurer’s obligation, codified in statute, to pay

no-fault benefits within thirty days after the insurer had

received from the provider reasonable proof of the fact and

amount of benefits.    Id. at 194-95, 124 P.3d at 939-40.         This


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court held both that an insurer had an obligation to give notice

to a provider if the insurer elected to deny a claim for

treatment and/or costs in whole or in part, and that an insurer

was not authorized to down-code providers’ bills.          Id. at 194-96,

124 P.3d at 939-41.    The case was remanded for further

proceedings.    Id. at 198, 124 P.3d at 943.

           Jou therefore filed the first appeal to the ICA in this

case in light of the Orthopedics Associates decision, a favorable

ruling for medical providers in a case factually similar to this

one.   The ICA nevertheless held in this case that because the no-

fault benefits under Agbayani’s policy had become exhausted in

the course of litigation--specifically, after Jou initially

sought review of the insurer’s denial but before Jou appealed--

DTRIC’s obligation to pay Jou’s outstanding bills was

extinguished.    Jou, 2008 WL 3919865, at *1-2.       This, however, was

by no means a foregone conclusion.

           When Jou first appealed, there were no published cases

in this jurisdiction holding that a provider who filed a claim

with an insurer before a policy was exhausted could not recover

for a wrongfully denied claim if the benefits subsequently became

exhausted.   The circuit court, however, assumed that Jou would

not be able to recover after the policy limits were reached in

the course of litigation.     Thus, at the conclusion of the hearing


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on Jou’s motion for fees and costs, the circuit court stated:
            [I]n reading the decision of the [ICA] that led to the order
            of remand, it’s perfectly clear as was pointed out at page
            two from [DTRIC’s] memo in op[position] that the insurance
            company had zero, none, not any obligation to pay beyond the
            policy limit which it was always agreed, understood and
            uncontested had been exhausted, and therefore I find the
            claim to be unreasonable and therefore deny the motion.

            It may be that the ICA’s first SDO in this case

suggested that there was greater certainty surrounding this

issue.    The ICA reasoned that it was well-recognized that an

insurer had the right to limit its liability by the terms of its

policy.    Jou, 2008 WL 3919865, at *1-2.        However, the Hawai#i

cases cited by the ICA to support the corollary that a provider

in Jou’s circumstances could not recover were neither directly on

point nor dispositive of Jou’s case.         Id.   The cited cases all

addressed whether an insurer could limit its liability through

the language of a policy, an issue that was not relevant to this

case as there was no dispute over whether Agbayani was entitled

to benefits under the policy.        See id. (citing Salviejo v. State

Farm Fire & Cas. Co., 87 Hawai#i 430, 958 P.2d 552 (App. 1998)

(holding that an insurer could limit its liability through a

household exclusion in its policy and that the exclusion did not

violate public policy); Crawley v. State Farm Mut. Auto. Ins.

Co., 90 Hawai#i 478, 979 P.2d 74 (App. 1999) (affirming that

insurers have the right to limit liability and holding that a

clause in a mother’s automobile policy did not provide coverage

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for her imputed statutory liability for her nonresident minor

child’s accident); Foote v. Royal Ins. Co. of Am., 88 Hawai#i

122, 962 P.2d 1004 (App. 1998) (holding that a “family member”

clause did not render a policy ambiguous and that an officer or

shareholder of a closely-held corporation was not entitled to

uninsured motorist benefits as a “named insured” under a business

policy)).

            The ICA also cited a New York case to support its

holding, but that case was also distinguishable.          In Hospital for

Joint Diseases v. State Farm Mutual Automobile Insurance Co., the

court held that an insurer was not required to pay a hospital for

services provided to an insured where the insurer had already

paid the full policy benefits.      779 N.Y.S.2d 534, 535 (N.Y. App.

Div. 2004).    However, in that case, it appeared that the

hospital’s claim to the insurer was not made until after the

benefits under the policy were already exhausted: “The evidence

submitted by the defendant was sufficient to establish that the

subject policy limits for personal injury protection benefits had

been exhausted by prior claims.”         Id. (emphasis added).

            In fact, the uncertainty in Hawai#i as to whether a

provider whose claim was wrongfully denied prior to the

exhaustion of benefits is entitled to recover was noted in a

federal district court as late as 2010, approximately four years


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after Jou filed his first appeal to the ICA in this case.             In

Painsolvers, Inc. v. State Farm Mutual Automobile Insurance Co.,

the plaintiff sought a preliminary injunction, arguing that the

insurer would contend that even if it was found to be liable for

several claims, the insurer “could then claim benefits had been

exhausted and thus not pay the claims.”          685 F. Supp. 2d 1123,

1139 (D. Haw. 2010).      In a lengthy footnote, the district court

responded that “[t]wo unpublished dispositions [the plaintiff

did] not cite might support [the plaintiff’s] position, but

neither is dispositive.”       Id. at 1139 n.17 (emphasis added).           The

district court then cited the ICA’s SDO from the first appeal in

this case and described the SDO as follows:
            [T]his is an unpublished and nonbinding decision of the
            Intermediate Court of Appeals of Hawai#i, which the court
            there specifically limited to the facts of that case.
            Furthermore, the factual background can be distinguished as
            it references “any additional outstanding bills” and it is
            unclear whether the plaintiff’s claims there were made prior
            to the exhaustion of the limit.

Id. (emphases added).9      The district court thus suggested that

whether a plaintiff can recover from an insurer after a policy

has been exhausted might depend on whether a plaintiff’s claim



      9
            The district court also cited AIG Hawai#i Insurance Co. v. Pain
Management Clinic of Hawai#i, Inc., No. 26743, 109 Hawai#i 468, 128 P.3d 350,
2006 WL 380183 (Jan. 9, 2006) (mem. op.). In that unpublished disposition,
this court determined that an insurer did not have to pay certain benefits
because policy limits had been reached. Painsolvers, 685 F. Supp. 2d at 1139
n.17. The district court explained that AIG Hawai#i was distinguishable
because exhaustion of benefits was the insurer’s defense in the first instance
and not, as the plaintiff had suggested would occur, a defense asserted after
the insurer was found to be liable. Id.

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was made before or after the policy limits were reached.            See id.

As noted, the only Hawai#i cases addressing the issue have been

unpublished and are therefore not dispositive.

          Not only was there uncertainty in Hawai#i as to whether

Jou could recover, but as Jou noted, liability in excess of

policy limits had been imposed on an insurer in a case where the

insurer engaged in wrongful conduct toward the claimant.            See

Delmonte v. State Farm Fire & Cas. Co., 90 Hawai#i 39, 52 n.9,

975 P.2d 1159, 1172 n.9 (1999) (“Even if the ultimate judgment

was in excess of the policy limits, the insurer may still be

liable for the entire amount if its refusal to settle was

unreasonable.”); see also Coleman v. Holecek, 542 F.2d 532, 538

n.7 (10th Cir. 1976) (“[L]iability for a judgment in excess of

the policy limits will be imposed where there was something the

insurance company could have and should have done that would have

relieved the insured of his excess liability[.]”) (internal

quotation marks and citation omitted); S. Gen. Ins. Co. v.

Wellstar Health Sys., Inc., 726 S.E.2d 488 (Ga. App. 2012)

(holding that an insurer was liable to a health care provider for

the amount of the provider’s hospital liens even though the

insurer had already paid its policy limits directly to the

insured, because the insurer could have satisfied the insured’s

claim by verifying the liens, making payment directly to the


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health care provider, and then remitting any balance of the

policy limits to the insured).

           In addition, as Jou noted, there are good policy

reasons for adopting the view that a person in Jou’s position

could recover.   Because Jou filed his claim before the policy was

exhausted, his claim would be superior to that of other providers

who might have been paid by DTRIC after Jou filed his claim.               As

between the insurer and the medical provider, it would seem that

the insurer should bear the loss if its wrongful conduct resulted

in the provider not obtaining payment for services rendered.

           Further, Jou could have reasonably believed, and in

fact argued, that the courts of this state would not adopt a rule

that left providers who would have been compensated if not for an

insurer’s wrongful conduct without a remedy because such a rule

would create stronger incentives for insurance companies to

withhold, reduce, or deny payments to the providers.

           If an insurer has no obligation to pay a provider once

the policy limits are exhausted, the insurer can defeat a lawsuit

alleging wrongful conduct as soon as the policy limits are

reached.   This may also cause doctors to hesitate in providing

services to insureds because the doctor would incur the risk of

not being paid by an insurance company even if benefits were

still available at the time the doctor treated the insured and


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presented his or her bills to the insurer for payment.

          Thus, when Jou first appealed, it was uncertain whether

he could recover on his claim under the circumstances, and, more

importantly, there was favorable authority and policy supporting

his position.    As such, it would seem that Jou’s pursuit of his

appeal was not irrational or without reason.

B.   Jou’s request for fees and costs is further supported by the
success of his prior claim that insurers are required to provide
formal written notice of a denial or reduction of benefits to a
medical provider

          In addition, it would seem that Jou’s pursuit and

eventual vindication of his claim that DTRIC failed to provide

proper notice of the denial should have factored into the circuit

court’s consideration of whether Jou’s appeal was reasonable.

Jou argued to the circuit court on remand that he had prevailed

on the question of whether insurers had to provide formal notice

to medical providers upon reducing or denying a provider’s claim.

 Jou explained that the ruling was important because if the

insurer does not send out formal notice, then the “provider’s

remedies are not triggered under companion statutes in the then

no-fault system” and this could leave a provider without “a

triggering point to take their remedies forward.”

          Jou further explained that “after years and years of

litigation[,] the [Hawai#i] Supreme Court agreed with [Jou] on

that point.”    Indeed, as noted, the ICA agreed with Jou in

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concluding that DTRIC was required to provide formal notice upon

reduction or denial of benefits.          It would seem eminently

reasonable for Jou to pursue a claim that was later adjudicated

in his favor, the result of which was to reaffirm an insurer’s

obligation to give notice when it reduces or denies a provider’s

claim.    However, at the hearing on Jou’s motion for costs and

fees on remand, the circuit court did not address the denial of

notice issue and only referred to the lack of an obligation on

DTRIC’s part to pay once the policy benefits were exhausted.10

            In this regard, the ICA concluded that DTRIC’s failure

to give statutorily required notice merely exposed it to

potential civil penalties and did not provide a remedy to Jou on

appeal.    Jou, 2012 WL 1088713, at *3.        However, obtaining a

remedy on appeal is not required in order to obtain attorney’s

fees under HRS § 431:10C-211(a).          As stated in Kawaihae, even if

a “claim is denied in its entirety,” 1 Haw. App. at 362, 619 P.2d

at 1092, a plaintiff may nevertheless recover reasonable

     10
            Moreover, the circuit court’s May 19, 2009 written order stated:

            Pursuant to the remand of the ICA, this [c]ourt does not
            find that JOU’s claim was fraudulent, excessive or
            frivolous. However, this [c]ourt is mindful of the body of
            case law holding that an insurance company has no obligation
            to pay on a claim for No-fault/PIP benefits beyond the No-
            fault/PIP policy limit. This [c]ourt further finds that the
            finding by the Hearings Officer that the policy benefits
            were exhausted as of February 3, 1999 was clear and was
            never challenged by JOU. Accordingly, this [c]ourt finds
            JOU’s arguments and his claims that reimbursement should
            have been paid under the provisions of the No-fault/PIP
            insurance policy of DTRIC were unreasonable.

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attorney’s fees and costs under that statute upon a determination

by the trial court that the claim was not unreasonable,

fraudulent, excessive, or frivolous.         Moreover, because Jou’s

claim was not denied in its entirety, an award of attorney’s fees

would seem even more appropriate.

          Based on all of the foregoing reasons, we therefore

conclude that Jou’s request for attorney’s fees and costs was not

unreasonable under HRS § 431:10C-211(a) because his underlying

claim for personal injury protection benefits based on medical

services rendered to the insured had been made before the

insured’s policy limit was reached.

                            IV.   CONCLUSION

          Accordingly, we vacate the ICA’s May 14, 2012 Judgment

on Appeal and the circuit court’s May 19, 2009 Final Judgment on

Remand, and we remand this case to the circuit court for further

proceedings consistent with this opinion.

Stephen M. Shaw, for                     /s/ Paula A. Nakayama
petitioner/provider-appellant
                                         /s/ Simeon R. Acoba, Jr.
J. Patrick Gallagher, for
respondent/respondent-                   /s/ Sabrina S. McKenna
appellee Dai-Tokyo Royal                 /s/ Richard W. Pollack
Insurance Company
                                         /s/ Glenn J. Kim
Elmira K.L. Tsang, for
respondent/respondent-
appellee J.P. Schmidt,
Insurance Commissioner,
Department of Commerce and
Consumer Affairs, State of
Hawai#i

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