Tauese v. State, Department of Labor & Industrial Relations, 113 Haw. 1

Summary

The Supreme Court of Hawaiʻi held that a fraudulent insurance act under Hawaiʻi Revised Statutes § 386-98(a)(8) must be proven by clear and convincing evidence, rather than by a preponderance of the evidence. The court also addressed the statute’s requirements, the nature of administrative penalties, constitutional challenges, First Amendment protection for misrepresentations to the Department of Labor and Industrial Relations, and physician-patient privilege. The court vacated the Labor and Industrial Relations Appeals Board’s decision and remanded for a rehearing, while affirming the circuit court’s judgment.

Holdings

1. A violation of HRS § 386-98 must be proved by clear and convincing evidence, not by a preponderance of the evidence.
2. A fraudulent insurance act does not require that benefits actually be received; it is sufficient that obtaining benefits was the logical result or purpose of the acts or omissions.
3. HRS § 386-98(a)(8) does not require proof of reliance or detrimental reliance by another party.
4. Administrative penalties imposed under HRS § 386-98(e) are not criminal in nature.
5. Tauese failed to establish that HRS § 386-98 improperly delegates the State's police power by allowing a private party to file an administrative complaint.
6. Misrepresentations made before the Department are not constitutionally protected by the First Amendment.
7. Statements made to a physician during an independent medical examination are not protected by the physician-patient privilege.

Questions Presented

1. Whether a violation of Hawaiʻi Revised Statutes § 386-98 must be proved by clear and convincing evidence rather than by a preponderance of the evidence.
2. Whether HRS § 386-98 requires that the claimant actually receive benefits, or merely that obtaining benefits be the logical result or purpose of the challenged conduct.
3. Whether HRS § 386-98(a)(8) requires reliance or detrimental reliance as elements of a fraudulent insurance act.
4. Whether administrative penalties under HRS § 386-98(e) are criminal or punitive in nature.
5. Whether HRS § 386-98 improperly delegates the State's police power by allowing a private party to initiate an administrative fraud complaint.
6. Whether misrepresentations made before the Department are protected speech under the First Amendment.
7. Whether statements made during an independent medical examination are protected by the physician-patient privilege.
8. Whether the circuit court properly dismissed Tauese's declaratory and injunctive action.

Disposition

reversed_and_remanded