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Llanes v. Daso9/19/2000
Plaintiff-appellant Victor Llanes (Llanes) appeals from the judgment of the district court of the third circuit ruling against Llanes and in favor of defendant-appellee AIG Hawaii Insurance Company (AIG) in a no-fault insurance case. On appeal, Llanes argues that the district court erred in 1) ruling against him based on Wilson v. AIG Hawaii Ins. Co., 89 Hawaii 45, 968 P.2d 647 (1998), wherein this court held that an insured under a no-fault insurance policy is not a "real party in interest" with respect to a claim for no-fault benefits to satisfy the medical provider's unpaid bill for services rendered; and 2) awarding AIG attorney's fees and costs associated with defending Llanes's claim. We hold that the district court correctly relied on Wilson with respect to claims for no-fault benefits to pay for services previously rendered by Llanes's provider, but erroneously neglected to recognize Llanes's interest in challenging AIG's denial of further chiropractic treatment or services. We thus vacate the judgment of the district court against Llanes, reverse its award of attorney's fees to AIG, and remand for further proceedings consistent with this opinion.
I. BACKGROUND
On June 28, 1997, Llanes, insured under a AIG no-fault insurance policy, was involved in a motor vehicle accident. Shortly thereafter, Llanes began chiropractic treatment with Jeffery Daso, D.C. (Dr. Daso) for bodily injuries suffered during the accident, including headaches and pain in his neck, lower back, and arm.
On August 15, 1997, Dr. Daso submitted a treatment plan for Llanes recommending treatment from August 16, 1997 to October 11, 1997. On October 2, 1997, Dr. Daso submitted another treatment plan requesting treatment from October 12, 1997 through December 6, 1997. All of the recommended treatments were provided to Llanes.
AIG challenged the treatment plans, requesting peer review pursuant to Hawaii Revised Statutes (HRS) ยง 431:10C-308.6(d) (1993) (repealed 1998). Jeff Mallory, D.C., prepared the peer review organization (PRO) report, concluding that the treatment proposed in the treatment plans were inappropriate and unreasonable and that " o further chiropractic care is recommended." Based on the PRO report, on October 7, 1997, AIG issued a denial of no-fault benefits for: "1) Chiropractic treatments as outlined in [Dr. Daso]'s treatment plan dated 8/15/97; 2) [Dr. Daso]'s treatment plan dated 10/2/97; 3) further chiropractic treatment after 10/11/97; and 4) any related expenses."
On April 3, 1998, Llanes filed a complaint in the district court alleging that AIG breached its duties under contract and statute to provide no-fault benefits. On October 28, 1998, this court issued its opinion in Wilson, holding that the insured under a no-fault insurance policy is not a "real party in interest" with respect to a claim for no-fault benefits to satisfy the medical provider's unpaid bill for services rendered. In response to the opinion, on April 6, 1999, Llanes filed his first amended complaint, adding Dr. Daso as a plaintiff seeking benefits for services already rendered. Llanes remained a plaintiff in the amended complaint seeking benefits due for future services.
Trial was conducted on May 4, 1999. In written closing arguments submitted after the trial, AIG argued for the first time that Wilson required the dismissal of Llanes as plaintiff because Dr. Daso was the only real party in interest.
On June 1, 1999, the district court issued its judgment, which stated in relevant part:
. . . [Dr. Daso] is entitled to Judgment against in the amount of $8,269.02 for chiropractic services provided to [Llanes], $1,992.17 in attorney's
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