Scarlett v. Macy's West Stores, Inc.

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
31-JUL-2023
07:52 AM
Dkt. 84 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

MONICA G. SCARLETT, Claimant-Appellee-Appellant,
v.
MACY'S WEST STORES, INC., Employer-Appellant-Appellee,
and
SEDGWICK CMS-HAWAII, Third-Party Administrator-
Appellant-Appellee

APPEAL FROM THE LABOR AND INDUSTRIAL RELATIONS APPEALS BOARD
(CASE NO. AB 2018-091 AND DCD NO. 2-17-05258)

SUMMARY DISPOSITION ORDER
(By: Leonard, Presiding Judge, Hiraoka and Wadsworth, JJ.)

Claimant-Appellee-Appellant Monica G. Scarlett appeals
from the "Order Adopting Proposed Decision and Order" entered by
the Labor and Industrial Relations Appeals Board (LIRAB or Board)
on November 25, 2019. The LIRAB majority adopted its "Proposed
Decision and Order" entered on October 4, 2019. For the reasons
explained below, we affirm.
Scarlett worked for Employer-Appellant-Appellee Macy's
West Stores, Inc. as a fragrance specialist in the Ala Moana
Center Bloomingdale's store. On July 9, 2017, she injured her
lower back while lifting boxes at work. Macy's accepted
liability for workers compensation benefits. Scarlett received
temporary total disability (TTD) benefits through July 16, 2017.
She was then released to perform modified duty work for no more
NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

than five hours per day. She worked part-time beginning July 17,
2017, and received temporary partial disability (TPD) benefits
until January 7, 2018.
On January 7, 2018, Macy's suspended Scarlett's
employment and denied further benefits. Scarlett's employment
was terminated on January 9, 2018.1
DLIR's Disability Compensation Division (DCD) conducted
a hearing on Scarlett's claim for workers compensation benefits
on March 16, 2018. Macy's did not attend the hearing or file a
memorandum.2 The Director of Labor and Industrial Relations
issued a decision on March 23, 2018. The Director: (1) awarded
Scarlett TTD benefits beginning January 7, 2018, "and terminating
at such time as is determined by the Director that such
disability has ended"; (2) assessed a penalty against Macy's
under Hawaii Revised Statutes (HRS) § 386-92 ("Default in
payments of compensation, penalty"); and (3) awarded Scarlett
attorney's fees and costs under HRS § 386-93; but (4) deferred a
decision on a treatment plan "until such time that [Macy's] has
been provided sufficient and adequate notice of a hearing."
Macy's appealed the Director's decision to LIRAB.
LIRAB issued a pretrial order. The issues to be determined were:
(1) whether Scarlett was entitled to TTD benefits after
January 7, 2018 (the date Scarlett was suspended);3 (2) whether
the Director erred by assessing the penalty against Macy's; and
(3) whether the Director erred by assessing attorney's fees and
costs against Macy's.

1
Records from the Department of Labor and Industrial Relations
Unemployment Insurance Division indicate that Macy's discharged Scarlett for
removing fragrance testers from Bloomingdale's without authorization.
2
Macy's was a workers compensation self-insurer and administered
its own claims. In early March 2018, Macy's transferred its workers
compensation claim-handling function to Third-Party Administrator-Appellant-
Appellee Sedgwick CMS — Hawaii. It appears that Sedgwick did not realize it
was handling Scarlett's claim, and that DCD was not informed of the change
until some time after the March 16, 2018 hearing.
3
LIRAB's pretrial order stated that the date at issue was
January 7, 2017, which was apparently a typographical error.

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LIRAB conducted a trial. On October 4, 2019, LIRAB
entered the Proposed Decision and Order, with the Chair
dissenting. Scarlett filed exceptions. Macy's filed a response.
LIRAB held a hearing on Scarlett's exceptions. On November 25,
2019, LIRAB entered the Order Adopting Proposed Decision and
Order, over a dissent by the Chair. The LIRAB majority concluded
that: (1) Scarlett was not entitled to TTD benefits after
January 7, 2018; (2) the Director erred in assessing a penalty
against Macy's for late payment of TTD benefits; and (3) the
Director erred in assessing attorney's fees and costs against
Macy's. This appeal followed.
Scarlett raises seven points of error: (1) "LIRAB erred
in determining that [Scarlett] was able to work with restrictions
and on a modified schedule pursuant to her physician's work
release, [so] she was not temporarily totally disabled after
January 7, 2018"; (2) "[t]he Board erred in finding that
[Scarlett] was not temporarily totally disabled after January 7,
2018, on grounds that [Macy's] had accommodated her restrictions
and subsequently terminated her for violating [Macy's] policies";
(3) "the Board erred in declining to determine whether [Macy's]
termination of [Scarlett] was justified when it based [her]
disentitlement to TTD on the grounds that her termination was for
violating [Macy's] policies and that such termination had not
been rescinded or otherwise modified"; (4) "the Board erred in
disregarding the determination of the Unemployment Insurance
Division, Department of Labor and Industrial Relations had not
committed any misconduct and declining to give the determination
preclusive effect in this case"; (5) "[t]he Board erred in
finding that there is no evidence that [Scarlett], upon her
suspension, made any attempt to return to work"; (6) "[t]he Board
erred in finding that [Scarlett] is not entitled to penalties for
the untimely payment of TTD benefits"; and (7) "[t]he Board erred
in finding that [Scarlett] is not entitled to an assessment of
attorney's fees and costs against [Macy's] for defending her

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claim for TTD benefits without reasonable ground under Section
386-93(a), HRS."

Appellate review of a LIRAB decision is governed by
HRS § 91-14(g). It is well-established that appellate
courts review LIRAB's findings of fact under the clearly
erroneous standard. However, LIRAB's conclusions of law
cannot bind an appellate court and are freely reviewable for
their correctness. Thus, the court reviews conclusions of
law de novo, under the right/wrong standard.

Skahan v. Stutts Constr. Co., 148 Hawai#i 460, 466, 478 P.3d 285,
291 (2021) (cleaned up). However, LIRAB's label of a finding of
fact or a conclusion of law does not determine the standard of
review. See Crosby v. State Dep't of Budget & Fin., 76 Hawai#i
332, 340, 876 P.2d 1300, 1308 (1994). Whether an agency's
determination is a finding of fact or a conclusion of law is a
question of law. The accuracy of the label affixed by the agency
is freely reviewable on appeal. Kilauea Neighborhood Ass'n v.
Land Use Comm'n, 7 Haw. App. 227, 229, 751 P.2d 1031, 1034
(1988).
(1) Scarlett contends that LIRAB erred by determining
she was not temporarily totally disabled after January 7, 2018.
She challenges the following findings of fact, analysis, and
conclusion of law:

FINDINGS OF FACT

. . . .

8. The Board finds that [Scarlett] was not totally
disabled for the period after January 7, 2018 through
December 18, 2018 - the medical reports submission deadline
on this appeal.

. . . .
12. The Board finds that [Scarlett] has not met her
burden of proving her entitlement to TTD benefits for the
period January 9, 2018 through December 18, 2018.

. . . .
ANALYSIS/DISCUSSION

. . . .
The medical evidence does not support [Scarlett]'s
assertion that she is temporarily and totally disabled

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because of her suspension and subsequent termination.
Rather, Dr. DiCostanzo's work status reports make clear that
for the period after January 7, 2018 through December 18,
2018, she was able to work with restrictions and on a
modified schedule. Therefore, she was not totally disabled
during that period.

. . . .
CONCLUSIONS OF LAW

1. The Board concludes that [Scarlett] is not
entitled to temporary total disability benefits after
January 7, 2018.

LIRAB's determination of a claimant's entitlement to
TTD benefits is reviewed de novo. Tamashiro v. Control
Specialist, Inc., 97 Hawai#i 86, 92, 34 P.3d 16, 22 (2001).
"Total disability" means "disability of such an extent that the
disabled employee has no reasonable prospect of finding regular
employment of any kind in the normal labor market." HRS § 386-1
(2015). "If an employee is injured on the job and is unable to
work in any capacity after the injury, he or she is eligible for
a total disability benefit." Ihara v. State, Dep't of Land &
Nat. Res., 141 Hawai#i 36, 42, 404 P.3d 302, 308 (2017) (emphasis
added) (citation omitted). Temporary total disability benefits
are available "[w]here a work injury causes total disability not
determined to be permanent in character[.]" HRS § 386-31(b)
(2015 & Supp. 2016).
Scarlett acknowledges that her doctor's January 12,
2018 disability certificate "states that [she] had modified duty
restrictions of working no more than 5 hours per work day (25
hours per week) and no lifting/carrying/pushing/pulling more than
5 pounds, no twisting of the torso/spine, sitting and resting as
needed, and only occasional bending at the waist." She "informed
the unemployment insurance division that she was ready, willing,
and able to work within her doctor's restrictions." Her
"[d]isability certifications from January 2018 through
December 18, 2018 (the date of the medical reports submission on
appeal to the LIRAB) continued [to] certify [her] with the
modified duty, part-time restrictions."

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LIRAB's findings that Scarlett was not totally disabled
are supported by substantial evidence in the record, and are not
clearly erroneous. LIRAB's conclusion that Scarlett is not
entitled to TTD benefits was not wrong.4
(2) Scarlett contends that LIRAB erred in finding that
she was not temporarily totally disabled after January 7, 2018,
"on grounds that [Macy's] had accommodated her restrictions and
subsequently terminated her for violating [Macy’s] policies."
She challenges the following findings of fact, analysis, and
conclusion of law:

FINDINGS OF FACT

. . . .

5. The Board finds no disagreement that [Macy's]
suspension and subsequent termination of [Scarlett]'s
employment related to an alleged theft by [Scarlett].
6. The Board finds that [Scarlett]'s suspension and
subsequent termination were unrelated to her July 9, 2017
work injury.

. . . .
ANALYSIS/DISCUSSION

. . . .

[Scarlett] relies on Dr. DiCostanzo's statement that
she be considered temporarily and totally disabled if
[Macy's] did not accommodate the restrictions imposed.
However, such reliance is misplaced, when [Macy's]
accommodated her restrictions, but suspended and then
terminated her for violating [Macy's] policies.
The parties take opposite views as to the propriety of
[Macy's] suspension and subsequent termination of
[Scarlett]'s employment. For purposes of deciding the issue
on appeal, the Board need not decide whether the basis for
[Scarlett]'s suspension and subsequent termination was in
line with [Macy's] policies regarding samples, deluxe
samples, testers, and gifts with purchase. There is no
dispute that [Scarlett] was suspended and subsequently
terminated for violating [Macy's] policies and that such
termination has not been rescinded or otherwise modified.

4
Scarlett is not claiming that Macy's owed her TPD benefits after
January 7, 2018, under HRS § 386-32(b) (2015) (discussing entitlement to
benefits "[w]here a work injury causes partial disability, not determined to
be permanent, which diminishes the employee's capacity for work[.]").

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As noted above, "(T)wo basic goals of compensation
statutes are: (a) to restore the injured worker, to the
greatest possible extent, physiologically and as a
productive member of society; and (b) to compensate him or
his family adequately for the losses consequent upon his
personal injury or death." However, the Board declines to
equate her termination with temporary total disability. The
Board also declines to compensate [Scarlett] with workers'
compensation benefits greater than she would be entitled had
she continued working at the modified position provided by
[Macy's] and not suspended and subsequently terminated.
[Scarlett] has not met her burden of proof and is not
entitled to TTD benefits for the period after January 7,
2018 through December 18, 2018.

The factual issues concerning the termination of
Scarlett's employment, the reasons therefor, and whether those
reasons were valid, are not material to the legal issues
presented by this appeal. Scarlett argues: "After her
termination from employment, [she] continued to be disabled, she
was unable to work for more than 5 hours per day of modified
duty, and she had not reached a point of medical stability."
(Emphasis added.) Thus, she concedes that she was not totally
disabled, and was not entitled to TTD benefits under HRS § 386-
31(b). She may have been entitled to TPD benefits under HRS
§ 386-32(b), but she did not make that claim before LIRAB and it
is not at issue in this appeal.
(3) Scarlett contends: "Should the Court determine
that a claimant's fault in causing her termination from
employment is relevant to the issue of her entitlement to TTD
benefits, the Board erred in declining to determine whether
[Macy's] termination of [Scarlett] was justified when it based
[Scarlett]'s disentitlement to TTD on the grounds that her
termination was for violating [Macy's] policies and that such
termination had not been rescinded or otherwise modified." As
discussed above, the termination of Scarlett's employment is not
material to the issues presented by this appeal. We need not
address her third point of error.
(4) Scarlett contends: "Should the Court determine
that a claimant's fault in causing her termination from
employment is relevant to the issue of her entitlement to TTD
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benefits, the Board erred in disregarding the determination of
the Unemployment Insurance Division, Department of Labor and
Industrial Relations [that she] had not committed any misconduct
and declining to give the determination preclusive effect in this
case." Again, the termination of Scarlett's employment is not
material to the legal issues presented by this appeal. We need
not address her fourth point of error.
(5) Scarlett contends that LIRAB erred by finding that
there was no evidence she made any attempt to return to work
after she was suspended. She challenges finding of fact no. 11.
However, her opening brief contains no citations to evidence in
the record showing that she did attempt to return to work after
she was suspended and terminated. See Hawai#i Rules of Appellate
Procedure Rule 28(b)(4)(A) and 28(b)(7). We are not obligated to
search the record for information that should have been provided
by Scarlett. Hawaii Ventures, LLC v. Otaka, Inc., 114 Hawai#i
438, 480, 164 P.3d 696, 738 (2007) (explaining that an appellate
court "is not obligated to sift through the voluminous record to
verify an appellant's inadequately documented contentions")
(citing Lanai Co. v. Land Use Comm'n, 105 Hawai#i 296, 309 n.31,
97 P.3d 372, 385 n.31 (2004) and Miyamoto v. Lum, 104 Hawai#i 1,
11 n.14, 84 P.3d 509, 519 n.14 (2004)). At any rate, this
factual issue is not material to the legal issues presented by
this appeal.
(6) Scarlett contends that LIRAB "erred in finding
that [she] is not entitled to penalties for the untimely payment
of TTD benefits." Scarlett was not entitled to TTD benefits
after July 16, 2017, when she was released to perform modified
duty work for no more than five hours per day and began receiving
TPD benefits. LIRAB did not err by not penalizing Macy's for not
paying benefits Macy's was not obligated to pay.
(7) Finally, Scarlett contends that LIRAB erred by
failing to award her attorney's fees and costs under HRS § 386-
93(a), because Macy's defended her claim for TTD benefits without
reasonable grounds. Macy's paid Scarlett TTD benefits until

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July 16, 2017, after which she returned to work part-time and
received TPD benefits. Scarlett was never entitled to receive
TTD benefits after July 16, 2017. Macy's had reasonable grounds
for defending her claim for TTD benefits. LIRAB did not err by
not awarding Scarlett attorney's fees or costs.
For the reasons explained above, the LIRAB majority's
"Order Adopting Proposed Decision and Order" entered on
November 25, 2019, is affirmed.
DATED: Honolulu, Hawai#i, July 31, 2023.

On the briefs:
/s/ Katherine G. Leonard
Andrew A. Cheng, Presiding Judge
for Claimant-Appellee-
Appellant. /s/ Keith K. Hiraoka
Associate Judge
Paul A. Brooke,
Kira J. Goo, /s/ Clyde J. Wadsworth
for Employer-Appellant- Associate Judge
Appellee Macy's West
Stores, Inc. and
Third-Party Administrator
Appellant-Appellee
Sedgwick CMS-Hawaii.

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