§488-4  Accumulated funds, protection, violation.  (a)  Any plan that accumulates funds from payments of premiums prior to paying those funds to persons providing legal services shall meet the requirements of this section.

     (b)  The plan administrator shall have the responsibilities of a trustee for all funds received or collected under this chapter.

     (c)  The plan administrator, upon receipt of premium funds intended for payment to a person providing legal services pursuant to this chapter, shall maintain the funds at all times in a federally insured account with a bank, savings and loan association, or financial services loan company located in Hawaii, separate from the plan's own funds or funds held by the plan administrator in any other capacity, in an amount at least equal to the funds collected and unpaid to the persons providing legal services, unless otherwise approved by the commissioner.  Only additional funds that are reasonably necessary to pay bank, savings and loan association, or financial services loan company charges may be commingled with premium funds accumulated pursuant to this section.  If the bank, savings and loan association, or financial services loan company account is an interest earning account, the plan shall not retain the interest earned on accumulated funds for the plan or plan administrator's own use or benefit without the prior written consent of the person entitled to the funds.  A plan trustee account shall be designated on the records of the bank, savings and loan association, or financial services loan company as a "trustee account established pursuant to section 488-4, Hawaii Revised Statutes", or words of similar import.

     (d)  The plan administrator shall obtain a bond in an amount and form approved by the commissioner which shall be executed by the plan administrator and a surety company authorized to do business in the State as a surety.  The bond shall be to the benefit of the members of the plan and shall be filed with the commissioner.  In lieu of the bond required by this section, the commissioner may accept letters of credit, certificates of deposits, or other evidences of security in form and amounts deemed appropriate by the commissioner.

     (e)  Any plan administrator who, not being lawfully entitled to do so, diverts or appropriates funds accumulated pursuant to this section or any portion thereof to the plan or plan administrator's own use, shall be subject to penalties as provided by law. [L 1976, c 156, pt of §1; am L 1992, c 78, §2; am L 2010, c 47, §1(4)]