REPORT TITLE:
Insurance


DESCRIPTION:
Defines independent bill reviewer (IBR) for insurance purposes;
requires licensing of IBRs; levies an IBR license fee of $80 and
$60 a year for services provided by DCCA.  Prohibits IBRs from
being paid on a contingency fee basis.  Appropriates funds to
regulate independent bill reviewers.  (SB2186 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2186
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                H.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended
 
 2 by adding three new sections to article 9 to be appropriately
 
 3 designated and to read as follows:
 
 4      "§431:9-    Independent bill reviewer.  (a) "Independent
 
 5 bill reviewer" means any individual who:
 
 6      (1)  Acts solely on behalf of either the insurer as an
 
 7           independent contractor or as an employee of an
 
 8           independent contractor; and
 
 9      (2)  Reviews or audits billings for medical services.
 
10      (b)  For the purposes of this section, an individual is not
 
11 deemed an independent bill reviewer if the individual is:
 
12      (1)  A salaried employee of an insurer or salaried employee
 
13           of an adjusting corporation owned or controlled by an
 
14           insurer; or
 
15      (2)  A database provider for the insurer.
 
16      §431:9-    Compensation by contingency fee prohibited.  An
 
17 independent bill reviewer shall not be compensated on a
 
18 contingency fee basis.
 

 
Page 2                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1      §431:9-    Qualification for independent bill reviewer's
 
 2 license.  To qualify for an independent bill reviewer's license,
 
 3 an applicant shall comply with this article and shall:
 
 4      (1)  Be domiciled in this State, or in a state that will
 
 5           permit residents of this State to act as independent
 
 6           bill reviewers in such other state;
 
 7      (2)  Have experience, special education, or training with
 
 8           reference to the review or audit of billings for
 
 9           medical services under insurance contracts, of
 
10           sufficient duration and extent to reasonably make the
 
11           individual competent to fulfill the responsibilities of
 
12           an independent bill reviewer;
 
13      (3)  Have successfully passed any examination required under
 
14           section 431:9-206; and
 
15      (4)  Pay the license fee;
 
16 provided that in the alternative to paragraphs (1) to (3), the
 
17 applicant shall hold the credential of a certified professional
 
18 coder granted by the American Academy of Professional Coders."
 
19      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 
20 by amending the title of article 9 to read as follows:
 
21                            "ARTICLE 9
 
22    LICENSING OF AGENTS, BROKERS, SOLICITORS, [AND] ADJUSTERS,
 
23                        AND BILL REVIEWERS"
 

 
Page 3                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1      SECTION 3.  Section 431:2-303, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§431:2-303  Examination of agents, [managers,] solicitors,
 
 4 adjusters, promoters[.], and independent bill reviewers.  For the
 
 5 purpose of ascertaining its condition, or compliance with this
 
 6 code, the commissioner may as often as the commissioner deems
 
 7 advisable examine the insurance accounts, records, documents, and
 
 8 transactions of:
 
 9      (1)  Any insurance general agent, subagent, solicitor, [or]
 
10           adjuster, or independent bill reviewer, including
 
11           insurance agencies and surplus lines agencies; or
 
12      (2)  Any person engaged in, proposing to be engaged in, or
 
13           assisting in the promotion or formation of a domestic
 
14           insurer, a stock corporation to finance a domestic
 
15           mutual insurer or the production of its business, or a
 
16           corporation to be attorney-in-fact for a domestic
 
17           reciprocal insurer."
 
18      SECTION 4.  Section 431:2-305, Hawaii Revised Statutes, is
 
19 amended by amending subsection (d) to read as follows:
 
20      "(d)  Orders shall be issued and hearings conducted as
 
21 follows:
 
22      (1)  All orders entered pursuant to subsection (c)(1) shall
 
23           be accompanied by findings and conclusions resulting
 

 
Page 4                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1           from the commissioner's consideration and review of the
 
 2           examination report, relevant examiner workpapers, and
 
 3           any written submissions or rebuttals.  Any [such] order
 
 4           shall be considered a final administrative decision and
 
 5           may be appealed pursuant to chapter 91, and shall be
 
 6           served upon the insurer or person by certified mail,
 
 7           together with a copy of the adopted examination report.
 
 8           Within thirty days of the issuance of the adopted
 
 9           report, the insurer or person shall file affidavits
 
10           executed by each of its directors stating under oath
 
11           that they have received a copy of the adopted report
 
12           and related orders, except that for examinations of
 
13           general agents, subagents, solicitors, adjusters,
 
14           independent bill reviewers, or surplus lines brokers,
 
15           serving the copy of the adopted report and related
 
16           orders by certified-return receipt requested mail will
 
17           satisfy the service requirement and no affidavits shall
 
18           be required; and
 
19      (2)  Any hearing conducted under subsection (c)(3) by the
 
20           commissioner or authorized representative shall be
 
21           conducted as a nonadversarial confidential
 
22           investigatory proceeding as may be necessary for the
 
23           resolution of any inconsistencies, discrepancies, or
 

 
Page 5                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1           disputed issues apparent upon the face of the filed
 
 2           examination report or raised by or as a result of the
 
 3           commissioner's review of relevant workpapers or raised
 
 4           by the written submission or rebuttal of the insurer or
 
 5           person.  Within twenty days of the conclusion of any
 
 6           [such] hearing, the commissioner shall enter an order
 
 7           pursuant to subsection (c)(1):
 
 8           (A)  The commissioner shall not appoint an examiner as
 
 9                an authorized representative to conduct the
 
10                hearing.  The hearing shall proceed expeditiously
 
11                with discovery by the insurer or person limited to
 
12                the examiner's workpapers that tend to
 
13                substantiate any assertions set forth in any
 
14                written submission or rebuttal.  The commissioner
 
15                or the commissioner's representative may issue
 
16                subpoenas for the attendance of any witnesses or
 
17                the production of any documents deemed relevant to
 
18                the investigation, whether under the control of
 
19                the division, the insurer, or other persons.  The
 
20                documents produced shall be included in the record
 
21                and testimony taken by the commissioner or the
 
22                commissioner's representative shall be under oath
 
23                and preserved for the record;
 

 
Page 6                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1           (B)  The hearing shall proceed in accordance with
 
 2                departmental rules adopted under chapter 91; and
 
 3           (C)  Nothing contained in this section shall require
 
 4                the insurance division to disclose any information
 
 5                or records that would indicate or show the
 
 6                existence or content of any investigation or
 
 7                activity of a criminal justice agency."
 
 8      SECTION 5.  Section 431:7-101, Hawaii Revised Statutes, is
 
 9 amended by amending subsections (a) and (b) to read as follows:
 
10      "(a)  The commissioner shall collect in advance the
 
11 following fees:
 
12      (1)  Certificate of authority:  Issuance............... $900
 
13      (2)  Organization of domestic insurers and affiliated
 
14           corporations:
 
15           (A)  Application and all other papers required for
 
16                issuance of solicitation permit, filing.... $1,500
 
17           (B)  Issuance of solicitation permit.............  $150
 
18      (3)  General agent's license:
 
19           (A)  Issuance, regular license..................... $75
 
20           (B)  Issuance, temporary license................... $75
 
21      (4)  Subagent's license:
 
22           (A)  Issuance, regular license..................... $75
 
23           (B)  Issuance, temporary license................... $75
 

 
Page 7                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1      (5)  Nonresident agent's or broker's license:  Issuance. $60
 
 2      (6)  Solicitor's license:  Issuance..................... $60
 
 3      (7)  Independent adjuster's license:  Issuance.......... $60
 
 4      (8)  Public adjuster's license:  Issuance............... $60
 
 5      (9)  Workers' compensation claims adjuster's limited
 
 6           license:  Issuance................................. $60
 
 7     (10)  Independent bill reviewer's license:  Issuance......$80
 
 8    [(10)] (11)  Limited license issued pursuant to section
 
 9           431:9-214(c):  Issuance............................ $60
 
10    [(11)] (12)  Managing general agent's license:  Issuance.. $75
 
11    [(12)] (13)  Reinsurance intermediary's license:  Issuance $75
 
12    [(13)] (14)  Surplus line broker's license:  Issuance.... $150
 
13    [(14)] (15)  Examination for license:  For each examination, a
 
14           fee to be established by the commissioner.
 
15      (b)  The fees for services of the department of commerce and
 
16 consumer affairs subsequent to the issuance of a certificate of
 
17 authority or a license are as follows:
 
18      (1)  $600 per year for all services (including extension of
 
19           the certificate of authority) for an authorized
 
20           insurer;
 
21      (2)  $75 per year for all services (including extension of
 
22           the license) for a regularly licensed general agent;
 

 
 
 
Page 8                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1      (3)  $75 per year for all services (including extension of
 
 2           the license) for a regularly licensed subagent;
 
 3      (4)  $45 per year for all services (including extension of
 
 4           the license) for a regularly licensed nonresident agent
 
 5           broker;
 
 6      (5)  $30 per year for all services (including extension of
 
 7           the license) for a regularly licensed solicitor;
 
 8      (6)  $45 per year for all services (including extension of
 
 9           the license) for a regularly licensed independent
 
10           adjuster;
 
11      (7)  $45 per year for all services (including extension of
 
12           the license) for a regularly licensed public adjuster;
 
13      (8)  $45 per year for all services (including extension of
 
14           the license) for a regularly limited licensed workers'
 
15           compensation claims adjuster;
 
16      (9)  $60 per year for all services (including extension of
 
17           the license) for a regularly licensed independent bill
 
18           reviewer;
 
19     [(9)] (10)  $45 per year for all services (including
 
20           extension of the license) for a limited license issued
 
21           pursuant to section 431:9-214(c);
 

 
 
 
 
 
Page 9                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1    [(10)] (11)  $75 per year for all services (including
 
 2           extension of the license) for a regularly licensed
 
 3           managing general agent;
 
 4    [(11)] (12)  $75 per year for all services (including
 
 5           extension of the license) for a regularly licensed
 
 6           reinsurance intermediary;
 
 7    [(12)] (13)  $45 per year for all services (including
 
 8           extension of the license) for a licensed surplus line
 
 9           broker; and
 
10    [(13)] (14)  The services referred to in paragraphs (1) to
 
11           [(12)] (13) shall not include services in connection
 
12           with examinations, investigations, hearings, appeals,
 
13           and deposits with a depository other than the
 
14           department of commerce and consumer affairs."
 
15      SECTION 6.  Section 431:9-101, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "§431:9-101  Scope.  This article shall govern the
 
18 qualifications and procedures for granting licenses to all
 
19 insurance agents, brokers, surplus lines brokers, nonresident
 
20 agents or brokers, subagents, solicitors, adjusters, independent
 
21 bill reviewers, and limited service representatives."
 

 
 
 
 
 
Page 10                                                    2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1      SECTION 7.  Section 431:9-201, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (a) to read as follows:
 
 3      "(a)  No person engaging in the business of insurance in
 
 4 this State shall act as, be appointed as, or hold oneself out to
 
 5 be a general agent, subagent, solicitor, [or] adjuster, or
 
 6 independent bill reviewer unless so licensed by this State."
 
 7      SECTION 8.  Section 431:9-206, Hawaii Revised Statutes, is
 
 8 amended by amending subsection (a) to read as follows:
 
 9      "(a)  Each applicant for license as general agent, subagent,
 
10 solicitor, [or] adjuster, or independent bill reviewer shall
 
11 prior to the issuance of any such license, personally take and
 
12 pass to the satisfaction of the commissioner an examination given
 
13 by the commissioner as a test of the applicant's qualifications
 
14 and competence."
 
15      SECTION 9.  Section 431:9-228, Hawaii Revised Statutes, is
 
16 amended by amending subsection (a) to read as follows:
 
17      "(a)  Every licensed general agent, subagent, [and]
 
18 adjuster, and independent bill reviewer shall have and maintain
 
19 in this State, or, if a nonresident agent or broker, in the state
 
20 of the agent's or broker's domicile, a place of business
 
21 accessible to the public."
 

 
 
 
 
 
Page 11                                                    2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1      SECTION 10.  Section 431:9-229, Hawaii Revised Statutes, is
 
 2 amended by amending the title and subsection (a) to read as
 
 3 follows:
 
 4      "§431:9-229  Records of general agent, subagent,
 
 5 adjuster[.], independent bill reviewer.  (a)  Every general
 
 6 agent, subagent, [or] adjuster, or independent bill reviewer
 
 7 shall keep a record of all transactions consummated under [such]
 
 8 their license.  This record shall be in organized form according
 
 9 to class of insurance and shall include:
 
10      (1)  If a general agent or subagent:
 
11           (A)  A record of each insurance contract procured or
 
12                issued, together with the names of the insurers
 
13                and insureds, the amount of premium paid or to be
 
14                paid, or the basis of the premium or consideration
 
15                paid or to be paid, and a statement of the subject
 
16                of the insurance; and
 
17           (B)  The names of any other licensees from whom
 
18                business is accepted, and of persons to whom
 
19                commissions or allowances of any kind are promised
 
20                or paid;
 
21      (2)  If an adjuster, a record of each investigation or
 
22           adjustment undertaken or consummated, and a statement
 
23           of any fee, commission, or other compensation received
 

 
Page 12                                                    2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 1
                                                        

 
 1           or to be received by the adjuster on account of [such]
 
 2           the investigation or adjustment; [and]
 
 3      (3)  If an independent bill reviewer, a record of each bill
 
 4           reviewed and a statement of any fee, commission, or
 
 5           other compensation received or to be received by the
 
 6           independent bill reviewer on account of the bill
 
 7           reviewed; and
 
 8     [(3)  Such other and ] (4)  Any additional information as
 
 9           shall be customary, or as may reasonably be required by
 
10           the commissioner."
 
11      SECTION 11.  There is created one permanent full time
 
12 position to carry out the purposes of this Act and to provide
 
13 additional compliance and enforcement resources for the insurance
 
14 division.
 
15      SECTION 12.  There is appropriated out of the insurance
 
16 regulation fund the sum of $96,508 or so much thereof as may be
 
17 necessary for fiscal year 2000-2002 to carry out the purposes of
 
18 this Act.
 
19      The sum appropriated shall be expended by the department of
 
20 commerce and consumer affairs.
 
21      SECTION 13.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 14.  This Act shall take effect upon approval;
 
24 provided that section 12 shall take effect July 1, 2050.