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.  Establishes and
appropriates funds to regulate independent bill reviewers.  (SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2186
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                
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 amending the title of article 9 to read as follows:
 
 3                            "ARTICLE 9
 
 4    LICENSING OF AGENTS, BROKERS, SOLICITORS, [AND] ADJUSTERS,
 
 5                        AND BILL REVIEWERS"
 
 6      SECTION 2.  Chapter 431:9, Hawaii Revised Statutes, is
 
 7 amended by adding three new sections to be appropriately
 
 8 designated and to read as follows:
 
 9      "§431:9-    Independent bill reviewer.  (a)  Independent
 
10 bill reviewer means any individual who:
 
11      (1)  Acts solely on behalf of either the insurer as an
 
12           independent contractor or as an employee of an
 
13           independent contractor; and
 
14      (2)  Reviews or audits billings for medical services.
 
15      (b)  For the purposes of this section, an individual is not
 
16 deemed an independent bill reviewer if the individual is a:
 
17      (1)  Salaried employee of an insurer or salaried employee of
 
18           an adjusting corporation owned or controlled by an
 
19           insurer; or
 

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

 
 1      (2)  A data base provider for the insurer.
 
 2      §431:9-    Compensation by contingency fee prohibited.  An
 
 3 independent bill reviewer shall not be compensated on a
 
 4 contingency fee basis.
 
 5      §431:9-    Qualification for independent bill reviewer's
 
 6 license.  To qualify for an independent bill reviewer's license,
 
 7 an applicant shall comply with this article and shall:
 
 8      (1)  Be domiciled in this State, or in a state which will
 
 9           permit residents of this State to act as independent
 
10           bill reviewers in such other state;
 
11      (2)  Have had experience, special education, or training
 
12           with reference to the review or audit of billings for
 
13           medical services under insurance contracts, of
 
14           sufficient duration and extent reasonably to make the
 
15           individual competent to fulfill the responsibilities of
 
16           an independent bill reviewer;
 
17      (3)  Have successfully passed any examination required under
 
18           section 431:9-206; and
 
19      (4)  Have paid the license fee; or
 
20 in the alternative to (1) to (4), the applicant shall hold the
 
21 credential of a certified professional coder, granted by the
 
22 American Association of Certified Professional Coders and has
 

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

 
 1 paid the license fee."
 
 2      SECTION 3.  Section 431:2-303, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "§431:2-303  Examination of agents, managers, promoters[.],
 
 5 independent bill reviewers.  For the purpose of ascertaining its
 
 6 condition, or compliance with this code, the commissioner may as
 
 7 often as the commissioner deems advisable examine the insurance
 
 8 accounts, records, documents, and 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
 

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

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

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

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

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

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

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

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

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

 
 1           the certificate of authority) for an authorized
 
 2           insurer;
 
 3      (2)  $75 per year for all services (including extension of
 
 4           the license) for a regularly licensed general agent;
 
 5      (3)  $75 per year for all services (including extension of
 
 6           the license) for a regularly licensed subagent;
 
 7      (4)  $45 per year for all services (including extension of
 
 8           the license) for a regularly licensed nonresident agent
 
 9           broker;
 
10      (5)  $30 per year for all services (including extension of
 
11           the license) for a regularly licensed solicitor;
 
12      (6)  $45 per year for all services (including extension of
 
13           the license) for a regularly licensed independent
 
14           adjuster;
 
15      (7)  $45 per year for all services (including extension of
 
16           the license) for a regularly licensed public adjuster;
 
17      (8)  $45 per year for all services (including extension of
 
18           the license) for a regularly limited licensed workers'
 
19           compensation claims adjuster;
 
20      (9)  $60 per year for all services (including extension of
 
21           the license) for a regularly licensed independent bill
 
22           reviewer;
 

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

 
 1     [(9)] (10)  $45 per year for all services (including
 
 2           extension of the license) for a limited license issued
 
 3           pursuant to section 431:9-214(c);
 
 4    [(10)] (11)  $75 per year for all services (including
 
 5           extension of the license) for a regularly licensed
 
 6           managing general agent;
 
 7    [(11)] (12)  $75 per year for all services (including
 
 8           extension of the license) for a regularly licensed
 
 9           reinsurance intermediary;
 
10    [(12)] (13)  $45 per year for all services (including
 
11           extension of the license) for a licensed surplus line
 
12           broker; and
 
13    [(13)] (14)  The services referred to in paragraphs (1) to
 
14           [(12)] (13) shall not include services in connection
 
15           with examinations, investigations, hearings, appeals,
 
16           and deposits with a depository other than the
 
17           department of commerce and consumer affairs."
 
18      SECTION 6.  Section 431:9-101, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "§431:9-101  Scope.  This article shall govern the
 
21 qualifications and procedures for granting licenses to all
 
22 insurance agents, brokers, surplus lines brokers, nonresident
 

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

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

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

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

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

 
 1           adjustment undertaken or consummated, and a statement
 
 2           of any fee, commission, or other compensation received
 
 3           or to be received by the adjuster on account of such
 
 4           investigation or adjustment; [and]
 
 5      (3)  If an independent bill reviewer, a record of each bill
 
 6           reviewed and a statement of any fee, commission, or
 
 7           other compensation received or to be received by the
 
 8           independent bill reviewer on account of the bill
 
 9           reviewed; and
 
10     [(3)] (4)  Such other and additional information as shall be
 
11           customary, or as may reasonably be required by the
 
12           commissioner."
 
13      SECTION 11.  There is created one permanent position to
 
14 carry out the purposes of this Act and to provide additional
 
15 compliance and enforcement resources for the insurance division.
 
16      SECTION 12.  There is appropriated out of the insurance
 
17 regulation fund the sum of $          , or so much thereof as may
 
18 be necessary for fiscal year 2000-2001, to carry out the purposes
 
19 of this Act.  The sum appropriated shall be expended by the
 
20 department of commerce and consumer affairs.
 
21      SECTION 13.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 

 
 
 
Page 13                                                    2186
                                     S.B. NO.           S.D. 2
                                                        
                                                        

 
 1      SECTION 14.  This Act shall take effect upon its approval;
 
 2 provided that section 12 shall take effect on July 1, 2000.