STAND. COM. REP. NO. 636-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2314
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 2314 entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to make it an unfair or
deceptive act or practice to withhold past or future coverage or
limit a claim because an individual may have a third-party claim
for damages.  This measure exempts reimbursement of past benefits
where:

     (1)  Damages are recovered;

     (2)  There is reimbursement or subrogation otherwise
          provided by the law.  

     Testimony was received from the Consumer Lawyers of Hawaii
in support of this measure with suggestions for clarification.
Your Committee received testimony from the Department of Commerce
and Consumer Affairs (DCCA) in opposition to this measure as
originally drafted.  The DCCA testified that the measure would be
supported if amended to clarify that future renewal was not
mandated.  The Hawaii Medical Service Association and State Farm
also opposed this measure.

     Your Committee finds that many types of insurance, such as
workers' compensation and automobile insurance, have statutory
subrogation or reimbursement rights where there is third-party

 
 
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                                 Page 2

 
liability.  This measure will bring uniformity to those insurance
coverages that do not have explicit third-party reimbursement
rights.

     HMSA raised a concern that this measure may impact its
operation.  HMSA suggested language exempting health benefit
providers from this amendment to article 13 and placing the same
requirements in Section 663-10, Hawaii Revised Statutes, which
covers health benefits.  Section 663-10 has been amended to
extend health benefit providers' third-party liability rights to
settlements, as well as lawsuits.  This amendment places all of
the rights and obligations of health benefit providers and
consumers in section 663-10 for third-party liability situations. 

     Your Committee also finds that this measure is intended to
prohibit provisions which purport to provide no coverage or limit
coverage before or after settlement or judgment, while providing
reimbursement rights pursuant to section 663-10 to avoid a
duplicate windfall recovery to the claimant.  

     Technical, nonsubstantive amendments have been made for
purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 2314, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
2314, H.D. 1, and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair