Clarifies that the board of trustees of the public employees health fund owes a dual fiduciary duty to both public employees and public employers. (HD1)

A BILL FOR AN ACT

SECTION 1. The legislature finds that the board of trustees has a fiduciary duty to public employees in administering moneys contributed to the public employees health fund to pay for health care benefits for public employees. However, the legislature also finds that, in order to fulfill its ultimate fiduciary duty to public employees, the board must also adopt a fiduciary duty to public employers to ensure that the overall public employees health fund system continues to survive and provide benefits to public employees. If the board were to single-mindedly pursue actions that reflect a solitary fiduciary duty only to public employees without regard to rising employer costs, a real possibility arises that the entire health benefits system for public employees may break down. Should this occur, the board would not have fulfilled its fiduciary duty to public employees.

In addition, moneys in the health fund consists of contributions from both public employers and public employees. Although benefits go only to public employees, moneys in the health fund are derived from employers as well as employees. As a result, the board of trustees must owe a dual fiduciary duty to both public employers and public employees.

The purpose of this Act is to clarify that the board of trustees of the public employees health fund owes a dual fiduciary duty to both public employees and public employers.

SECTION 2. Section 87-21, Hawaii Revised Statutes, is amended to read as follows:

"§87-21 Administration of the fund[.]; dual fiduciary duty. (a) The board of trustees shall administer and carry out the purpose of the fund.

(b) The board of trustees, in carrying out its duties under this chapter, or in fulfilling any other responsibility specified under this chapter, shall owe a dual fiduciary duty to both public employers and public employees."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.