Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 940 entitled:

begs leave to report as follows:

The purpose of this measure is to subject mutual benefit societies and health maintenance organizations to the unfair practices provisions of the business of insurance, for refusing to provide or limit coverage to an individual having a third-party claim for damages.

Testimony in support of this measure was submitted by the Consumer Lawyers of Hawaii and a private attorney. Testimony in opposition to this measure was submitted by the Hawaii Medical Service Association (HMSA).

Your Committee finds that there is a major loophole in exempting mutual benefit societies and health maintenance organizations from Hawaii Revised Statutes section 431:13-103 pertaining to unfair methods of competition and unfair or deceptive acts or practices in the business of insurance. This loophole has actually made things worse for accident victims and provides no administrative protections for consumers. Your Committee recognizes that there might be unintended consequences of this measure as drafted. Thus, your Committee is requesting HMSA, Kaiser Permanente, the Insurance Commissioner, and plaintiff attorneys to work on consensus language for this measure.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 940 and recommends that it pass Third Reading.