Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred S.B. No. 2093, S.D. 1, entitled:

beg leave to report as follows:

The purpose of this bill is to reduce health insurance costs by establishing penalties for acts or omissions related to fraudulent health insurance claims.

Testimony in support of this measure was submitted by the Hawaii Medical Service Association. Testimony in opposition was received from the Hawaii Medical Association and the Office of the Public Defender. The Department of Commerce and Consumer Affairs, Office of Information Practices, and American Council of Life Insurance provided comments.

Your Committees find that insurance fraud is on the rise both locally and nationally. The health insurance industry suffers tremendous annual losses as a result of insurance fraud, which costs are passed on to consumers.

This bill adds fraud provisions modeled after the motor vehicle insurance fraud law enacted in Act 155, Session Laws of 1998, to the laws governing accident and sickness insurance, mutual benefit societies, and health maintenance organizations.

Your Committees support the intent of this bill, but have amended it by replacing its contents with a similar House bill that your Committees believe better achieves the intended purpose of this measure. As amended, the bill:

(1) References the motor vehicle insurance fraud law; and

Your Committees have also made technical, nonsubstantive amendments for purposes of clarity and consistency.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2093, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2093, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.