Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2721, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to extend for another year the insurance commissioner's authority to examine and supervise, rehabilitate, or liquidate insolvent dental insurers, and to allow any action brought pursuant to this authority to proceed to its conclusion.

The Insurance Commissioner, Hawaii Dental Service, and Hawaii Medical Service Association testified in support of this measure.

Act 132, Session Laws of Hawaii 2001, Regular Session (Act 132) made dental service corporations and dental service organizations subject to the Commissioner's enforcement, examination, supervision, rehabilitation, and liquidation powers. Prior to the Act, not all dental plans were subject to regulation by the Commissioner. Act 132 further provided for a repeal of these powers as to dental service corporations and organizations on July 1, 2002.

Pursuant to Act 132, the Commissioner initiated an investigation against a dental insurer that was unable to pay its claims, was not adequately responding to complaints, and was not cooperating with State authorities. Subsequently, based on evidence that the insurer was insolvent and had violated state laws, the State Circuit Court ordered the insurer seized and liquidated.

The Commissioner is currently serving as Liquidator in the liquidation proceedings. By extending the sunset date on the law establishing the Commissioner's oversight over dental service corporations and organizations, and allowing for the continuation of proceedings brought thereunder until their conclusion, this measure would allow the Commissioner to continue to pursue the claims of providers and creditors in the pending liquidation action.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2721, S.D. 1, and recommends that it pass Third Reading.