Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 940, H.D. 2, entitled:

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to clarify the rights and obligations of health insurers, mutual benefit societies, and health maintenance organizations with regard to the health coverage rights of persons with third-party claims for damages.

Refusing to provide or limiting health coverage to persons who have third-party claims for damages is not permitted, except for reimbursement under section 663-10, Hawaii Revised Statutes (HRS). This measure makes such acts unfair insurance practices under article 13 of the insurance code to eliminate any doubt that health insurers have always been subject to these limitations under section 663-10, HRS. Health insurers continue to be entitled to reimbursement of their subrogation liens under section 663-10, HRS.

Your Committee on Conference has amended this measure to give health insurers the right to refuse or limit coverage until workers' compensation or motor vehicle insurance personal injury protection (PIP) medical benefits are used to pay applicable medical expenses. This will avoid duplicate payments for the same expense or shifting those expenses to health insurance. Persons with workers' compensation or motor vehicle insurance PIP benefits must use those benefits first before applicable health insurance. This provision does not apply to workplace or motor vehicle liability coverage. Thus, the limited exemption provided in section 431:13-103(a)(10)(C)(i), HRS, is intended to apply only to the extent that the claimant has workers' compensation or motor vehicle PIP medical coverage available to pay applicable medical expenses. The exemption does not extend to liability, uninsured, or underinsured motorist benefits, and health insurers may not refuse to provide or limit coverage because a claimant may be entitled to recover under those coverages.

Under this measure, as amended, health insurers are also given the right to require reasonable notice of third party claims and reasonable cooperation in providing sufficient information. Claimants who intentionally seek to evade their reimbursement obligations will waive their rights. Reimbursement of payments made because of untimely notice is provided to protect health insurers and avoid forfeiture. Insurers and claimants are given the option of submitting disputes to impartial binding arbitration, if both insurer and claimant agree. It is intended that the consumer have an independent right and opportunity to select arbitration or court proceedings, rather than having it imposed as a policy or contract term. Health insurers are given the right to adequate discovery in both arbitration and court proceedings to obtain required information.

This measure provides a fair balance between the rights of health insurers to recover reimbursement for their payments and protection for consumers to retain adequate health coverage and redress for injuries. This measure, as amended, should eliminate any confusion caused by Act 29, Session Laws of Hawaii 2000, and clarify that Act 29 had no effect on the rights and obligations imposed on health insurers by section 663-10, HRS.

Your Committee on Conference has also amended this measure to provide that it shall become effective upon its approval.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 940, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 940, H.D. 2, C.D. 1.