Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 43 entitled:

begs leave to report as follows:

The purpose of this bill is to establish immunity from civil liability for a person who reports health insurance fraud, except in the case of malicious reporting or perjury.

Testimony in support of this measure was submitted by State Farm Insurance Company and the Hawaii Medical Service Association. The Hawaii Medical Association supported the intent of the measure and suggested an amendment. The Insurance Division of the Department of Commerce and Consumer Affairs and Consumer Lawyers of Hawaii commented.

Your Committee finds that, in Hawaii, based on the conservative estimate that health insurance fraud amounts to three percent of annual Hawaii health care costs, insurance fraud causes losses that exceed $60 million annually.

This bill will encourage individuals to report health insurance fraud, by providing immunity from civil liability for providing insurance fraud information to the Insurance Commissioner, National Association of Insurance Commissioners, any governmental enforcement or regulatory agency, or another insurer, except where the person has acted with malice or committed perjury.

Your Committee recognizes the concerns of the Hawaii Medical Association that there is a maze of medical codes that have been created to track insurance charges, and that if a physician knowingly selects the code that makes the most sense for the procedure then presents a charge based on that code to an insurer, this may be punishable as insurance fraud, as the term is currently defined.

Accordingly, your Committee has amended the bill by amending the definition of "insurance fraud" in section 431:10C-307.7, Hawaii Revised Statutes (HRS), to specify that to be considered insurance fraud, false information on a claim must be presented with the intent to defraud.

In addition, your Committee has amended this bill by:

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 43, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 43, H.D. 1, and be referred to the Committee on Judiciary.