Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 43, H.D. 2, entitled:

begs leave to report as follows:

The purpose of this measure is to create a criminal offense for insurance fraud.

Your Committee received testimony in support of this measure from the State Farm Insurance Companies, Consumer Lawyers of Hawaii, and Hawaii Medical Service Association. Testimony in opposition was received from Davis Levin Livingston Grande and Price Okamoto Himeno & Lum. Comments were submitted by the Insurance Division and Hawaii Medical Association.

Insurance fraud is on the rise both locally and nationally. Insurance fraud has also increasingly affected costs within the health insurance industry. In Hawaii, based on the conservative estimate that insurance fraud amounts to three per cent of annual Hawaii health care costs, insurance fraud causes losses that exceed $60,000,000 annually.

Your Committee notes that the new statutory section under this measure is verbatim to section 431:10C-307.7, Hawaii Revised Statutes, relating to the offense of insurance fraud under the motor vehicle insurance laws. Your Committee further notes that the measure has been changed from its original version as introduced in the House, which provided for immunity to persons who report health insurance fraud. Your Committee is concerned whether the present measure is appropriate to reduce health insurance fraud and has therefore retained the defective effective date of July 1, 2050, to facilitate further discussion on this issue.

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 H.B. No. 43, H.D. 2, and recommends that it pass Second Reading and be referred to the Committee on Judiciary and Hawaiian Affairs.