Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred H.B. No. 1374, H.D. 2, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to entitle a plaintiff that successfully proves a case of workers' compensation insurance fraud to recoupment of payments for medical services and reimbursement of attorney's fees and costs.

This measure also entitles a defendant that successfully defends a case of workers' compensation insurance fraud to reimbursement of attorney's fees and costs.

In addition, this measure authorizes the insurance fraud unit of the Insurance Division to investigate and prosecute workers' compensation fraud relating to self-insured employers.

Your Committee finds that present law does not ensure that a successful plaintiff in a workers' compensation insurance fraud case is entitled to restitution of benefits. Rather, the workers' compensation law specifies merely that restitution of benefits to the source from which compensation was received is possible in lieu of criminal penalties being levied against the defrauding party. Accordingly, this measure is necessary to clarify that the successful plaintiff in a fraud case is entitled to restitution from the defrauding party. Furthermore, parity requires that a similar remedy be accorded to a successful defendant who is not found to have committed fraud.

Your Committee also finds that, under present law, the duties of the insurance fraud investigations unit of the Insurance Division is limited to motor vehicle insurance fraud. Your Committee finds that expanding the duties of the unit to include workers' compensation fraud is appropriate in light of the magnitude of the problem.

Your Committee has amended this measure by making technical nonsubstantive amendments for the purposes of clarity and style. Your Committee has also amended this measure by changing the effective date from June 30, 2009 to June 30, 9002, for the purposes of continued discussion of the matter.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1374, H.D. 2, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1374, H.D. 2, S.D. 2.