Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 738 entitled:

begs leave to report as follows:

The purpose of this measure is to allow the Employees' Retirement System to compromise or settle claims for benefits, including those claims arising over the detrimental reliance by ERS members on erroneous information provided by the ERS, as approved by the Attorney General.

Testimony in support of this measure was submitted by the Department of the Attorney General, the Employees' Retirement System (ERS), and the Hawaii State Teachers Association.

Your Committee finds that the Attorney General has opined that, under the current law, the ERS is not authorized to compromise or settle claims in which an ERS member has detrimentally relied on erroneous information provided by the ERS, if this would result in the member receiving benefits that the member is not entitled to receive by statute. Therefore, the current law does not provide for the more effective and efficient disposition of cases wherein an ERS member has made a decision, based upon erroneous information obtained from the ERS, which may result in severely adverse consequences to the member. Your Committee further finds that situations may occur in which a member is mistakenly or incorrectly credited with service to which the member is not entitled as a matter of law. As the courts may find that this situation was established through the detrimental reliance of a member on information obtained from the ERS, the ERS should be authorized to compromise or settle the case instead of having to participate in full blown litigation unless this is necessary.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 738, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 738, S.D. 1, and be referred to the Committee on Ways and Means.