Requires the administrative board of a mutual benefit society to have representatives from small businesses, provider networks, large businesses, and consumer interests. Gives the insurance commissioner increased authority to provide equitable relief and legal remedies on behalf of aggrieved members.

A BILL FOR AN ACT

SECTION 1. Section 432:1-202, Hawaii Revised Statutes, is amended to read as follows:

"§432:1-202 Constitution and bylaws; officers; government of society. (a) Mutual benefit societies promising or offering to pay death, sick, disability, or other benefits in an amount equal to or in excess of $25 shall, subject to the approval of the commissioner, have the power to make a constitution and bylaws for the government of the society, the admission of its members, the management of its affairs, and the fixing and readjusting of the rates of contribution of its members. The societies shall have the power to amend the constitution and bylaws and such other powers as are necessary to carry into effect the object and purpose of the society, but shall not suspend temporarily any part of its constitution or bylaws as the same are governed by this article.

(b) Each mutual benefit society shall elect or otherwise appoint among its officers a president and a treasurer, who shall be residents of the State.

(c) After the organization of a society is completed and a certificate of compliance with law is granted by the commissioner, the society shall be governed by its administrative board or body, in accordance with its constitution and bylaws[.], and this article. The administrative board or body of a mutual benefit society shall be composed of members that represent the following groups:

(d) Upon compliance with this article any society engaged in transacting business or operating in this State may exercise all of the rights conferred by this article, and all of the rights, powers and privileges possessed by it under its constitution and bylaws, rules and regulations, or articles of incorporation or charter not inconsistent with this article.

(e) Any aggrieved member of a mutual benefit society that has concerns relating to the governance of the society may apply to the commissioner for relief. The commissioner may order any equitable relief, including, but not limited to, reviewing the society's bylaws and constitution to determine whether the bylaws and constitution sufficiently protect the rights of the members. In the event the commissioner deems the society's bylaws or constitution, in part or in whole, to insufficiently protect the rights of the members, the commissioner may order the society to remove and revise the relevant provisions of the bylaws or constitution, as the commissioner may deem appropriate under the circumstances.

(f) Notwithstanding any other provision of this article, if a mutual benefit society fails to comply with the requirements of this section, the commissioner may take appropriate action to ensure that the continued operation of the mutual benefit society will not be hazardous to its members. Appropriate action by the commissioner includes any applicable penalty provided in section 432:1-105. In addition, if the mutual benefit society fails to comply with the requirements of this section within sixty days from being notified of the violation by the commissioner, the following penalties may also apply:

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.