Requires allegations of Insurance Code violations to be filed and heard by the Insurance Commissioner. Allows the Commissioner to award restitution as a remedy through an administrative hearing.

A BILL FOR AN ACT

SECTION 1. This Act allows the insurance commissioner (commissioner) to protect and assist Hawaii's citizens by timely determining restitution claims and ordering appropriate damages to affected parties.

Currently, the Insurance Code provides that the commissioner can only fine, suspend, or revoke the license of someone who violates the Insurance Code. The commissioner cannot provide a remedy for a consumer who has been damaged by a violation of the code. Instead a consumer must pursue a costly lawsuit to obtain a proper remedy. Often the damage to the consumer, a few hundred or a few thousand dollars, is not enough to justify the costs of a lawsuit. Without hope of recovery, the consumer may not even want to go to the trouble of filing a complaint with the commissioner. In order to properly protect consumers, it is essential that the commissioner be able to order restitution to Hawaii's consumers for damages they have suffered due to violations of the Insurance Code.

This Act authorizes the commissioner to provide a more efficient, expedient, and timely forum for protecting consumers and helping alleviate their anxieties on whether they can recover their losses from Insurance Code violators.

This quick and timely process will provide immediate relief for Hawaii's citizens and directly reduce the amount of time spent by affected citizens in litigation and related expensive litigation costs.

SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding to article 2 a new part to be appropriately designated and to read as follows:

"PART . PROCEEDINGS

§431:2-A Original jurisdiction. An action for a claim of a violation of this chapter shall be filed with the insurance commissioner.

§431:2-B Notice of right to sue. (a) The commissioner may issue a notice of right to sue upon written request of the plaintiff or the plaintiff's counsel. The commissioner, in determining whether to issue a notice of right to sue, shall consider the following factors, including:

(b) Within ninety days after receipt of a notice of right to sue, the plaintiff or the plaintiff's counsel shall institute litigation in an appropriate court or the claim will be barred.

(c) The commissioner may intervene in a civil action alleging a violation of this chapter if it is in the public interest.

(d) Nothing herein shall create a civil cause of action that did not previously exist before the effective date of this Act.

§431:2-C Statute of limitations. (a) No claim shall be filed with the commissioner under this part later than:

(b) This section shall not apply to articles 7, 10C, and 10D.

§431:2-D Restitution. (a) A court or the commissioner may include in the order or judgment such provisions as may be necessary to effect restitution.

(b) The commissioner may establish a special fund designated as the commissioner's restitution fund. The fund shall be used to hold and disburse moneys received or recovered through a court or administrative order which are due consumers as restitution.

(c) The commissioner may assign to a consumer for collection that portion of any judgment awarding restitution to that consumer.

§431:2-E Attorney's fees and costs. (a) A person making a successful claim under this part for a violation of this chapter may request an award of attorney's fees and costs.

(b) A request for an award of reasonable attorney's fees and costs shall be in writing and be accompanied with appropriate documentation.

(c) An award for reasonable attorney's fees and costs shall be in writing."

SECTION 3. Section 431:2-203, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (b) to read as follows:

2. By amending subsection (d) to read as follows:

"(d) If the commissioner has cause to believe that any person is violating or is about to violate any provision of this code or any order of the commissioner, the commissioner may issue a cease and desist order to enforce compliance with this code or any order of the commissioner, or bring an action in any court of competent jurisdiction to enjoin the person from continuing the violation or doing any act in furtherance thereof. The commissioner shall have the discretion to include in a cease and desist order or request in an action brought in any court an assessment of a monetary penalty and restitution against any person who violates this code or who has violated an order of the commissioner."

3. By amending subsection (g) to read as follows:

"(g) A monetary penalty and restitution may be imposed in addition to any applicable suspension, revocation, or denial of a license or certificate of authority."

SECTION 4. Section 431:13-201, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) If, after the hearing, the commissioner shall determine that the person charged has engaged in an unfair method of competition or an unfair or deceptive act or practice, the commissioner shall reduce the findings to writing and shall issue and cause to be served upon the person charged with the violation a copy of the findings and an order requiring the person to cease and desist from engaging in the method of competition, act, or practice. If the act or practice is a violation of section 431:13-103, the commissioner may, at the commissioner's discretion, order any one or more of the following:

SECTION 5. Section 431:13-202, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any person who violates a cease and desist order of the commissioner under section 431:13-201 may be subject at the discretion of the commissioner, after notice and hearing and upon order of the commissioner, to [either or both] any one or more of the following:

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 7. In codifying the new sections of the new part added to article 2 of chapter 431, Hawaii Revised Statutes, by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in the designation of the new sections.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval.