Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Health, to which was referred S.B. No. 707 entitled:

begs leave to report as follows:

The purpose of this measure is to limit special damages claims in civil actions when such claims arise out of medical or other health care services paid for by a government program, such as Medicare or Medicaid.

The Attorney General submitted testimony in support of this measure. The Consumer Lawyers of Hawaii submitted testimony in opposition.

Your Committee finds that according to the Attorney General, special damages compensate claimants for specific out-of-pocket financial expenses and losses. An example is the medical expenses incurred by a claimant who was in an automobile accident, and needed treatment for injuries. If the claimant is liable for a sum to the hospital for medical services, our justice system would award that sum to the claimant as special damages.

However, recent decisions prohibit limiting special damages to the amount of out-of-pocket financial expenses and losses. An award is made based on the amount of the liability and not necessarily what was paid for the service. So for instance, if a medical provider bills the claimant $5,000 but is required to accept a Medicaid reimbursement of a lesser amount, the claimant gets the difference between the billed amount and the collateral amount owed to Medicaid. According to the Attorney General, this results in an inequitable "windfall" to the claimant. This measure would limit special damages to the amount actually paid.

Upon further consideration, your Committee has amended this measure by changing the effective date to July 1, 2010, so that additional discussion can be had on this issue.

As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 707, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 707, S.D. 1, and be referred to the Committee on Judiciary and Hawaiian Affairs.