DISSENT
TO STAND. COM. REP. NO. 1441-07
March 23, 2007
RE: Senate Bill 1060,
S.D. 1, H.D. 1
Honorable Calvin
K.Y. Say
Speaker, House of
Representatives
Twenty-Fourth State Legislature
Regular Session of
2007
State of
Sir:
I respectfully dissent from the
recommendation of your Committee on Consumer Protection and Commerce favoring
passage of Senate Bill No. 1060, S.D. 1, H.D. 1, “A
BILL FOR AN ACT RELATING TO WORKERS’ COMPENSATION LAW”. The purpose of the bill is to:
(1)
Allow
for alternative dispute resolution for workers’ compensation claims;
(2)
Establish
criteria for the use of optional evidence-based guidelines for treatment and
for the denial and dispute processes;
(3)
Exempt
individuals holding ownership of at least 50% in an employing unit, including
corporations, partnerships, limited liability partnerships, and sole
proprietorships from workers’ compensation requirements if the individual
chooses to be excluded, provided that the exclusion shall be irrevocable for
five years;
(4)
Exempt
service performed by a partner for the for the partnership, a partner of a
limited liability partnership, and sole proprietor for the sole proprietorship
from workers’ compensation requirements;
(5)
Prevent
essential medical services from being discontinued in the event of a dispute,
until the Director of Labor renders a decision on whether medical treatment
should be continued;
(6)
Allow
for the recovery of costs from a claimant’s personal health care provider or
other appropriate occupational or non-occupational insurer by an employer or
employer’s insurer in the event unwarranted medical treatment was provided;
(7)
Allow
injured workers to be referred for vocational rehabilitation where the employee
has achieved maximum medical improvement and the employer has made no offer of
permanent suitable work;
(8)
Allow
for requests for hearings by employees and employers;
(9)
Provide
for reimbursement of medical treatment expenses which should have been denied;
(10) Limit the rulemaking powers of the Director;
(11) Establishes requirements and standards for
independent medical examiners to perform independent medical exams;
(12) Clarifies authorization for claims for
attorney’s services; and
(13) Require the submission of annual reports by
workers’ compensation insurers to the Director of Department of Commerce and
Consumer Affairs and the Insurance Commissioner.
The
Committee on Consumer Protection and Commerce passed the bill in an unamended form.
I do not agree with many of the provisions of
the bill in its current form. The language
in Section 8 of this bill alters the selection process for an independent
medical examiner. Under current law, the
employer designates and pays for the independent medical examiner. It is one of the few cost-managing options
for the employer in the workers’ compensation arena. The proposed language calls for the
independent medical examiner to be selected by mutual agreement of the claimant
and employer, removing a cost-containment tool for the employer.
The
language is also ambiguous as to what will happen if there is no mutual
agreement between the parties as to the independent medical examiner. The proposed language calls for the director
to provide the parties “with the names of three duly qualified independent
medical examiners within ten calendar days from the notification of failure to
reach mutual agreement, compiled and maintained by the director, to the
employer and employee from which they shall choose.” However, what happens upon further disagreement
is unclear. The
language on page 27-28 states, “If the employer and employee, within ten
calendar days.” Without statutory
guidance, this situation would go unresolved, resulting in no resolution for
the employer, and no care for the employee.
In addition, current law allows for the employee
to have their own physician present at the examination. This is to allow the employee verification of
the medical examination conducted by the employer's IME
and allows for balance in the process.
Current law mandates that the employer has the right to select the
physician, but also has the obligation to pay.
The language of this section switches the burden of payment onto the
employer, further weakening cost containment potential, and creating a conflict
of interest situation for the employee's physician and a punitive situation for
the employer.
Second, the proposed language in Section 4 of
the bill creates a situation that further penalizes the employer. Under the proposed language, even if the
physician determines that the employee can return to work, by disputing the
opinion, the employee can continue to receive medical services until the Director of Labor and Industrial Relations
renders a ruling to the contrary. This
continuing medical care contributes to higher costs to the system and in
insurance premiums.
In addition, should the Director rule in
favor of an employer, the employer or the employer’s insurer may initiate an
action to recover all of the sums paid for medical services rendered after the
date designated by the Director. However,
the recovery can only be made against the claimant’s personal health care
provider, or any appropriate occupational or non-occupational insurer, not the
claimant themselves. This will have the
effect of further increasing health insurance premiums, which are paid by the
employer. In other words, the employer
will end up paying either way under these provisions.
Third, the language in Section 6 of the bill
allows an employer to request in writing for the issuance of a credit for the
amount of temporary total disability benefits paid by an employer after the
date which the Director of Labor and Industrial Relations determines should
have been the last date of payment of benefits.
This language supposedly allows a credit against future medical or indemnity
payments. What remains unanswered is
where such a credit will come from. If
the credit is to come from the injured employee’s future settlement, the
procedure for such recovery is not specified in this bill. Without such specification, the employer has
no realistic possibility of reimbursement for paying future medical or
indemnity benefits.
Fourth, the National Council on Compensation
Insurance, Inc., in their testimony on House Bill 763, H.D. 2, which is the
language currently adopted in Senate Bill 1060, S.D. 1, H.D. 1, stated that the
language in Section 5 of the bill, allowing the Director of Labor and
Industrial Relations to refer workers who are not permanently disabled but have
reached maximum medical improvement and whose employers have not offered them
permanent employment as nearly as possible to their pre-injury wage level for
vocational rehabilitation services, and the language in Section 10 of the bill,
expanding the prohibition on unscheduled reporting, will increase costs. Specifically, the National Council on
Compensation Insurance, Inc. testified that, under the scenarios run by the
council, the combined overall impact of just these two proposed sections could
range from a potential cost impact of $6 to $20 million. At a time when the direction should be to
lower the cost of workers’ compensation insurance premiums and system expenses,
this is a move in the wrong direction.
Additionally, the expansion of the
prohibition on unscheduled reporting in Section 10 may conflict with the
language of Section 1 of the bill, starting on page 5, which requires the
attending physician to submit a treatment plan to the employer.
Finally, the language in Sections 2, 7, and
12, combine to severely restrict the rulemaking authority of the Director of
Labor and Industrial Relations.
Legislative approval of proposed rules merely frustrates and prevents
the ability of the Director to perform.
Such a system will prevent prompt responses to the changing needs of the
workers’ compensation program. This
proposed inefficiency only serves to frustrate the Director’s ability to
facilitate and promote the efficient execution of the workers’ compensation
laws, hurting both employer and injured employee.
Many others have drawn the same conclusions
regarding this bill. Among those who
testified against the bill include the Retail Merchants of Hawaii, the National
Council on Compensation Insurance, Inc., the State Attorney General, the
Department of Human Resources Development, the Hawaii Insurers Council, the
Hawaii Medical Association, the National Federation of Independent Businesses, Klein
Chiropractic Center, the Department of Human Resources of the City and County
of Honolulu, Bay Harbor Honolulu, LLC, Pearl County Club, Zippy’s
Restaurants, the Chamber of Commerce of Hawaii, Itoen,
ILWU Local 142, HEMIC, and
the Hawaii Government Employees Association.
Several chiropractors also testified in limited opposition to the
bill.
For the reasons discussed above, I cannot, in
good conscience, support the proposed legislation.
Respectfully
submitted by the following member of your Committee on Consumer Protection and
Commerce
Barbara
Marumoto, Ranking Minority Member