HB1290 SD1

SECTION 1. Section 87A-1, Hawaii Revised Statutes, is amended by amending the definition of "employee-beneficiary" to read as follows:

""Employee-beneficiary" means:

(1) An employee;

(2) The [~~beneficiary~~] spouse of an employee who is killed in the performance of the employee's duty[;], until the spouse remarries;

(3) [~~An employee who retired prior to 1961;~~] The child of an employee who is killed in the performance of the employee's duty, until the child marries or reaches the age of nineteen, whichever occurs first;

(4) The [~~beneficiary~~] spouse of a retired member of the employees' retirement system[;], a county pension system[;], or a police, firefighters, or bandsmen pension system of the State or a county, upon the death of the retired member[;] until the spouse remarries; or

(5) The [~~surviving~~] child of a [~~deceased retired employee, if the child is unmarried and under the age of nineteen;~~] retired member of the employees' retirement system, a county pension system, or a police, firefighters, or bandsmen pension system of the State or a county, upon the death of the retired member and until the child marries or reaches the age of nineteen, whichever occurs first;

~~[(6) The surviving spouse of a deceased retired employee, if the surviving spouse does not subsequently remarry;~~]

provided that the employee, the employee's [~~beneficiary, or the beneficiary of the deceased retired employee~~] spouse or child, or the retired member's spouse or child is deemed eligible by the board to participate in a health benefits plan or long-term care benefits plan under this chapter."

SECTION 2. Section 87A-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

"Fiduciary" means any person, with respect to the fund or a plan, to the extent that such person:

(1) Exercises any discretionary authority or discretionary control respecting management of the fund or a plan or exercises authority or control respecting management or disposition of the fund's;

(2) Renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the fund or a plan, or has authority or responsibility to do so; or

(3) Has any discretionary authority or discretionary responsibility in the administration of the fund or a plan.

Without limiting the foregoing, "fiduciary" shall include each trustee of the fund.

SECTION 3. Section 87A-26, Hawaii Revised Statutes, is amended to read as follows:

"[§87A-26] Rules; policies, standards, and procedures. (a) The board may adopt rules for the purposes of this chapter. Rules shall be adopted without regard to chapter 91. Rule-making procedures shall be adopted by the board and shall minimally provide for:

(1) Consultation with employers and affected employee organizations with regard to proposed rules;

(2) Adoption of rules at open meetings that permit the attendance of any interested persons;

(3) Approval of rules by the governor; and

(4) Filing of rules with the lieutenant governor.

(b) The board may also issue policies, standards, and procedures consistent with its rules.

(c) The board may adopt rules, without regard to chapter 91, governing dispute resolution procedures in the event of impasse in decision-making; provided that the rules shall be adopted with the concurrence of six trustees.

(d) Any repeal or revocation of a rule shall not diminish the rights of an employee, a dependent beneficiary, employee beneficiary, including but not limited to a spouse, child, or a domestic partner, unless the repeal or revocation affects all beneficiaries under this chapter. There shall be no discrimination based on age, sex, religion, marital status, sexual orientation or gender and other protected groups under the State and U.S. Constitution."

SECTION 4. Chapter 87A, Hawaii Revised Statutes, is amended by adding two new section to be appropriately designated and to read as follows:

"§87A- Awarding of contracts. (a) Notwithstanding any other law to the contrary, any contract awarded under this chapter shall be awarded to the lowest responsible and responsive bidder or offeror, as defined in section 103D-104, whose bid or proposal meets the requirements and criteria set forth in the invitation for bids or a request for proposals. The contracts awarded under this chapter include but not limited to the following:

(1) health plans including a preferred provider option (ppo), health maintenance organization (hmo), high deductible health (hdhp), prescription drug plan, supplemental medical, dental service, and vision;

(2) group life insurance benfits or group life insurance plans;

(3) long-term care benefits plan;

(4) plans for part-time, temporary, and seasonal or casual employees including medical, hospital, or surgical benefits; and

(5) professional services.

(b) All responses submitted in a bid or proposal shall be verified by an independent auditor."

SECTION 5. Part III of Chapter 87A, Hawaii Revised Statutes, is amended by adding six new sections to be appropriately designated and to read as follows:

"§87A- Fiduciary duties; prohibited transactions. (a) All fiduciaries of the fund shall discharge their duties with respect to the fund or a plan solely in the interest of the participants and beneficiaries and:

(1) For the exclusive purpose of:

(A) Providing benefits to participants and their beneficiaries; and

(B) Defraying reasonable expenses of administering the plan;

(2) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of an enterprise of a similar character and with like aims;

(3) By diversifying the investments of the fund so as to minimize the risk of large losses, unless, under the circumstances, it is clearly prudent not to do so; and

(4) In accordance with the documents and instruments governing the fund or a plan insofar as such documents and instruments are consistent with the provisions of this chapter.

(b) In addition to any liability that a fiduciary may have under this chapter, a fiduciary with respect to a fund or a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the fund or the same plan in the following circumstances:

(1) If the fiduciary participates knowingly in, or knowingly undertakes to conceal, an act or omission of the other fiduciary, knowing that act or omission is a breach;

(2) If, by the fiduciary's failure to comply with subsection (a) or (b), the fiduciary has enabled such other fiduciary to commit breach; or

(3) If the fiduciary has knowledge of the breach by such other fiduciary, unless the fiduciary makes reasonable efforts under the circumstances to remedy the breach.

(1) Deal with the assets of the fund in the fiduciary's own interest or for the fiduciary's own account;

(2) In the fiduciary's individual capacity or in any other capacity act in any transaction involving the fund or a plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries; or

(3) Receive any consideration for the fiduciary's own personal account from any party dealing with the fund or a plan in connection with a transaction involving the assets of the fund."

"§87A- Liability for breach of fiduciary duty. (a) Any person who is a fiduciary with respect to the fund or a plan and who breaches any of the responsibilities, obligations, or duties imposed on fiduciaries by this chapter shall be personally liable to make good to the fund any losses to the fund resulting from each breach, and to restore to the fund any profits of the fiduciary that have been made through the use of assets of the fund by the fiduciary, and shall be subject to any other equitable and remedial relief as the court may deem appropriate, including removal of the fiduciary.

(b) Any provision in any agreement or instrument that purports to relieve a fiduciary of responsibility or liability for any responsibility, obligation, or duty under this chapter shall be void as against public policy. However, nothing in this section shall preclude:

(1) The board from purchasing insurance for its fundees to cover liability or losses occurring by reason of the act or omission of a fundee in the case of a breach of a fiduciary obligation by the fundee, if the insurance permits recourse by the insurer against the fundee in the case of a breach of fiduciary obligation by the fundee; or

(2) A fiduciary from purchasing insurance to cover liability under this chapter from and for the fiduciary's own account."

"§87A- Violation of the chapter; enforcement. (a) A civil action may be brought by a participant, beneficiary, or fiduciary:

(1) For relief, if the board or the fund fails to provide any information required under this chapter, or fails to comply with any request for information that the board or the fund is required to furnish to the participant, beneficiary or legislature;

(2) To recover benefits due the participant or beneficiary under the terms of the fund, or to enforce the participant's or beneficiary's rights under the terms of the fund, or to clarify the participant's or beneficiary's rights to future benefits under the terms of the fund;

(3) For appropriate relief against any breach of fiduciary duty under section 87A- ; or

(4) To enjoin any act or practice that violates any provision of this chapter or the terms of the fund, or to obtain any other appropriate equitable relief, or to redress such violations, or to enforce any provisions of this chapter or the terms of the fund.

(b) A civil action may be brought by the legislative auditor:

(1) For relief, if the fund fails to provide any information required by this chapter, or if the fund fails to comply with any request for information that the fund is required to furnish any state or county department or the legislature;

(2) To enjoin any act or practice that violates any provision of this chapter;

(3) To redress the violations;

(4) To enforce any provision of this chapter; or

(c) The legislative auditor shall have the power, in order to determine whether any person has violated or is about to violate any provision of this chapter:

(1) To conduct an investigation and in connection therewith to require submission of reports, books, and records, and the filing of data in support of any information required to be filed under this chapter; and

(2) To enter any place, inspect any books and records, and question any persons as the legislative auditor may deem necessary to enable the legislative auditor to determine the facts relative to an investigation.

For purposes of any investigation provided for in this chapter, the legislative auditor may utilize the investigation procedures set forth in chapter 23.

(d) The rights and remedies provided in this section are in addition to any rights or remedies that the participants, beneficiaries, fiduciaries, legislative auditor, or other state or federal agencies may have over the fund or any plans provided by or through the fund, and fiduciaries of the plans."

"§87A- Filing and furnishing of information requirements. (a) Within one hundred twenty days prior to the convening of the legislature, the board shall provide an annual report for each plan covered by this chapter to the legislature. The annual reports shall be government records open to public inspection.

(b) The board shall provide summary plan descriptions to each participant and beneficiary of the fund within ninety days of a participant becoming enrolled in a plan or within ninety days of a beneficiary first receiving benefits under a plan. If a material modification or amendment is made to a plan, the board shall provide a summary description of such modification or amendment to each participant or beneficiary within two hundred ten days after the plan year in which the modification or amendment is made.

(c) Upon request of any participant or beneficiary, the board shall provide such person with the latest updated summary plan description, the latest annual report."

"§87A- Separate category or voluntary employees' beneficiary association trusts. Any employee organization, as defined under section 89-2, authorized by the board to establish a health benefits plan separate from health benefits plans for all other employees or as a voluntary employees' beneficiary association trust pursuant to chapter 87D shall be responsible for its own reserve fund and any losses incurred by said employee organization shall be borne by the organization and its own reserve fund. Under no circumstances, shall the fund's reserve fund pay for any losses incurred by said employee organization."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

HOUSE OF REPRESENTATIVES	H.B. NO.	1290
TWENTY-FOURTH LEGISLATURE, 2007		H.D. 1
STATE OF HAWAII		S.D. 1