HB85

SECTION 1. The legislature recognizes that collateral source payments occur whenever a plaintiff in a tort action receives compensation or benefits from a third party that is not involved in the litigation to compensate for damages the plaintiff sustained and the "collateral source rule" bars defendants from introducing evidence to show that a plaintiff has received collateral source payments. The legislature further recognizes that although section 663-10, Hawaii Revised Statutes, provides collateral sources with recourse against a plaintiff, the practice has shown that often plaintiffs in tort actions essentially recover damages twice and the collateral sources are not reimbursed because tort actions may last for an extended period of time and notices required to present claims of a lien or for subrogation are not provided before the court enters a judgment or stipulation for dismissal.

Moreover, the legislature finds that tort litigation has increased substantially and the cost of litigation has risen as well. The legislature finds that these increases have an impact on the price and availability of insurance products.

The legislature believes that the recovery of medical and incident-related expenses as damages by plaintiffs who are also reimbursed for the same expenses from other sources contributes to the increase in the cost of insurance products and related litigation.

The legislature intends that plaintiffs be compensated fully for any medical or incident-related expenses, but not receive compensation more than once for the same expenses and that collateral sources be able to recover moneys paid to the plaintiff, either from the plaintiff or a defendant.

SECTION 2. The purpose of this Act is to provide collateral sources with a direct right of subrogation against the defendants in a tort action.

SECTION 3. Section 663-10, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) In any civil action in tort, the court, before any judgment or stipulation to dismiss the action is approved, shall determine the validity of any claim of a lien against the amount of the judgment or settlement by any person who files timely notice of the claim to the court or to the parties in the action. The judgment entered, or the order subsequent to settlement, shall include a statement of the amounts[~~, if any,~~] due [~~and owing~~] to any person determined by the court to be a holder of a valid lien and to be paid to the lienholder out of the amount of the corresponding special damages recovered by the judgment or settlement. In determining the payment due the lienholder, the court shall deduct from the payment a reasonable sum for the costs and fees incurred by the party who brought the civil action in tort. As used in this section, lien means a lien arising out of a claim for payments made or indemnified from collateral sources, including health insurance or benefits, for costs and expenses arising out of the injury which is the subject of the civil action in tort. If there is a settlement before suit is filed or there is no civil action pending, then any party may petition a court of competent jurisdiction for a determination of the validity and amount of any claim of a lien. In addition, collateral sources shall have a right of subrogation or reimbursement directly against the defendant. A collateral source shall be limited to the actual amount paid to the plaintiff and the collateral source may only recover once, either from the plaintiff or the defendant. If the collateral source recovers moneys from the defendant directly, the judgment entered or the order subsequent to settlement, shall include a statement of the amount recovered and no deduction shall be made from the special damages awarded in the jury verdict."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	85
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII