SB1622

SECTION 1. Hawaii adopted its first workers' compensation law in 1915. The coverage of the Hawaii law even then was intended to be broad, compulsory, and exclusive, barring all remedies by the employee, the employee's personal representatives, dependents, and next of kin against the employer for all accidents and injuries that arise out of and in the course of employment.

As the law was revised over the years, its reach and benefits were continuously expanded, and Hawaii courts, when claims were challenged, regularly expressed the opinion that the provisions of the law were to be "liberally construed, and by authority the construction must be a broad one so as to effectuate the purposes on the act." In re Ikoma, 23 Haw. 291, 295 (1916). In this same decision, the supreme court further explained that "[t]he act, taking from the employee the right to sue for injuries received, certainly did not intend that his right to look to his employer should be frittered away and the beneficent provisions of the act taken from him by devices and subterfuges . . . ." Id. at 300. In recent years, however, the noble intent and purpose of the workers' compensation law have been frittered away at the expense of the beneficent provisions intended and to the detriment of injured workers and those families and dependents who rely upon the law and the department of labor and industrial relations for relief.

Ten years ago, the State enacted workers' compensation reform that was clearly designed to limit the resort of employers and their carriers to repetitive "employer-requested medical exams" that were being abused to such an extent that claimants were experiencing harassment and non-health related costs were being added to the workers' compensation system. But recently, decisions of the director of labor and industrial relations to waive the statutory restrictions have resulted in a de facto veto of the legislative intent.

A recent study of employer-requested examinations in Oregon documented comparable bias and abuse of the uncontrolled and unbalanced power of employers and revealed that "there are credible and unbiased [independent medical examination] physicians in the system" and there is "no effective process for injured worker complaints regarding their [independent medical examination] experience[s] . . . ." Workers' Compensation Insurer Medical Examination Study, Oregon Department of Consumer and Business Services (Dec. 2, 2004). In Hawaii, despite clear statutory language to the contrary, claimants are routinely threatened with termination of benefits if they do not comply with the order of an insurance carrier instead of the director of labor and industrial relations to attend an examination.

The purpose of this Act is to recommit this law and the department of labor and industrial relations to the historic, humane, and proper purpose of chapter 386, Hawaii Revised Statutes, whereby the welfare of the injured workers shall be of paramount concern, so that injured workers shall expeditiously and without insult or harassment receive compensation and medical services designed to mitigate injuries and, where possible, rehabilitate to the greatest extent every injured worker.

SECTION 2. Section 386-31, Hawaii Revised Statutes, is amended to read as follows:

"§386-31 Total disability. (a) Permanent total disability. Where a work injury causes permanent total disability the employer shall pay the injured employee a weekly benefit equal to sixty-six and two-thirds per cent of the employee's average weekly wages, subject to the following limitation:

Beginning January 1, 1975, and during each succeeding twelve-month period thereafter, not more than the state average weekly wage last determined by the director, rounded to the nearest dollar, nor less than $38 or twenty-five per cent of the foregoing maximum amount, rounded to the nearest dollar, whichever is higher.

In the case of the following injuries, the disability caused thereby shall be deemed permanent and total:

(1) The permanent and total loss of sight in both eyes;

(2) The loss of both feet at or before the ankle;

(3) The loss of both hands at or above the wrist;

(4) The loss of one hand and one foot;

(5) An injury to the spine resulting in permanent and complete paralysis of both legs or both arms or one leg and one arm; or

(6) An injury to the skull resulting in incurable imbecility or insanity.

In all other cases the permanency and totality of the disability shall be determined on the facts. No adjudication of permanent total disability shall be made until after two weeks from the date of the injury.

(b) Temporary total disability. Where a work injury causes total disability not determined to be permanent in character, the employer, for the duration of the disability, but not including the first three calendar days thereof, shall pay the injured employee a weekly benefit at the rate of sixty-six and two-thirds per cent of the employee's average weekly wages, subject to the limitations on weekly benefit rates prescribed in subsection (a), or if the employee's average weekly wages are less than the minimum weekly benefit rate prescribed in subsection (a), at the rate of one hundred per cent of the employee's average weekly wages.

If an employee is unable to complete a regular daily work shift due to a work injury, the employee shall be deemed totally disabled for work for that day.

The employer shall pay temporary total disability benefits promptly as they accrue to the person entitled thereto without waiting for a decision from the director, unless this right is controverted by the employer in the employer's initial report of industrial injury. The first payment of benefits shall become due and shall be paid no later than on the tenth day after the employer has been notified of the occurrence of the total disability, and thereafter the benefits due shall be paid weekly except as otherwise authorized pursuant to section 386-53.

The payment of these benefits shall only be terminated upon order of the director or if the employee is able to resume work. When the employer is of the opinion that temporary total disability benefits should be terminated because the injured employee is able to resume work, the employer shall notify the employee and the director in writing of an intent to terminate the benefits at least two weeks prior to the date when the last payment is to be made. The notice shall give the reason for stopping payment and shall inform the employee that the employee may make a written request to the director for a hearing if the employee disagrees with the employer. Upon receipt of the request from the employee, the director shall conduct a hearing as expeditiously as possible and render a prompt decision as specified in section 386-86. If the employee is unable to perform light work, if offered, temporary total disability benefits shall not be discontinued based solely on the inability to perform or continue to perform light work.

No employer shall suspend, deny, or discontinue benefits to an injured employee without an order from the director. The order shall only be issued after a full and fair hearing at which the injured employee shall be provided the opportunity to review the employer's evidence and present rebuttal.

An employer or insurance carrier who fails to comply with this section shall pay not more than $2,500 into the special compensation fund upon the order of the director, in addition to attorney's fees and costs to the employee for enforcement of this section and other penalties prescribed in section 386-92.

(1) If the director determines, based upon a review of medical records and reports and other relevant documentary evidence, that an injured employee's medical condition may be stabilized and the employee is unable to return to the employee's regular job, the director shall issue a preliminary decision regarding the claimant's entitlement and limitation to benefits and rights under Hawaii's workers' compensation laws. The preliminary decision shall be sent to the affected employee and the employee's designated representative and the employer and the employer's designated representative and shall state that any party disagreeing with the director's preliminary findings of medical stabilization and work limitations may request a hearing within twenty days of the date of the decision. The director shall be available to answer any questions during the twenty‑day period from the injured employee and affected employer. If neither party requests a hearing challenging the director's finding the determination shall be deemed accepted and binding upon the parties. In any case where a hearing is held on the preliminary findings, any person aggrieved by the director's decision and order may appeal under section 386-87.

A preliminary decision of the director shall inform the injured employee and the employer of the following responsibilities, benefits, and limitations on vocational rehabilitation benefits that are designed to facilitate the injured employee's early return to suitable gainful employment:

(A) That the injured employee may invoke the employee's rights under section 378-2, 378-32, or 386-142, or all of them, in the event of unlawful discrimination or other unlawful employment practice by the employer; and

(B) That after termination of temporary total disability benefits, an injured employee who resumes work may be entitled to permanent partial disability benefits, which if awarded, shall be paid regardless of the earnings or employment status of the disabled employee at the time.

(2) If the rehabilitation unit determines that an injured employee is not a feasible candidate for rehabilitation and that the employee is unable to resume the employee's regular job, it shall promptly certify the same to the director. Soon thereafter, the director shall conduct a hearing to determine whether the injured employee remains temporarily totally disabled, or whether the employee is permanently partially disabled, or permanently totally disabled.

(c) An injured employee shall be entitled to receive a weekly benefit equal to seventy per cent of the injured employee's average weekly wages, or a maximum weekly income benefit based on the state average weekly wage applicable on the date compensation was first received when:

(1) A work injury causes permanent or temporary disability; and

(2) Payment of compensation due under this chapter was not begun within thirty days of or within the same year as the date of injury, whichever is later."

SECTION 3. Section 386-79, Hawaii Revised Statutes, is amended to read as follows:

"§386-79 Medical examination by employer's physician. After an injury and during the period of disability, the employee, whenever ordered by the director [~~of labor and industrial relations~~], shall submit to examination, at reasonable times and places, by a duly qualified physician or surgeon designated and paid by the employer. [~~The~~] Physicians selected to perform medical examinations as provided by this section shall be licensed in Hawaii and members of the Hawaii medical association, subject to peer review. The first medical examination in any claim shall be selected by mutual agreement between the claimant and the employer; provided that if no mutual agreement is reached, the director, pursuant to section 386‑80, shall appoint a duly qualified physician or surgeon from a rotating list of duly qualified physicians and surgeons established and maintained by the department. Examiners performing subsequent medical examinations as ordered by the director in any claim, with the exception of final impairment examinations, may be selected solely by the employer. For these examinations, the employee shall have the right to have a physician or surgeon designated and paid by the [~~employee~~] employer present at the examination, which right, however, shall not be construed to deny to the employer's physician the right to visit the injured employee at all reasonable times and under all reasonable conditions during total disability.

An order to attend the examination shall be issued only by the director. The employee so ordered shall be contacted in advance of the order by the director to arrange a reasonable time and place for the examination. The employer shall reimburse the employee for any lost wages or expenses incurred by attending the examination. It shall constitute fraud for an employer or insurance carrier to order an examination or threaten to suspend or controvert an employee's pending claim or right to compensation.

If an employee unreasonably refuses to submit to, or in any way obstructs [~~such~~] the examination, the employee's right to claim compensation for the work injury [~~shall~~] may be suspended, upon order of the director, until the refusal or obstruction ceases and no compensation shall be payable for the period during which the refusal or obstruction continues. The employee and the employee's physician may record the examination and ask reasonable questions relating to the examining physician's experience, education, certification, and qualifications. Exercising these rights shall not be construed as obstruction.

In cases where the employer is dissatisfied with the progress of the case or where major and elective surgery, or either, is contemplated, the employer may appoint a physician or surgeon of the employer's choice who shall examine the injured employee and make a report to the employer. If the employer remains dissatisfied, this report may be forwarded to the director. No employer shall suspend, deny, or discontinue benefits to an injured employee without an order from the director. The order shall only be issued after a full and fair hearing at which the injured employee shall be provided the opportunity to review the employer's evidence and present rebuttal.

Employer requested examinations under this section shall not exceed more than one per case unless, after a hearing and upon written order of the director, good and valid reasons exist with regard to the medical progress of the employee's treatment. The cost of conducting the ordered medical examination shall be limited to the complex consultation charges governed by the medical fee schedule established pursuant to section 386-21(c).

Any employer or insurer found in violation of this section shall pay a fine of $500 per violation to the injured employee, plus attorney's fees and costs to the employee in addition to any other penalties prescribed in section 386-92."

SECTION 4. Section 386-94, Hawaii Revised Statutes, is amended to read as follows:

"§386-94 Attorneys, physicians, other health care providers, and other fees. Claims for services shall not be valid unless approved by the director or, if an appeal is had, by the appellate board or court deciding the appeal. Any claim so approved shall be a lien upon the compensation in the manner and to the extent fixed by the director, the appellate board, or the court.

In approving fee requests, the director, appeals board, or court may consider factors such as the attorney's skill and experience in state workers' compensation matters, the amount of time and effort required by the complexity of the case, the novelty and difficulty of issues involved, the amount of fees awarded in similar cases, benefits obtained for the claimant, and the hourly rate customarily awarded attorneys possessing similar skills and experience. Claims for attorney's services shall be presumed valid if the represented injured employee approves in writing the fees for the attorney's services. In all cases, reasonable attorney's fees shall be awarded.

Any person who receives any fee, other consideration, or gratuity on account of services so rendered, without approval, in conformity with the preceding paragraph, shall be fined by the director not more than $10,000."

SECTION 5. Section 386-96, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any physician, surgeon, or hospital that has given any treatment or rendered any service to an injured employee shall make a report of the injury and treatment on forms prescribed by and to be obtained from the department as follows:

(1) Within seven days after the date of first attendance or service rendered, an initial report shall be made to the department and to the employer of the injured employee in the manner prescribed by the department;

(2) Interim reports to the same parties and in the same manner as prescribed in paragraph (1) shall be made at appropriate intervals to verify the claimant's current diagnosis and prognosis, that the information as to the nature of the examinations and treatments performed is complete, including the dates of those treatments and the results obtained within the current reporting period, the execution of all tests performed within the current reporting period and the results of the tests, whether the injured employee is improving, worsening, or if "medical stabilization" has been reached, the dates of disability, any work restrictions, and the return to work date. When an injured employee is returned to full-time, regular, light, part-time, or restricted work, the attending physician shall submit a report to the employer within seven calendar days indicating the date of release to work or medical stabilization; and

(3) A final report to the same parties and in the same manner as prescribed in paragraph (1) shall be made within seven days after termination of treatment.

No physician, surgeon, or hospital that has given any treatment or rendered any service to an injured employee shall be required to provide any additional reports or treatment plans not otherwise mandated by this section."

SECTION 6. Section 431:14-110.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§431:14-110.5[]] Disclosure of workers' compensation premium information. (a) All policies issued to employers for workers' compensation insurance shall disclose clearly to employers as separate figures the portion of the premium charged for:

(1) Medical care, services, and supplies;

(2) Wage loss benefits including temporary total, temporary partial, and permanent total disability benefits and their related benefits;

(3) Indemnity benefits for permanent partial disability; and

(4) Death benefits.

In addition, a disclosure statement shall indicate to the employer both the portion of the premium and the monetary costs attributable to loss control and administrative costs, attorney's fees of the insurer, the cost of employer requested medical examinations, and private investigation costs.

(b) When a policy is issued to employers for workers' compensation insurance, it shall be accompanied by a statement disclosing the percentages of premiums expended during the previous year by the insurer for claims paid in the categories specified in subsection (a), including loss control and administrative costs, attorney's fees of the insurer, the cost of employer requested medical examinations, and private investigation costs.

(c) All denials of claims shall be reported to the employer on an annual basis, the employer shall also provide information on the dates of injuries or alleged injuries, the dates employers' reports were filed, the dates of denials or the dates compensability was accepted, and the dates of subsequent appeals and the status of the appeals.

[~~(c)~~] (d) The information provided to employers by insurers pursuant to this section shall be provided on an annual basis to the director of labor and industrial relations and to the commissioner.

[~~(d)~~] (e) Any insurer found in violation of this section shall pay a fine of $5,000 per violation to the insured, plus attorney's fees and costs to the insured for enforcing this section."

SECTION 7. Act 11, Special Session Laws of Hawaii 2005, is amended by amending section 14 to read as follows:

"SECTION 14. This Act shall take effect upon its approval; provided that sections 2, 3, and 7 of this Act shall take effect on January 1, 2005[~~; provided further that section 7 shall be repealed on July 1, 2007, and section 386-72, Hawaii Revised Statutes, shall be reenacted in the form in which it read on December 31, 2004~~]."

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.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1622
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII