HOUSE OF REPRESENTATIVES	H.B. NO.	2220
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO PURCHASEs OF HEALTH AND HUMAN SERVICES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that procurement laws regarding request for proposal procedures for the purchase of health and human services need to be clarified.  Currently, the request for proposal procedure allows for-profit organizations intending to bid for health and human services contracts to submit a "pre-tax" bid.  The ability to submit a "pre-tax bid" does not apply to not-for-profit companies because not-for-profit companies are not subject to the insurance premium tax that is mandated by Hawaii law.

     In 2008, two for-profit companies bid for the QUEST Expanded Access (QExA) Program contracts and were awarded the contracts.  After losing the QExA contract, a losing bidder filed numerous appeals, including one with the federal district court, all of which upheld the decision of the State and affirmed that the contract was rightfully awarded.  Due to confusion and misunderstandings regarding the bidding and awarding process used by the department of human services, House Bill No. 1642 and Senate Bill No. 1191 were introduced during the 2009 legislative session to address some of these misunderstandings.

     During the interim, the affected parties have made attempts to reconcile the matter, and all have agreed that the ultimate goal is to have all bidders be treated in a fair and equal manner.

     As a result of the parties being unable to reach a mutually agreeable interpretation of the legality of the bidding process utilized by the department of human services, other alternative proposals have arisen as potential methods of ensuring fair and equal treatment by all bidders for health and human services contracts issued by the State.

     The purpose of this Act is to:

     (1)  Clarify that the premium tax shall be applied to any organization that is awarded a contract through state procurement laws and the request for proposal process, regardless of whether they are a non-profit or for-profit company; and

     (2)  Require bidders to be properly licensed in the State to conduct the business being sought by the request for proposals, unless the business being sought is not required by the State to be licensed.

     SECTION 2.  Chapter 103F, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§103F-   Premium Tax. Any applicant submitting a proposal subject to this chapter, whether a not-for-profit or a for-profit organization, shall be:

(1) Duly licensed in the State to conduct the business being sought by the request for proposals; provided that this paragraph shall not apply if contractors of the business being sought by the request for proposals are not required by statute to be licensed; and

(2) Responsible for payment of all applicable federal, state, and county taxes and fees that may become due and owing by the provider by reason of a contract with the State, including:

(A) Income taxes;

(B) Employment related fees, assessments, and taxes; and

(C) General excise taxes."

     SECTION 3.  The department of health and the department human services shall execute contract amendments with any existing contracts, and any subsequent contracts shall reflect the payment of any applicable taxes and fees in order to ensure that any winning bidder is able to remain financially solvent.

     SECTION 4.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 5.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2010.

INTRODUCED BY:

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Report Title:

Premium tax applicability for procurement of health and human services contracts

Description:

Mandates that any premium taxes be applied to both non-profit and for-profit companies for any health and human services contract issued by the State.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.