STAND. COM. REP. NO.  186-16

Honolulu, Hawaii

                , 2016

RE:   H.B. No. 2715

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred H.B. No. 2715 entitled:

"A BILL FOR AN ACT RELATING TO WORKERS' COMPENSATION,"

begs leave to report as follows:

The purpose of this measure is to overhaul employee health and safety insurance protections in the state by:

     (1)  Repealing the Hawaii Employers' Mutual Insurance Company;

     (2)  Establishing the State Workers' Compensation Insurance Company, a public body corporate, attached to the Department of Labor and Industrial Relations, and tasked with providing workers' compensation to employees across the State; and

     (3)  Requiring employers to self-insure or obtain workers' compensation coverage through the State Workers' Compensation Insurance Company.

The Ironworkers Stabilization Fund testified in support of this measure.  ILWU Local 142, Chamber of Commerce Hawaii, National Association of Mutual Insurance Companies, Hawaii Insurers Council (Council), and Property Casualty Insurers Association of America testified in opposition.  The Department of Labor and Industrial Relations and General Contractors Association of Hawaii provided comments.

     Your Committee notes that testimony provided by the Council highlighted the potential benefits of performing a closed claim study prior to taking legislative action to repeal the Hawaii Employers' Mutual Insurance Company and establish the State Workers' Compensation Insurance Company.  The Council testified that such a study, similar to the Tillinghast study that was conducted in Hawaii in 1993, may provide the Legislature with a clearer picture on "where cost drivers exists, where backlogs are slowing the process, and what, if any, inequities exist as to either the injured worker or insurer."  Given the testimony of the Council, should the Committee on Consumer Protection and Commerce choose to deliberate further on this measure, your Committee respectfully requests that it further examine the merits of such a study.

     Your Committee has amended this measure by:

     (1)  Requiring the Department of Labor and Industrial Relations to develop, report to the Legislature on, and implement a transition and implementation plan for the repeal of the Hawaii Employers' Mutual Insurance Company and establishment of the State Workers' Compensation Insurance Company;

     (2)  Changing its effective date to July 1, 2091, to encourage further discussion; and

     (3)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2715, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2715, H.D. 1, and be referred to your Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Labor & Public Employment,

____________________________

MARK M. NAKASHIMA, Chair