STAND. COM. REP. NO. 1957

Honolulu, Hawaii

RE: H.B. No. 393

H.D. 1

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committees on Judiciary and Ways and Means, to which was referred H.B. No. 393, H.D. 1, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND,"

beg leave to report as follows:

The purpose and intent of this measure is to:

(1) Create a fiduciary duty on Employer-Union Health Benefits Trust Fund trustees;

(2) Prohibit transactions where the trustee has a conflict of interest; and

(3) Establish liabilities for breach of fiduciary duty.

Your Committees received testimony in support of this measure from the Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO and the Oahu County Democrats Legislative Priorities Committee. Your Committees received testimony in opposition to this measure from the Department of Budget and Finance.

Your Committees find that under existing law, Employer-Union Health Benefits Trust Fund (EUTF) trustees owe no fiduciary duty to the participants or beneficiaries of the EUTF when acting on their behalf. Your Committees further find that currently, EUTF trustees may represent participants or beneficiaries where there is a conflict of interest. This measure creates a fiduciary duty on EUTF trustees which will increase the accountability of the EUTF trustees to the participants or beneficiaries and better protect their interests. Your Committees note that some of the terminology in this measure relating to fiduciary responsibilities may not be entirely appropriate to EUTF trustees, and encourage further discussion on this issue as this measure proceeds in the legislative process.

Your Committees have amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the records of votes of the members of your Committees on Judiciary and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 393, H.D. 1, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as H.B. No. 393, H.D. 1, S.D. 2.

Respectfully submitted on behalf of the members of the Committees on Judiciary and Ways and Means,

________________________________ DONOVAN M. DELA CRUZ, Chair

________________________________ KARL RHOADS, Chair