Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1580
                                        S.D. 1

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 1580 entitled: 


begs leave to report as follows:

     The purpose of this measure is to require health care
providers to be licensed if providing benefits under the motor
vehicle insurance law.

     The measure also provides for investigative and containment
policies for the overutilization of treatments by these health
care providers.

     Testimony in support of this measure was presented by the
Department of Commerce and Consumer Affairs.  The Hawaii Insurers
Council and State Farm Insurance Companies presented testimony in
support of the intent of this measure.  Opposing testimony was
presented by the Consumer Lawyers of Hawaii.  The Hawaii Medical
Association and Dwyer, Imanaka, Schraff, Kudo, Meyer, and
Fujimoto, Attorneys at Law, although not present, submitted
written testimony in opposition.

     Your Committee finds that while it is evident that there is
a need to make more effective the process of dealing with
providers who continually overutilize and overprescribe
treatments and procedures, your Committee believes that the
process for the resolution of this issue needs to be improved.

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                                   STAND. COM. REP. NO. 413
                                   Page 2

     There is a growing use of independent bill reviewers
administrators (IBRs) by insurers for the evaluation of
providers' billing submissions.  IBRs, in general, are
independent contractors hired by insurers to review providers'
submissions of codings and bills.  They review and recommend to
insurers whether the submissions should be accepted or rejected.  

     Your Committee further finds that the Department of Commerce
and Consumer Affairs has been receiving complaints from providers
that the IBRs, because of their discretionary power, have been
exercising harsh and unreasonable tactics, thereby causing the
providers to withdraw from the workers' compensation and motor
vehicle insurance markets.  

     While not all IBRs perform their work in this alleged
fashion, your Committee believes that their work must be
regulated, as the use of IBRs are becoming standard industry

     Accordingly, your Committee has deleted section one and
amended this measure to ensure that:

     (1)  IBRs are licensed by the Department of Commerce and
          Consumer Affairs Insurance Division; and

     (2)  IBRs are not allowed to be paid on a contingency fee

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 1580, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 1580, S.D. 1, and be referred to the Committee on Ways and

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                                   STAND. COM. REP. NO. 413
                                   Page 3

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,

                                   BRIAN KANNO, Co-Chair

                                   BRIAN T. TANIGUCHI, Co-Chair

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