REPORT TITLE:
Insurance


DESCRIPTION:
Requires licensing of independent bill reviewers (IBRs) and
appropropriates funds to implement regulation of IBRs.  Prohibits
IBRs from being paid on a contingency fee basis.  (CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2186
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                H.D. 2
STATE OF HAWAII                                            C.D. 1
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE.



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

 1      SECTION 1.  Chapter 431, Hawaii Revised Statutes, is amended
 
 2 by adding three new sections to article 9 to be appropriately
 
 3 designated and to read as follows:
 
 4      "431:9-    Independent bill reviewer.  (a) "Independent
 
 5 bill reviewer" means any individual who:
 
 6      (1)  Acts solely on behalf of either the insurer as an
 
 7           independent contractor or as an employee of an
 
 8           independent contractor; and
 
 9      (2)  Reviews or audits billings for medical services.
 
10      (b)  For the purposes of this section, an individual is not
 
11 deemed an independent bill reviewer if the individual is:
 
12      (1)  A salaried employee of an insurer or salaried employee
 
13           of an adjusting corporation owned or controlled by an
 
14           insurer; or
 
15      (2)  A database provider for the insurer.
 
16      431:9-    Compensation by contingency fee prohibited.  An
 
17 independent bill reviewer shall not be compensated on a
 
18 contingency fee basis.
 
19      431:9-    Qualification for independent bill reviewer's
 

 


 

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 1 license.  To qualify for an independent bill reviewer's license,
 
 2 an applicant shall comply with this article and shall:
 
 3      (1)  Be domiciled in this State, or in a state that will
 
 4           permit residents of this State to act as independent
 
 5           bill reviewers in such other state;
 
 6      (2)  Have experience, special education, or training with
 
 7           reference to the review or audit of billings for
 
 8           medical services under insurance contracts, of
 
 9           sufficient duration and extent to reasonably make the
 
10           individual competent to fulfill the responsibilities of
 
11           an independent bill reviewer;
 
12      (3)  Have successfully passed any examination required under
 
13           section 431:9-206; and
 
14      (4)  Pay the license fee;
 
15 provided that in the alternative to paragraphs (1) to (3), the
 
16 applicant shall hold the credential of a certified professional
 
17 coder granted by the American Academy of Professional Coders."
 
18      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 
19 by amending the title of article 9 to read as follows:
 
20                            "ARTICLE 9
 
21    LICENSING OF AGENTS, BROKERS, SOLICITORS, [AND] ADJUSTERS,
 
22                        AND BILL REVIEWERS"
 
23      SECTION 3.  Section 431:2-303, Hawaii Revised Statutes, is
 

 
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 1 amended to read as follows:
 
 2      "431:2-303  Examination of agents, [managers,] solicitors,
 
 3 adjusters, promoters[.], and independent bill reviewers.  For the
 
 4 purpose of ascertaining its condition, or compliance with this
 
 5 code, the commissioner may as often as the commissioner deems
 
 6 advisable examine the insurance accounts, records, documents, and
 
 7 transactions of:
 
 8      (1)  Any insurance general agent, subagent, solicitor, [or]
 
 9           adjuster, or independent bill reviewer, including
 
10           insurance agencies and surplus lines agencies; or
 
11      (2)  Any person engaged in, proposing to be engaged in, or
 
12           assisting in the promotion or formation of a domestic
 
13           insurer, a stock corporation to finance a domestic
 
14           mutual insurer or the production of its business, or a
 
15           corporation to be attorney-in-fact for a domestic
 
16           reciprocal insurer."
 
17      SECTION 4.  Section 431:2-305, Hawaii Revised Statutes, is
 
18 amended by amending subsection (d) to read as follows:
 
19      "(d)  Orders shall be issued and hearings conducted as
 
20 follows:
 
21      (1)  All orders entered pursuant to subsection (c)(1) shall
 
22           be accompanied by findings and conclusions resulting
 
23           from the commissioner's consideration and review of the
 

 
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 1           examination report, relevant examiner workpapers, and
 
 2           any written submissions or rebuttals.  Any [such] order
 
 3           shall be considered a final administrative decision and
 
 4           may be appealed pursuant to chapter 91, and shall be
 
 5           served upon the insurer or person by certified mail,
 
 6           together with a copy of the adopted examination report.
 
 7           Within thirty days of the issuance of the adopted
 
 8           report, the insurer or person shall file affidavits
 
 9           executed by each of its directors stating under oath
 
10           that they have received a copy of the adopted report
 
11           and related orders, except that for examinations of
 
12           general agents, subagents, solicitors, adjusters,
 
13           independent bill reviewers, or surplus lines brokers,
 
14           serving the copy of the adopted report and related
 
15           orders by certified-return receipt requested mail will
 
16           satisfy the service requirement and no affidavits shall
 
17           be required; and
 
18      (2)  Any hearing conducted under subsection (c)(3) by the
 
19           commissioner or authorized representative shall be
 
20           conducted as a nonadversarial confidential
 
21           investigatory proceeding as may be necessary for the
 
22           resolution of any inconsistencies, discrepancies, or
 
23           disputed issues apparent upon the face of the filed
 

 
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 1           examination report or raised by or as a result of the
 
 2           commissioner's review of relevant workpapers or raised
 
 3           by the written submission or rebuttal of the insurer or
 
 4           person.  Within twenty days of the conclusion of any
 
 5           [such] hearing, the commissioner shall enter an order
 
 6           pursuant to subsection (c)(1):
 
 7           (A)  The commissioner shall not appoint an examiner as
 
 8                an authorized representative to conduct the
 
 9                hearing.  The hearing shall proceed expeditiously
 
10                with discovery by the insurer or person limited to
 
11                the examiner's workpapers that tend to
 
12                substantiate any assertions set forth in any
 
13                written submission or rebuttal.  The commissioner
 
14                or the commissioner's representative may issue
 
15                subpoenas for the attendance of any witnesses or
 
16                the production of any documents deemed relevant to
 
17                the investigation, whether under the control of
 
18                the division, the insurer, or other persons.  The
 
19                documents produced shall be included in the record
 
20                and testimony taken by the commissioner or the
 
21                commissioner's representative shall be under oath
 
22                and preserved for the record;
 
23           (B)  The hearing shall proceed in accordance with
 

 
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 1                departmental rules adopted under chapter 91; and
 
 2           (C)  Nothing contained in this section shall require
 
 3                the insurance division to disclose any information
 
 4                or records that would indicate or show the
 
 5                existence or content of any investigation or
 
 6                activity of a criminal justice agency."
 
 7      SECTION 5.  Section 431:7-101, Hawaii Revised Statutes, is
 
 8 amended by amending subsections (a) and (b) to read as follows:
 
 9      "(a)  The commissioner shall collect in advance the
 
10 following fees:
 
11      (1)  Certificate of authority:  Issuance............... $900
 
12      (2)  Organization of domestic insurers and affiliated
 
13           corporations:
 
14           (A)  Application and all other papers required for
 
15                issuance of solicitation permit, filing.... $1,500
 
16           (B)  Issuance of solicitation permit.............  $150
 
17      (3)  General agent's license:
 
18           (A)  Issuance, regular license..................... $75
 
19           (B)  Issuance, temporary license................... $75
 
20      (4)  Subagent's license:
 
21           (A)  Issuance, regular license..................... $75
 
22           (B)  Issuance, temporary license................... $75
 
23      (5)  Nonresident agent's or broker's license:  Issuance. $60
 

 
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 1      (6)  Solicitor's license:  Issuance..................... $60
 
 2      (7)  Independent adjuster's license:  Issuance.......... $60
 
 3      (8)  Public adjuster's license:  Issuance............... $60
 
 4      (9)  Workers' compensation claims adjuster's limited
 
 5           license:  Issuance................................. $60
 
 6     (10)  Independent bill reviewer's license:  Issuance......$80
 
 7    [(10)] (11)  Limited license issued pursuant to section
 
 8           431:9-214(c):  Issuance............................ $60
 
 9    [(11)] (12)  Managing general agent's license:  Issuance.. $75
 
10    [(12)] (13)  Reinsurance intermediary's license:  Issuance $75
 
11    [(13)] (14)  Surplus line broker's license:  Issuance.... $150
 
12    [(14)] (15)  Examination for license:  For each examination, a
 
13           fee to be established by the commissioner.
 
14      (b)  The fees for services of the department of commerce and
 
15 consumer affairs subsequent to the issuance of a certificate of
 
16 authority or a license are as follows:
 
17      (1)  $600 per year for all services (including extension of
 
18           the certificate of authority) for an authorized
 
19           insurer;
 
20      (2)  $75 per year for all services (including extension of
 
21           the license) for a regularly licensed general agent;
 
22      (3)  $75 per year for all services (including extension of
 
23           the license) for a regularly licensed subagent;
 

 
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 1      (4)  $45 per year for all services (including extension of
 
 2           the license) for a regularly licensed nonresident agent
 
 3           broker;
 
 4      (5)  $30 per year for all services (including extension of
 
 5           the license) for a regularly licensed solicitor;
 
 6      (6)  $45 per year for all services (including extension of
 
 7           the license) for a regularly licensed independent
 
 8           adjuster;
 
 9      (7)  $45 per year for all services (including extension of
 
10           the license) for a regularly licensed public adjuster;
 
11      (8)  $45 per year for all services (including extension of
 
12           the license) for a regularly limited licensed workers'
 
13           compensation claims adjuster;
 
14      (9)  $60 per year for all services (including extension of
 
15           the license) for a regularly licensed independent bill
 
16           reviewer;
 
17     [(9)] (10)  $45 per year for all services (including
 
18           extension of the license) for a limited license issued
 
19           pursuant to section 431:9-214(c);
 
20    [(10)] (11)  $75 per year for all services (including
 
21           extension of the license) for a regularly licensed
 
22           managing general agent;
 
23    [(11)] (12)  $75 per year for all services (including
 

 
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 1           extension of the license) for a regularly licensed
 
 2           reinsurance intermediary;
 
 3    [(12)] (13)  $45 per year for all services (including
 
 4           extension of the license) for a licensed surplus line
 
 5           broker; and
 
 6    [(13)] (14)  The services referred to in paragraphs (1) to
 
 7           [(12)] (13) shall not include services in connection
 
 8           with examinations, investigations, hearings, appeals,
 
 9           and deposits with a depository other than the
 
10           department of commerce and consumer affairs."
 
11      SECTION 6.  Section 431:9-101, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "431:9-101  Scope.  This article shall govern the
 
14 qualifications and procedures for granting licenses to all
 
15 insurance agents, brokers, surplus lines brokers, nonresident
 
16 agents or brokers, subagents, solicitors, adjusters, independent
 
17 bill reviewers, and limited service representatives."
 
18      SECTION 7.  Section 431:9-201, Hawaii Revised Statutes, is
 
19 amended by amending subsection (a) to read as follows:
 
20      "(a)  No person engaging in the business of insurance in
 
21 this State shall act as, be appointed as, or hold oneself out to
 
22 be a general agent, subagent, solicitor, [or] adjuster, or
 
23 independent bill reviewer unless so licensed by this State."
 

 
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 1      SECTION 8.  Section 431:9-206, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (a) to read as follows:
 
 3      "(a)  Each applicant for license as general agent, subagent,
 
 4 solicitor, [or] adjuster, or independent bill reviewer shall
 
 5 prior to the issuance of any such license, personally take and
 
 6 pass to the satisfaction of the commissioner an examination given
 
 7 by the commissioner as a test of the applicant's qualifications
 
 8 and competence."
 
 9      SECTION 9.  Section 431:9-228, Hawaii Revised Statutes, is
 
10 amended by amending subsection (a) to read as follows:
 
11      "(a)  Every licensed general agent, subagent, [and]
 
12 adjuster, and independent bill reviewer shall have and maintain
 
13 in this State, or, if a nonresident agent or broker, in the state
 
14 of the agent's or broker's domicile, a place of business
 
15 accessible to the public."
 
16      SECTION 10.  Section 431:9-229, Hawaii Revised Statutes, is
 
17 amended by amending the title and subsection (a) to read as
 
18 follows:
 
19      "431:9-229  Records of general agent, subagent,
 
20 adjuster[.], independent bill reviewer.  (a)  Every general
 
21 agent, subagent, [or] adjuster, or independent bill reviewer
 
22 shall keep a record of all transactions consummated under [such]
 
23 their license.  This record shall be in organized form according
 

 
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 1 to class of insurance and shall include:
 
 2      (1)  If a general agent or subagent:
 
 3           (A)  A record of each insurance contract procured or
 
 4                issued, together with the names of the insurers
 
 5                and insureds, the amount of premium paid or to be
 
 6                paid, or the basis of the premium or consideration
 
 7                paid or to be paid, and a statement of the subject
 
 8                of the insurance; and
 
 9           (B)  The names of any other licensees from whom
 
10                business is accepted, and of persons to whom
 
11                commissions or allowances of any kind are promised
 
12                or paid;
 
13      (2)  If an adjuster, a record of each investigation or
 
14           adjustment undertaken or consummated, and a statement
 
15           of any fee, commission, or other compensation received
 
16           or to be received by the adjuster on account of [such]
 
17           the investigation or adjustment; [and]
 
18      (3)  If an independent bill reviewer, a record of each bill
 
19           reviewed and a statement of any fee, commission, or
 
20           other compensation received or to be received by the
 
21           independent bill reviewer on account of the bill
 
22           reviewed; and
 
23     [(3)  Such other and ] (4)  Any additional information as
 

 
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 1           shall be customary, or as may reasonably be required by
 
 2           the commissioner."
 
 3      SECTION 11.  There is created one permanent full time
 
 4 position to carry out the purposes of this Act and to provide
 
 5 additional compliance and enforcement resources for the insurance
 
 6 division.
 
 7      SECTION 12.  There is appropriated out of the insurance
 
 8 regulation fund the sum of $51,379 or so much thereof as may be
 
 9 necessary for fiscal year 2000-2001 to carry out the purposes of
 
10 this Act.
 
11      The sum appropriated shall be expended by the department of
 
12 commerce and consumer affairs.
 
13      SECTION 13.  Statutory material to be repealed is bracketed.
 
14 New statutory material is underscored.
 
15      SECTION 14.  This Act shall take effect upon its approval;
 
16 provided that section 12 shall take effect July 1, 2000.