STAND. COM. REP. NO.551-02

Honolulu, Hawaii

, 2002

RE: H.B. No. 2207

H.D. 1




Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred H.B. No. 2207 entitled:


beg leave to report as follows:

The purpose of this bill is to reduce the cost of health care insurance by amending article 10A of Chapter 431, and Chapters 432 and 432D, Hawaii Revised Statutes, to allow prosecution of health insurance fraud. This bill:

(1) Specifies prohibited activities;

(2) Establishes criminal penalties of up to a class B felony;

(3) Provides for restitution or recovery of amounts defrauded;

(4) Requires health insurers, health maintenance organizations, and mutual benefit societies to report suspected health insurance fraud within sixty days of its discovery; and

(5) Limits the civil liability of persons providing information assisting in investigation and prosecution of health insurance fraud.

HMSA and State Farm Insurance testified in support of this measure. The Insurance Division of the Department of Commerce and Consumer Affairs submitted comments, stating that the bill's provisions cannot be enforced by the Insurance Division's motor vehicle fraud branch because of statutory restrictions not addressed in the bill.

Your Committees find that insurance fraud is on the rise both locally and nationally. Annually, the health insurance industry suffers tremendous losses as a result of fraud and abuse, losses which are passed on to consumers in the form of higher insurance premiums.

Your Committees further find that Act 155, Session Laws of Hawaii 1998, amended the motor vehicle insurance law by adding insurance fraud provisions. This bill adds similar anti-fraud provisions to the accident and sickness insurance law, and to the laws governing mutual benefit societies and health maintenance organizations.

Your Committees have amended this measure by changing the effective date to July 1, 2050, to facilitate further discussion.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2207, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2207, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs,