THE SENATE |
S.B. NO. |
2770 |
TWENTY-NINTH LEGISLATURE, 2018 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO HEALTH CLUBS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 486N, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§486N- Surety
bond requirements for health clubs. (a)
Every health club shall maintain a surety bond naming the
director as the obligee, unless the health club:
(1) Does not collect payment for more
than one month of service;
(2) Does not collect annual, initiation,
enrollment, or other fees that total more than $200; and
(3) Does not collect payments that are
identified as payment for specific future monthly services.
(b) The surety bond shall be:
(1) In an amount no less than $100,000;
(2) Conditioned to provide payment to
any buyer who:
(A) Is contractually obligated to pay
for services more than one month in advance of the date the services are
provided to the buyer; and
(B) Suffers loss of money paid to a
health club due to the insolvency of the health club or
cessation of operation of the health club;
(3) In a form approved by the director;
and
(4) Issued by a surety authorized to do
business in the State.
(c) A health club shall not provide the required
coverage through multiple surety bonds but shall provide a single surety bond.
(d) A change in ownership shall not release,
cancel, or terminate liability under any surety bond previously filed unless
the director agrees in writing to the release, cancellation, or
termination. The director may agree to
the release, cancellation, or termination of the bond if:
(1) The new owner has filed a new surety
bond in accordance with subsection (b); or
(2) The former owner has refunded all
unearned advance fees paid by the buyers.
(e) The surety on a surety bond filed under this
section shall be released sixty days after the surety serves written notice of
the release to the director at the director's office by certified mail. Service shall be effective upon the receipt
of the written notice by the director.
(f) The surety shall provide payment to any buyer
who the director finds to have met the conditions of subsection (b)(2), but
only if the buyer files a claim no later than one year from the date on which
the health club becomes insolvent or ceases operation.
(g) The health club shall provide the following
information to the director within fifteen business days of the insolvency or
cessation of operation of the health club:
(1) A list of the
names, electronic mail addresses, and postal mail addresses of all members of
the health club;
(2) The original or
a copy of all health club contracts; and
(3) A record of all
payments received under the health club contracts."
SECTION 2. Section 486N-10,
Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) No health club
shall be considered fully operative until [substantially]:
(1) Substantially
all of the equipment and services listed in accordance with section 486N-9 are actually
available for use by buyers[.]; and
(2) The health
club:
(A) Has
provided the director with a surety bond meeting the requirements of section
486N- ; or
(B) Is
exempt from the surety bond requirement pursuant to section 486N- (a)."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on January 1, 2019.
Report Title:
Health Clubs; Surety Bond; Requirements
Description:
Requires health clubs to maintain a surety bond of at least $100,000 to be paid to any member who suffers loss of money paid due to the insolvency or cessation of operation of a health club. Effective 1/1/2019. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.