Consumer Choice No-Fault

Creates a system of motor vehicle insurance that offers a choice
of methods of protection against losses from personal injury
arising out of the maintenance or use of motor vehicles and
abolishes tort liability in certain cases.

HOUSE OF REPRESENTATIVES                H.B. NO.907        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The purpose of this Act is to give motorists the
 2 opportunity to determine the extent of their insurance coverage,
 3 depending on their needs and resources.
 4      Motorists will still have the right to elect traditional
 5 tort liability coverage, thus maintaining their right to pursue
 6 remedies through the tort system.  In addition, motorists will
 7 have the option of purchasing a personal injury protection
 8 insurance policy.  A personal injury protection policy would
 9 protect the motorist and the motorist's family members in the
10 event of a motor vehicle accident; however, the motorist would
11 generally forfeit the right to seek pain and suffering and other
12 noneconomic damages.  Finally, motorists will also have the
13 option of not purchasing any insurance.
14      The following summarizes how this Act will affect Hawaii's
15 motorists:
16      (1)  Accidents between motorists who both have tort
17           liability coverage.  When two motorists both have tort
18           liability insurance and are involved in an accident
19           with each other, their rights against each other will

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                                     H.B. NO.907        

 1           be unaffected by this Act.
 2      (2)  Accidents between a motorist with tort liability
 3           coverage and a motorist with personal injury protection
 4           coverage.  If motorist A has tort liability insurance
 5           and gets into an accident with motorist B, who has
 6           personal injury protection coverage, motorist A retains
 7           the right to pursue remedies through the tort system,
 8           except that based on fault:
 9           (A)  Motorist A can be sued by motorist B only for
10                damages in excess of the limits of the personal
11                injury protection policy; and
12           (B)  Motorist A cannot claim against motorist B except
13                for uncompensated economic loss in excess of the
14                limits of motorist A's own first-party tort
15                maintenance coverage.
16                Motorists who choose personal injury protection
17           coverage established by this Act and who are involved
18           in an accident with a motorist who has traditional tort
19           liability insurance will be promptly compensated for
20           their own losses, without regard to fault, and can also
21           claim against the other motorist based on fault for
22           uncompensated economic loss in excess of the limits of
23           the personal injury protection policy.

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                                     H.B. NO.907        

 1      (3)  Accidents between a motorist with tort liability
 2           coverage and an uninsured motorist.  If motorist A has
 3           tort liability insurance and is involved in an accident
 4           with motorist B, who is an uninsured motorist, motorist
 5           A will be compensated for losses under the uninsured
 6           motorist provisions of the policy based on fault and
 7           has the right to sue for damages.  On the other hand,
 8           motorist B forfeits the right to claim for noneconomic
 9           loss against motorist A unless motorist A was driving
10           under the influence of intoxicating liquor, driving
11           under the influence of drugs, or was guilty of
12           intentional misconduct.
13      (4)  Accidents between motorists with personal injury
14           protection coverage.  Motorists who purchase personal
15           injury protection policies will procure $10,000 of
16           property damage liability insurance as part of
17           mandatory coverage.  To keep the cost of property
18           damage liability insurance as low as possible, persons
19           who have chosen personal injury protection coverage
20           have no cause of action for damage to a motor vehicle
21           to the extent the vehicle is insured against collision
22           damage in accidents involving other personal injury
23           protection insureds.

Page 4                                                     
                                     H.B. NO.907        

 1                When two motorists with personal injury protection
 2           coverage are involved in an accident with each other,
 3           both will be promptly compensated under their own
 4           policies for their own losses without regard to fault.
 5           In this situation, the two personal injury protection
 6           motorists lose the right to claim and sue for pain and
 7           suffering, and other noneconomic loss, but if either
 8           suffers economic loss in excess of their policy's
 9           benefit levels, that person retains the right to sue
10           for unreimbursed economic loss based on fault.
11      (5)  Accidents between a motorist with personal injury
12           protection coverage and an uninsured motorist.  If a
13           motorist with personal injury protection coverage is
14           involved in an accident with an uninsured motorist, the
15           personal injury protection motorist will be promptly
16           compensated for losses without regard to fault under
17           the personal injury protection policy, and has the
18           right to claim and sue the uninsured motorist for
19           damages based on fault.  The uninsured motorist
20           forfeits the right to claim for noneconomic loss
21           against the motorist who has chosen the personal injury
22           protection policy except when the personal injury
23           protection insured was driving under the influence of

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                                     H.B. NO.907        

 1           intoxicating liquor, driving under the influence of
 2           drugs, or was guilty of intentional misconduct.
 3      SECTION 2.  Chapter 431, Hawaii Revised Statutes, is amended
 4 by adding a new article to be appropriately designated and to
 5 read as follows:
 6                            "ARTICLE 
 8      431:     -1  Definitions.  As used in this article:
 9      "Accidental bodily injury" means bodily injury, death,
10 sickness, or disease, arising out of the operation, maintenance,
11 or use of a motor vehicle, including an object drawn or propelled
12 by a motor vehicle, or while occupying a vehicle, which is
13 accidental as to the person injured.
14      "Added personal injury protection" means coverage in
15 addition to basic personal injury protection.
16      "Basic personal injury protection" means basic coverage
17 under a personal injury protection policy providing benefits for
18 loss resulting from accidental bodily injury.
19      "Cause of action for injury" means a claim for accidental
20 bodily injury for economic or noneconomic loss or both, caused by
21 the negligent conduct or intentional misconduct of another
22 person, whether directly or vicariously, and includes a claim by
23 any person other than a person suffering accidental bodily injury

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                                     H.B. NO.907        

 1 based on such injury, including but not limited to loss of
 2 consortium, companionship, or any other derivative claim.
 3      "Collateral sources" means all benefits one receives or is
 4 entitled to receive as reimbursement of loss because of an injury
 5 from sources other than personal injury protection benefits.
 6 "Collateral sources" shall not include amounts one receives or is
 7 entitled to receive:
 8      (1)  In discharge of familial obligations or support;
 9      (2)  By reason of another's death, except that there is
10           subtracted from loss in calculating net loss those
11           amounts received from social security or workers'
12           compensation; or
13      (3)  As gratuities.  In no event is any payment made by an
14           employer to an employee or an employee's survivors to
15           be regarded as a gratuity.
16      "Commissioner" means the insurance commissioner.
17      "Coverage" means a policy or plan for insurance benefits.
18      "Driving under the influence of intoxicating liquor" means
19 the same as the term is defined in section 291-4.
20      "Driving under the influence of drugs" means the same as the
21 term is defined in section 291-7.
22      "Economic loss" means medical expenses, loss of income from
23 work, and replacement services loss incurred by or on behalf of

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                                     H.B. NO.907        

 1 an injured person as the result of an accidental bodily injury to
 2 the injured person.
 3      "Fault" is encompassed by the definition of tort liability.
 4      "Intentional misconduct" means conduct whereby harm is
 5 intentionally caused or attempted to be caused by one who acts or
 6 fails to act for the purpose of causing harm or with knowledge
 7 that harm is substantially certain to follow when the conduct
 8 caused or substantially contributed to the harm claimed.  A
 9 person does not intentionally cause or attempt to cause harm:
10      (1)  Merely because the person's act or failure to act is
11           intentional or done with the realization that it
12           creates a grave risk of causing harm; or
13      (2)  If the act or omission causing bodily harm is for the
14           purpose of averting bodily harm to oneself or another
15           person.
16      "Loss of income from work" means eighty per cent of the
17 income an injured person would have earned through work during
18 the period of disability, reduced by any income from substitute
19 work actually performed by the injured person, or by any income
20 the injured person would have earned in available appropriate
21 substitute work that the person was capable of performing but
22 unreasonably failed to undertake.  "Loss of income from work"
23 does not include any loss after the death of an injured person

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                                     H.B. NO.907        

 1 and payment for the period of disability shall not exceed two
 2 years from the date of the accident.
 3      "Medical expenses" means reasonable expenses incurred for
 4 necessary medical, surgical, x-ray, dental, ambulance, hospital,
 5 medical rehabilitation, and professional nursing services and
 6 includes expenses for eyeglasses, hearing aids, and prosthetic
 7 devices.  "Medical expenses" shall not include:
 8      (1)  That portion of the charge for a room in any hospital,
 9           clinic, convalescent or nursing home, extended care
10           facility, or any similar facility in excess of the
11           reasonable and customary charge for semi-private
12           accommodations unless medically required; or
13      (2)  Treatment, services, products, or procedures that are
14           experimental in nature, for research or not primarily
15           designed to serve a medical purpose, or not commonly
16           and customarily recognized throughout the medical
17           profession and within the United States as appropriate
18           for treatment of accidental bodily injury.
19      "Medical rehabilitation" means rehabilitation services
20 reasonably necessary and designed to reduce the disability and
21 dependence of an injured person and to restore the person, to the
22 extent reasonably possible, to the person's pre-accident level of
23 physical functioning.

Page 9                                                     
                                     H.B. NO.907        

 1      "Motor vehicle" means any vehicle of a type required to be
 2 registered under chapter 286, including a trailer attached to
 3 such a vehicle, but not including motorcycles and motor scooters.
 4      "Noneconomic loss" includes but is not limited to pain,
 5 suffering, inconvenience, mental anguish, and all other
 6 noneconomic damage regardless of whether the damages are
 7 otherwise recoverable under the law of this State.  "Noneconomic
 8 loss" does not include economic loss caused by pain and suffering
 9 or by physical impairment.
10      "Occupying" means to be in or upon a motor vehicle or
11 engaged in the immediate act of entering into or alighting from
12 the motor vehicle.
13      "Operation or use" means operation or use of a motor vehicle
14 as a motor vehicle.  "Operation or use" does not include
15 manufacturing, sale, or maintenance of a motor vehicle, including
16 repairing, servicing, washing, loading, or unloading, unless the
17 conduct occurs while in the immediate proximity of the motor
18 vehicle.
19      "Owner" means the person or persons in whose name the motor
20 vehicle has been registered.  If no registration is in effect at
21 the time of an accident involving the motor vehicle, "owner"
22 means the person or persons holding legal title to the motor
23 vehicle, except that in the case of a motor vehicle that is the

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                                     H.B. NO.907        

 1 subject of a security agreement or lease with a term of not less
 2 than one year with the debtor or lessee having the right to
 3 possession, the term means the debtor or lessee.  "Owner" does
 4 not include the United States of America or any agency thereof
 5 except with respect to motor vehicles for which it has elected to
 6 provide insurance.
 7      "Person" means any individual, company, insurer,
 8 association, organization, group, reciprocal or interinsurance
 9 exchange, partnership, business, trust, or corporation.
10      "Personal injury protection" means insurance coverage that
11 provides basic and, if additionally purchased, added benefits,
12 regardless of fault, for loss resulting from accidental bodily
13 injury.
14      "Personal injury protection insured" means:
15      (1)  The first person identified by name as an insured under
16           a policy providing personal injury protection benefits,
17           the spouse of the person if a resident of the person's
18           household, and any other resident relative of the same
19           household; and
20      (2)  With respect to accidents within the State, any person
21           who sustains accidental bodily injury while occupying
22           or through being struck by a motor vehicle insured for
23           personal injury protection, unless such person is

Page 11                                                    
                                     H.B. NO.907        

 1           insured pursuant to the tort liability insurance option
 2           or is an uninsured motorist.
 3      "Personal injury protection insurer" means an insurer or
 4 qualified self-insurer providing personal injury protection
 5 benefits.
 6      "Replacement services loss" means expenses reasonably
 7 incurred in obtaining ordinary and necessary services from
 8 others, not members of the injured person's household, in lieu of
 9 the services the injured person would have performed for the
10 benefit of the household.  Replacement services loss are not due
11 if the injured person is entitled to receive personal injury
12 protection benefits for loss of income from work for the same
13 time period.  Replacement services loss does not include any loss
14 after the death of an injured person, and payment for the period
15 of disability under basic personal injury protection is not to
16 exceed two years from the date of accidental bodily injury.
17      "Resident relative" means a person related to the owner of a
18 motor vehicle by blood, marriage, adoption, or otherwise, and
19 residing in the same household.  A person resides in the same
20 household if the person usually makes their home in the same
21 family unit, even though temporarily living elsewhere.
22      "Tort liability" means the legal obligation for the payment
23 of damages caused by one adjudged to have committed a tort.

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                                     H.B. NO.907        

 1      "Tort maintenance coverage" means coverage under which a
 2 person who has chosen tort liability coverage when involved in an
 3 accident with a personal injury protection insured claims for
 4 tort liability against one's own insurer to the extent of such
 5 coverage.
 6      "Uncompensated economic loss" means that portion of economic
 7 loss arising out of an accidental bodily injury of an injured
 8 person which exceeds the benefits provided by:
 9      (1)  Personal injury protection coverage (except for loss
10           because of the application of a deductible under such a
11           policy);
12      (2)  Tort maintenance coverage; and
13      (3)  Collateral sources.
14      Such loss is recoverable under the same terms and
15 limitations as under added personal injury protection, but shall
16 not be subject to the aggregate of liability of the coverage.
17      "Uninsured motorist" means the owner, or a dependent of the
18 owner, of a motor vehicle uninsured for either basic personal
19 injury protection or liability insurance at the limits prescribed
20 by motor vehicle financial responsibility laws or higher.
21      431:    -2  Insurance requirements.  Every motor vehicle
22 required to be registered in this State may be:
23      (1)  Insured under one of the following options:

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                                     H.B. NO.907        

 1           (A)  Personal injury protection coverage, including
 2                basic personal injury protection and the property
 3                damage liability mandated under the motor vehicle
 4                financial responsibility laws; or
 5           (B)  Tort maintenance coverage option for bodily injury
 6                and property damage liability as described in the
 7                motor vehicle financial responsibility laws; or
 8      (2)  Uninsured.
 9      431:    -3  Personal injury protection coverage.(a)  A
10 personal injury protection insurer shall include all basic
11 personal injury protection benefits in personal injury protection
12 insurance policies.
13      (b)  Coverage under basic personal injury protection shall
14 meet the requirements of motor vehicle financial responsibility
15 laws even though the policy does not provide protection against
16 bodily injury liability claims arising out of accidents within
17 the state.
18      (c)  A personal injury protection insurer shall offer, at
19 the option of a named insured, added personal injury protection
20 on a policy providing basic personal injury protection.  The
21 exercise of the option not to purchase added personal injury
22 protection by a named insured or an applicant shall be binding on
23 all personal injury protection insureds covered under the policy.

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                                     H.B. NO.907        

 1      (d)  A personal injury protection insurer may write personal
 2 injury protection without any deductible or subject to reasonable
 3 deductibles pursuant to section 431:    -27.
 4      (e)  A personal injury protection insurer shall also offer
 5 pain and suffering coverage, pursuant to rules issued under
 6 section 431:    -27, with a limit of $50,000, payable if the
 7 injured person sustains an accidental bodily injury resulting in:
 8      (1)  Death;
 9      (2)  Dismemberment;
10      (3)  Significant and permanent loss of important bodily
11           function; or
12      (4)  Significant and permanent scarring or disfigurement.
13 This subsection shall not preclude any insurer from offering
14 higher limits of pain and suffering coverage or providing broader
15 coverage.
16      (f)  Nothing in this section shall prevent a personal injury
17 protection insurer from also making available other additional
18 compensation benefits in coverages and amounts other than those
19 prescribed in this article.
20      In addition to added personal injury protection coverage, a
21 personal injury protection insurer may offer other insurance
22 coverage with the approval of the commissioner.  Such coverages
23 shall include but not be limited to bodily injury liability

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 1 insurance, tort maintenance coverage, collision coverage, and
 2 comprehensive physical damage coverage.
 3      Rejection of any benefits, options, or coverages required
 4 under this article shall be in writing.
 5      (g)  Personal injury protection insurers may review medical
 6 expenses before, during, and after the course of treatment of an
 7 injured person, to ensure that the expenses are reasonable and
 8 necessary.  Under basic personal injury protection and added
 9 personal injury protection, medical expenses shall be payable for
10 services provided to the injured person within two years of the
11 date of accidental bodily injury.
12      (h)  Basic personal injury protection shall consist of the
13 following elements with an aggregate limit of $15,000 per person:
14      (1)  Medical expenses, subject to a deductible of $250
15           applicable only to the named insured and to resident
16           relatives of the named insured;
17      (2)  Loss of income from work, not to exceed $200 per week;
18      (3)  Replacement services loss, not to exceed $100 per week;
19           and
20      (4)  A death benefit of $10,000 payable to the dependents,
21           if any, or, if none, to the heirs or estate of the
22           decedent, if the death of an injured person is directly
23           and proximately caused by an accidental bodily injury

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                                     H.B. NO.907        

 1           and occurs within one year of the date of such injury.
 2      (i)  Added personal injury protection shall include benefits
 3 with an aggregate limit of $100,000 per person, including $30,000
 4 of basic personal injury protection benefits to consist of:
 5      (1)  Medical expenses;
 6      (2)  Up to $1,000 per week of loss of income from work;
 7      (3)  Up to $300 per week of replacement services loss; and
 8      (4)  If death is proximately and directly caused by a motor
 9           vehicle and occurs within one year of the date of the
10           accident, a death benefit of $25,000 payable to the
11           dependents, if any, or, if none, to the heirs or estate
12           of the decedent.
13      431:    -4  Tort maintenance coverage.(a)  Every tort
14 liability insurance policy shall provide for not less than
15 $25,000 for accidental bodily injury and $10,000 for property
16 damage.
17      (b)  A tort liability insurance policy shall pay damages as
18 might have been recovered against a personal injury protection
19 insured except for the exemption from tort liability provided by
20 section 431:    -13 up to the liability limits of the tort
21 maintenance coverage.
22      (c)  A tort liability insurance policy written by an insurer
23 pursuant to this article shall include tort maintenance coverage

Page 17                                                    
                                     H.B. NO.907        

 1 for accidental bodily injury of an insured caused by the
 2 negligence, in whole or in part, of a personal injury protection
 3 insured.
 4      (d)  Insurers providing tort maintenance coverage shall
 5 provide primary coverage for motor vehicles at limits equal to
 6 the bodily injury liability coverage carried by the tort
 7 maintenance insured, and shall offer basic and added personal
 8 injury protection benefits.
 9      431:    -5  Election of personal injury protection coverage
10 or tort maintenance coverage.  (a)  Upon the earliest and first
11 renewal of any applicable motor vehicle liability insurance
12 policy on or after July 1, 1999, or before the issuance of a
13 policy required by this article, an insured person shall choose
14 coverage under a personal injury protection insurance policy or a
15 tort liability insurance policy.
16      (b)  To minimize any potential conflict between the two
17 options, all motor vehicle insurers may maintain underwriting
18 rules that encourage uniformity within a household.
19      (c)  A choice made pursuant to this article shall be binding
20 with respect to any continuation, renewal, or reinstatement of an
21 applicable motor vehicle insurance policy, and continue with
22 respect to any policy that extends, supersedes, or replaces the
23 policy unless the named insured subsequently makes a different

Page 18                                                    
                                     H.B. NO.907        

 1 choice in writing.
 2      431:    -6  Application of coverage.(a)  If there is only
 3 one vehicle owned by the named insured or any member of the
 4 household of the named insured, the choice made by the named
 5 insured is applicable to the named insured's spouse and to any
 6 resident relatives of the household.  The choice also applies to
 7 all persons insured under the policy while occupying other motor
 8 vehicles or if struck by another motor vehicle.
 9      (b)  If there is more than one motor vehicle in the
10 household and the named insured chooses different options for
11 different vehicles, the choice applicable to the vehicle in use
12 governs not only the named insured, but also all other persons
13 insured under the policy whose injuries arise out of the use of
14 that motor vehicle unless the named insured has specifically
15 identified family members who shall be basic compensation
16 insureds.
17      (c)  Tort maintenance coverage shall apply and personal
18 injury protection benefits shall not be provided when:
19      (1)  The named insured is injured while occupying another
20           vehicle, or is injured by being struck by another motor
21           vehicle; and
22      (2)  Any other person insured under two or more policies
23           covering different options is injured while occupying

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                                     H.B. NO.907        

 1           another motor vehicle, or is injured by being struck by
 2           another motor vehicle, and that insured has not been
 3           specifically identified by the named insured as being a
 4           basic compensation insured at all times.
 5      (d)  If there are two or more vehicles in the household,
 6 each owned by different persons, each person shall have the right
 7 to choose coverage under a personal injury protection insurance
 8 policy or a tort liability insurance policy.  The person's choice
 9 shall determine the person's rights no matter which vehicle the
10 person is occupying or which vehicle the person may be struck by.
11 The rights of all members of the household who are not motor
12 vehicle owners shall be governed by the choice applicable to the
13 motor vehicle that they were occupying at the time of the injury,
14 if that vehicle was owned by a member of the household.
15      (e)  In the event of bodily injury occurring before the
16 effective date of a required choice, if there are conflicting
17 choices within the household creating questions as to the
18 applicability of choice of coverage, or if there is a failure to
19 make a choice as required by this article, liability insurance
20 shall be applicable, and compensation benefits shall not be
21 payable.
22      431:    -7  Geographic application of personal injury
23 protection policies.  A personal injury protection insurer shall

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                                     H.B. NO.907        

 1 pay personal injury protection benefits for accidental bodily
 2 injury of a personal injury protection insured sustained within
 3 the United States of America, its territories, or possessions.
 4 Any personal injury protection insurance policy issued to satisfy
 5 motor vehicle financial responsibility laws shall be conformed to
 6 satisfy the financial responsibility law of any jurisdiction
 7 mentioned above in which the insured motor vehicle is being
 8 operated with respect to an accident occurring in that
 9 jurisdiction.
10      431:    -8  Persons not entitled to personal injury
11 protection benefits.  A personal injury protection insurer has no
12 obligation to provide personal injury protection benefits to or
13 on behalf of any injured person who was:
14      (1)  Involved in a motor vehicle accident while committing a
15           felony or while voluntarily occupying a motor vehicle
16           known to be stolen;
17      (2)  Driving under the influence of intoxicating liquor or
18           drugs;
19      (3)  Injured while occupying a motor vehicle owned by, or
20           furnished or available for the regular use of, the
21           injured person or the injured person's resident spouse
22           or relative, if the motor vehicle is not described in
23           the policy under which a claim is made, or is not a

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                                     H.B. NO.907        

 1           newly acquired or replacement motor vehicle covered
 2           under the terms of the policy;
 3      (4)  Operating or occupying a motorcycle or motor scooter;
 4      (5)  Found guilty of intentional misconduct;
 5      (6)  Insured pursuant to the tort maintenance coverage
 6           unless personal injury protection benefits have been
 7           purchased or otherwise apply; or
 8      (7)  An uninsured motorist, or a dependent of an uninsured
 9           motorist who is not otherwise insured for personal
10           injury protection.
11      Nothing shall prevent a personal injury protection insurer
12 from including any of the persons mentioned in this section from
13 personal injury protection coverage.
14      431:    -9  Payment of personal injury protection benefits.
15 Personal injury protection benefits, when due, shall be payable
16 at the option of the personal injury protection insurer to any of
17 the following:
18      (1)  The injured person;
19      (2)  The parent or guardian of the injured person, if the
20           injured person is a minor or incompetent;
21      (3)  A dependent survivor, executor, or administrator of the
22           injured person; or
23      (4)  Any other person or organization rendering the services

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                                     H.B. NO.907        

 1           for which payment is due.
 2      431:    -10  Multiple coverages.  Regardless of the number
 3 of motor vehicles involved, persons covered, claims made, motor
 4 vehicles or premiums shown on the policy, or premiums paid, in no
 5 event shall the coverage limits under a motor vehicle insurance
 6 policy for any one coverage be added to, combined with, or
 7 otherwise stacked upon any other coverage limit to determine the
 8 maximum limit of coverage available to an injured person for any
 9 one accident.  Unless clearly providing otherwise, policies or
10 plans may also provide that if two or more policies, plans, or
11 coverages apply equally to the same accident, the highest limit
12 of liability applicable shall be the maximum amount available to
13 an insured person under any one of these policies.  Each of these
14 policies, plans, or coverages shall bear its proportionate share
15 of the loss.
16      431:    -11  Priority of benefits.(a) Persons entitled to
17 basic personal injury protection benefits required or provided
18 pursuant to this article shall be entitled to at least the
19 personal injury protection coverage under the policy insuring
20 them and shall claim these benefits from insurers in the
21 following order of priority up to the limits of personal injury
22 protection in the listed category:
23      (1)  Personal injury protection covering a motor vehicle

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                                     H.B. NO.907        

 1           involved in the accident, if the person injured was an
 2           occupant of or was struck by the motor vehicle at the
 3           time of the accident;
 4      (2)  Personal injury protection under which the injured
 5           person is or was an insured;
 6      (3)  If no personal injury protection is available under the
 7           above priorities, a person injured as a result of a
 8           motor vehicle accident may claim benefits under the
 9           assigned claims plan pursuant to section 431:    -22,
10           unless unqualified for benefits under section
11           431:    -5.
12      (b)  If two or more insurers are obligated to pay personal
13 injury protection benefits in accordance with the priorities set
14 out in this section, the insurer against whom the claim is first
15 made shall pay the claim as if wholly responsible, and may
16 thereafter recover contribution pro rata from any other insurer
17 at the same priority level for the cost of the payments and the
18 processing of the claim.
19      (c)  For purposes of this section, an unoccupied parked
20 motor vehicle is not a motor vehicle involved in an accident
21 unless it was parked in such a way as to cause unreasonable risk
22 of injury.
23      431:    -12  Coordination of benefits.  A personal injury

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                                     H.B. NO.907        

 1 protection insurer has the primary obligation to indemnify an
 2 injured person except to the extent of collateral sources paid or
 3 payable to such person.
 4      431:    -13  Tort rights and legal liability.(a)  No
 5 personal injury protection insured has a cause of action for
 6 injury against, nor is liable to, any other person due to an
 7 accident occurring within this State, except as provided in
 8 subsections (b), (c), (d), and (e) and except for injury caused
 9 other than by the ownership, operation, or use of a motor
10 vehicle.
11      (b)  Any injured person has a cause of action for accidental
12 bodily injury against any person driving under the influence of
13 intoxicating liquor, driving under the influence of drugs, or
14 found guilty of intentional misconduct.  Any insurer providing
15 personal injury protection or tort maintenance coverage to the
16 injured person has a right of subrogation under this subsection.
17      (c)  A personal injury protection insured has a cause of
18 action for accidental bodily injury for uncompensated economic
19 loss against, and is liable for the same to, any person insured
20 under personal injury protection or tort maintenance coverage.
21      (d)  A person with tort maintenance coverage has a cause of
22 action for injury against another person so covered.
23      (e)  Benefits under subsection (c) include reasonable

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                                     H.B. NO.907        

 1 expenses incurred by the person in collecting the benefits,
 2 including a reasonable attorney's fee for advising and
 3 representing a claimant for such benefits.  No part of the fee
 4 for representing the person in connection with these benefits
 5 shall be a charge against benefits otherwise due the claimant,
 6 and no additional fee may be charged by an attorney to any party
 7 in collecting the benefits.  All or part of the fee may be
 8 deducted from the benefits otherwise due the claimant if any
 9 significant part of the claim for such benefits was fraudulent or
10 so excessive as to have no reasonable foundation.  In any action
11 brought against an injured person by a personal injury protection
12 insurer, the court may award the injured person's attorney a
13 reasonable attorney's fee for defending the action if the injured
14 person is the prevailing party.
15      (f)  A personal injury protection insured whose motor
16 vehicle is damaged by the fault of another personal injury
17 protection insured has a cause of action for damage to the motor
18 vehicle only to the extent the motor vehicle is not covered by
19 collision insurance.
20      (g)  An uninsured motorist shall have no cause of action
21 against a personal injury protection insured for:
22      (1)  Injury other than for uncompensated economic loss; and
23      (2)  Damage to property except damage in excess of the

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                                     H.B. NO.907        

 1           property damage liability limits mandated under the
 2           motor vehicle financial responsibility laws unless the
 3           personal injury protection insured was driving under
 4           the influence of intoxicating liquor, driving under the
 5           influence of drugs, or was found guilty of intentional
 6           misconduct.
 7      An uninsured motorist remains liable in tort to a person
 8 insured for personal injury protection benefits for all losses
 9 including noneconomic loss, economic loss, and property damage.
10      431:    -14  Insurer's right of subrogation.  There shall
11 be no right of subrogation or contribution by a personal injury
12 protection insurer except under sections 431:    -12,
13 431:    -13, 431:    -15, 431:    -22, and except that a personal
14 injury protection insurer is subrogated, to the extent any
15 recovery duplicates benefits paid, with respect to an accident
16 caused in whole or in part by:
17      (1)  The negligence of an uninsured motorists;
18      (2)  The negligence of the owner or operator of a motor
19           vehicle having a gross weight of 7,000 pounds or more;
20      (3)  A person driving under the influence of intoxicating
21           liquor;
22      (4)  A person driving under the influence of drugs;
23      (5)  Intentional misconduct; or

Page 27                                                    
                                     H.B. NO.907        

 1      (6)  Any person who is not affected by the limitation on
 2           tort rights and liabilities pursuant to section
 3           431:    -13.
 4      431:    -15  Personal injury protection benefits and causes
 5 of action for injury.  No subtraction shall be made against
 6 personal injury protection benefits due because of the value of a
 7 cause of action for injury preserved under this article except
 8 that after recovery is realized under the cause of action, a
 9 subtraction is made to the extent of the net recovery duplicates
10 benefits paid, exclusive of reasonable attorneys' fees and other
11 reasonable expenses incurred in effecting the recovery.  If
12 personal injury protection benefits have already been received,
13 the recipient thereof shall repay to the insurer paying personal
14 injury protection benefits out of the recovery a sum equal to the
15 personal injury protection benefits received but not more than
16 the realized net recovery, and the insurer shall have a lien on
17 the recovery to this extent.  Any remainder of the net recovery
18 from the cause of action applies periodically against loss as it
19 accrues, until an amount equal to the net recovery under the
20 cause of action has been subtracted.
21      431:    -16  Personal injury protection benefits payable
22 periodically. Personal injury protection benefits shall be
23 payable monthly as loss accrues.  Such benefits shall be overdue

Page 28                                                    
                                     H.B. NO.907        

 1 if not paid within thirty days after the personal injury
 2 protection insurer receives reasonable proof of the fact and the
 3 amount of loss sustained, except that a personal injury
 4 protection insurer may accumulate claims for periods not
 5 exceeding one month, and benefits shall not be overdue if paid
 6 within twenty days after the period of accumulation.  If
 7 reasonable proof is not supplied as to the entire claim, the
 8 amount supported by reasonable proof shall be overdue if not paid
 9 within thirty days after such proof is received by the insurer,
10 subject to the right of review.  Any part or all of the remainder
11 of the claim that is later supported by reasonable proof shall be
12 overdue if not paid within thirty days after such proof is
13 received by the insurer.  For the purpose of calculating the
14 extent to which any benefits are overdue, payment shall be
15 treated as made on the date a draft or other valid instrument is
16 placed in the mail in a properly addressed postpaid envelope, or,
17 if not so posted, on the date of delivery.  Personal injury
18 protection benefits may be paid by the personal injury protection
19 insurer directly to persons supplying necessary products,
20 services, or accommodations to the injured person.  If overdue
21 benefits are recovered against a personal injury protection
22 insurer or are paid by a personal injury protection insurer, the
23 provision pertaining to expenses and attorney's fees apply.  In

Page 29                                                    
                                     H.B. NO.907        

 1 addition, the insurer shall be obligated to pay interest on the
 2 overdue payment at one hundred fifty per cent of the prime rate
 3 in effect at the time the payment became overdue.
 4      431:    -17  Assignment or garnishment of personal injury
 5 protection benefits.(a)  Personal injury protection benefits,
 6 other than those for medical expenses, shall be exempt from
 7 garnishment, attachment, execution, and any other process or
 8 claim to the extent that wages or earnings are exempt under any
 9 applicable law exempting wages or earnings from process or
10 claims.
11      (b)  An agreement for assignment of any right to personal
12 injury protection benefits payable in the future other than
13 medical expenses shall be unenforceable except to the extent that
14 such benefits are for the cost of products, services, or
15 accommodations provided or to be provided by the assignee or that
16 benefits for loss of income from work or replacement services are
17 assigned to secure payment of alimony, maintenance, or child
18 support.  Pain and suffering coverage benefits may also be
19 assigned.
20      431:    -18  No penalty for claims for personal injury
21 protection benefits.  An insurer shall not cancel, fail to renew,
22 or increase the premium of its insured solely on account of the
23 insured or any other injured person making a claim for personal

Page 30                                                    
                                     H.B. NO.907        

 1 injury protection benefits or for collision damage to the insured
 2 vehicle.  Violation of this section shall be punishable by a fine
 3 of $1,000 per offense.
 4      431:    -19  Limitation of actions.  Subject to arbitration
 5 provisions, if benefits have not been paid, an action may be
 6 commenced against the personal injury protection insurer not
 7 later than two years after the injured person suffers accidental
 8 bodily injury.  If personal injury protection benefits have been
 9 paid, an action for recovery of further benefits by either the
10 injured person or another claimant may be commenced not later
11 than two years after the last payment of benefits.
12      431:    -20  Mental and physical examinations.(a)
13 Whenever the mental or physical condition of an injured person is
14 material to any claim that has been made or may be made for past
15 or future personal injury protection benefits, the insured person
16 when reasonably required, shall submit to reasonable mental or
17 physical examinations by an independent physician or physicians
18 designated by the insurer at a reasonably convenient time and
19 location, subject to rules, if any, adopted by the commissioner.
20 The insurer shall bear expenses incurred by the injured person.
21 Personal injury protection benefits insurers are authorized to
22 include provisions of this nature in policies providing personal
23 injury protection benefits.

Page 31                                                    
                                     H.B. NO.907        

 1      (b)  Where an insurer has requested of a person receiving
 2 personal injury protection benefits that the person undergo
 3 medical or rehabilitation services, and the person unreasonably
 4 refuses to comply with the request, the insurer may, upon written
 5 notice, suspend all future benefits until the person complies
 6 with that request.
 7      431:    -21  Verification of entitlement to benefits.(a)
 8 Every employer shall furnish pertinent information on a form
 9 approved by the commissioner regarding an employee who has filed
10 a claim for personal injury protection benefits if a request is
11 made by an insurer providing these benefits under this section.
12      (b)  Every physician, hospital, clinic, or other medical
13 institution providing, before or after an injury resulting from a
14 motor vehicle accident upon which a claim for personal injury
15 protection benefits is based, any products, services, or
16 accommodations in relation to that or any other injury, or in
17 relation to a condition claimed to be connected with that or any
18 other injury shall, if requested to do so by the personal injury
19 protection insurer against whom the claim has been made, furnish
20 a written report of the history, condition, and treatment, and
21 the dates and costs of the treatment, of the injured person, with
22 the consent of the patient.  The information shall be provided
23 together with a sworn statement that the treatment or services

Page 32                                                    
                                     H.B. NO.907        

 1 rendered were reasonable and necessary with respect to the injury
 2 sustained and identifying which portion of the expenses for the
 3 treatment or services were incurred as a result of the injury.
 4 Every physician, hospital, clinic, or other medical institution
 5 shall also promptly produce and permit the inspection and copying
 6 of its records regarding the history, condition, and treatment,
 7 and the dates and costs of treatment.  The sworn statement
 8 required under this section shall read as follows:
 9      "Under penalty of perjury I declare that I have read
10      the foregoing and the facts alleged are true, to the
11      best of my knowledge and belief."
12      No cause of action for violation of a physician-patient
13 privilege or invasion of the right of privacy shall be allowed
14 against any physician, hospital, clinic, or other medical
15 institution complying with the provisions of this section, with
16 the consent of the patient.  The person requesting records and a
17 sworn statement under this subsection shall pay all reasonable
18 costs connected therewith.
19      (c)  In the event of any dispute regarding the personal
20 injury protection insurer's right to discovery of facts about an
21 injured persons, if the dispute is not referred to arbitration
22 under section 431:    -30, a court of record may enter an order
23 for such discovery as justice requires.

Page 33                                                    
                                     H.B. NO.907        

 1      431:    -22  Assigned claims plan.(a)  Insurers and
 2 qualified self-insurers authorized to provide personal injury
 3 protection insurance shall organize, participate in, and maintain
 4 an assigned claims plan to provide basic personal injury
 5 protection benefits to any person who is injured as a result of a
 6 motor vehicle accident if basic personal injury protection
 7 benefits are payable but not applicable to the injury for some
 8 reason other than those specified in section 431:    -8; provided
 9 the person shall have the right to reject protection benefits and
10 to seek damages in tort.  The election must be made within ninety
11 days after the accident or ninety days after receiving written
12 notice of the right of election.
13      (b)  If basic personal injury protection benefits are
14 unavailable, in whole or in part, because of financial inability
15 of an insurer to fulfill its obligations, payments shall be made
16 by the assigned claims plan pursuant to this subsection
17 constitute covered claims of the Insurance Guaranty Association
18 under the laws of this state.
19      (c)  The assigned claims plan shall provide rules and
20 agreements for the operation of the plan and for the equitable
21 distribution of costs as approved by the commissioner.  Any claim
22 brought through the assigned claims plan shall be assigned to an
23 insurer in accordance with rules and agreements, and that

Page 34                                                    
                                     H.B. NO.907        

 1 insurer, after assignment, shall have the rights and obligations
 2 it would have had if, prior to assignment, it had issued a policy
 3 providing personal injury protection applicable to the loss.  Any
 4 person accepting personal injury protection benefits under the
 5 assigned claims plan has the same rights and obligations as the
 6 person would have had under a policy providing personal injury
 7 protection benefits.
 8      (d)  If a claim qualifies for assignment under this section,
 9 the assigned claims plan and any insurer to whom the claim is
10 assigned are subrogated to all of the rights of the claimant
11 against any person liable for loss and against any insurer, its
12 successor in interest, or any other person or organization
13 legally obligated to provide personal injury protection benefits
14 to the insured person for benefits provided by the assignment.
15      431:    -23  Fraudulent claims.  Any person, including an
16 insurer, who, with intent to insure, defraud, or deceive any
17 other person in connection with a claim for payment or other
18 benefit pursuant to an insurance policy providing benefits under
19 this article, does or attempts to do either of the following,
20 knowing that the statement contains any false, incomplete, or
21 misleading information concerning any fact or thing material to
22 such claim:
23      (1)  Presents or causes to be presented, or conspires to

Page 35                                                    
                                     H.B. NO.907        

 1           present or cause to be presented, any written or oral
 2           statements in connection with a claim for payment or
 3           other benefit; or
 4      (2)  Prepares or makes any written or oral statement that is
 5           intended to be presented to any person in connection
 6           with or in support of any claim for payment or other
 7           benefit,
 8 shall be guilty of a felony punishable by a fine of not more than
 9 $10,000.
10      431:    -24  Nondiscrimination in fees for medical
11 services.  A physician, hospital, clinic, other person, or
12 institution lawfully rendering treatment to an injured person,
13 and a person or institution providing medical rehabilitation
14 services following an injury to an injured person, may charge a
15 reasonable amount for the products, services, and accommodations
16 rendered.  The charge shall not exceed the amount the person or
17 institution customarily charges for like products, services, and
18 accommodations in cases not involving insurance.
19      431:    -25  Managed care.  A personal injury protection
20 insurer, with the approval of the commissioner, may utilize, for
21 the payment of medical expenses provided under personal injury
22 protection, managed care systems including but not limited to
23 health maintenance and preferred provider organizations, and may

Page 36                                                    
                                     H.B. NO.907        

 1 require an injured person to obtain health care through a managed
 2 care system designated by the personal injury protection insurer
 3 if the injured person has opted at the time of purchase of
 4 personal injury protection coverage at an appropriately reduced
 5 premium to be subject to such a managed care system.
 6      431:    -26  Safety equipment.  Each personal injury
 7 protection insurer shall adopt an actuarially sound program that
 8 provides incentives, in the form of increased benefits, reduced
 9 premiums, or other means, for personal injury protection insureds
10 to install, maintain, and make use of injury reducing devices
11 such as but not limited to seat and harness belts, air bags, and
12 child restraint systems.
13      431:    -27  Rules.(a)  The commissioner may adopt
14 additional rules to provide effective administration of this
15 article that are consistent with its purposes and are fair and
16 equitable, including rules that authorize personal injury
17 protection insurers to write personal injury protection insurance
18 with reasonable deductibles higher or lower in amount than that
19 provided in this section, and rules to permit the offering of
20 pain and suffering coverage.
21      (b)  The commissioner shall develop an informational
22 brochure that shall be provided by each insurer or agent to each
23 policyholder or applicant for motor vehicle insurance explaining

Page 37                                                    
                                     H.B. NO.907        

 1 the personal injury protection insurance option and the tort
 2 liability insurance option as well as the consequences of
 3 selection of one option over the other.
 4      (c)  The commissioner shall establish, within the insurance
 5 division, a compliance unit that shall monitor all complaints
 6 against insurers, health care provides, and attorneys arising out
 7 of the provision of personal injury protection benefits.  The
 8 commissioner shall report to the legislature, at least annually,
 9 the nature of the complaints, the penalties levied against
10 insurers, and the final disposition of the complaints.  The
11 report shall identify parties by name and shall be available on
12 request by any member of the public.
13      431:    -28  Limitation of liability for advising on
14 options.  No insurer, agent, or employee of such insurer, or
15 insurance producer representing a motor vehicle insurer or any
16 automobile residual market plan, or attorney licensed to practice
17 law within this state shall be liable in an action for damages
18 due to an election of the tort liability insurance option, an
19 election of the personal injury protection insurance option, or a
20 failure to make a required election, unless the person has
21 wilfully misrepresented the available choices or has fraudulently
22 induced the election of one system over the other.
23      431:    -29  Cost of living adjustment.  Beginning July 1,

Page 38                                                    
                                     H.B. NO.907        

 1 1998, and every two years thereafter, the commissioner shall
 2 report in writing to the legislature the effect of changes in the
 3 relevant components of the cost of living on levels of benefits,
 4 limits of liability, and deductibles.
 5      431:    -30  Arbitration.  Any dispute with respect to
 6 personal injury protection coverage between a personal injury
 7 protection benefits insurer and an injured person, or the
 8 dependents of the person, shall be submitted to arbitration.  The
 9 dispute shall either be submitted to the American Arbitration
10 Association, or be submitted for determination in the following
11 manner:
12      (1)  Upon the request for arbitration being made by either
13           party, each party to the dispute shall select an
14           arbitrator and the two arbitrators so named shall
15           select a third arbitrator;
16      (2)  The written decision of any two arbitrators is binding
17           on each party; and
18      (3)  If arbitrators are not selected within forty-five days
19           from the request, either party may require that such
20           arbitration be submitted to the American Arbitration
21           Association.
22      431:    -31  Out-of-state vehicles.(a)   Each insurer
23 authorized to transact or transacting business in this State

Page 39                                                    
                                     H.B. NO.907        

 1 shall file with the commissioner, as a condition of its continued
 2 transaction of business within this State, a form approved by the
 3 commissioner declaring that any contract of motor vehicle
 4 liability insurance, wherever issued, covering the maintenance or
 5 use of a motor vehicle while the motor vehicle is in this State,
 6 is deemed to provide the insurance required by section
 7 431:    -4, unless the named insured, prior to a motor vehicle
 8 accident, has elected the personal injury protection insurance
 9 option pursuant to section 431:    -3.  Any nonadmitted insurer
10 may also file this form.
11      (b)  In the event a person is entitled to personal injury
12 protection benefits or their equivalent under the requirements of
13 more than one state, the person shall elect to recover under the
14 laws of any one state and the election shall represent the
15 exclusive source of recovery of all personal injury protection
16 benefits, or their equivalent, paid or payable under the
17 financial responsibility requirements of that or any other state.
18      431:    -32  Terms, conditions, and exclusions.  All
19 insurance coverages provided pursuant to this article shall be
20 subject to such terms, conditions, and exclusions as approved by
21 the commissioner.
22      431:    -33  Applicable provisions to tort maintenance
23 coverage.  As to matters covered in sections 431:    -11,

Page 40                                                    
                                     H.B. NO.907        

 1 431:    -14, 431:    -15, 431:    -17, 431:    -20, 431:    -21,
 2 431:    -22, 431:    -25, 431:    -26, 431:    -28, 431:    -31,
 3 and other related matters, where appropriate, laws and rules of
 4 this state applicable to uninsured motorist coverage shall be
 5 applicable to tort maintenance coverage, except that the
 6 commissioner may by rule apply pertinent provisions applicable to
 7 personal injury protection to tort maintenance coverage."
 8      SECTION 3.  Section 41D-3, Hawaii Revised Statutes, is
 9 amended to read as follows:
10      "41D-3 Adjustment of claims against the State.(a)  The
11 attorney general may review any claim.  The attorney general may
12 refer claims to the comptroller for informal resolution.
13      (b)  All claims against the State that are within the
14 purview of section 41D-8 shall be reviewed in the first instance
15 by the comptroller for informal resolution as provided in this
16 section.
17      [(c)  The comptroller may compromise or settle a claim
18 within the purview of section 41D-8 for an amount not exceeding
19 $15,000, and the comptroller may pay the claim without review by
20 the attorney general.
21      (d)] (c)  The comptroller may compromise or settle a tort
22 claim not within the purview of section 41D-8 for $10,000 or less
23 without the necessity of court approval, and the comptroller may

Page 41                                                    
                                     H.B. NO.907        

 1 pay the claim.
 2      [(e)] (d)  Upon referral by the comptroller, the attorney
 3 general, in the attorney general's discretion, shall make
 4 determinations of whether a claim would or would not be within
 5 the purview of section 41D-8 for purposes of subsections (c) and
 6 (d).
 7      [(f)] (e)  If the tort claim cannot be resolved informally
 8 as set forth in [subsections (c) and (d),] subsection (c), the
 9 comptroller promptly shall inform the attorney general.
10      [(g)] (f)  All of the efforts of the comptroller or the
11 comptroller's delegate under this section shall be "compromise
12 negotiations" within the meaning of rule 408, Hawaii Rules of
13 Evidence, as set forth in section 626-1.
14      [(h)] (g)  Claims compromised or settled under this section
15 shall be paid from the state risk management revolving fund."
16      SECTION 4.  Section 41D-8, Hawaii Revised Statutes, is
17 amended to read as follows:
18      "[[]41D-8[]]  Insurance on public vehicles.  Vehicles owned
19 by the State or in the custody and use of any department may be
20 self-insured or insured by purchased insurance against public
21 liability [in compliance with article 10C of chapter 431].
22 Determinations of whether to insure or self-insure shall be made
23 by the comptroller in conjunction with the state agency having

Page 42                                                    
                                     H.B. NO.907        

 1 custody or control of the vehicle, or the vehicle may be insured
 2 on a complete or excess coverage basis under a comprehensive
 3 automobile liability insurance policy entered into by the
 4 comptroller.  If the vehicles are self-insured, claims for which
 5 the State is liable [under article 10C of chapter 431] may be
 6 settled and paid by the comptroller from the state risk
 7 management revolving fund, notwithstanding the provisions of
 8 chapter 662.  Any purchased state comprehensive automobile
 9 liability insurance policy shall be administered by and be
10 subject to the control of the comptroller."
11      SECTION 5.  Section 286-26, Hawaii Revised Statutes, is
12 amended to read as follows:
13      "286-26  Certificates of inspection.(a)  The following
14 vehicles shall be certified as provided in subsection (e) once
15 every six months:
16      (1)  Ambulances;
17      (2)  Trucks, truck-tractors, semitrailers, and pole trailers
18           having a gross vehicle weight rating of more than
19           10,000 pounds;
20      (3)  Buses;
21      (4)  Rental or U-drive motor vehicles one year of age or
22           older; and
23      (5)  Taxi cabs.

Page 43                                                    
                                     H.B. NO.907        

 1      (b)  All other vehicles, including motorcycles, trailers,
 2 semitrailers, and pole trailers having a gross vehicle weight
 3 rating of 10,000 pounds or less, and antique motor vehicles as
 4 defined in section 249-1, except those in subsections (c) and
 5 (d), shall be certified as provided in subsection (e) every
 6 twelve months.
 7      (c)  Any vehicle that has been involved in an accident shall
 8 be certified as provided in subsection (e) before it is operated
 9 again if:
10      (1)  It is determined by a police officer or an insurer that
11           the vehicle's equipment has been damaged so as to
12           render the vehicle unsafe; or
13      (2)  It is rebuilt or restored.
14      (d)  Every vehicle shall be certified prior to the issuance
15 of a temporary or permanent registration by the director of
16 finance and prior to the transfer of any registration; provided
17 that this requirement shall not apply to a subsequent transfer of
18 registration in a vehicle that carries a current certificate of
19 inspection.
20      (e)  Upon application for a certificate of inspection to be
21 issued for a vehicle, an inspection as prescribed by the director
22 under subsection (g) shall be conducted on the vehicle, and if
23 the vehicle is found to be in a safe operating condition, a

Page 44                                                    
                                     H.B. NO.907        

 1 certificate of inspection shall be issued upon payment of a fee
 2 to be determined by the director.  [The certificate shall state
 3 the effective date, the termination date, the name of the issuing
 4 insurance carrier, and the policy number of the motor vehicle
 5 insurance identification card for the inspected motor vehicle as
 6 specified by section 431:10C-107 or state the information
 7 contained in the proof of insurance card as specified by section
 8 431:10G-106.]  A sticker, authorized by the director, shall be
 9 affixed to the vehicle at the time a certificate of inspection is
10 issued.  An inspection sticker which has been lost, stolen, or
11 destroyed shall be replaced without reinspection by the
12 inspection station that issued the original inspection sticker
13 upon presentation of the vehicle's current certificate of
14 inspection; provided that the current certificate of inspection
15 and inspection sticker shall not have expired at the time the
16 replacement is requested.  The director shall adopt rules to
17 determine the fee for replacement of lost, stolen, or destroyed
18 inspection stickers.
19      (f)  The operator of an official inspection station shall
20 pay, from the fee in subsection (e), an amount to be determined
21 by rules adopted pursuant to chapter 91 to the director of
22 transportation.  This amount shall be expended only for
23 administration and enforcement of the periodic motor vehicle

Page 45                                                    
                                     H.B. NO.907        

 1 inspection program.  The funds collected pursuant to this
 2 subsection shall be deposited into the highway special fund.
 3      (g)  The director of transportation shall adopt necessary
 4 rules for the administration of inspections and the issuance of
 5 certificates of inspection.
 6      (h)  This section shall not apply to:
 7      (1)  Any motor vehicle which is covered by part XI,
 8           governing safety of motor carrier vehicle operation and
 9           equipment; provided that the rules adopted pursuant to
10           part IA impose standards of inspection at least as
11           strict as those imposed under subsection (g) and that
12           certification is required at least as often as provided
13           in subsections (a), (b), (c), and (d); and
14      (2)  Aircraft servicing vehicles that are being used
15           exclusively on lands set aside to the department of
16           transportation for airport purposes.
17      [(i)  As part of the inspection required by this section,
18 the owner of the vehicle to be inspected shall produce and
19 display the motor vehicle insurance identification card for the
20 inspected motor vehicle required by section 431:10C-107 or the
21 proof of insurance card required by section 431:10G-106.  If no
22 card is displayed, then the sticker authorized by the director
23 shall not be affixed to the vehicle and the certificate of

Page 46                                                    
                                     H.B. NO.907        

 1 inspection shall not be issued.]"
 2      SECTION 6.  Section 286-108, Hawaii Revised Statutes, is
 3 amended to read as follows:
 4      "286-108  Examination of applicants.(a)  Except as
 5 provided in section 286-107.5(a), the examiner of drivers shall
 6 examine every applicant for a driver's license, except as
 7 otherwise provided in this part.  The examination shall include a
 8 test of:
 9      (1)  The applicant's eyesight and any further physical
10           examination as the examiner of drivers finds necessary
11           to determine the applicant's fitness to operate a motor
12           vehicle safely upon the highways;
13      (2)  The applicant's ability to understand highway signs
14           regulating, warning, and directing traffic;
15      (3)  The applicant's knowledge of the rules of the road
16           based on the traffic laws of the State and the traffic
17           ordinances of the county where the applicant resides or
18           intends to operate a motor vehicle; and
19      (4)  The actual demonstration of ability to exercise
20           ordinary and reasonable control in the operation of a
21           motor vehicle.
22 The examinations shall be appropriate to the operation of the
23 category of motor vehicle for which the applicant seeks to be

Page 47                                                    
                                     H.B. NO.907        

 1 licensed and shall be conducted as required by the director.
 2      The examiner of drivers may waive the actual demonstration
 3 of ability to operate a motorcycle or motor scooter for any
 4 person who furnishes evidence, to the satisfaction of the
 5 examiner of drivers, that the person has completed the motorcycle
 6 education course approved by the director in accordance with
 7 section 431:10G-104.
 8      At the time of examination, an application for voter
 9 registration by mail shall be made available to every applicant
10 for a driver's license.
11      For the purposes of this section, the term "applicant" does
12 not include any person reactivating a license under section
13 286-107.5(a).
14      (b)  Except as provided in subsection (c), the examiner of
15 drivers shall not examine any applicant for a driver's license
16 who is fifteen through seventeen years of age unless the
17 applicant holds a valid instruction permit under section 286-110,
18 for a period of no fewer than ninety days.
19      (c)  The examiner of drivers may waive the actual
20 demonstration of ability to operate a motor vehicle for any
21 person who is at least eighteen years of age and who possesses a
22 valid driver's license issued to the applicant in any other state
23 of the United States, the District of Columbia, the Commonwealth

Page 48                                                    
                                     H.B. NO.907        

 1 of Puerto Rico, American Samoa, Guam, a province of the Dominion
 2 of Canada, or the Commonwealth of the Northern Mariana Islands
 3 for the operation of vehicles in categories 1 through 3 of
 4 section 286-102.
 5      [(d)  As part of the examination required by this section,
 6 the applicant for a driver's license shall produce and display a
 7 valid motor vehicle or liability insurance identification card
 8 for the motor vehicle required by sections 431:10C-107 and
 9 431:10G-106, when the applicant demonstrates the ability to
10 operate a motor vehicle to the satisfaction of the examiner of
11 drivers.  If no valid motor vehicle or liability insurance
12 identification card is displayed, the examiner of drivers shall
13 not issue a driver's license to the applicant.]"
14      SECTION 7.  Section 286-116, Hawaii Revised Statutes, is
15 amended to read as follows:
16      "286-116  License, [insurance identification card,]
17 possession, exhibition.  [(a)]  Every licensee shall have a valid
18 driver's license in the licensee's immediate possession at all
19 times[, and a valid motor vehicle or liability insurance
20 identification card applicable to the motor vehicle operated as
21 required under section 431:10C-107 and section 431:10G-106,] when
22 operating a motor vehicle, and shall display the same upon demand
23 of a police officer.  Every police officer or law enforcement

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                                     H.B. NO.907        

 1 officer when stopping a vehicle or inspecting a vehicle for any
 2 reason shall demand that the driver or owner display the driver's
 3 or owner's driver's license [and insurance identification card].
 4 No person charged with violating this section shall be convicted
 5 if the person produces in court, or proves from the proper
 6 official or other records that the person was the holder of a
 7 driver's license [or a motor vehicle or liability insurance
 8 identification card and policy conforming to article 10C and
 9 article 10G of chapter 431 or a certificate of self-insurance
10 issued by the insurance commissioner pursuant to section
11 431:10C-107 and section 431:10G-103,] theretofore issued to the
12 person and valid at the time of the person's arrest.
13      [(b)  At any time a law enforcement officer finds a motor
14 vehicle in operation by a driver not in possession of the no-
15 fault or liability insurance identification card required under
16 section 431:10C-107 and section 431:10G-106, the officer shall
17 issue a citation with the earliest possible date for court
18 appearance in every instance.
19      (c)  In all instances in which a citation shall be issued
20 under subsection (b), whenever the driver cited is not found to
21 be the registered owner of the motor vehicle under operation, the
22 citation shall also be issued to the driver as the owner's agent
23 and to the registered owner of the motor vehicle.  Whenever the

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                                     H.B. NO.907        

 1 registered owner of any motor vehicle permits any person to
 2 operate the registered owner's motor vehicle, the registered
 3 owner appoints, designates, and constitutes the driver the
 4 registered owner's agent for all purposes under this section and
 5 section 431:10C-107, section 431:10G-106, and section 805-13.
 6      (d)  The operation of any motor vehicle required to be
 7 licensed on a highway by a driver, whether or not licensed, who
 8 knows, or has reason to believe, that the motor vehicle is not
 9 insured in compliance with article 10C and article 10G of chapter
10 431, shall constitute a violation of this chapter.
11      (e)  Any registered owner of any motor vehicle required to
12 be licensed, who directly or indirectly permits the operation of
13 such motor vehicle on any highway at any time the motor vehicle
14 is not insured in compliance with article 10C and article 10G of
15 chapter 431, shall be guilty of a violation of this chapter.  The
16 registered owner shall, in all cases, be presumed to know whether
17 a motor vehicle is insured in compliance with article 10C and
18 article 10G of chapter 431.]"
19      SECTION 8.  Section 302A-417, Hawaii Revised Statutes, is
20 amended to read as follows:
21      "[[]302A-417[]]  Traffic safety education.(a)  The
22 department may establish and administer a traffic safety
23 education program to be conducted at each public school for

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                                     H.B. NO.907        

 1 students from grades kindergarten through twelve.
 2      (b)  The department may establish the requirements for the
 3 position of traffic safety education specialist and may employ at
 4 least one traffic safety education specialist for the purposes of
 5 this section.  [The traffic safety education specialist may be
 6 paid out of fees allocated to the director of commerce and
 7 consumer affairs from the special drivers education fund account
 8 pursuant to section 431:10C-115.]"
 9      SECTION 9.  Section 431:2-201, Hawaii Revised Statutes, is
10 amended by amending subsection (c) to read as follows:
11      "(c)  The commissioner may:
12      (1)  Make reasonable rules for effectuating any provision of
13           this code, except those relating to the commissioner's
14           appointment, qualifications, or compensation.  [The
15           commissioner shall adopt rules to effectuate article
16           10C of chapter 431, subject to the approval of the
17           governor's office and the requirements of chapter 91.]
18      (2)  Conduct examinations and investigations to determine
19           whether any person has violated any provision of this
20           code or to secure information useful in the lawful
21           administration of any provision.
22      (3)  Require, upon reasonable notice, that insurers report
23           any claims information the commissioner may deem

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                                     H.B. NO.907        

 1           necessary to protect the public interest."
 2      SECTION 10.  Section 431:2-204, Hawaii Revised Statutes, is
 3 amended to read as follows:
 4      "431:2-204  Commissioner's power to subpoena.(a)  The
 5 commissioner, either on the commissioner's own behalf or on
 6 behalf of any interested party, may take depositions, and
 7 subpoena witnesses or documentary evidence.  The commissioner may
 8 administer oaths, and examine under oath any individual relative
 9 to the affairs of any person being examined, or relative to the
10 subject of any hearing or investigation.
11      (b)  The subpoena shall have the same force and effect and
12 shall be served in the same manner as if issued from a court of
13 record.
14      (c)  Witness fees and mileage, if claimed, shall be allowed
15 the same as for testimony in a court of record.  Witness fees,
16 mileage, and the actual expense necessarily incurred in securing
17 attendance of witnesses and their testimony shall be itemized,
18 and shall be paid by the person as to whom the examination is
19 being made, or by the person if other than the commissioner, at
20 whose request the hearing is held.
21      [(d)  When the commissioner, through the insurance fraud
22 investigations unit, is conducting an investigation of possible
23 violations of section 431:10C-307.7, the commissioner shall pay

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                                     H.B. NO.907        

 1 to a financial institution that is served a subpoena issued under
 2 this section a fee for reimbursement of such costs as are
 3 necessary and which have been directly incurred in searching for,
 4 reproducing, or transporting books, papers, documents, or other
 5 objects designated by the subpoena.  Reimbursement shall be paid
 6 at a rate not to exceed the rate set forth in section 28-
 7 2.5(d).]"
 8      SECTION 11.  Section 431:10G-105, Hawaii Revised Statutes,
 9 is amended to read as follows:
10      "431:10G-105  Tort liability.  [(a)]  With respect to
11 accidental harm incurred in or arising out of a motorcycle
12 accident or motor scooter accident, tort liability is not
13 abolished.
14      [(b)  Any owner or operator of a motorcycle or motor
15 scooter involved in a motor vehicle accident as defined in
16 section 431:10C-103 and who incurs accidental harm as defined in
17 section 431:10C-103, including such person's representative or
18 legal guardian, shall have a cause of action in tort as provided
19 in section 431:10C-306.]"
20      SECTION 12.  Section 431:12-101, Hawaii Revised Statutes, is
21 amended by amending the definition of "motor vehicle insurance"
22 to read as follows:
23      ""Motor vehicle insurance" means an insurance policy and

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                                     H.B. NO.907        

 1 optional additional insurance [as defined in article 10C]."
 2      SECTION 13.  Section 431:12-110, Hawaii Revised Statutes, is
 3 amended to read as follows:
 4      "431:12-110  Premium rates.  Premium rates for insurance
 5 sold on a mass merchandising basis shall comply with the
 6 standards [in article 10C for motor vehicle insurance and] in
 7 article 14 for property and casualty insurance including the
 8 standards that rates not be excessive, inadequate or unfairly
 9 discriminatory.
10      Rates shall not be deemed to be unfairly discriminatory
11 because different premiums result for policyholders with like
12 loss exposure but different expense factors, or like expense
13 factors but different loss exposures, so long as the rates
14 reflect the differences with reasonable accuracy.  Rates shall
15 not be deemed to be unfairly discriminatory if they are averaged
16 broadly among persons insured under a mass merchandising plan."
17      SECTION 14.  Section 431:16-108, Hawaii Revised Statutes, is
18 amended by amending subsection (a) to read as follows:
19      "(a)  The association shall:
20      (1)  Be obligated to the extent of the covered claims
21           existing prior to the determination of insolvency,
22           which the insolvent insurer would have been legally
23           obligated to pay but for its insolvency, and arising

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                                     H.B. NO.907        

 1           within thirty days after the determination of
 2           insolvency, or before the policy expiration date if
 3           less than thirty days after the determination, or
 4           before the insured replaces the policy or causes its
 5           cancellation, if the insurer does so within thirty days
 6           of the determination, but the obligation shall include
 7           only that amount of each covered claim which is less
 8           than $300,000, except that the association shall pay
 9           the full amount of any covered claim arising out of a
10           workers' compensation policy.  In no event shall the
11           association be obligated to a policyholder or claimant
12           in an amount in excess of the stated policy limit of
13           the insolvent insurer under the policy from which the
14           claim arises;
15      (2)  Be deemed the insurer, but only to the extent of its
16           obligation on covered claims and to that extent shall
17           have all rights, duties, and obligations of the
18           insolvent insurer as if the insurer had not become
19           insolvent;
20      (3)  Assess insurers amounts necessary to pay the
21           obligations of the association under subsection (a)(1)
22           subsequent to an insolvency, the expenses of handling
23           covered claims subsequent to an insolvency, and the

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                                     H.B. NO.907        

 1           cost of examinations under section 431:16-113, and
 2           other expenses authorized by this part.  The
 3           assessments of each member insurer shall be in the
 4           proportion that the net direct written premiums of the
 5           member insurer for the preceding calendar year bears to
 6           the net direct written premiums of all member insurers
 7           for the preceding calendar year.  Each member insurer
 8           shall be notified of the assessment not later than
 9           thirty days before it is due.  No member insurer may be
10           assessed in any year an amount greater than two per
11           cent of that member insurer's net direct written
12           premiums for the preceding calendar year.  If the
13           maximum assessment, together with the other assets of
14           the association, does not provide in any one year an
15           amount sufficient to make all necessary payments, the
16           funds available shall be prorated and the unpaid
17           portion shall be paid as soon thereafter as funds
18           become available.  The association may exempt or defer,
19           in whole or in part, the assessment of any member
20           insurer, if the assessment would cause the member
21           insurer's financial statement to reflect amounts of
22           capital or surplus less than the minimum amounts
23           required for a certificate of authority by any

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                                     H.B. NO.907        

 1           jurisdiction in which the member insurer is authorized
 2           to transact insurance.  Each member insurer may set off
 3           against any assessment payments authorized by the
 4           administrator of the association to be made on covered
 5           claims and expenses incurred in the payment of the
 6           claims by the member insurer;
 7      (4)  Investigate claims brought against the association and
 8           adjust, compromise, settle, and pay covered claims to
 9           the extent of the association's obligation and deny all
10           other claims and may review settlements, releases, and
11           judgments to which the insolvent insurer or its
12           insureds were parties to determine the extent to which
13           such settlements, releases, and judgments may be
14           properly contested;
15      (5)  Notify the persons as the commissioner directs under
16           section 431:16-110(b)(1);
17      (6)  Handle claims through its employees or through one or
18           more insurers or other persons designated as servicing
19           facilities.  Designation of a servicing facility is
20           subject to the approval of the commissioner, but the
21           designation may be declined by a member insurer;
22      (7)  Reimburse each servicing facility for obligations of
23           the association paid by the facility and for expenses

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                                     H.B. NO.907        

 1           incurred by the facility while handling claims on
 2           behalf of the association and shall pay the other
 3           expenses of the association authorized by this code;
 4           and
 5      (8)  Have the authority[, notwithstanding sections
 6           431:10C-110 and 431:10C-111,] to cancel all policies
 7           issued by an insolvent insurer.  All claims under these
 8           policies shall be covered by the association in an
 9           amount not to exceed the state policy limit of the
10           insolvent insurer under the policy from which the claim
11           arises."
12      SECTION 15.  Section 431:19-102.2, Hawaii Revised Statutes,
13 is amended by amending subsection (b) to read as follows:
14      "(b)  Any captive insurance company formed pursuant to this
15 section shall be subject to articles 5, 10, 10A, 10B, [10C,] 10D,
16 10E, 10F, 10G, 12, 15, and 17 of chapter 431 in addition to all
17 other applicable law."
18      SECTION 16.  Section 431:21-102, Hawaii Revised Statutes, is
19 amended by amending the definition of "member insurer" to read:
20      ""Member insurer" means any person who is authorized to
21 transact property or casualty insurance in this State [and is not
22 engaged only in writing motor vehicle insurance under section
23 431:10C-106]."

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                                     H.B. NO.907        

 1      SECTION 17.  Section 805-13, Hawaii Revised Statutes, is
 2 amended to read as follows:
 3      "805-13 Motor vehicle [insurance] violation.(a)  In all
 4 cases of citation for alleged violations of [chapter 431:10C or]
 5 section 286-116, the court shall hear and dispose of such actions
 6 expeditiously.  Such actions may be severed from any other
 7 proceedings to facilitate immediate disposition.  Continuance of
 8 proceedings on motor vehicle [insurance] violations may be
 9 allowed in the discretion of the court[, only after the court has
10 received evidence that the required insurance on the motor
11 vehicle involved was in fact in force on the date of the
12 citation, or that the motor vehicle has been, or is ordered by
13 the court to be, impounded].
14      (b)  In all cases of citation for alleged violations of
15 [chapter 431:10C or] section 286-116 the court shall require the
16 appearance of the driver cited and the registered owner of the
17 motor vehicle.  If the registered owner is not the driver, the
18 registered owner shall be cited by service of the citation on the
19 driver who shall be deemed to be the owner's agent for purposes
20 of service and by naming the owner jointly with the driver in the
21 citation.  Where the registered owner is a corporation or
22 association, an officer or designated agent thereof shall be
23 required to appear.  Where the registered owner is a partnership,

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                                     H.B. NO.907        

 1 a general partner thereof shall be required to appear.
 2      (c)  In the case of multiple violations the court shall, in
 3 addition to any other penalty, impose the following penalties:
 4      (1)  Imprisonment of not more than thirty days;
 5      (2)  Suspension or revocation of driver's license of the
 6           driver and of the registered owner;
 7      (3)  Suspension or revocation of the motor vehicle
 8           registration plates of the vehicle involved;
 9      (4)  Impoundment, or impoundment and sale, of the motor
10           vehicle for the costs of storage and other charges
11           incident to seizure of the vehicle; [or any other cost
12           involved pursuant to section 431:10C-117;] or
13      (5)  Any combination of such penalties.
14      The court shall impose any other sanction it finds necessary
15 to remove the vehicle or driver involved from the highways, and
16 to preclude the driver or registered owner from the continued
17 operation of any [uninsured] motor vehicle.
18      (d)  Upon subsequent hearing ordered by the court or upon
19 the driver's or registered owner's motion, the court may, in its
20 discretion, terminate any judgment previously entered under
21 subsection (c) upon finding that the registered owner and the
22 driver, as applicable, have complied with chapter 287 with
23 respect to any prior accident as evidenced by a form properly

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                                     H.B. NO.907        

 1 validated by a police department [and:
 2      (1)  Complied with all requirements under chapter 431:10C as
 3           evidenced by a motor vehicle insurance identification
 4           card and the insurance policy issued by a licensed
 5           insurer; or
 6      (2)  Complied with all requirements under chapter 431:10C as
 7           evidenced by a certificate of self-insurance issued by
 8           the insurance commissioner pursuant to section
 9           431:10C-107(c)].
10      (e)  The court may, in its discretion, maintain continuing
11 jurisdiction following any termination or judgment as provided in
12 subsection (d), to assure the continued compliance of the
13 registered owner or driver with chapter 286[,] or 287[, or
14 431:10C]."
15      SECTION 18.  Article 10C of chapter 431, Hawaii Revised
16 Statutes, is repealed.
17      SECTION 19.   Section 431:19-115.5, Hawaii Revised Statutes,
18 is repealed.
19      ["431:19-115.5  Applicability of other laws to captive
20 insurance companies writing motor vehicle insurance policies in
21 this State.  Captive insurance companies writing motor vehicle
22 insurance policies in this State shall be subject to sections
23 431:10C-102, 431:10C-103, 431:10C-107, 431:10C-108, 431:10C-109,

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                                     H.B. NO.907        

 1 431:10C-112, 431:10C-115, 431:10C-115.5, 431:10C-119,
 2 431:10C-120, 431:10C-207, 431:10C-211, 431:10C-212, 431:10C-213,
 3 431:10C-215, 431:10C-301, and 431:10C-303 through 431:10C-315.
 4 Captive insurance companies shall also be subject to the rules
 5 adopted by the commissioner to implement these sections."]
 6      SECTION 20.  Questions of law may exist with respect to the
 7 constitutionality of some of the sections of the new article
 8 established in section 2 of this Act.  Therefore, public welfare
 9 requires that these questions be resolved with expedition before
10 such time as its mandatory provisions take effect to avoid
11 disruption of the orderly implementation of its provisions.
12      The legislature finds that the remedy of declaratory
13 judgment, to determine the constitutionality of the provisions
14 set forth in section 2, shall be immediately made available to
15 determine those important questions, to avoid confusion by the
16 public in the event this article is declared unconstitutional
17 after January 1, 2000.
18      Any resident of the State may bring an action for a
19 declaratory judgment in the appropriate court for the county in
20 which the resident resides against the commissioner to determine
21 the constitutionality of this article's provisions.  The court
22 shall reserve the questions of law for the advice of the supreme
23 court as provided by law.  In the interest of expediting a

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                                     H.B. NO.907        

 1 decision, the supreme court may suspend its rules as provided
 2 therein.
 3      SECTION 21.  The provisions of this Act do not affect
 4 rights, duties, or actions that are based upon events or acts
 5 that have taken place before the effective date of this Act, or
 6 the effective date of any provisions of this Act, nor to
 7 penalties that were incurred or proceedings begun before the
 8 effective date of this Act.
 9      SECTION 22.  If any provisions of this Act, or the
10 application thereof to any person or circumstance is held
11 invalid, the invalidity does not affect other provisions or
12 applications of the Act which can be given effect without the
13 invalid provision or application, and to this end the provisions
14 of this Act are severable.
15      SECTION 23.  Statutory material to be repealed is bracketed.
16 New statutory material is underscored.
17      SECTION 24.  This Act shall take effect on July 1, 1999.
19                           INTRODUCED BY:  _______________________