REPORT TITLE:
Insurance


DESCRIPTION:
Defines independent bill reviewer (IBR) for insurance purposes;
requires licensing of IBRs; levies an IBR license fee of $80 and
$60 a year for services provided by DCCA.  Prohibits IBRs from
being paid on a contingency fee basis.  Establishes and
appropriates funds to regulate independent bill reviewers.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2186
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO INSURANCE. 


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

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

 
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 1      (1)  Be domiciled in this State, or in a state which will
 
 2           permit residents of this State to act as independent
 
 3           bill reviewers in such other state;
 
 4      (2)  Have had experience, special education, or training
 
 5           with the reference to the review or audit of billings
 
 6           for medical services under insurance contracts, of
 
 7           sufficient duration and extent reasonably to make the
 
 8           individual competent to fulfill the responsibilities of
 
 9           an independent bill reviewer;
 
10      (3)  Have successfully passed any examination required under
 
11           section 431:9-206; and
 
12      (4)  Have paid the license fee."
 
13      SECTION 2.  Section 431:2-303, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "431:2-303  Examination of agents, managers, promoters[.],
 
16 independent bill reviewers.  For the purpose of ascertaining its
 
17 condition, or compliance with this code, the commissioner may as
 
18 often as the commissioner deems advisable examine the insurance
 
19 accounts, records, documents, and transactions of:
 
20      (1)  Any insurance general agent, subagent, solicitor, [or]
 
21           adjuster, or independent bill reviewer, including
 
22           insurance agencies and surplus lines agencies; or
 
23      (2)  Any person engaged in, proposing to be engaged in, or
 

 
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 1           assisting in the promotion or formation of a domestic
 
 2           insurer, a stock corporation to finance a domestic
 
 3           mutual insurer or the production of its business, or a
 
 4           corporation to be attorney-in-fact for a domestic
 
 5           reciprocal insurer."
 
 6      SECTION 3.  Section 431:2-305, Hawaii Revised Statutes, is
 
 7 amended by amending subsection (d) to read as follows:
 
 8      "(d)  Orders shall be issued and hearings conducted as
 
 9 follows:
 
10      (1)  All orders entered pursuant to subsection (c)(1) shall
 
11           be accompanied by findings and conclusions resulting
 
12           from the commissioner's consideration and review of the
 
13           examination report, relevant examiner workpapers, and
 
14           any written submissions or rebuttals.  Any such order
 
15           shall be considered a final administrative decision and
 
16           may be appealed pursuant to chapter 91, and shall be
 
17           served upon the insurer or person by certified mail,
 
18           together with a copy of the adopted examination report.
 
19           Within thirty days of the issuance of the adopted
 
20           report, the insurer or person shall file affidavits
 
21           executed by each of its directors stating under oath
 
22           that they have received a copy of the adopted report
 
23           and related orders, except that for examinations of
 

 
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 1           general agents, subagents, solicitors, adjusters,
 
 2           independent bill reviewers, or surplus lines brokers,
 
 3           serving the copy of the adopted report and related
 
 4           orders by certified-return receipt requested mail will
 
 5           satisfy the service requirement and no affidavits shall
 
 6           be required; and
 
 7      (2)  Any hearing conducted under subsection (c)(3) by the
 
 8           commissioner or authorized representative shall be
 
 9           conducted as a nonadversarial confidential
 
10           investigatory proceeding as may be necessary for the
 
11           resolution of any inconsistencies, discrepancies, or
 
12           disputed issues apparent upon the face of the filed
 
13           examination report or raised by or as a result of the
 
14           commissioner's review of relevant workpapers or raised
 
15           by the written submission or rebuttal of the insurer or
 
16           person.  Within twenty days of the conclusion of any
 
17           such hearing, the commissioner shall enter an order
 
18           pursuant to subsection (c)(1):
 
19           (A)  The commissioner shall not appoint an examiner as
 
20                an authorized representative to conduct the
 
21                hearing.  The hearing shall proceed expeditiously
 
22                with discovery by the insurer or person limited to
 
23                the examiner's workpapers that tend to
 

 
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 1                substantiate any assertions set forth in any
 
 2                written submission or rebuttal.  The commissioner
 
 3                or the commissioner's representative may issue
 
 4                subpoenas for the attendance of any witnesses or
 
 5                the production of any documents deemed relevant to
 
 6                the investigation, whether under the control of
 
 7                the division, the insurer, or other persons.  The
 
 8                documents produced shall be included in the record
 
 9                and testimony taken by the commissioner or the
 
10                commissioner's representative shall be under oath
 
11                and preserved for the record;
 
12           (B)  The hearing shall proceed in accordance with
 
13                departmental rules adopted under chapter 91; and
 
14           (C)  Nothing contained in this section shall require
 
15                the insurance division to disclose any information
 
16                or records that would indicate or show the
 
17                existence or content of any investigation or
 
18                activity of a criminal justice agency."
 
19      SECTION 4.  Section 431:7-101, Hawaii Revised Statutes, is
 
20 amended by amending subsections (a) and (b) to read as follows:
 
21      "(a)  The commissioner shall collect in advance the
 
22 following fees:
 
23      (1)  Certificate of authority:  Issuance............... $900
 

 
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 1      (2)  Organization of domestic insurers and affiliated
 
 2           corporations:
 
 3           (A)  Application and all other papers required for
 
 4                issuance of solicitation permit, filing.... $1,500
 
 5           (B)  Issuance of solicitation permit.............  $150
 
 6      (3)  General agent's license:
 
 7           (A)  Issuance, regular license..................... $75
 
 8           (B)  Issuance, temporary license................... $75
 
 9      (4)  Subagent's license:
 
10           (A)  Issuance, regular license..................... $75
 
11           (B)  Issuance, temporary license................... $75
 
12      (5)  Nonresident agent's or broker's license:  Issuance. $60
 
13      (6)  Solicitor's license:  Issuance..................... $60
 
14      (7)  Independent adjuster's license:  Issuance.......... $60
 
15      (8)  Public adjuster's license:  Issuance............... $60
 
16      (9)  Workers' compensation claims adjuster's limited
 
17           license:  Issuance................................. $60
 
18     (10)  Independent bill reviewer's license:  Issuance......$80
 
19    [(10)] (11)  Limited license issued pursuant to section
 
20           431:9-214(c):  Issuance............................ $60
 
21    [(11)] (12)  Managing general agent's license:  Issuance.. $75
 
22    [(12)] (13)  Reinsurance intermediary's license:  Issuance $75
 
23    [(13)] (14)  Surplus line broker's license:  Issuance.... $150
 

 
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 1    [(14)] (15)  Examination for license:  For each examination, a
 
 2           fee to be established by the commissioner.
 
 3      (b)  The fees for services of the department of commerce and
 
 4 consumer affairs subsequent to the issuance of a certificate of
 
 5 authority or a license are as follows:
 
 6      (1)  $600 per year for all services (including extension of
 
 7           the certificate of authority) for an authorized
 
 8           insurer;
 
 9      (2)  $75 per year for all services (including extension of
 
10           the license) for a regularly licensed general agent;
 
11      (3)  $75 per year for all services (including extension of
 
12           the license) for a regularly licensed subagent;
 
13      (4)  $45 per year for all services (including extension of
 
14           the license) for a regularly licensed nonresident agent
 
15           broker;
 
16      (5)  $30 per year for all services (including extension of
 
17           the license) for a regularly licensed solicitor;
 
18      (6)  $45 per year for all services (including extension of
 
19           the license) for a regularly licensed independent
 
20           adjuster;
 
21      (7)  $45 per year for all services (including extension of
 
22           the license) for a regularly licensed public adjuster;
 
23      (8)  $45 per year for all services (including extension of
 

 
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 1           the license) for a regularly limited licensed workers'
 
 2           compensation claims adjuster;
 
 3      (9)  $60 per year for all services (including extension of
 
 4           the license) for a regularly licensed independent bill
 
 5           reviewer;
 
 6     [(9)] (10)  $45 per year for all services (including
 
 7           extension of the license) for a limited license issued
 
 8           pursuant to section 431:9-214(c);
 
 9    [(10)] (11)  $75 per year for all services (including
 
10           extension of the license) for a regularly licensed
 
11           managing general agent;
 
12    [(11)] (12)  $75 per year for all services (including
 
13           extension of the license) for a regularly licensed
 
14           reinsurance intermediary;
 
15    [(12)] (13)  $45 per year for all services (including
 
16           extension of the license) for a licensed surplus line
 
17           broker; and
 
18    [(13)] (14)  The services referred to in paragraphs (1) to
 
19           [(12)] (13) shall not include services in connection
 
20           with examinations, investigations, hearings, appeals,
 
21           and deposits with a depository other than the
 
22           department of commerce and consumer affairs."
 
23      SECTION 5.  Section 431:9-101, Hawaii Revised Statutes, is
 

 
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                                     S.B. NO.           2186
                                                        
                                                        

 
 1 amended to read as follows:
 
 2      "431:9-101  Scope.  This article shall govern the
 
 3 qualifications and procedures for granting licenses to all
 
 4 insurance agents, brokers, surplus lines brokers, nonresident
 
 5 agents or brokers, subagents, solicitors, adjusters, independent
 
 6 bill reviewers, and limited service representatives."
 
 7      SECTION 6.  Section 431:9-201, Hawaii Revised Statutes, is
 
 8 amended by amending subsection (a) to read as follows:
 
 9      "(a)  No person engaging in the business of insurance in
 
10 this State shall act as, be appointed as, or hold oneself out to
 
11 be a general agent, subagent, solicitor, [or] adjuster, or
 
12 independent bill reviewer unless so licensed by this State."
 
13      SECTION 7.  Section 431:9-206, Hawaii Revised Statutes, is
 
14 amended by amending subsection (a) to read as follows:
 
15      "(a)  Each applicant for license as general agent, subagent,
 
16 solicitor, [or] adjuster, or independent bill reviewer shall
 
17 prior to the issuance of any such license, personally take and
 
18 pass to the satisfaction of the commissioner an examination given
 
19 by the commissioner as a test of the applicant's qualifications
 
20 and competence."
 
21      SECTION 8.  Section 431:9-228, Hawaii Revised Statutes, is
 
22 amended by amending subsection (a) to read as follows:
 
23      "(a)  Every licensed general agent, subagent, [and]
 

 
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 1 adjuster, and independent bill reviewer shall have and maintain
 
 2 in this State, or, if a nonresident agent or broker, in the state
 
 3 of the agent's or broker's domicile, a place of business
 
 4 accessible to the public."
 
 5      SECTION 9.  Section 431:9-229, Hawaii Revised Statutes, is
 
 6 amended by amending subsection (a) to read as follows:
 
 7      "(a)  Every general agent, subagent, [or] adjuster, or
 
 8 independent bill reviewer shall keep a record of all transactions
 
 9 consummated under such license.  This record shall be in
 
10 organized form according to class of insurance and shall include:
 
11      (1)  If a general agent or subagent:
 
12           (A)  A record of each insurance contract procured or
 
13                issued, together with the names of the insurers
 
14                and insureds, the amount of premium paid or to be
 
15                paid, or the basis of the premium or consideration
 
16                paid or to be paid, and a statement of the subject
 
17                of the insurance; and
 
18           (B)  The names of any other licensees from whom
 
19                business is accepted, and of persons to whom
 
20                commissions or allowances of any kind are promised
 
21                or paid;
 
22      (2)  If an adjuster, a record of each investigation or
 
23           adjustment undertaken or consummated, and a statement
 

 
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 1           of any fee, commission, or other compensation received
 
 2           or to be received by the adjuster on account of such
 
 3           investigation or adjustment; [and]
 
 4      (3)  If an independent bill reviewer, a record of each bill
 
 5           reviewed and a statement of any fee, commission, or
 
 6           other compensation received or to be received by the
 
 7           independent bill reviewer on account of the bill
 
 8           reviewed; and
 
 9     [(3)] (4)  Such other and additional information as shall be
 
10           customary, or as may reasonably be required by the
 
11           commissioner."
 
12      SECTION 10.  There is created one permanent position for a
 
13 motor vehicle insurance investigator/cost containment specialist
 
14 to carry out the purposes of this Act and to provide additional
 
15 enforcement resources for the insurance division.
 
16      SECTION 11.  There is appropriated out of the motor vehicle
 
17 insurance revolving fund the sum of $          , or so much
 
18 thereof as may be necessary for fiscal year 2000-2001, for the
 
19 insurance division to examine the insurance accounts, records,
 
20 documents, and transactions of independent bill reviewers.  The
 
21 sum appropriated shall be expended by the department of commerce
 
22 and consumer affairs. 
 
23      SECTION 12.  Statutory material to be repealed is bracketed.
 

 
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                                     S.B. NO.           2186
                                                        
                                                        

 
 1 New statutory material is underscored.
 
 2      SECTION 13.  This Act shall take effect upon its approval;
 
 3 provided that section 11 shall take effect on July 1, 2000.
 
 4 
 
 5                           INTRODUCED BY:  _______________________