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.  Appropriates funds to
regulate independent bill reviewers.  (SB2186 HD2)

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

                   A  BILL  FOR  AN  ACT



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

Page 2                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

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

Page 3                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

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

Page 4                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

 1      "(d)  Orders shall be issued and hearings conducted as
 2 follows:
 3      (1)  All orders entered pursuant to subsection (c)(1) shall
 4           be accompanied by findings and conclusions resulting
 5           from the commissioner's consideration and review of the
 6           examination report, relevant examiner workpapers, and
 7           any written submissions or rebuttals.  Any [such] order
 8           shall be considered a final administrative decision and
 9           may be appealed pursuant to chapter 91, and shall be
10           served upon the insurer or person by certified mail,
11           together with a copy of the adopted examination report.
12           Within thirty days of the issuance of the adopted
13           report, the insurer or person shall file affidavits
14           executed by each of its directors stating under oath
15           that they have received a copy of the adopted report
16           and related orders, except that for examinations of
17           general agents, subagents, solicitors, adjusters,
18           independent bill reviewers, or surplus lines brokers,
19           serving the copy of the adopted report and related
20           orders by certified-return receipt requested mail will
21           satisfy the service requirement and no affidavits shall
22           be required; and

Page 5                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

 1      (2)  Any hearing conducted under subsection (c)(3) by the
 2           commissioner or authorized representative shall be
 3           conducted as a nonadversarial confidential
 4           investigatory proceeding as may be necessary for the
 5           resolution of any inconsistencies, discrepancies, or
 6           disputed issues apparent upon the face of the filed
 7           examination report or raised by or as a result of the
 8           commissioner's review of relevant workpapers or raised
 9           by the written submission or rebuttal of the insurer or
10           person.  Within twenty days of the conclusion of any
11           [such] hearing, the commissioner shall enter an order
12           pursuant to subsection (c)(1):
13           (A)  The commissioner shall not appoint an examiner as
14                an authorized representative to conduct the
15                hearing.  The hearing shall proceed expeditiously
16                with discovery by the insurer or person limited to
17                the examiner's workpapers that tend to
18                substantiate any assertions set forth in any
19                written submission or rebuttal.  The commissioner
20                or the commissioner's representative may issue
21                subpoenas for the attendance of any witnesses or
22                the production of any documents deemed relevant to
23                the investigation, whether under the control of

Page 6                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

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

Page 7                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

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

Page 8                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

 1      (1)  $600 per year for all services (including extension of
 2           the certificate of authority) for an authorized
 3           insurer;
 4      (2)  $75 per year for all services (including extension of
 5           the license) for a regularly licensed general agent;
 6      (3)  $75 per year for all services (including extension of
 7           the license) for a regularly licensed subagent;
 8      (4)  $45 per year for all services (including extension of
 9           the license) for a regularly licensed nonresident agent
10           broker;
11      (5)  $30 per year for all services (including extension of
12           the license) for a regularly licensed solicitor;
13      (6)  $45 per year for all services (including extension of
14           the license) for a regularly licensed independent
15           adjuster;
16      (7)  $45 per year for all services (including extension of
17           the license) for a regularly licensed public adjuster;
18      (8)  $45 per year for all services (including extension of
19           the license) for a regularly limited licensed workers'
20           compensation claims adjuster;
21      (9)  $60 per year for all services (including extension of
22           the license) for a regularly licensed independent bill
23           reviewer;

Page 9                                                     2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

 1     [(9)] (10)  $45 per year for all services (including
 2           extension of the license) for a limited license issued
 3           pursuant to section 431:9-214(c);
 4    [(10)] (11)  $75 per year for all services (including
 5           extension of the license) for a regularly licensed
 6           managing general agent;
 7    [(11)] (12)  $75 per year for all services (including
 8           extension of the license) for a regularly licensed
 9           reinsurance intermediary;
10    [(12)] (13)  $45 per year for all services (including
11           extension of the license) for a licensed surplus line
12           broker; and
13    [(13)] (14)  The services referred to in paragraphs (1) to
14           [(12)] (13) shall not include services in connection
15           with examinations, investigations, hearings, appeals,
16           and deposits with a depository other than the
17           department of commerce and consumer affairs."
18      SECTION 6.  Section 431:9-101, Hawaii Revised Statutes, is
19 amended to read as follows:
20      "431:9-101  Scope.  This article shall govern the
21 qualifications and procedures for granting licenses to all
22 insurance agents, brokers, surplus lines brokers, nonresident
23 agents or brokers, subagents, solicitors, adjusters, independent
24 bill reviewers, and limited service representatives."

Page 10                                                    2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

 1      SECTION 7.  Section 431:9-201, Hawaii Revised Statutes, is
 2 amended by amending subsection (a) to read as follows:
 3      "(a)  No person engaging in the business of insurance in
 4 this State shall act as, be appointed as, or hold oneself out to
 5 be a general agent, subagent, solicitor, [or] adjuster, or
 6 independent bill reviewer unless so licensed by this State."
 7      SECTION 8.  Section 431:9-206, Hawaii Revised Statutes, is
 8 amended by amending subsection (a) to read as follows:
 9      "(a)  Each applicant for license as general agent, subagent,
10 solicitor, [or] adjuster, or independent bill reviewer shall
11 prior to the issuance of any such license, personally take and
12 pass to the satisfaction of the commissioner an examination given
13 by the commissioner as a test of the applicant's qualifications
14 and competence."
15      SECTION 9.  Section 431:9-228, Hawaii Revised Statutes, is
16 amended by amending subsection (a) to read as follows:
17      "(a)  Every licensed general agent, subagent, [and]
18 adjuster, and independent bill reviewer shall have and maintain
19 in this State, or, if a nonresident agent or broker, in the state
20 of the agent's or broker's domicile, a place of business
21 accessible to the public."
22      SECTION 10.  Section 431:9-229, Hawaii Revised Statutes, is
23 amended by amending the title and subsection (a) to read as
24 follows:

Page 11                                                    2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

 1      "431:9-229  Records of general agent, subagent,
 2 adjuster[.], independent bill reviewer.  (a)  Every general
 3 agent, subagent, [or] adjuster, or independent bill reviewer
 4 shall keep a record of all transactions consummated under [such]
 5 their license.  This record shall be in organized form according
 6 to class of insurance and shall include:
 7      (1)  If a general agent or subagent:
 8           (A)  A record of each insurance contract procured or
 9                issued, together with the names of the insurers
10                and insureds, the amount of premium paid or to be
11                paid, or the basis of the premium or consideration
12                paid or to be paid, and a statement of the subject
13                of the insurance; and
14           (B)  The names of any other licensees from whom
15                business is accepted, and of persons to whom
16                commissions or allowances of any kind are promised
17                or paid;
18      (2)  If an adjuster, a record of each investigation or
19           adjustment undertaken or consummated, and a statement
20           of any fee, commission, or other compensation received
21           or to be received by the adjuster on account of [such]
22           the investigation or adjustment; [and]

Page 12                                                    2186
                                     S.B. NO.           S.D. 2
                                                        H.D. 2

 1      (3)  If an independent bill reviewer, a record of each bill
 2           reviewed and a statement of any fee, commission, or
 3           other compensation received or to be received by the
 4           independent bill reviewer on account of the bill
 5           reviewed; and
 6     [(3)  Such other and ] (4)  Any additional information as
 7           shall be customary, or as may reasonably be required by
 8           the commissioner."
 9      SECTION 11.  There is created one permanent full time
10 position to carry out the purposes of this Act and to provide
11 additional compliance and enforcement resources for the insurance
12 division.
13      SECTION 12.  There is appropriated out of the insurance
14 regulation fund the sum of $51,379 or so much thereof as may be
15 necessary for fiscal year 2000-2001 to carry out the purposes of
16 this Act.
17      The sum appropriated shall be expended by the department of
18 commerce and consumer affairs.
19      SECTION 13.  Statutory material to be repealed is bracketed.
20 New statutory material is underscored.
21      SECTION 14.  This Act shall take effect upon approval;
22 provided that section 12 shall take effect July 1, 2050.