STAND. COM. REP. NO. 1330-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 2563
                                     S.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 2563, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to make it an unfair or
deceptive act to limit or withhold coverage under insurance
policies because a consumer may have a third-party claim for
damages.  This measure will prevent duplicate recoveries in
personal injury claims while creating a fair, uniform and
comprehensive procedure governing the rights and obligations of
insurance companies and consumers for the reimbursement of
insurance benefits from third-party sources of recovery.

     Testimony in support of this measure was received from the
Department of Commerce and Consumer Affairs (DCCA), Hawaii
Medical Services Association (HMSA), and Consumer Lawyers of
Hawaii.  The Hawaii Health Coalition submitted concerns about
this measure.

     Workers' compensation and motor vehicle insurance benefits
are exempted from this measure because those coverages already
have reimbursement rights defined by statute.  Health coverage
and benefits are exempted from Section 431:13-103 and the same
rights and obligations are placed in Section 663-10 for health
insurers.  The amendment extends health benefit providers' third-
party liability rights to settlements, as well as lawsuits under
Section 663-10.  This amendment places all of the rights and

 
 
                                 STAND. COM. REP. NO. 1330-00
                                 Page 2

 
obligations of health benefit providers and consumers in Section
663-10 for third-party liability situations to create a uniform
and comprehensive procedure.

     Your Committee finds that this measure is intended to
prohibit provisions which purport to provide no coverage or limit
coverage before or after settlement or judgment, while providing
reimbursement rights pursuant to Section 663-10 to avoid a
duplicate windfall recovery to the claimaint.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 2563, S.D. 1, and recommends that it pass
Second Reading and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair