Insurance reform bills
hit workers’ comp snag
Decisions by three Senate committee chairmen to delete workers' compensation cases from an administration bill to crack down on all forms of insurance fraud has provoked sharp criticism on the Senate floor.
"The action today leaves me appalled, disappointed and angry," Sen. Sam Slom (R, Diamond Head-Hawaii Kai) told his colleagues last week after action by the Judiciary, Labor and Commerce and Consumer Protection Committees.
"The business community has told us year after year that workers' compensation reform is their No. 1 priority, the No. 1 issue. And once again, we're going to sell them down the river," he said.
The bill would carry out Republican Gov. Linda Lingle's State of the State address pledge to seek broader powers for the state insurance commissioner to investigate and prosecute cases of fraud in all lines of insurance.
While the focus of Thursday's discussion suggested the target would be people making false workers' compensation or medical claims, the bill equally addresses insurance companies or company employees who cheat someone making a legitimate claim.
According to the bill, "any person, provider, insurer or any person acting on behalf of an insurer commits the offense of insurance fraud" if they knowingly use false information to obtain or deny benefits, recovery or compensation.
The bill says that based on a conservative estimate, health insurance fraud costs Hawaii consumers $60 million each year, and motor vehicle insurance fraud costs $164 annually per household.
On Wednesday, two House committees approved a similar administration bill that would include workers' compensation insurance cases.
Slom noted that business groups and others who testified before the Senate committees on Thursday supported the bill and especially to go after workers' compensation fraud, while the only opposing testimony was in writing from the International Longshore and Warehouse Union and the Hawaii State AFL-CIO.
Both organizations "for more than 20 years have opposed any reform in workers' compensation and any addressing of fraud in workers' compensation," he said.
"Although this bill raises interesting concepts about combating employer fraud, its vision of criminalizing all fraud is so sweeping and misdirected that we are compelled to oppose it," the ILWU said.
The AFL-CIO said: "A bill of this nature will deter injured workers from filing claims where compensability is in question. If the employee loses on the issue of compensability, the employee is subject to criminal fraud charges under this act."
Labor Chairman Brian Kanno (D, Kalaeloa-Makakilo), a strong labor advocate, said he planned to take up the issue of workers' compensation fraud in other administration bills moving in the House that deal with workers' compensation reform.
Sen. Suzanne Chun Oakland (D, Kalihi-Liliha) said she is concerned about taking workers' compensation out of the insurance fraud bill.
"We've gotten so many calls concerning workers' comp and I just don't want to jeopardize that, and this bill could address those concerns as well," she said.
Consumer Protection Chairman Ron Menor (D, Mililani) said later he agrees the issue of workers' compensation fraud is serious and needs to be addressed, adding that the decision to put it in another bill was a procedural one requested by Kanno.