SB1060 CD1

SECTION 1. Chapter 386, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§386- Alternative dispute resolution. (a) In lieu of a hearing before the director, at anytime after a claim for compensation is made and before the director renders a decision, the parties may agree in writing to have any controversy arising under this chapter be decided by a referee paid for by the parties.

(b) Before a referee may conduct a hearing, the parties shall submit the agreed upon referee’s name to the director for appointment to serve as a referee. The referee shall be a neutral person. An individual who has a known, direct, and material interest in the outcome of the controversy or a known, existing, and substantial relationship with a party may not serve as a referee, unless that interest is disclosed and any conflict is waived by the parties.

(c) Unless the parties otherwise agree, the costs and fees of the alternative resolution process shall be divided equally between the parties.

(d) If the parties agree to have any controversy referred to a referee, the director shall stay all actions or proceedings until the referee issues a recommended decision.

(e) This chapter and its rules remain applicable to proceedings before the referee, except that requests shall be directed to and recommended decisions shall be made by the referee instead of the director.

(f) The referee shall issue and submit a recommended decision to the director no later than five days after the hearing and shall deliver the recommended decision to all parties personally or by registered or certified mail.

(g) The director shall review the referee’s recommended decision to determine whether the recommended decision is in compliance with this chapter.

If the recommended decision is in compliance with this chapter, the director shall approve the recommended decision within ten days of receiving the recommendation. Upon the director’s approval, the recommended decision shall have the same force and effect as a director’s decision rendered under this chapter, and it may be enforced as if it had been rendered in an action before the director. If the recommended decision does not comply with this chapter, the director may modify or vacate the recommended decision within ten days of receiving the recommendation. If the director vacates the recommended decision, the parties may resubmit the controversy to the referee.

(h) The parties may appeal the director’s decision in accordance with section 386-87.

(i) This chapter and Hawaii administrative rules title 12, chapters 10, 14, and 15 shall govern the proceedings before the referee.

(j) Unless otherwise provided in the agreement to mediate, the costs and fees of mediation shall be divided equally between the parties."

SECTION 2. Section 91-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Except as provided in section 386-72, and subsection (f), prior to the adoption of any rule authorized by law, or the amendment or repeal thereof, the adopting agency shall:

(1) Give at least thirty days' notice for a public hearing. The notice shall include:

(A) A statement of the topic of the proposed rule adoption, amendment, or repeal or a general description of the subjects involved; [~~and~~]

(B) A statement that a copy of the proposed rule to be adopted, the proposed rule amendment, or the rule proposed to be repealed will be mailed to any interested person who requests a copy, pays the required fees for the copy and the postage, if any, together with a description of where and how the requests may be made;

(C) A statement of when, where, and during what times the proposed rule to be adopted, the proposed rule amendment, or the rule proposed to be repealed may be reviewed in person; and

(D) The date, time, and place where the public hearing will be held and where interested persons may be heard on the proposed rule adoption, amendment, or repeal.

The notice shall be mailed to all persons who have made a timely written request of the agency for advance notice of its rulemaking proceedings, given at least once statewide for state agencies and in the county for county agencies. Proposed state agency rules shall also be posted on the Internet as provided in section 91-2.6; and

(2) Afford all interested persons opportunity to submit data, views, or arguments, orally or in writing. The agency shall fully consider all written and oral submissions respecting the proposed rule. The agency may make its decision at the public hearing or announce then the date when it intends to make its decision. Upon adoption, amendment, or repeal of a rule, the agency, if requested to do so by an interested person, shall issue a concise statement of the principal reasons for and against its determination."

SECTION 3. Section 386-1, Hawaii Revised Statutes, is amended by amending the definition of "employment" to read as follows:

""Employment" means any service performed by an individual for another person under any contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully entered into. It includes service of public officials, whether elected or under any appointment or contract of hire express or implied.

"Employment" does not include the following service:

(1) Service for a religious, charitable, educational, or nonprofit organization if performed in a voluntary or unpaid capacity;

(2) Service for a religious, charitable, educational, or nonprofit organization if performed by a recipient of aid therefrom and the service is incidental to or in return for the aid received;

(3) Service for a school, college, university, college club, fraternity, or sorority if performed by a student who is enrolled and regularly attending classes and in return for board, lodging, or tuition furnished, in whole or in part;

(4) Service performed by a duly ordained, commissioned, or licensed minister, priest, or rabbi of a church in the exercise of the minister's, priest's, or rabbi's ministry or by a member of a religious order in the exercise of nonsecular duties required by the order;

(5) Service performed by an individual for another person solely for personal, family, or household purposes if the cash remuneration received is less than $225 during the current calendar quarter and during each completed calendar quarter of the preceding twelve-month period;

(6) Domestic, which includes attendant care, and day care services authorized by the department of human services under the Social Security Act, as amended, performed by an individual in the employ of a recipient of social service payments;

(7) Service performed without wages for a corporation without employees by a corporate officer in which the officer is at least a twenty-five per cent stockholder;

(8) Service performed by an individual for a corporation if the individual owns at least fifty per cent of the corporation; provided that no employer shall require an employee to incorporate as a condition of employment; and

(9) Service performed by an individual for another person as a real estate salesperson or as a real estate broker, if all the service performed by the individual for the other person is performed for remuneration solely by way of commission[.];

(10) Service performed by a partner of a partnership for the partnership, as defined in section 425-101, if the partner is an individual; provided that no employer shall require an employee to become a partner as a condition of employment;

(11) Service performed by a partner of a limited liability partnership, if the partner is an individual and has a transferable interest, as defined in section 425-127 in the partnership of at least fifty per cent; provided that no employer shall require an employee to form a limited liability partnership as a condition of employment; and

(12) Service performed by a sole proprietor for the sole proprietorship.

As used in this paragraph, "religious, charitable, educational, or nonprofit organization" means a corporation, unincorporated association, community chest, fund, or foundation organized and operated exclusively for religious, charitable, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or individual.”

SECTION 4. Section 386-21, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The liability of the employer for medical care, services, and supplies shall be limited to the charges computed as set forth in this section. The director shall make determinations of the charges and adopt fee schedules based upon those determinations. [~~Effective January 1, 1997, and for each succeeding calendar year thereafter, the~~] The charges shall not exceed one hundred ten per cent of fees prescribed in the Medicare Resource Based Relative Value Scale system applicable to Hawaii as prepared by the United States Department of Health and Human Services, except as provided in this subsection. The rates or fees provided for in this section shall be adequate to ensure at all times the standard of services and care intended by this chapter to injured employees.

If the director determines that an allowance under the medicare program is not reasonable, or if a medical treatment, accommodation, product, or service existing as of June 29, 1995, is not covered under the medicare program, the director, at any time, may establish an additional fee schedule or schedules not exceeding the prevalent charge for fees for services actually received by providers of health care services to cover charges for that treatment, accommodation, product, or service. If no prevalent charge for a fee for service has been established for a given service or procedure, the director shall adopt a reasonable rate that shall be the same for all providers of health care services to be paid for that service or procedure.

The director shall update the schedules required by this section every three years or annually, as required. The updates shall be based upon:

(1) Future charges or additions prescribed in the Medicare Resource Based Relative Value Scale system applicable to Hawaii as prepared by the United States Department of Health and Human Services; or

(2) A statistically valid survey by the director of prevalent charges for fees for services actually received by providers of health care services or based upon the information provided to the director by the appropriate state agency having access to prevalent charges for medical fee information.

When a dispute exists between an insurer or self-insured employer and a medical services provider regarding the amount of a fee for medical services, the director may resolve the dispute in a summary manner as the director may prescribe; provided that a provider shall not charge more than the provider's private patient charge for the service rendered.

When a dispute exists between an injured employee and the employer or the employer's insurer regarding the proposed treatment plan or whether medical services should be continued, the injured employee shall continue to receive essential medical services prescribed by the treating physician necessary to prevent deterioration of the injured employee's condition or further injury until the director issues a decision on whether the injured employee's medical treatment should be continued. The director shall make a decision within thirty days of the filing of a dispute. If the director determines that medical services pursuant to the treatment plan should be or should have been discontinued, the director shall designate the date after which medical services for that treatment plan are denied. The employer or the employer's insurer, may recover from the claimant's personal health care provider pursuant to section 386-27, or from any other appropriate occupational or non-occupational insurer, all the sums paid for medical services rendered after the date designated by the director. Under no circumstances shall the claimant be charged for the disallowed services, unless the services were obtained in violation of section 386-98. The attending physician, injured employee, employer, or insurance carrier may request in writing that the director review the denial of the treatment plan or the continuation of medical services."

SECTION 5. Section 386-25, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The director may refer employees who may have or have suffered permanent disability as a result of work injuries or who have otherwise been deemed unable to return to their regular jobs after they have achieved maximum medical improvement, where the employer has made no offer of suitable work that would restore the earnings capacity as nearly as possible to the level that the employee was earning at the time of injury, and who, in the director's opinion, can be vocationally rehabilitated to the department of human services or to private providers of rehabilitation services for vocational rehabilitation services that are feasible. A referral shall be made upon recommendation of the rehabilitation unit established under section 386-71.5 and after the employee has been deemed physically able to participate in rehabilitation by the employee's attending physician. The unit shall include appropriate professional staff and shall have the following duties and responsibilities:

(1) To review and approve rehabilitation plans developed by certified providers of rehabilitation services, whether they [be] are private or public;

(2) To adopt rules consistent with this section that shall expedite and facilitate the identification, notification, and referral of industrially injured employees to rehabilitation services[,] and establish minimum standards for providers providing rehabilitation services under this section;

(3) To certify private and public providers of rehabilitation services meeting the minimum standards established under paragraph (2); and

(4) To enforce the implementation of rehabilitation plans."

SECTION 6. Section 386-31, Hawaii Revised Statutes, is amended to read as follows:

"§386-31 Total disability. (a) Permanent total disability. Where a work injury causes permanent total disability the employer shall pay the injured employee a weekly benefit equal to sixty-six and two-thirds per cent of the employee's average weekly wages, subject to the following limitation:

Beginning January 1, 1975, and during each succeeding twelve-month period thereafter, not more than the state average weekly wage last determined by the director, rounded to the nearest dollar, nor less than $38 or twenty-five per cent of the foregoing maximum amount, rounded to the nearest dollar, whichever is higher.

In the case of the following injuries, the disability caused thereby shall be deemed permanent and total:

(1) The permanent and total loss of sight in both eyes;

(2) The loss of both feet at or before the ankle;

(3) The loss of both hands at or above the wrist;

(4) The loss of one hand and one foot;

(5) An injury to the spine resulting in permanent and complete paralysis of both legs or both arms or one leg and one arm; or

(6) An injury to the skull resulting in incurable imbecility or insanity.

In all other cases the permanency and totality of the disability shall be determined on the facts. No adjudication of permanent total disability shall be made until after two weeks from the date of the injury.

(b) Temporary total disability. Where a work injury causes total disability not determined to be permanent in character, the employer, for the duration of the disability, but not including the first three calendar days thereof, shall pay the injured employee a weekly benefit at the rate of sixty-six and two-thirds per cent of the employee's average weekly wages, subject to the limitations on weekly benefit rates prescribed in subsection (a), or if the employee's average weekly wages are less than the minimum weekly benefit rate prescribed in subsection (a), at the rate of one hundred per cent of the employee's average weekly wages.

If an employee is unable to complete a regular daily work shift due to a work injury, the employee shall be deemed totally disabled for work for that day.

The employer shall pay temporary total disability benefits promptly as they accrue to the person entitled [~~thereto~~] to the benefits without waiting for a decision from the director, unless this right is controverted by the employer in the employer's initial report of industrial injury. The first payment of benefits shall become due and shall be paid no later than on the tenth day after the employer has been notified of the occurrence of the total disability, and thereafter the benefits due shall be paid weekly except as otherwise authorized pursuant to section 386-53.

The payment of these benefits shall [~~only~~] be terminated only upon order of the director or if the employee’s treating physician determines that the employee is able to resume work[.] and the employer has made a bona fide offer of suitable work within the employee’s medical restrictions. The order shall only be issued after a full and fair hearing at which the injured employee shall be provided the opportunity to review the employer's evidence and present rebuttal evidence. When the employer is of the opinion that temporary total disability benefits should be terminated [~~because the injured employee is able to resume work~~], the employer shall notify the employee and the director in writing of an intent to terminate the benefits at least two weeks prior to the date when the last payment is to be made. The notice shall give the reason for stopping payment and shall inform the employee that the employee may make a written request to the director for a hearing if the employee disagrees with the employer. Upon receipt of the request from the employee, the director shall conduct a hearing as expeditiously as possible and render a prompt decision as specified in section 386-86[.],indicating whether temporary total disability benefits should have been discontinued and, if so, a date shall be designated after which temporary total disability benefits should have been discontinued. The employer may request in writing to the director that the director issue a credit for the amount of temporary total disability benefits paid by an employer after the date that the director had determined should have been the last date of payment. If the employee is unable to perform light work, if offered, temporary total disability benefits shall not be discontinued based solely on the inability to perform or continue to perform light work.

An employer or insurance carrier who fails to comply with this section shall pay not more than $2,500 into the special compensation fund upon the order of the director, in addition to attorney's fees and costs to the employee for enforcement of this section and other penalties prescribed in section 386-92.

(1) If the director determines, based upon a review of medical records and reports and other relevant documentary evidence, that an injured employee's medical condition may be stabilized and the employee is unable to return to the employee's regular job, the director shall issue a preliminary decision regarding the claimant's entitlement and limitation to benefits and rights under Hawaii's workers' compensation laws. The preliminary decision shall be sent to the affected employee and the employee's designated representative and the employer and the employer's designated representative and shall state that any party disagreeing with the director's preliminary findings of medical stabilization and work limitations may request a hearing within twenty days of the date of the decision. The director shall be available to answer any questions during the twenty‑day period from the injured employee and affected employer. If neither party requests a hearing challenging the director's finding the determination shall be deemed accepted and binding upon the parties. In any case where a hearing is held on the preliminary findings, any person aggrieved by the director's decision and order may appeal under section 386-87.

A preliminary decision of the director shall inform the injured employee and the employer of the following responsibilities, benefits, and limitations on vocational rehabilitation benefits that are designed to facilitate the injured employee's early return to suitable gainful employment:

(A) That the injured employee may invoke the employee's rights under section 378-2, 378-32, or 386-142, or all of them, in the event of unlawful discrimination or other unlawful employment practice by the employer; and

(B) That after termination of temporary total disability benefits, an injured employee who resumes work may be entitled to permanent partial disability benefits, which if awarded, shall be paid regardless of the earnings or employment status of the disabled employee at the time.

(2) If the rehabilitation unit determines that an injured employee is not a feasible candidate for rehabilitation and that the employee is unable to resume the employee's regular job, it shall promptly certify the same to the director. Soon thereafter, the director shall conduct a hearing to determine whether the injured employee remains temporarily totally disabled, or whether the employee is permanently partially disabled, or permanently totally disabled.

(c) An injured employee shall be entitled to receive a weekly benefit equal to seventy per cent of the injured employee's average weekly wages, or a maximum weekly income benefit based on the state average weekly wage applicable on the date of compensation was first received if:

(1) A work injury causes permanent or temporary dsability; and

(2) Payment of compensation due under this chapter was not begun within thirty days of or within the same year as the date of injury, whichever is later."

SECTION 7. Section 386-79, Hawaii Revised Statutes, is amended to read as follows:

"§386-79 Medical examination by employer's physician. After an injury and during the period of disability, the employee, whenever ordered by the director [~~of labor and industrial relations~~], shall submit to examination, at reasonable times and places, by a duly qualified physician or surgeon [designated] pursuant to this section and paid by the employer. [~~The~~] Physicians selected to perform independent medical examinations as provided by this section shall:

(1) Be licensed in Hawaii; provided that for claimants whose residency is not Hawaii, the physicians shall be licensed in the state where the claimant resides;

(2) Be subject to peer review; and

(3) Currently hold and have held an active professional and occupational license under title 25 for the five consecutive years prior to the examination.

The independent medical examiner shall be selected by mutual agreement between the employee and the employer within fourteen calendar days of a request by either party for an independent medical examination; provided that if no mutual agreement is reached within ten calendar days from the notification of failure to reach mutual agreement, the director shall provide the parties with the names of three independent medical examiners, from a list compiled and maintained by the director, to the employer and employee from which they shall choose. If the employer and employee are unable to choose an independent medical examiner, then within ten calendar days, the director shall appoint an independent medical examiner from the names provided to the employer and employee. For these examinations, the employee shall have the right to have a physician or surgeon designated by the employee and paid by the [~~employee~~] employer present at the examination, which right, however, shall not be construed to deny to the employer's physician the right to visit the injured employee at all reasonable times and under all reasonable conditions during total disability.

If an employee unreasonably refuses to submit to, or in any way obstructs [~~such~~] the independent medical examination, the employee's right to claim compensation for the work injury [~~shall~~] may be suspended, only upon order of the director, until the refusal or obstruction ceases and no compensation shall be payable for the period during which the refusal or obstruction continues.

In cases where the employer is dissatisfied with the progress of the case or where major and elective surgery, or either, is contemplated, the employer may appoint a physician or surgeon of the employer's choice who shall examine the injured employee and make a report to the employer. If the employer remains dissatisfied, this report may be forwarded to the director.

Employer requested examinations under this section shall not exceed more than one per case unless good and valid reasons exist with regard to the medical progress of the employee's treatment. The cost of conducting the ordered medical examination shall be limited to the complex consultation charges governed by the medical fee schedule established pursuant to section 386-21(c)."

SECTION 8. Section 386-94, Hawaii Revised Statutes, is amended to read as follows:

"§386-94 [~~Attorneys,~~] Claimants’ attorneys, defense attorneys, physicians, other health care providers, and other fees. Claims for services shall not be valid unless approved by the director or, if an appeal is had, by the appellate board or court deciding the appeal. Any claim by a claimant's attorney and so approved shall be a lien upon the compensation in the manner and to the extent fixed by the director, the appellate board, or the court.

In approving fee requests, the director, appeals board, or court may consider factors such as [~~the~~]:

(1) The attorney's skill and experience in state workers' compensation matters[~~, the~~];

(2) The amount of time and effort required by the complexity of the case[~~, the~~];

(3) The novelty and difficulty of issues involved[~~, the~~];

(4) The amount of fees awarded in similar cases[~~, benefits~~];

(5) Benefits obtained for the claimant[~~, and the~~]; and

(6) The hourly rate customarily awarded attorneys possessing similar skills and experience.

In all cases, reasonable attorney's fees shall be awarded.

Any person who receives any fee, other consideration, or gratuity on account of services so rendered, without approval, in conformity with the preceding paragraph, shall be fined by the director not more than $10,000."

SECTION 9. Section 386-96, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any physician, surgeon, or hospital that has given any treatment or rendered any service to an injured employee shall make a report of the injury and treatment on forms prescribed by and to be obtained from the department as follows:

(1) Within seven days after the date of first attendance or service rendered, an initial report shall be made to the department and to the employer of the injured employee in the manner prescribed by the department;

(2) Interim reports to the same parties and in the same manner as prescribed in paragraph (1) shall be made at appropriate intervals to verify [~~the~~]:

(A) The claimant's current diagnosis and prognosis[~~, that~~];

(B) That the information as to the nature of the examinations and treatments performed is complete, including the dates of those treatments and the results obtained within the current reporting period[~~, the~~];

(C) The execution of all tests performed within the current reporting period and the results of the tests[~~, whether~~];

(D) Whether the injured employee is improving, worsening, or if "medical stabilization" has been reached[~~, the~~];

(E) The dates of disability[~~, any~~];

(F) Any work restrictions[,]; and [~~the~~]

(G) The return to work date.

When an injured employee is returned to full-time, regular, light, part-time, or restricted work, the attending physician shall submit a report to the employer within seven calendar days indicating the date of release to work or medical stabilization; and

(3) A final report to the same parties and in the same manner as prescribed in paragraph (1) shall be made within seven days after termination of treatment.

No physician, surgeon, or hospital that has given any treatment or rendered any service to an injured employee shall be required to provide any additional reports or treatment plans not otherwise mandated by this section."

SECTION 10. Section 386-124, Hawaii Revised Statutes, is amended to read as follows:

"§386-124 The insurance contract[.]; annual reports. (a) Every policy of insurance issued by an insurer of an employer referred to in section 386-1 which covers the liability of the employer for compensation shall cover the entire liability of the employer to the employer's employees covered by the policy or contract, and provide for the deductible under section 386-100, at the option of the insured. The policy also shall contain a provision setting forth the right of the employees to enforce in their own names either by filing a separate claim or by making the insurance carrier a party to the original claim, the liability of the insurance carrier in whole or in part for the payment of the compensation. Payment in whole or in part of compensation by either the employer or the insurance carrier shall, to the extent thereof, be a bar to the recovery against the other of the amount so paid.

All insurance policies shall be of a standard form, the form to be designated and approved by the insurance commissioner. No policy of insurance different in form from the designated and approved form shall be approved by the director. (b) Every insurer of an employer referred to in section 386-1 shall provide to the director and to the insurance commissioner on or before March 1 of each calendar year an annual report of the costs of its policies, which includes:

(1) Costs of independent medical examinations;

(2) Costs for legal services relating to administration of claims; and

(3) Administrative costs.

All annual reports shall be of a standard form to be designated and approved by the insurance commissioner."

SECTION 11. Act 11, Special Session Laws of Hawaii 2005, is amended by amending section 14 to read as follows:

"SECTION 12. This Act shall take effect upon its approval; provided that sections 2, 3, and 7 of this Act shall take effect on January 1, 2005[~~; provided further that section 7 shall be repealed on July 1, 2007, and section 386-72, Hawaii Revised Statutes, shall be reenacted in the form in which it read on December 31, 2004~~]."

SECTION 13. The rules adopted by the department of labor and industrial relations entitled:

(1) "Amendments to Chapter 12-10, Hawaii Administrative Rules, Worker's Compensation Law" dated April 20, 2005, and adopted May 13, 2005; and

(2) "Amendments to Chapter 12-15, Hawaii Administrative Rules, Worker's Compensation Law, Medical Fee Schedule" dated April 20, 2005, and adopted May 13, 2005;

on file in the office of the lieutenant governor pursuant to recordation number 2640, are repealed.

SECTION 14. This Act shall take effect on June 30, 2007; provided that the amendments made to subsections 386-21(c) and 386-31(b), Hawaii Revised Statutes, by this Act shall be superseded by any other amendments made to the same subsections of law by any other Act:

(1) enacted before or after this Act by the twenty-fourth legislature during the 2007 regular session; or

(2) if vetoed that has been reenacted pursuant to an override of the veto in a special session convened during the interim of 2007; provided that, if an amendment to subsection 386-21(c) or subsection 386-31(b), Hawaii Revised Statutes, contained in any Act enacted by the twenty-fourth legislature during the regular session of 2007 or any special session convened during the 2007 interim that does not conflict with the intent of this Act, then the revisor of statutes may harmonize those amendments with this Act.

THE SENATE	S.B. NO.	1060
TWENTY-FOURTH LEGISLATURE, 2007		S.D. 1
STATE OF HAWAII		H.D. 2
		C.D. 1