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HOUSE OF REPRESENTATIVES             H.C.R. NO.            
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     HOUSE CONCURRENT
                        RESOLUTION
REQUESTING AN EVALUATION OF LIABILITIES TRANSFERRED TO THE HAWAII
   HEALTH SYSTEMS CORPORATION. 


 1   
 2       WHEREAS, Act 262, Session Laws of Hawaii 1996, (Act 262)
 3   created the Hawaii Health Systems Corporation (HHSC), a public
 4   body corporate and politic and an instrumentality and agency of
 5   the State; and
 6   
 7       WHEREAS, the stated purpose and overriding goal of Act 262
 8   was "to provide better health care for all the people of the
 9   State of Hawaii, including those served by small rural
10   facilities, by freeing the facilities from unwarranted
11   bureaucratic oversight"; and
12   
13       WHEREAS, the transfer of operation of public health
14   facilities to HHSC from the Department of Health's Division of
15   Community Hospitals (DCH) occurred on November 30, 1996, only a
16   few months after the appointment of the HHSC Board of
17   Directors; and
18   
19       WHEREAS, Act 262 mandated transfer of liabilities owed and
20   all assets owned by DCH at the time of transfer to HHSC on the
21   transfer date, and further mandated that contributions to
22   pension and retirement funds be made by HHSC on behalf of
23   employees of the corporation; and
24   
25       WHEREAS, liabilities owed by DCH both before and after the
26   transfer have been presented to HHSC for payment and continue
27   to be presented to HHSC for payment including:
28   
29       (1)  Alleged payments due to the Office of Hawaiian
30            Affairs;
31   
32       (2)  Employee liabilities accruing prior to the transfer;
33   
34       (3)  Liabilities for persons who were never employees of
35            HHSC, such as workers' compensation claims, retiree
36            benefits, and accrued vacation pay;
37   

 
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                                  H.C.R. NO.            
                                                        
                                                        

 
 1       (4)  Civil penalties and fines;
 2   
 3       (5)  Claims for medicare and medicaid overpayments for
 4            services rendered prior to the transfer; and
 5       
 6       (6)  Liabilities pertaining to the facilities;
 7   
 8   and
 9   
10       WHEREAS, HHSC has spent at least $14 million on DCH
11   liabilities since the transfer date and has estimated that it
12   will be presented with millions of dollars of claims in
13   additional liabilities; and
14   
15       WHEREAS, the payment of DCH liabilities has eroded HHSC's
16   small amount of working capital, constitutes a drain on
17   operating funds needed for the provision of quality health
18   care, and interferes with HHSC's budgeting process as bills
19   continue to be presented for matters previously unknown to
20   HHSC; and 
21   
22       WHEREAS, in the 1997 Session, HHSC sought a legislative
23   solution to the issue by having legislation introduced to give
24   the State the clarification it allegedly needs to determine who
25   is responsible for the various types of liabilities of DCH; and
26   
27       WHEREAS, the proposed legislation was amended to exclude
28   the clarification and to include a provision requiring the
29   various departments to meet with HHSC to review the issues and
30   make a report to the Legislature; and
31   
32       WHEREAS, the final measure enacted, Act 229, Session Laws
33   of Hawaii 1998, did not clarify the liabilities issues
34   confronting HHSC; and
35   
36       WHEREAS, the various departments met with HHSC on two
37   occasions to discuss the liablities issues and could only agree
38   upon one liability issue; and
39   
40       WHEREAS, HHSC wrote the required report and submitted it to
41   this Legislature but was unable to have a bill introduced to
42   clarify the extent of the liabilities transferred to it; and
43   
44       WHEREAS, the impact of HHSC's ability to meet its stated
45   purpose of providing quality health care to the people of this
46   State, particularly in remote rural areas, is severely hampered
47   by the outstanding liabilities issues; now, therefore, 

 
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                                  H.C.R. NO.            
                                                        
                                                        

 
 1   
 2       BE IT RESOLVED by the House of Representatives of the
 3   Twentieth Legislature of the State of Hawaii, Regular Session
 4   of 1999, the Senate concurring, that the Hawaii Health Systems
 5   Corporation and the Department of Budget and Finance meet in
 6   good faith and further evaluate the liabilities of the Hawaii
 7   Health Systems Corporation transferred from the Division of
 8   Community Hospitals of the Department of Health in light of
 9   liabilities claimed in this past year and other relevant
10   factors; and
11   
12       BE IT FURTHER RESOLVED that the Hawaii Health Systems
13   Corporation, with the cooperation of the Department of Budget
14   and Finance, is requested to submit a report to the Legislature
15   no later than twenty days before the convening of the Regular
16   Session of 2000 explaining the position of each party on each
17   liability evaluated; and
18   
19       BE IT FURTHER RESOLVED that certified copies of this
20   Concurrent Resolution be transmitted to the Director of Budget
21   and Finance and the Board of Directors of the Hawaii Health
22   Systems Corporation.
23 
24 
25 
26                         OFFERED BY:  ____________________________