Hawaii Monopolistic State Fund – Shocking Possibility

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The 50th State May Create Hawaii Monopolistic State Fund

The idea of a Hawaii Monopolistic State Fund may not just be a subject tossed around by Workers Comp aficionados.   A new piece of legislation referred to as House Bill 2715 may change the Hawaii WC landscape permanently.   Please remember  HB 2715 is quite a few steps from being enacted including surviving a veto by the Governor.

Picture of Hawaii Monopolistic State Fund Map
123RF

The shocker is that all the states that have decided to switch from a monopolistic state fund to more of a regular insurance market discovered paydirt for the employers.   Nevada and West Virginia are among the successful transitions from monopolistic to  the regular marketplace.

You can find the Hawaii Monopolistic State Fund bill here >   HB 2715 .  It is a .PDF file.   It may be worth downloading to follow along with my analysis or to read on your own.   The first part of the bill is original.   The second part amends older legislation.

My curiosity overcame me and yes, I had to read this complete bill.   Some of the more interesting passages from the bill are:  (my comments are in italics)

Page 1 Line 12 – The workers’ compensation law includes certain statutory  presumptions that place on the employer the burden of producing substantial evidence to the contrary to rebut a claim for a covered work injury. Despite this presumption, recommended medical treatment or vocational rehabilitation plans are delayed or arbitrarily and capriciously denied; approved services provided by medical or other healthcare professionals go unpaid; and there is a reluctance to accept workers’
compensation cases for fear of being denied reimbursements, all of which contribute to a dysfunctional health care system that cannot rehabilitate the injured worker.

Woman Pulling Hawaii Monopolistic State Fund A Giant Briefcase
StockUnlimited

A state fund is going to solve this concern or add to it? 

Page 7 Line 15 – An employer with two or more lost-time claims greater than $10,000, and a loss ratio greater than 1.0, over the immediately preceding three years shall be placed in the high
risk division.

That is not the definition of a high-risk employer.

Page 8  Line 16 The contingent liabilities of members provided in section 431:4-317 may be separated so that members assigned to the high risk division have a further contingent liability for deficits in the high risk division; provided that no contingent liability shall be in the aggregate for more than five times the annual premium rate of the member’s policy nor for a term of more than one year.

Does this mean a 500% addition to an employer’s premium?  Ouch – if I am reading that passage correctly.  

Interestingly enough,  the bill has been voted on twice.

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2 Responses

  1. James,

    Do you think that page 1, line 12 would open HI to medical travel if the medical care is delayed under this legislation? Would it then fall to the employer and employee to find other alternatives to denied or delayed medical treatment?

  2. Yes, I think it would be a possibility. Where would the nearest medical travel facility be located for use by HI injured workers?
    When I checked on the bill’s status today, it was
    2016-02-22 House Bill scheduled to be heard by FIN on Wednesday, 02-24-16 3:00PM in House conference room 308.
    2016-02-19 House Re-referred to LAB, FIN, referral sheet 18

    I am not sure if repealing HEMIC and replacing with a state fund would be a better solution.

Comments are closed.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

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