Two New Laws May Cause Trouble In Paradise (Hawaii)

On July 1, 2000, Act 87, The Privacy of Health Care Information Act, and Act 140, Relating to Privacy of Health Care Information went into effect. These new laws provide for potentially severe civil and criminal penalties if violated.

All employers in the state of Hawaii should familiarize themselves with these acts. The new law puts restrictions on employers and requires them to give their employees certain notices and disclosures regarding employee rights. Therefore, it may be advisable for all employers to consult their own labor attorney as to the obligations your organization may be subject to.

While the new law was well intended, it has met with unintended results. Most insurers believed the new law would not affect them, but has proved to be wrong. There currently is a great deal of controversy and confusion in the insurance industry over whether these Acts apply to workers' compensation, automobile, temporary disability insurance (TDI), and other related claims.

The new requirements regarding notices, disclosures and waivers have created a huge burden on all individuals and entities involved in the handling of claims. The additional paperwork has created delays in the processing and settling of claims. At last report, the Labor and Industrial Relations Appeal Board had suspended all trials to allow lawyers in each case to obtain additional information and releases necessary to continue their hearings.

Until some of the controversy is resolved and there is a better understanding of the laws, most insurance carriers, third party administrators, physicians, insurance agents, and others, are taking a very conservative approach in the receipt and release of information. New claimants must sign an "Authorization to Release and Disclose" form provided by the insurance carrier handling their claim, if they want their claim processed. Old claims are presenting a problem due to the amount of work necessary to secure a release from all prior or existing claimants.

Until this controversy is resolved, most insurance companies have stopped providing open claim reviews, loss reports, or allowing on-line access to loss history on individuals. Instead, they are now providing cumulative loss reports and are eliminating the name of the claimants. At the time this briefing was written, the Hawaii State Legislature was considering whether to reconvene in a special session to try and resolve this issue. Hopefully, the confusion and changes will be temporary. SullivanCurtisMonroe will continue to monitor the new laws and keep you updated with the most current information.

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