Bill Text: HI SB2839 | 2016 | Regular Session | Amended

Hawaii Senate Bill 2839 (Prior Session Legislation)

Bill Title: Hawaii Employer-Union Health Benefits Trust Fund (EUTF); Dependent-beneficiary; Collective Bargaining

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2016-04-28 - Conference committee meeting to reconvene on 04-29-16 9:30AM in conference room 325. [SB2839 Detail]

Download: Hawaii-2016-SB2839-Amended.html

THE SENATE	S.B. NO.	2839
TWENTY-EIGHTH LEGISLATURE, 2016		S.D. 2
STATE OF HAWAII		H.D. 2

A BILL FOR AN ACT

RELATING TO THE HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

PART I

SECTION 1. The legislature finds that the Hawaii employer-union health benefits trust fund offers health benefits to the children of state and county employees and retirees. Due to the current construction of chapter 87A, Hawaii Revised Statutes, when an employee or retiree passes away, the employee's or retiree's surviving spouse's children that are born after the employee's or retiree's death are eligible to participate in benefits plans offered by the fund. However, the legislature finds that a child born or legally adopted after an employee's or retiree's death who is not the natural child of the deceased employee or retiree should not be eligible to participate in fund benefits plans because the child is not the child of the state or county employee or retiree.

The legislature further finds that the definition of "dependent-beneficiary" should be amended to be consistent with the federal Patient Protection and Affordable Care Act of 2010, which prohibits restricting health insurance coverage to only unmarried dependents and denying health insurance coverage to married dependents.

The purposes of this part are to:

(1) Amend the definition of "dependent-beneficiary" contained in chapter 87A, Hawaii Revised Statutes, to clarify eligibility of children for participation in fund benefit plans;

(2) Bring the definition of "dependent-beneficiary" into conformance with the federal Patient Protection and Affordable Care Act of 2010; and

(3) Make housekeeping amendments to sections 87A-34 and 87A-36, Hawaii Revised Statutes.

SECTION 2. Section 87A-1, Hawaii Revised Statutes, is amended by amending the definition of "dependent-beneficiary" to read as follows:

""Dependent-beneficiary" means an employee-beneficiary's:

(1) Spouse;

(2) [~~Unmarried child~~] Child deemed eligible by the board, including a legally adopted child, stepchild, foster child, or recognized natural child who lives with the employee-beneficiary[;], but excluding a child born or legally adopted more than ten months after the death of an employee killed in the performance of duty, born or legally adopted more than ten months after the death of an active employee who was eligible to retire on the date of death, or born or legally adopted more than ten months after the date of death of a retired employee-beneficiary; and

(3) Unmarried child regardless of age who is incapable of self-support because of a mental or physical incapacity, which existed prior to the unmarried child's reaching the age of nineteen years."

SECTION 3. Section 87A-34, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) This section shall apply to state and county contributions to the fund for employees specified in paragraph [~~(1)(E)~~] (1)(D) of the definition of "employee" in section 87A-1 who:

(1) Were hired on or before June 30, 1996; and

(2) Retired after June 30, 1984, with fewer than ten years of credited service, excluding sick leave."

SECTION 4. Section 87A-36, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The State, through the department of budget and finance, and the counties, through their respective departments of finance, shall pay to the fund:

(1) For retired employees based on the self plan with ten or more years but fewer than fifteen years of service, a monthly contribution equal to one-half of the base medicare or non-medicare monthly contribution set forth under section 87A-33(b);

(2) For retired employees based on the self plan with at least fifteen but fewer than twenty-five years of service, a monthly contribution equal to seventy-five per cent of the base medicare or non-medicare monthly contribution set forth under section 87A-33(b);

(3) For retired employees based on the self plan with twenty-five or more years of service, a monthly contribution equal to one-hundred per cent of the base medicare or non-medicare monthly contribution set forth under section 87A-33(b); and

(4) One-half of the monthly contributions for the employee-beneficiary or employee-beneficiary with dependent-beneficiaries upon the death of the employee, as defined in paragraph [~~(1)(E)~~] (1)(D) of the definition of "employee" in section 87A-1.

If both husband and wife are employee-beneficiaries, the total contribution by the State or county shall not exceed the monthly contribution for two supplemental medicare self or non-medicare self plans, as appropriate."

PART II

SECTION 5. The purpose of this part is to amend the management and administrative structure of the Hawaii employer-union health benefits trust fund.

SECTION 6. Chapter 87A, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§87A- Selection of benefit plan carriers, third-party administrators, consultants, actuaries, auditors, or administrators. Procurement of carriers, third-party administrators for any benefits plan, consultants, actuaries, auditors, or administrators shall be exempt from chapter 103D.

§87A- Fiduciary duties; prohibited transactions. (a) A fiduciary of the trust shall comply, with respect to a plan, with all fiduciary duties imposed on fiduciaries under title 29 United States Code sections 1001-1191, as amended, and related regulations.

(b) All fiduciaries of the trust shall discharge their duties with respect to a plan solely in the interest of the participants and beneficiaries and:

(1) For the exclusive purpose of:

(A) Providing benefits to participants and their beneficiaries; and

(B) Defraying reasonable expenses of administering the plan;

(2) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of an enterprise of a similar character and with like aims;

(3) By diversifying the investments of the plan so as to minimize the risk of large losses unless, under the circumstances, it is clearly prudent not to do so; and

(4) In accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with this chapter.

(c) In addition to any liability that a fiduciary may have under this chapter, a fiduciary with respect to a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the same plan in the following circumstances:

(1) If the fiduciary participates knowingly in, or knowingly undertakes to conceal, an act of omission of the other fiduciary, knowing that act or omission is a breach;

(2) If, by the fiduciary's failure to comply with subsection (a) or (b), the fiduciary has enabled such other fiduciary to commit a breach; or

(3) If the fiduciary has knowledge of the breach by such other fiduciary, unless the fiduciary makes reasonable efforts under the circumstances to remedy the breach.

If the assets of the plan are held by two or more trustees, each shall use reasonable care to prevent a co-trustee from committing a breach, and each shall be responsible for jointly managing and controlling the assets of the plan.

(d) A fiduciary shall not cause a plan to engage in a transaction if the fiduciary knows or should know that the transaction constitutes a direct or indirect:

(1) Sale or exchange, or leasing, of any property between the plan and a party in interest;

(2) Lending of money or other extension of credit between the plan and a party in interest;

(3) Furnishing of goods, services, or facilities between the plan and a party in interest; or

(4) Transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan.

(e) A fiduciary shall not:

(1) Deal with the assets of the plan in the fiduciary's own interest or for the fiduciary's own account;

(2) In the fiduciary's individual capacity or in any other capacity act in any transaction involving the plan on behalf of a party, or represent a party, whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries; or

(3) Receive any consideration for the fiduciary's own personal account from any party dealing with the plan in connection with a transaction involving the assets of the plan.

§87A- Liability for breach of fiduciary duty. (a) Any person who is a fiduciary with respect to a plan and who breaches any of the responsibilities, obligations, or duties imposed on fiduciaries by this chapter shall be personally liable to make good to the plan any losses to the plan resulting from each breach and to restore to the plan any profits of the fiduciary that have been made through the use of assets of the plan by the fiduciary, and shall be subject to any other equitable and remedial relief as the court may deem appropriate, including removal of the fiduciary.

(b) Any provision in any agreement or instrument that purports to relieve a fiduciary of responsibility or liability for any responsibility, obligation, or duty under this chapter shall be void as against public policy. However, nothing in this section shall preclude:

(1) A plan from purchasing insurance for its fiduciaries or for itself to cover liability or losses occurring by reason of the act or omission of a fiduciary in the case of a breach of a fiduciary obligation by the fiduciary, if the insurance permits recourse by the insurer against the fiduciary in the case of a breach of fiduciary obligation by the fiduciary;

(2) A fiduciary from purchasing insurance to cover liability under this chapter from and for the fiduciary's own account; or

(3) An employee organization from purchasing insurance to cover potential liability of one or more persons who serve in a fiduciary capacity with regard to an employee welfare benefit plan."

SECTION 7. Section 28-8.3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) No department of the State other than the attorney general may employ or retain any attorney, by contract or otherwise, for the purpose of representing the State or the department in any litigation, rendering legal counsel to the department, or drafting legal documents for the department; provided that the foregoing provision shall not apply to the employment or retention of attorneys:

(1) By the public utilities commission, the labor and industrial relations appeals board, and the Hawaii labor relations board;

(2) By any court or judicial or legislative office of the State; provided that if the attorney general is requested to provide representation to a court or judicial office by the chief justice or the chief justice's designee, or to a legislative office by the speaker of the house of representatives and the president of the senate jointly, and the attorney general declines to provide such representation on the grounds of conflict of interest, the attorney general shall retain an attorney for the court, judicial, or legislative office, subject to approval by the court, judicial, or legislative office;

(3) By the legislative reference bureau;

(4) By any compilation commission that may be constituted from time to time;

(5) By the real estate commission for any action involving the real estate recovery fund;

(6) By the contractors license board for any action involving the contractors recovery fund;

(7) By the office of Hawaiian affairs;

(8) By the department of commerce and consumer affairs for the enforcement of violations of chapters 480 and 485A;

(9) As grand jury counsel;

(10) By the Hawaii health systems corporation, or its regional system boards, or any of their facilities;

(11) By the auditor;

(12) By the office of ombudsman;

(13) By the insurance division;

(14) By the University of Hawaii;

(15) By the Kahoolawe island reserve commission;

(16) By the division of consumer advocacy;

(17) By the office of elections;

(18) By the campaign spending commission;

(19) By the Hawaii tourism authority, as provided in section 201B-2.5;

(20) By the division of financial institutions for any action involving the mortgage loan recovery fund;

(21) By the office of information practices; [or]

(22) By the Hawaii employer-union health benefits trust fund, as provided in section 87A-9; or

[~~(22)~~] (23) By a department, if the attorney general, for reasons deemed by the attorney general to be good and sufficient, declines to employ or retain an attorney for a department; provided that the governor waives the provision of this section."

SECTION 8. Section 87A-5, Hawaii Revised Statutes, is amended to read as follows:

"§87A-5 Composition of board. (a) The board of trustees of the employer-union health benefits trust fund shall consist of [~~ten~~] trustees appointed [~~by the governor~~] in accordance with the following procedure:

(1) [~~Five~~] Six trustees[~~, one of whom shall represent retirees,~~] to represent employee-beneficiaries and to be selected as follows:

[~~(A)~~ ~~Three trustees shall be appointed from a list of two nominees per trustee selected by each of the three exclusive representative organizations that have the largest number of employee-beneficiaries;~~

~~(B)~~ ~~One trustee shall be appointed from a list of two nominees selected by mutual agreement of the remaining exclusive employee representative organizations; and~~

~~(C)~~ ~~One trustee representing retirees shall be appointed from a list of two nominees selected by mutual agreement of all eligible exclusive representatives; and~~

~~(2)~~ ~~Five trustees to represent public employers.~~]

(A) One trustee to be appointed by the exclusive bargaining representative for bargaining units 2, 3, 4, 6, 8, 9 and 13;

(B) One trustee to be appointed by the exclusive bargaining representative for bargaining unit 5;

(D) One trustee to be appointed by the exclusive bargaining representative for bargaining units 1 and 10;

(E) One trustee to be appointed by the exclusive bargaining representative for bargaining unit 11; and

(F) One trustee to be appointed by the exclusive bargaining representative for bargaining unit 12;

provided that all trustees shall serve at the pleasure of the appointing exclusive bargaining representative; and

(2) Six trustees, five to represent public employers and one to represent retiree beneficiaries, as follows:

(A) One trustee shall be appointed by the governor to represent the State of Hawaii administration;

(B) One trustee shall be appointed by the governor from a nominee submitted by the University of Hawaii board of regents;

(D) One trustee shall be appointed by the mayor of the city and county of Honolulu;

(E) One trustee shall be appointed by at least two county mayors from the county of Hawaii, Maui, or Kauai; and

(F) One trustee shall be appointed by the governor to represent retiree beneficiaries;

provided that all trustees shall serve at the pleasure of the appointing authority.

(b) If an exclusive bargaining representative negotiates a specific contribution to apply to only that bargaining unit, that unit shall have a sub-board of trustees to administer that exclusive bargaining unit's contributions and benefits. The benefits for the bargaining unit, including the type and level, shall be determined by the sub-board of trustees or established pursuant to the collective bargaining agreement. There shall be two trustees appointed by the employer and two trustees appointed by the exclusive bargaining representative to the sub-board.

(c) Section 26-34 shall not apply to board member selection and terms. Notwithstanding any other provision of this section, no exclusive representative of a bargaining unit that sponsors or participates in a voluntary employee beneficiary association shall be eligible to select nominees or to be represented by a trustee on the board.

(d) As used in this section, the term "exclusive representative" shall have the same meaning as in section 89-2."

SECTION 9. Section 87A-6, Hawaii Revised Statutes, is amended to read as follows:

"§87A-6 Term of a trustee; vacancy. [~~The term of office of each trustee shall be four years; provided that a trustee may be reappointed for one additional consecutive four-year term.~~

A vacancy on the board shall be filled in the same manner as the trustee who vacated that position was nominated or appointed; provided that the criteria used for nominating or appointing the successor shall be the same criteria used for nominating or appointing the person's predecessor; provided further that vacancies on the board for each trustee position representing retirees and employee-beneficiaries appointed under section 87A-5(1)(A) and (B) shall be filled by appointment of the governor as follows:

~~(1)~~ If a vacancy occurs in one of the trustee positions described in section 87A-5(1)(A), then the vacancy shall be appointed from a list of two nominees submitted by the exclusive employee representative from among the three largest exclusive employee representatives that does not have a trustee among the three trustee positions;

~~(2)~~ If a vacancy occurs in a trustee position described in section 87A-5(1)(B), then the vacancy shall be appointed from a list of two nominees submitted by mutual agreement of the exclusive employee representatives described in section 87A-5(1)(B); and

~~(3)~~ If a vacancy occurs in the retiree position described in section 87A-5(1)(C), then the vacancy shall be appointed from a list of two nominees submitted by mutual agreement of all eligible exclusive employee representatives.

~~If by the end of a trustee's term the trustee is not reappointed or the trustee's successor is not appointed, the trustee shall serve until the trustee's successor is appointed.~~] The term of office of each trustee shall be at the pleasure of the nominating or appointing authority. In the event the appointing authority fails to appoint an employer trustee to fill a vacant position, the chief justice of the supreme court shall make the appointment upon petition by two or more employee-beneficiary trustees. In the event the appointing authority fails to appoint an employee-beneficiary trustee to fill a vacant position, the chief justice of the supreme court shall make the appointment upon petition by two or more employer trustees."

SECTION 10. Section 87A-9, Hawaii Revised Statutes, is amended to read as follows:

"[[]§87A-9[]] Legal adviser. The [~~attorney general shall~~] board may appoint or retain by contract an attorney who is independent of the attorney general to serve as legal adviser to the board and shall provide legal representation for the Hawaii employer-union health benefits trust fund. The legal adviser shall have Employee Retirement Income Security Act employee benefits experience, either from the private or public sector."

SECTION 11. Section 87A-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§87A-11[]] Quorum; board actions; voting. [~~(a) Six trustees, three of whom represent the public employer and three of whom represent employee-beneficiaries,~~] Eight trustees shall constitute a quorum for the transaction of business.

[~~(b) Trustees representing the public employers shall collectively have one vote. Trustees representing the employee-beneficiaries shall collectively have one vote.~~

For any vote of the trustees representing the public employers to be valid, three of these trustees must concur to cast such a vote. In the absence of such concurrence, the trustees representing the public employers shall be deemed to have abstained from voting.

For any vote of the trustees representing the employee-beneficiaries to be valid, three of these trustees must concur to cast such a vote. In the absence of such concurrence, the trustees representing the employee-beneficiaries shall be deemed to have abstained from voting.

~~An abstention shall not be counted as either a vote in favor or against a matter before the board.~~

(c) Any action taken by the board shall be by the concurrence of at least two votes. In the event of a tie vote on any motion, the motion shall fail. Upon the concurrence of six trustees, the board shall participate in dispute resolution.]"

SECTION 12. Section 87A-15, Hawaii Revised Statutes, is amended to read as follows:

"[[]§87A-15[]] Administration of the fund. The board shall administer and carry out the purpose of the fund. Health and other benefit plans shall be provided [~~at a cost affordable to both the public employers and the public employees.~~] as follows:

(1) For collective bargaining units based on the collectively bargained contribution from the employer and employees;

(2) For retirees within the appropriation adopted by the legislature and the respective counties; and

(3) For all other eligible beneficiaries based on the contribution from the employer and employees."

SECTION 13. Section 87A-30, Hawaii Revised Statutes, is amended to read as follows:

"§87A-30 Hawaii employer-union health benefits trust fund; establishment. There is established outside the state treasury, a trust fund to be known as the "Hawaii Employer-Union Health Benefits Trust Fund". The fund shall consist of contributions, interest, income, dividends, refunds, rate credits, and other returns. It is hereby declared that any and all sums contributed or paid from any source to the fund created by this part, and all assets of the fund including any and all interest and earnings on the same, are and shall be held in trust by the board for the exclusive use and benefit of the employee-beneficiaries and dependent-beneficiaries and shall not be subject to appropriation for any other purpose whatsoever. The fund shall be under the control of the board of trustees and placed under the [~~department of budget and finance~~] office of collective bargaining for administrative purposes."

PART III

SECTION 14. Section 89-9, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) The employer and the exclusive representative shall meet at reasonable times, including meetings sufficiently in advance of the February 1 impasse date under section 89-11, and shall negotiate in good faith with respect to wages, hours, the benefits and amounts of contributions by the State and respective counties to the Hawaii employer-union health benefits trust fund to the extent allowed in subsection (e), and other terms and conditions of employment which are subject to collective bargaining and which are to be embodied in a written agreement as specified in section 89-10, but such obligation does not compel either party to agree to a proposal or make a concession.

2. By amending subsections (d) and (e) to read:

"(d) Excluded from the subjects of negotiations are matters of classification, reclassification, [~~benefits of but not contributions to the Hawaii employer-union health benefits trust fund,~~] recruitment, examination, initial pricing, and retirement benefits except as provided in section 88-8(h). The employer and the exclusive representative shall not agree to any proposal which would be inconsistent with the merit principle or the principle of equal pay for equal work pursuant to section 76-1 or which would interfere with the rights and obligations of a public employer to:

(1) Direct employees;

(2) Determine qualifications, standards for work, and the nature and contents of examinations;

(3) Hire, promote, transfer, assign, and retain employees in positions;

(4) Suspend, demote, discharge, or take other disciplinary action against employees for proper cause;

(5) Relieve an employee from duties because of lack of work or other legitimate reason;

(6) Maintain efficiency and productivity, including maximizing the use of advanced technology, in government operations;

(7) Determine methods, means, and personnel by which the employer's operations are to be conducted; and

(8) Take such actions as may be necessary to carry out the missions of the employer in cases of emergencies.

This subsection shall not be used to invalidate provisions of collective bargaining agreements in effect on and after June 30, 2007, and shall not preclude negotiations over the procedures and criteria on promotions, transfers, assignments, demotions, layoffs, suspensions, terminations, discharges, or other disciplinary actions as a permissive subject of bargaining during collective bargaining negotiations or negotiations over a memorandum of agreement, memorandum of understanding, or other supplemental agreement.

Violations of the procedures and criteria so negotiated may be subject to the grievance procedure in the collective bargaining agreement.

(e) Negotiations relating to the benefits of and contributions to the Hawaii employer-union health benefits trust fund shall be for the purpose of agreeing upon the benefits under the health benefits plan and amounts which the State and counties shall contribute under section 87A-32, toward the payment of the costs for a health benefits plan, as defined in section 87A-1, and group life insurance benefits, and the parties shall not be bound by the benefits and amounts contributed under prior agreements; provided that section 89-11 for the resolution of disputes by way of arbitration shall not be available to resolve impasses or disputes relating to the amounts the State and counties shall contribute to the Hawaii employer-union health benefits trust fund."

PART IV

SECTION 15. This Act does not affect the rights that accrued before the effective date of this Act.

SECTION 16. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 17. This Act shall take effect on July 1, 2091; provided that parts II and III shall be repealed on June 30, 2017, and sections 28-8.3, 87A-5, 87A-6, 87A-9, 87A-11, 87A-15, 87A-30, and 89-9, Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day prior to the effective date of this Act.

Report Title:

Hawaii Employer-Union Health Benefits Trust Fund (EUTF); Dependent-beneficiary; Collective Bargaining

Description:

Amends the definition of "dependent-beneficiary". Exempts procurement of certain EUTF services from the Procurement Code. Specifies the fiduciary duties of EUTF Board of Trustees. Amends the composition, appointing authorities, vacancy-filling procedure, and quorum requirements of the EUTF Board. Authorizes the establishment of sub-boards of the EUTF Board for the negotiation of contributions that apply only to particular bargaining units. Authorizes the EUTF Board to appoint attorneys independent of the Attorney General. Amends the administration of EUTF moneys and transfers control of EUTF to the EUTF Board and placed under the Office of Collective Bargaining for administrative purposes. Specifies that the benefits of the EUTF are subject to negotiation under collective bargaining. (SB2839 HD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.