REQUESTING THE AUDITOR TO CONDUCT A PERFORMANCE AND PROCUREMENT AUDIT OF THE DEPARTMENT OF HUMAN RESOURCES DEVELOPMENT TO REVIEW ITS COMPLIANCE WITH THE HAWAII PUBLIC PROCUREMENT CODE.

HCR172

HOUSE OF REPRESENTATIVES

H.C.R. NO.

172

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

HOUSE CONCURRENT

RESOLUTION

REQUESTING THE AUDITOR TO CONDUCT A PERFORMANCE AND
PROCUREMENT AUDIT OF THE DEPARTMENT OF HUMAN RESOURCES DEVELOPMENT TO REVIEW
ITS COMPLIANCE WITH THE HAWAII PUBLIC PROCUREMENT CODE AND ITS MANAGEMENT OF
WORKERS� COMPENSATION-RELATED PRESCRIPTION DRUG CLAIMS.

����
WHEREAS,
the Department of Human
Resources Development (DHRD) is responsible for managing statewide human
resources programs, including workers� compensation administration for state
employees;
and

����
WHEREAS,
the State�s workers�
compensation system relies on accurate, timely, and compliant bill review
services to ensure that medical payments, treatment approvals, and related
processes adhere to applicable laws and state established‑ fee schedules
;
and

����
WHEREAS,
concerns have been
raised that DHRD may not have followed the Hawaii Public Procurement Code,
Chapter 103D, Hawaii Revised Statutes, when selecting contractors to provide
workers� compensation bill review or related services
; and

����
WHEREAS,
it is in the State�s
interest to ensure that all procurement, including professional services
related to workers� compensation, are conducted transparently, competitively,
and in a manner that promotes fairness and best value to taxpayers
; and

����
WHEREAS,
inadequate procurement
practices can result in excessive costs, reduced accountability, and long-term
inefficiencies affecting both the State and injured employees who rely on
timely‑ processing of claims
; and

����
WHEREAS,
injured employees are
entitled under state law to timely medical care, prescription medications, and
benefits necessary for recovery and return to work
; and

����
WHEREAS,
concerns have been
raised that DHRD has adopted practices that result in overzealous denials,
delays, or repeated requests for justification of legitimate workers�
compensation prescription drug claims, midlevel office visits, surgical
implants, treatment plans and certain acupuncture codes (collectively �WC
Claims�), creating barriers to care for injured workers
; and

����
WHEREAS,
such practices may be
inconsistent with the intent and requirements of Chapter 386, Hawaii Revised
Statutes (HRS), and related Hawaii Administrative Rules (HAR) governing timely
provision of medical benefits, physician authority, and employer obligations
;
and

����
WHEREAS,
workers� compensation
law envisions a system in which necessary prescription medications are
furnished promptly when required by the nature of an industrial injury, and
delays, administrative or otherwise, can undermine statutory protections for
injured workers
; and

����
WHEREAS,
while DHRD may assert
that its heightened scrutiny of prescription drug and other WC Claims is
intended to reduce costs and protect taxpayer funds, these practices may
instead impose unintended adverse consequences on medical providers,
particularly physicians who dispense medications directly to patients as
permitted under Hawaii law
; and

����
WHEREAS,
recurring denials or
prolonged delays of payment for WC Claims have been reported to cause financial
strain on medical practitioners, discouraging them from continuing to treat
injured workers or from offering point of‑ ‑care dispensing
services that can improve patient compliance and outcomes
; and

����
WHEREAS,
these delays and
denials can also lead to disrupted continuity of care, forcing injured workers
to wait for medication approvals, seek alternative providers, or experience
gaps in pain management or other medically necessary treatment
; and

����
WHEREAS,
prescribing physicians,
pharmacists, and injured workers have expressed concern that burdensome
administrative barriers imposed by DHRD may compromise the effectiveness,
reliability, and fairness of the State�s workers� compensation system
;
and

����
WHEREAS,
persistent delays and
denials in payments may also signal broader systemic issues, including
inadequate internal controls,
insufficient claims management
practices, or intentional avoidance of statutory obligations
; and

���������������
WHEREAS, if
DHRD�s practices contradict statutory and regulatory standards, or impair
access to reasonable and necessary care, such actions warrant independent
review and corrective recommendations; and

���������������
WHEREAS, the
Legislature finds that these issues, combined with concerns about DHRD�s
procurement of bill r‑eview services, justify a comprehensive audit to
evaluate compliance, efficiency, cost impacts, and the effect of current
practices on injured workers and medical providers; and

���������������
WHEREAS, the
Auditor has the authority to conduct performance audits, procurement compliance
audits, and management audits, including investigations into the use of sole
‑
source, small
‑
purchase, or non
‑
competitive procurement methods; now,
therefore,

����
BE IT
RESOLVED by the House of Representatives of the Thirty-third Legislature of the
State of Hawaii, Regular Session of 2026, the Senate concurring,
that the Auditor is
requested to conduct a performance and procurement audit of the Department of
Human Resources Development
; and

���������������
BE IT FURTHER RESOLVED
that the audit include, but not be limited to:

A review of all procurement actions
taken by DHRD for workers� compensation related services over the past
five fiscal years;

An
assessment of whether DHRD complied with applicable procurement statutes,
rules, and policies;

An evaluation of the justification and
documentation used for any sole source, emergency, or small purchase
procurements;

An analysis of the effectiveness, cost efficiency,
and oversight of the contractors selected;

Recommendations
for improving procurement controls, management practices, and
accountability within DHRD;

A
determination of the extent of delays, denials and defaults in
contravention of the intent of our workers� compensation laws;

The
adequacy of existing enforcement mechanisms and penalties for
noncompliance;

The
effectiveness of current monitoring systems used to detect payment delays;

The
sufficiency of reporting and documentation requirements imposed on
employers and carriers; and

Any systemic issues contributing to repeated or
prolonged nonpayment of benefits
; and

����
BE IT FURTHER
RESOLVED
that Auditor is
requested to submit a report of its findings and recommendations, including any
proposed legislation, to the Legislature no later than twenty days prior to the
convening of the Regular Session of 2027
; and

����
BE IT FURTHER
RESOLVED that certified copies of this Concurrent Resolution be transmitted to
the Auditor, the
Director of Human Resources Development, the Director of Labor and Industrial
Relations, and the Governor
.

OFFERED BY:

_____________________________

Report Title:
�

DHRD;
Workers' Compensation; Audit; Hawaii Public Procurement Code; Prescription Drug