HCR 172: 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.

HOUSE OF REPRESENTATIVES	H.C.R. NO.	172
THIRTY-THIRD LEGISLATURE, 2026		H.D. 1
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.

 

 

 

     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 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, and related Hawaii Administrative Rules 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 state 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 review 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:

 

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

 

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

 

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

 

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

 

     (5)  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 Governor, Auditor, Director of Human Resources Development, and Director of Labor and Industrial Relations.

Report Title: 

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

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:

1. A review of all procurement actions taken by DHRD for workers’ compensation related services over the past five fiscal years;
2. An assessment of whether DHRD complied with applicable procurement statutes, rules, and policies;
3. An evaluation of the justification and documentation used for any sole source, emergency, or small purchase procurements;
4. An analysis of the effectiveness, cost efficiency, and oversight of the contractors selected;
5. Recommendations for improving procurement controls, management practices, and accountability within DHRD;
6. A determination of the extent of delays, denials and defaults in contravention of the intent of our workers’ compensation laws;
7. The adequacy of existing enforcement mechanisms and penalties for noncompliance;
8. The effectiveness of current monitoring systems used to detect payment delays;
9. 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