House Standing Committee on Consumer Protection & Commerce

Good afternoon, everyone. We are convene the committee on consumer protection and commerce. It is Tuesday, 03/24/2026, 2:03PM in Conference Room 329. Nice fun agenda for you all. Vice Chair, go ahead.

Thank you.

Just a quick reminder that we have a two minute time limit for testimony, and I have a little timer here that will flash in rainbow colors. If when it goes off, I will just politely ask you to wrap up your comments, in the interest of staying on track for our agenda. So first up on that agenda is SB 2433 SD 1 relating to condominiums.

Requires the condominium education trust fund to be used for educational resources for condominium unit owners in condo governance, requires the real estate commission to ensure the interest of condo unit owners are represented in certain activities funded by the condominium education trust fund and to adopt rules protecting the rights of those owners for purposes of condominium government governance. First up is the Hawaii Real Estate Commission in support.

Thank you. We have Greg Misakian, individual in support.

Mahalo, Chair, Vice Chair, Members of the committee. My name is Greg Nasekian, and I'm here today because my building lost power today. So I was testifying earlier by Zoom for other hearings. And there's a relevance to that because as I walked down the staircase of my building, there were emergency lights in the stairwell that were out. There was still water on the landing from water that came into our building during the storm, and there were many issues.

We have lots of issues in my building.

The fire alarm panels haven't been working for quite some times since the storms happened. There are many issues in buildings throughout Hawaii and condominium associations when they're mismanaged or there's problems. And with that said, you know my background, you know I serve as president of Kekua Council, I'm the vice president of Hawaii Alliance for Retired Americans, I'm a member of the Good Government Caucus, I'm a former Waikiki Neighborhood Board member, I'm a director on my condo association board. So I'm saying this with experience and knowledge.

What this bill does is it's just providing some additional support so that our legislators recognize that myself as an owner and an advocate would like to sit at the table with the different committees and task forces and PIGs that are created, the real estate commission PIGs or committees.

And I've asked personally to mister Kleinhan's over there to participate. I've yet to get an invitation. They want to be the other owners and myself want to be able to sit at the table and be considered stakeholders. That was the word that the introducer of the spill had used previously. I don't know if it's been stricken completely, but stakeholders is a global term.

We wanna be recognized and we wanna have voting power. So just like at the real estate commission, there's a non real estate certified, you know, broker or agent that's on that commission. So with that said, just to I know I'm like, my time is limited. We just want to be able to have a seat at the table and help make the decisions because there's very bad things happening in condominium associations, and mine is one of the worst. So I don't have time to share that.

If this goes further, I'll be sharing a lot more at the judiciary. This goes I believe this goes to one more hearing to judiciary, but I might be wrong. I might be thinking of CPN. With that said, if you do have questions, I would appreciate the questions because the questions will be.

It's been two minutes. Thank you.

Will be able to add some story. Thank you. Thank you.

Thank you. Anyone else in person or online who'd like to testify on this measure? Seeing none, Members, any questions?

Real estate commission. So there's testimony from Bill Nerny and Richard Emery in our testimony today that says you guys can already do this. Yes. Do do you do you need this bill in order to accomplish what this bill is trying to do? Or is this kind of repetitive?

Yeah. The bill's not necessary, but moving forward since the there is this bill that, you know, it'll be taken into consideration if the bill doesn't pass that, you know, there was this legislation and it was and originally calling for, you know, to consider, you know, what is the stakeholders, which they're the primary beneficiaries of the CTFs, so they are stakeholders.

So even if this bill doesn't pass, I'm not saying we're gonna not pass it through this committee, but if this bill doesn't pass through the legislature, you can still the real estate commission can still use the trust fund to educate individual unit owner? Yes. Yes.

Is there a were you planning on doing that anyway before this bill, or are you planning on doing it now? Yes. There's stuff in in progress.

Okay. Is there a timeline on that? When do you expect the education efforts to go forward? Hopefully, we gotta check because there is a solicitation out. Right now, it's with DHE score review. That project, I wanna say, might be done by the June.

Oh. Not a realistic kind of It's pretty

I mean, we just want a ballpark.

It's for solicitation purposes to.

For the end of the year. Is that fair?

Oh, yeah. Yeah.

Okay. Thank you. Fine.

Thank you.

Chair. I have a follow-up question. Yeah.

Go ahead.

Thank you for the real estate commission. So currently, even though condo owners are considered stakeholders, I think you conceded that. Does that mean they have a vote on the commission as a as a group in the same way that we heard there are different, you know, slots that different people fell.

Sorry. I wanna make sure that the bill doesn't do that. Right? I just wanna make sure we're asking questions about about the bill.

Well, doesn't it kind of it in broadly indicate that wherever stakeholders were how the owners are identified as stakeholders, that they have the same participation as other stakeholders. Isn't that Oh, yeah.

Actually, that's I see your point. Go ahead. Hopefully, I understand the the question, but yeah, I mean, the condominium unit owners are the are the stakeholders of the the CETF. So the funds will be used for, you know, education purposes. And there are committees and and probably future committees will be formed, comprised of unit owners.

But for instance, the real estate commission itself doesn't have slots for various stakeholders, And among those slots for stakeholders are condo owners acknowledged as one of those slots. As There's room for participation.

As far as the commission composition there are two public seats, but it's not specifically a condominium owner seats.

Okay. But there are other okay. I guess. But you're saying that currently, there is a discretion that they it could be filled with somebody who is wearing a hat of a condo owner or advocate. Oh, yes.

Yes. And then maybe if there was a part to as for, like, committees that the commission creates or, for example, to improve education just generally, then, yes, it would be strange if owners wouldn't be on that, you know, ad hoc committee Uh-huh. Because we do want that perspective. Okay.

Okay. And they would have a and that's and I think that's the concern is that this feeling that they're not being equitably included for for, you know, for instance, whenever there's a a property management company and there's real real realtors that there also be condo owners or at least somebody wearing the hat of a condo owner and looking at whatever it is, the rules, the laws, the the recommendations of the task force from the perspective of a condo owner as a as a consumer. So k.

So sorry. You mentioned task force too, but the the condo task force is attached to DCCA. The real estate commission is attached to the PBL division of DCCA.

Right. But you're the I think you're the only representative from that whole, I'm kinda like, organization. But thank you. Okay. Thank you.

Thanks. Thanks.

Any other questions? Seeing none, moving on to SD 2047 SD 2 HD 1 relating to pharmacy benefit managers. Establishes certain requirements for pharmacy benefit managers that reimburse contracting pharmacies for drugs on a maximum allowable cost basis. Allows contracting pharmacies to reverse and rebuild claims if a maximum allowable cost is denied on appeal and authorizes the insurance commissioner to assess fines for violations. First up is DTCA's insurance division offering comments.

Good afternoon, Chair, Vice Chair, Members of the committee. Justin Chu from the insurance division. We stand on our written testimony. Thank you.

Thank you. Hawaii Pharmacists Association in support.

Corey Sanders, Executive Director of the Hawaii Pharmacists Association, standing on our testimony in written support with an amendment, but also a proposal about potentially some other use of funds for PBM reform to set us up for success in the future.

Thank you. Kaiser Permanente with comments on Zoom.

Good day. John Cameron here for Kaiser Permanente. Thank you, Chair, Vice Chair, and committee Members here in this bill. Kaiser stands on to bring testimony requesting a technical amendment. Thank you.

Thank you. Anyone else in person or online who'd like to testify on this measure? Seeing none, any questions?

I think one for Corey, actually. The DCCA Insurance Commission requested a lot in order to effectuate this bill. Do you have do you have thoughts on whether that level of resource is needed?

It seems really high to me. Looking at MAC pricing alone is a really small subset of PBM reform. It gives me concern about some other issues that we would wanna bring up in future sessions that I think would be more impactful. I asked some other state associations what their start up costs were. I'm getting under 1,000,000 for some other bigger initiatives.

But I know they spoke to this last hearing. They also considered startup costs with equipment training from other states. It seems like a lot of FTEs, and it seems like a lot of funds. But I'm happy to come back with any other data that I can get specifically for MAC pricing if needed. Okay.

I think this is I have one more committee to go if you could if you put that in the next testimony to the next committee about that.

Thank you.

Sure.

Any other questions? Seeing none, next up is SB 2425 SD 2 HD 1 relating to health insurance. Requires health insurers, mutual benefit societies, and health maintenance organizations to honor a patient's written assignment of benefits to a substance use disorder treatment provider. Amy Klonick prohibits anti assignment clauses that restrict or invalidate a patient's right to assign benefits.

Amy Klonick authorizes insurance, Commissioner, to adopt rules and take enforce enforcement action and deems violations to be unfair methods of competition and unfair or deceptive acts or practices in the business of insurance.

First up is DCCA's insurance division with comments.

Hi. Good afternoon again. Justin Chu with the insurance division. We stand on our written testimony providing comments. Thank you.

Thank you.

The Ohana Treatment Center offerings support on Zoom.

Aloha, Chair Matayoshi, Vice Chair Grandinetti, and Members of the committee. My name is Elliot Smith. I'm the CEO of the Ohana Addiction Treatment Center in Kona on Hawaii Island and a person in long term recovery. So I wanna address two concerns directly. So first, HMSA says it's working to address this internally.

And providers have been asking HMSA to change this practice for more than five years. And they've actively refused and gone out of their way to block direct provider payment. And that's not a disagreement. That's a standing policy. So now after the Senate passes this bill 25 to zero and HLT passes it seven to one, HMSA says it will self correct.

But this committee should ask, what are they implementing? When does it start? Is it binding or voluntary? Because if it's voluntary, it can be reversed the moment the bill dies. So if HMSA truly intends to do this, then the bill simply puts their commitment into law.

And that shouldn't be a problem. Five years of asking produce nothing, one bill produced a promise. So second, the concern is that this creates a special class of providers, and it does not. A cancer patient does not relapse because they received a reimbursement check. But a person in early recovery from addiction receives a check for tens of thousands of dollars, and that money can kill them.

We've lost a patient to exactly that in Hawaii, and this is not a special class of providers. It is the legislature recognizing a specific harm and matching the fix to the problem. The bill is narrow. Boca licensed residential and detox only. Every insurer fraud protection stays intact.

29 other states already have similar protections, and I respectfully urge the committee to pass SB 2425 HD 1. And I'm available for questions if you have any.

Thank you. Next up is HMSA in opposition.

Good afternoon, Chairman Matayoshi, Vice Chair Graninetti, Members of the committee. Weldon Ah on behalf of HMSA. We stand on our written testimony in opposition to this measure. But as mister Smith had alluded, given the concerns of, stakeholders as well as the legislature, our leadership has enabled our teams to secure a system and solution to allow for direct payments for nonpar, substance use This order facility is effective 03/27, so this Friday.

HMSA will now send direct payments to non participating SUD treatment facilities in Hawaii, including the four facilities that are nonpar on the Big Island for all services provided to our commercial members.

We agree that this solution best serves our members who are on SUD treatment plans in their long term journey. We still have a lot of concerns about the assignment of benefit portion of this, but we do feel that the direct payments and supporting our members to not have access to the large amounts of money that are alluded to would be best for their treatment journey. Thank you for the opportunity to testify.

Thank you. Hawaii Association of Health Plans in opposition.

Good afternoon Chair, Vice Chair, Members of the committee. Rachel Wilkinson on behalf of the Voice Association of Health Plans and we're gonna stand on our written testimony in opposition. Thank you.

Joseph DeBasto, individual in support on Zoom. Joseph?

Good afternoon, Chair, Vice Chair, Members of the committee. My name is Joseph DeVasto. I am a licensed mental health counselor and addiction specialist and a current dictatorial candidate at Chaminade University in Honolulu. Thank you for the opportunity to provide testimony and strong support of SB2425 HD1. I speak today not only as a clinician, but as someone who sits face to face with the consequences of our system every single day.

Just yesterday, I received a call from a young woman receiving seeking a referral to treatment. She had achieved six months of sobriety, six hard earned months. She was also experiencing active suicidal ideation and urgently urgently seeking residential treatment for substance use disorder after a significant relapse. She was ready, willing, and motivated, and yet she could not access care. Not because treatment was unavailable but be and not because she lacked insight but because of these insurance barriers.

The out of pocket costs required for admission in Hawaii were simply too high. She was told her only viable option was to leave the islands and attend treatment on the mainland, but she is a student. She works. Her support system is here. Asking her to leave was not clinically appropriate. It is also destabilizing.

This is not an isolated case. I have seen this as a pattern in my fifteen years of addiction treatment in Hawaii. Too often, individuals are forced into unhealthy decisions, stay stay close to home or forgo forgo treatment or leave everything behind just to access care. At its core, this is a failure. Insurance and financial systems are designed to remove barriers and are instead creating them.

And the impact is not limited to one demographic. I see this affecting the working and middle class across our islands. These are our nurses, teachers, first responders, construction workers, young professionals who contribute to our communities every day. These are individuals who want treatment, who are asking for help, and are being turned away not by Clinicians, but our current system. What happens next is predictable and preventable.

Without access to timely appropriate care, we see increased risk

two minutes. Can you wrap up your comments, please? Thank you.

Thank you. Ultimately, I wanna say, care has been delayed and not denied. And behavioral health denial care can be fatal. Insurance should be used to remove barriers and not create them. Thank you.

Thank you. Anyone else in person around Zoom who'd like to testify on SB 2425? Seeing none, Members, any questions?

Question for HMSA. So, I guess, I'm trying to understand the term reimbursement. So in I think one of the testimonies site, a case where somebody maybe somebody gets a a really large check or it's a reimbursement. But is it because they paid for the service out of pocket and now they're being reimbursed?

Or did the treatment facility provide the care and then you're giving the payment to the the patient and then the patient's supposed to pay for reimburse the patient's then supposed to reimburse the care facility. So.

thank you for the question, rep. And I think what at the heart of this, the reason why the reimbursement goes to the patient is because the provider that they're seeing is what's considered nonpar or nonparticipating. If a patient opts to see a participating provider, which the majority over, I believe, 90% of the SUD facilities in the island or state are participating, there's a set co pay and the reimbursement or what we reimburse goes directly to the provider.

In the case of a nonpar, nonparticipate participating provider, whether it's SUDs or any other type of medical care, because we don't have a contract with them, we have a contract with the member. So the member would pay upfront, and then we would reimburse that.

So that's why this whole issue about nonpar par, that's why the amount of monies is going to the member directly. But in this case, starting this Friday, we'll be paying, at least for SUVs, the nonpar facilities directly. But it's a function of the provider choosing to not be a part of the participating network.

Right. But it's so okay. Thank you for also confirming or affirming that it is possible that what this bill is trying to do.

There's a there's a large reason for having those contracts and agreements with the providers and having them to be participating. It ensures quality of care. It also controls the cost of out of pocket for the member. In nonpar settings, there's what's called balance billing where we would in a participating setting, we would set the amount of the co pay and the reimbursement, and that's it. In nonpar settings, they can charge whatever they want and go back to the member for that balance.

So that balance billing is something that we feel very strongly about. It's not a full payment. Thank you.

Why wouldn't HMSA honor an agreement by the vice member to assign its benefits or assign the payments to a nonpar facility. I'm I'm I this bill seeks to force HMSA and others to honor that kind of agreement. So if I'm the patient and I tell HMSA, like, hey. I'm I'm going to the Southern facility. I have a assign I wanna assign my benefits instead of you paying directly to me.

It I mean, it's it's voluntary by your member. So why would HMSA honor that agreement? I know you're not a party to it, but it is it's a sign of a third party beneficiary kind of situation.

The assignment benefit takes the member out of the decision.

So in the case of a nonpar provider, I seek them by choice. I would still have to submit the reimbursement and take on the potential, I guess, burden, if you will, to seek that care. But if the assignment of benefit is granted or honored, that provider can charge whatever they want and potentially even balance bill the member after the fact because now they're in possession of it.

So that's why there are other reasons why we would hope that providers would become participating in our network, largely in part due to the quality of care and controlled cost of the network.

So it's fraud that you're worried about, is that the.

We are worried about fraud, and we've seen across the country. I mean, this space is just brought with it. I mean, in 2025, the DOJ found a $650,000,000 scheme, almost a mill of patients, if you will, especially around Native American reservations and homeless, where they would sign people up for plans and basically just bill tons of reimbursements against the Medicaid system in Arizona. Has that been happening here?

We're seeing fraud in the state, but we're not quite at that level largely, I think, in part because there is no assignment of benefits.

So have patients tried to do an assignment of benefits with you folks before and you've denied it? Or what what's I

believe our contracts have a benefit clause. I can't speak directly to it.

Okay. Now you said you're you're changing your policy some for

the SUDs. When is that gonna take effect? Friday, the twenty seventh. So in practice, it took a little bit of time to make the system work, but starting the twenty seventh, those should be lined up to allow for it during payments for SUDs.

So three days from now. Yeah. Is that not essentially the same thing? I mean, how how will fraud be addressed if you start this new policy that the.

Member is still in the position to have to file the reimbursement, of which the reimbursement would go to the provider? In the case of assignment of benefit, that's all of the hats of the member. And I think that's the biggest difference of what we're looking at.

Okay. So the patient will still have to take some steps to request the money from you folks, but instead of the money going back to them, it would go to the provider.

But we feel that allows them to make a decision about their payment plan as well as the potential cost of seeing our provider. Thank you. Thank you.

Any other questions? Seeing none, moving on to SB 3045 SD 1 HD 1 relating to health insurance. Requires all health insurance, mutual benefit societies, and health maintenance organizations in the state, including Medicaid managed care programs to cover the cost of continuous glucose monitors and related supplies under certain conditions. DCCA insurance division with comments.

Good afternoon. Justin Chu for the insurance division, we stand on a written testimony for writing comments.

Comments. Department of Human Services with comments on Zoom. Oh, in person.

Aloha, Chair, Vice Chair, Members of the committee, Meredith Nichols on behalf of DHS. And we'll stand on our testimony. However, I do wanna note that we left off the HD1 in the title of our testimony and also did not recognize the good work of HHS and the health committee in the last hearing where the section that we had requested be removed did get removed from the current status of the bill. So we wanted to acknowledge that.

And, yeah, we're here for questions if you have them here. Mahalo.

Thank you.

State Health Planning and Development Agency in support.

Hi, Chair, Vice Chair, Members. Jack Lewin, SHPDA. I just wanted to state that on behalf of a woman named Gail Mogawa, who's secretary in our agency, who was denied a continuous glucose monitor twice, and then she passed from hypoglycemia. That shouldn't happen again. So I think I mean, I and I'm hearing some some real tool.

It's in the fourth year around, I'm hearing from matures that they're they're taking a more reasonable approach to this. But we think that when you have an insulin dependent diabetic person and their physician has ordered continuous glucose monitor, it's standard of care. So that would just be one simple tightening up of this that we we'd like to see happen and and not to have us come back next year to talk about it again. Thank you.

Hilo Benioff Medical Center Foundation in support on Zoom.

Aloha, Chair, Vice Chair, and Members of the committee. I also wanna thank Meredith from MedQuest and Jacqueline from SHPDA for providing support for this bill. We I'll send them my testimony, but we did a series of community gatherings, and what we found is insurance has been inconsistently inconsistent with supporting our patients and community members with access to glucose monitors. And we are the only state in the nation that does not have a published criteria.

And so as doctor Lewin said, it is a standard of care, and we would like to see this get passed out of your committee to protect folks. Happy to answer any questions.

Thank you. Hawaii Association of Health Plans offering comments.

Good afternoon again, Chairs, and Members of the committee. Rachel Wilkinson on behalf of the Hawaii Association of Health and we're gonna stand on our written testimony providing copies. Thank you.

Anyone else in person or on Zoom who'd like to testify on this measure? Oh, sorry about that. I skipped you. You can see insurance division.

You gotta tie your job.

I'm sorry. Sorry. Wait. Where am I? I'm sorry.

Yeah. I think that's gonna be offended. Chair Matayoshi, Vice Chair Grandinetti, Members of the committee, Weldon Ah on behalf of HMSA. We stand on our written testimony offering comments. I just would like to note that in 2025, we've updated our coverage policies internally to basically allow for anyone on a type one or incident dependent diabetes during any type of access with CGM.

We do have some concerns that broadening it to gestational as well as type two mandated could impact the supply chain of it. We feel that medical necessity is a huge component of issuing of the CGMs. And we just like to highlight in the others report 2606, which dealt with the mandate of CGMs.

They ended by concluding that hospital eight twenty, which was the bill at the time, which reiterates coverage for continuous glucose monitors when medically necessary prescribed would not alter existing insurance coverage requirements in their Hawaii law. Thanks for the opportunity to testify.

Thank you. Thank you, HMS. Sorry. Okay. Anyone else who'd like to testify on this project?

Seeing none, Members, any questions?

Questions for HMA, but I'll just add another letter. HMSA? So it all already requires medical necessity in a prescription. Some other testimony, though, I think maybe including yours said that if it's already if these glucose monitors are covered already if they're medically necessary and prescribed. Right.

So are you already doing what's in this bill? Or have you already been doing what's in this bill?

Yes. We do provide for medically necessary CGM.

Okay. So we answered the But that's like a type one diabetes only, you said?

I mean, there there's a varying, I guess, plethora of different factors that goes into the medical necessity, but I believe that regardless, we found that type one or insulin dependency is a

pretty key indicator of medical necessity. So if someone had type two diabetes and the doctor their doctor decided that it was medically necessary and provided a prescription for it, would HSA cover it?

I believe so if the medical necessity criteria was met. Good.

And that's so you're you're relying on that doctor to to make that call, or were you guys second guessing some of those?

That I can't speak to directly, but I believe that I mean, again, in our coverage would be all for all medically necessary requirements in CGM. But the type one or insulin stands out because of the acute need, I think, for constant monitoring. So up to date, readings of blood sugar.

So that that's fair. I mean, we don't want type two to become type 12. Right? I mean, I I to me, this bill is a little more preventative. I guess what I'm trying to get to is why this bill why the introducer of this bill felt it was necessary to even put it up.

If doctors unless doctors who are determining that a glucose monitor is medically necessary and are prescribing them are getting denied, that's the only situation I can think of right now.

I think there I think there's no legal issues, chair. I mean, this bill has been introduced, think, a handful of times. Right? About four or five years. Our policy has changed in 2025. So recently, I know that there's been a big demand for CGMs outside of the diabetes space, largely in the lifestyle space.

So, I mean, there are talks of access to this. But in terms of diabetes, the medical necessity component will continue to be kind of the driving forces to HMSA coverage.

And then this bill is just for diabetes, g gestational diabetes. So.

Type one, type two, and gestation. The type one that we respect is acutely needed, and that's why our internal policy is called. But in term I can't speak necessarily to the type two or gestation. But in the policy, it does apply. Insulin dependency is typically an indicator of medical necessity.

But you're not aware of any denials for type two or gestational diabetes where their the doctor has determined medical necessity at I'm not. Prescribed. Okay. But you you you think that it would be covered? Because if so, then should you guys be okay with this bill? Because it's

I mean, we we still have because there is and maybe it's gotten better, but there were concerns about supply chain issues in the last couple years. But, I mean, it still is an issue that if someone acutely needs it, that there could be impacts on the supply chain because now everyone has access to it. There is a little bit of concern.

We don't need to paint it through the gloom picture, but it is something a reason why the medical necessity and I think standard of it.

Okay. Thanks.

Okay. Thanks.

Sorry. Well, then I one other question based on your testimony. Somebody referred to outpatients being covered.

I just wanna make sure that because my my understanding of these monitors when talking to people is that these monitors are not just for outpatients. They're used for people experiencing diabetes, just day to day kind of thing. Did your testimony mean that HPSA had been covering it in the past for just people in outpatient procedures and settings, or did you mean for everyone, not just outpatients?

And then maybe I'm maybe I'm misinterpreting the word outpatient to be.

Which means you're not in the hospital.

Yeah. Is that for All So this is a durable medical equipment. So someone would have it with them constantly or constantly on them outside of the hospital.

So it could be by misunderstanding of it, but is an outpatient anyone outside of the hospital period? So there's no time limit to how long someone can be considered an outpatient.

I mean, I believe that if you have the type one insulin dependent diabetes, it's kind of a life time of patient. So you just need to have access to this throughout the duration. Thanks. Type two, I believe, can be reversed. Type one, I don't believe.

Okay. Thanks.

Any other questions? Seeing none, moving on to SB 2761 SD 2 HD 1 relating to social media. Requires the social media platform to take reasonable steps to verify the age of new and existing account holders on the social media platform. Prohibits a platform from allowing individuals under 16 years of age from creating or maintaining an account or profile, absent expressed consent from a parent or legal guardian. First up is DCCA's Office of Consumer Protection with comments.

Good morning. Good afternoon, sheriff's vice chancellor of the committee. I'm Raji Tolentino with Office six Consumer Protection, and we will stand on our testimony offering comments. I'm happy to answer any questions.

Thank you. Matt Joyce in opposition on Zoom.

Yes. Good afternoon, members of the committee. My name is Amy Bos, Vice President of Government Affairs at NetChoice, a trade association dedicated to free expression, free enterprise online. We share the goal of protecting kids online, but we do have serious concerns with this bill as written. The age verification requirements do create a massive privacy problem.

To verify someone's age, platforms would need to collect sensitive documents, government IDs, biometric data from every single user, including adults. That data creates a honeypot for hackers and puts Hawaiian's data at risk. So while the bill is framed as a protection for children, it functionally creates a digital ID requirement for the entire net entire Internet using public. Second, we do want to raise some of the constitutional issues. Courts have consistently struck down similar laws in other states for restricting minors access to constitutionally protected speech.

Most recently, courts have struck down nearly identical laws in Arkansas, Louisiana, Ohio, Georgia, and California, for these reasons. We'd love to work with a committee on targeted solutions, like digital literacy, education, ways to protect kids online without putting individuals' data at risk. So happy to answer any questions committee members may have and thank you again for the opportunity to testify today.

Thank you. Computer and Communications Industry Association in opposition on Zoom.

Good afternoon, Chair Matayoshi and Members of the committee. My name is Megan Stokes, and I'm the State Policy Director of the Computer and Communications Industry Association. We stand on our written opposition, but would like to reiterate that Senate Bill 2761 involves core first amendment protections. Courts have consistently held that the government cannot broadly restrict lawful speech in the name of protecting minors, particularly when doing so would limit the access for adults and older teens.

This bill's approach, especially its age verification and parental consent requirements, risk doing exactly that.

And similar laws across the country are already being joined on those grounds. Again, thank you for the opportunity to testify.

Thank you. Meta in opposition.

Good afternoon, Chair Matayoshi, Vice Chair Grandinetti, Members. Thank you for the opportunity to testify on behalf of Meta. Meta opposes this bill. We certainly share the goal of online protection of children, teens, but we have to oppose this bill. Chair Marten and HHS took the bill in, we think, a positive direction by, getting rid of the the ban for 16 and, substituting parental control.

But the way it's written, it creates, many problems. And there's yeah. I'll just highlight two. One, it it's unworkable for families, and it's it's gonna create a lot of confusion because it's gonna be on an app by app basis. Meaning, every app has to set up some kind of, age verification and parental consent.

That as one of the other people testified creates a gigantic amount of data privacy problems. But for families, if teens use maybe 40 apps a week, if you have to keep doing this over and over again, it's gonna be burdensome on families of, people in Hawaii. And then the data privacy issues, you know, we recently had a data privacy breach up the and the cancer center. We don't wanna create another treasure trove of things that people can get to.

Meta suggests that the way to go is to have an app store statue.

We appended one to the my testimony, and that's a model bill. It's been passed. A version of it has been passed in four different states. Texas, Louisiana, Utah, and Alabama. And that way, you already have this data which goes in at the app store level or the operation when somebody gets a Iphone or something like that.

They have to put in key data and then they just send a signal out to all providers that says this team is at a certain age. And so we think that is a much more workable solution rather than creating a problem. So we'd ask you to consider that. Perhaps, you know, we don't like to gut and replace, but you could use those provisions and put them into this bill. And finally, Meta does share all these, concerns.

Meta tries to, keep teens safe, with teen accounts where you can parents can restrict, the amount of time that that, kids can be on there and establishes that that there's aPG 13 content in the event that somebody is under DH. So thank you very much for the opportunity to testify. I'll be happy to answer any questions.

Thank you. Anyone else in person or on Zoom who'd like to testify on this measure? Seeing none, Members, any questions?

Yeah. David, I've got a question for you.

Certainly.

So you you suggested the App Store kind of page verification on that level, which I'm not opposed to. I actually think that's a pretty good player to add. My understanding though is that Utah tried to implement that, and they're currently being sued, possibly by you guys for that idea. So I just wanna make sure that if you're proposing that idea, you're not gonna sue us for putting in your idea.

Oh, well, I certainly have no intent of suing you for putting in my ideas. But my understanding is is that Utah was sued on something else, but I don't have a perfect understanding of the suits.

But, yeah, could you could you look at that?

Let me look at that and and communicate with your office, Chair. I apologize. I'm not up on that.

No problem. Thank you. Thank you. Appreciate it.

I have a question for opposite consumer protection. Oh, thank you. I was just wondering if you could speak to some of the data privacy concerns because I guess I was a little surprised to see them and present not addressed in your testimony because we had just recently heard SB 3016 which is kinda related to personal identification.

Well, as I mentioned in my previous testimonies, their Nike state have a comprehensive data privacy law. So they have this a framework where the the laws show I mean, they regulate how you collect data, protect data, sell data. We don't have that. Even the definition of personal information in Chapter 47 n, which our our office enforces is outdated. And I think Senate bill 3016 is trying to expand the definition of personal information.

So what we really need is to have a framework for protecting data, not having these patchworks of legislation to have a definition of data minimization in one bill and in another one. It makes it hard for us to enforce. It makes it hard for business to to to follow the the law as well.

Thank you. Any other questions? Okay. Moving on to the final measure. Finally?

Nope. Not quite. SB 3001 SD2 HD1 relating to artificial intelligence. Requires operators of conversational artificial intelligence services in the state to issue certain disclosures to account holders and users. Requires operators to develop protocols to prevent the production of suicidal ideation.

Amy Nunez In account holders establishes protections for account holders and users of conversational artificial intelligence services and establishes protections for minor account holders and users of those services. First step is the Department of Education and Support. Not present. Office of Consumer Protection with comments.

Raji Tonikido, again, Office of Consumer Protection. We offer comments on this bill. We suggest deleting the definition of sensitive data because that term is not actually used anywhere else in the bill. We also noticed that the personal data is defined, but it does not appear elsewhere either. At the same time, the bill does use the term personal information in the annual reporting requirement, so we do think it'd be helpful to define that term.

As we mentioned earlier, chapter 47 n already includes a definition of personal information for consumer privacy purposes. If the definition of personal information is expanded in this, this session in senate bill three zero one six, then this bill should be amended to meet personal information as defined as in HRS four eighty seven n dash one. On the performance side, because OCP already has authority to enforce chapter 41 e, we recommend clarifying that OCP may also enforce this bill.

We think this would help avoid confusion and make the enforcement provisions clearer. And finally, we request the general fund of probation to support enforcement by our office.

Thank you.

Thank you. SHPDA offering support.

Chair, Vice Chair, Members, yes, we do support this bill strongly. And we've got some some comments coming in to SHPDA that suggest maybe we didn't our testimony didn't reach quite as far as it it it might have.

And these some of these came from actually young users, but as we're we went in the section later. So I didn't include this in the testimony, but I will verbally just share what what had what we've received under ensuring the operators can avoid protection by ignoring age signals, right, and around that topic. We're using a standard in this bill knows or has reasonable certainty.

And that certainty piece is could it could be, I think, improved upon by having a standard that said should reasonably know in the course of business as the standard. Where it would be a little bit if a if a program did not really ask PH but knew that there were minors using it on a frequent basis, then understanding would be a little bit more acceptable.

So I can send that to you if you'd like.

Okay. Alright. Thank you. Thank you. Office of Wellness and Resilience in support.

Chair, Vice Chair and Members of the committee. Naomi Leikuh with the Office of Wellness and Resilience. We stand in our testimony and support. Thank you for hearing from us. Transparency

Coalition and support on Zoom.

Thank you, Chair and Members of the committee. My name is Jay Jessima. I'm testifying in support of SB 2001 with amendments. I'm a cofounder of a nonprofit called Transparency Coalition based in Seattle, and it was my pleasure to testify in front of you in for rep La Chica's House Bill 1782 a few weeks ago. We've been working with lawmakers in multiple states.

At this point, we're actually working with lawmakers in about 20 states on bills. I'm pleased to report today that Washington's governors signed a thoughtfully crafted bill just today that includes several provisions that are absent in SB 2001, and I wanted to highlight a few of them. One is that the definition of conversational AI exempts applications that are integrated into another web application. By this standard, a very commonly used chatbot like Google Gemini or Meta AI, among others would be exempt.

And I'm sure that's not the intent of the author or this committee.

Both have been implicated and well publicized cases of harmful effects of chatbots. The second is that all the chatbots laws that have been enacted so far and at least one that is will be soon be enacted, all provide for private right of action for citizens to claim redress when affected by chatbots in a material fashion. Why should Hawaii's residents receive less protection than these other states?

By the way, Ted was neutral on the inclusion of a PRA in Washington and Oregon, where I had first hand knowledge of the negotiations. And then I think the last thing I wanted to touch on was that the chatbot laws in Washington and Oregon include prohibitions on manipulative engagement design.

These have been implicated in many cases of emotional and physical harm among children, and these provisions are absent in SB 3001 but present in House Bill 1782 as an example. Thank you for hearing this bill, and we hope to work with you and the committee on appropriately amending this piece of legislation. I'm available to answer any questions.

Thank you. Young People's Alliance in opposition on Zoom.

Aloha, Chair Matayoshi, Vice Chair Grandinetti, and Members of the committee. My name is Mick Tobin. I am 23 years old. I'm the cofounder of the Young People's Alliance, a youth led bipartisan organization representing 2,400 students across 72 campuses nationally. I strongly support protections against AI companions.

Three weeks ago, I testified in support of an AI companion safety bill, h b seventeen eighty two, to this committee, actually. And then two weeks ago, I flew to Honolulu to testify in support of the same bill to the JHH committee. With that said, I strongly oppose oppose SB three zero zero one unless amendments are made. As ill as is, the bill contains significant gaps that undermines ability to meaningfully protect Hawaii's Kiki and families in favor of protecting big tech.

Key human like design techniques that foster emotional dependency and romantic relationships and minors everyday use of these tools aren't limited in this bill, allowing chatbots to create emotional bonds, manipulate manipulate engagement, and claim sentience.

And those provisions to protecting against these type of engagement tactics were included in the Washington bill that Jay just spoke of and or included in HB 1782. The definition of conversational artificial intelligence in this bill excludes AI chatbots that exist within social media platforms such as Snapchats MyAI or Instagram's MetaAI. These are features targeted for minors and marketed as replacements for friends. They remember conversations across sessions and children treated like a friend. Why should they have special privileges?

Moreover, the bill's knowledge standard allows operators to avoid obligations by claiming ignorance of whether user or minors and Its enforcement framework places the entire burden on the attorney general's office while leaving harm families with no direct pass through accountability. Those in six states including, s p three zero zero one have here have appeared with many of these same gaps suggesting they recorded in some form. And we're personally just worried that big tech is sliding this language into otherwise strong bills without legislators fully knowing.

I've included stronger language alternatives at the bottom of my testimony drawing from h Hawaii's HB 1782, which has passed the house and is currently moving through the senate. If we pass SB 3001 without amendments, we'll cement a national status quo where legislators feel like they've addressed the problem, but children still aren't protected.

We must stand for Hawaii's Keiki and families, not for big tech. Please amend SB 3001.

Thank you. Next up is Google in support.

Aloha, Chair, Vice Chair, Members of the committee. Nahelani Parsons on behalf of Google in support of best case user one. We recognize that there is no currently no statute in the HRS that regulates chatbots or conversational AI in the protection for minors, and so I appreciate the committee's attention on this matter. This measure would set an industry standard that is in alignment with other states such as California, New York, Washington, and Oregon recently.

We respectfully ask that the committee as they move this conversation forward to keep the bill focused narrow to address the intent to protect our keiki and that we can use this measure to give the attorney general a tool in the toolbox that they don't currently have.

So appreciate the opportunity to testify and be available if you have questions.

Thank you. Brianna Harmon, individual offering comments on Zoom. Not present. Okay.

Anyone else in person or on Zoom who would like to testify on this measure? Seeing none, Members sending questions.

Should I do have one for Google? There there is an exemption in here for integrated chatbot services. Gemini was brought up, which is you guys. When was that exemption put in? What was the justification for that?

My understanding is they're not exempt. The Gemini currently adheres to all of the requirements in this bill in their own applications. So as the bill is currently written, they already do administer those protections. They already have the protections against suicidal aviation and protections for minors. So the bill wouldn't add anything new that they're already currently doing.

So my understanding is it would apply.

Chair, may I comment?

No. Unfortunately, hold on one second.

Sure. I have the bill in front of you. You wanna

Yeah. I think it's oh, wait. Subsection h. So on page seven, there's a carve out for conversational artificial intelligence service, and that's what the other testifiers are complaining about saying that that would exempt certain things like the integrated chatbot AI, maybe Gemini, other things from that. So in your perspective, that does not exclude Gemini?

But that would be an expert on this matter that that I would have to defer to them and check. But my understanding of this is things like when you defer to the the web interface for the the airlines that have the inbuilt checkbook service, and then they help you troubleshoot your your change of flight or things like that. That would be considered that, but Gemini itself is

So you you folks wouldn't have any issue with taking out that section then?

Moving. I would have to double check about removing the language, but as far as I know that it have issues with it. Okay.

Do you know why that so so you're saying that that section, they'll put it more for, like, the Hawaiian Airlines chatbot?

That was my understanding about what it would apply to, like, those types of, like, user interfaces that are service orientated.

Okay. Thank you. Let's hear from the other testifiers. Did you have something to add?

No. I think maybe we can add clarification language as so long as it doesn't behave like the conversational chatbot. You know, that way, there might be ways to clarify it. So it only limits it to customer service chatbots like the Google testifier suggested.

So there

may be a suggestion we can make there.

Okay. Okay. That's fair.

I think Meta AI also has the same thing. It's integrated into a web application, Facebook. So it might also be exempt in our reading of the bill. And this is very similar language in some other states as well that we've been pointing out.

That you've been fighting against. Is that right? Okay.

Yes. That's right. Okay.

Thank you. Members any other questions?

I have a question.

Sure. Or go back.

I was wondering if you could speak to the private redaction.

Sure. My understanding of the I was just sharing with someone recently. I know Washington and Oregon included the language. We presently don't are not getting involved in that language, but my understanding why Washington and Oregon included that was is more of a budgetary issue because their state budgets were in a deficit and any bills that were at that point that could move forward couldn't have a finance referral on it. So they added the private redaction at the last minute in order to keep the bill going.

So it wasn't actually quite a variety of actions to do with more getting the bill moved forward in a year that they couldn't all the bills died when we had a pin or finance committee on it.

To, like, remove some of the enforcement pressure from

Yep.

They were just yep. They were struggling with that, that internal. So that's why I understand that, but I don't have a position on the private production. Thank you.

Vice Chair, may I correct the record there if it's possible?

He was involved in the bill. Go ahead.

Yeah. I was involved in both bills. Both bills emerged from the drafting table with the private right of action. So it's it's a, you know, it's not accurate to say that it was It was added in at the last minute or introduced as a compromise. And those both bills had that from the beginning, and tech was neutral.

I mean, I can send you a picture of people from tech smiling next to the governor today when the bill

Just because it was just because it came out of drafting, though, that that doesn't necessarily mean that it wasn't put in for budgetary concerns, though. Right?

That is entirely true. Yeah. It it's entirely possible that the budgetary constraints play the role, but both Washington and Oregon provide the AG the option of enforcing it and also offer a private right of action, which is another formula you could, you know, consider for the state of Hawaii.

Okay. Thank you. Any other questions, Members? Okay. Recess.

Alright. We're reconvening for decision making. First up on the Agenda is SB 2433 SD1 relating to condominiums. Chair's recommendation is on page seven to delete subsection f. Page five, line 21, we're gonna add a subsection six to the list.

Adding subsection six to the list of, for uses for the funds collected by the real estate commission and to re defect the date. Members, any comments?

I'm sorry. I don't have it in front of me. Do you mind just one sentence on what those two sections that you are

You can pull them up. I didn't write it down. Oh, sorry. One is adding what we're trying to do to the list of things the funds can't be used for. Otherwise, they'd have kinda trouble using it.

Subsection F, I believe

I'm here. I'm in Subsection F. But what are you doing with that deal? You need to it. Yep.

Oh, that's the most important part.

I believe it's unnecessary. I think it's, are repetitive.

Okay. Thank you. I'll be voting given that I think this is the put with reservations on that. Okay. Yeah. I've okay.

Yeah. The the real estate commission already has to do this. That's why we're taking it out, so it's not confusing. Okay. Members, any comments?

Ok Vice Chair for the vote.

Voting on SB 2433 SD1. Chair's recommendation is to pass with amendments. [Roll Call] Chair, your recommendation is adopted.

Thank you, members. Moving on to SB 2047 SD2 HD 1 relating to pharmacy benefit managers. Chair's recommendation is to adopt Kaiser's proposed amendment, which is just a section change, to redefec the date. And I do want to include in the committee report the funding request by the insurance commissioner, which is please be happy. Members, any comments?

Yep. Vice Chair for the vote.

Moving on SB 2047 SD 2 HD1. Chair's recommendation is to pass with amendments. Any reservations? Any Noes? Are your recommendations adopted?

And moving on to SB 2425 SD2 HD 1 relating to health insurance. Yeah. For some consideration with given that HMSA is already implementing a very similar program to this starting Friday, a chance recommendation is to defer this measure at this time. I do want to note that I'm a little disappointed that it had to come to this to get movement on this issue, but I am grateful that HMSA is acting at this time. So we'll be deferring this measure.

Moving on to SB 3045 SD1 HD1 relating to health insurance. We have some technical amendments to make, and I'd also like to redefine the date. Members, any comments? Any Vice Chair for the vote?

Voting on SB3045 SD1 HD1. Chair's recommendation is to pass with amendments. Any reservations? Any Noes? Chair, your recommendation is adopted.

K. Moving on to SB 2761 SD2 HD 1 relating to social media. We'll be deferring decision making on this matter to tomorrow's agenda, 2PM agenda in this this room 329. Last up on the well, not last up. Next up is SB 3001 SD2 HD1 relating to artificial intelligence.

Got a number of amendments we're gonna be making here. Char's recommendation is to first define personal information as the same as under HRS 487 n-1. On page nine, we'll be do we'll be deleting the term sensitive data as it no longer appears anywhere in the bill. It's kinda left over. On page eight, we're gonna be also deleting the term personal data as it also no longer appears in the bill except for in the definition of sensitive data, which we're already deleting.

Subsection h on page five, we're gonna add language notwithstanding the UDAB section or any law to the contrary or subsection j, just for clarity. I will be adding OCP as an enforcer on page five line seven for clarity along with the AG. Adding language from HB seventeen eighty two under the protection of protections for minors section. We'll be adding that to the bill, which restricts the chat bots from doing certain things like creating emotional dependency and such.

Deleting the conversational artificial intelligence service carve out from page seven and redefining the date.

Members, any comments? K. Vice Chair for the vote.

Voting on SB 3001 SD2 HD1. Chair's recommendation is to pass with amendments. Any reservations? Any Noes? Chair, your recommendation is adopted.

K. Moving on to SB 2852 SD1 relating to civil rights. We'll be redefining the date. I also want to revise the bill so that rather than establishing the accessibility requirements in statute, we're gonna require, the Hawaii Civil Rights Commission to adopt rules to establish and implement the accessibility requirements instead. Members, any comments?

Okay. Vice Chair for the vote.

Voting on SB 2852 SD1, Chair's recommendation is to pass with amendments. Any reservations? Any Noes? Chair, your recommendations adopted.

K. Moving last the true last one of the other agendas today. SB 2471 SD 2 relating to the powers of artificial persons. Hope we don't get too smoked in court. One of the major problems that I wanted to at least fix in this bill going forward on page 13, line 12, and page 15, lines four through five, we're gonna be deleting the language charitable or public benefit language.

Adding this language would put many existing nonprofits that do not fall into that category in jeopardy of becoming not in jeopardy of losing their nonprofit status, which would include unions and veterans organizations among others. So not the intention of the bill, and would be extremely harmful where that language just remain in. I do wanna note in the committee report the concerns brought up by the AGs about Citizens United and other constitutional concerns that this bill may face.

I also wanna note in the committee report that it is this committee's belief that natural persons free speech is not impeded by the restriction of corporate speech. The natural person is still able to exercise their free speech.

However, a natural person would aside from within that corporation. I'm also gonna be redefining the date. Members, any comments? Yep. Grab your one open.

Thank you, Chair. I just wanted to express my disappointment that the attorney general's office actually weighed in on this when they may be in a situation that we may have required them to defend us. On other bills where they clearly they they position themselves in a stronger position to defend our bills by not participating and providing testimony on other bills.

And so I felt it was really not anyway, I was disappointed by that decision they made. But thank you for your for your amendments. I think it does make sense to remove the nonprofits because they're not allowed to make political contributions anymore. Right?

Any other comments? K. Vice Chair for the vote.

Voting on SB2471 SD2, Chair's recommendation is to pass with amendments. Any reservations? Any Noes? Chair, your recommendation is adopted.

Thank you, Member. We're adjourned.