Hawaii enrolled two workers’ compensation bills this week that shift treatment authority from employers and TPAs toward treating physicians. HB 1509, enrolled on May 6, 2026, requires employers to respond to a treatment plan within 10 days of receipt or face monetary penalties. If the employer misses that window, the plan is deemed accepted. HB 1515, enrolled one day earlier, lets attending physicians order functional capacity examinations (FCEs) and refer injured employees for those exams without employer pre-authorization. It also expands the pool of qualified examiners to include licensed occupational and physical therapists.
Both bills now await Governor Green’s signature.
Who It Affects
These provisions apply to every Hawaii employer carrying workers’ compensation obligations, including self-insured entities. The state’s largest self-insured exposure concentrations sit in hospitality (resort and hotel operations), healthcare systems, and public-sector employers: counties, the state government, and the University of Hawaii system. Any employer that self-insures or participates in a group self-insurance program in Hawaii should assess both the operational and reserving implications.
How It Hits Reserves
The reserve effect runs through two channels: severity and development pattern.
Severity. The 10-day deemed-acceptance rule removes a key utilization review lever. Under the prior framework, employers and TPAs could contest or delay treatment plans while evaluating medical necessity. Once that window compresses to 10 days with an automatic approval default, medical spend ramps up faster in the first 12 to 24 months of claim maturity. The penalty provisions add a second layer: employers that object and are later found to have denied a plan improperly face additional costs that flow straight into allocated loss adjustment expense.
Development pattern. HB 1515’s physician-directed FCE authority accelerates the return-to-work assessment cycle independently of employer scheduling. While FCEs can support faster closures, they also generate additional medical costs and may produce findings that extend indemnity benefits. When the treating physician controls the timing, the employer loses a scheduling lever that previously helped manage claim duration.
Together, these changes suggest that medical development factors in early periods will steepen. If your actuary’s selected link ratios for Hawaii WC use historical patterns that assumed employer-controlled treatment authorization, those factors may understate development going forward.
What This Means for Your Next Review
Ask your actuary whether Hawaii-specific medical development factors need adjustment to reflect faster treatment plan approvals. Review your TPA’s workflow for treatment plan responses: the 10-day clock means your claims team needs a documented triage process that flags incoming plans on receipt. If your case reserve guidelines for Hawaii claims assumed a contestation buffer on medical severity, that buffer is shrinking.
Watch for the governor’s signature and the effective date. Once signed, claims filed after the effective date will operate under the new rules, and reserve assumptions for those accident periods should reflect the change.