AI-assisted research summary: The plan administrator must handle collected funds as a trustee, keep them in a separate insured Hawaii account, post a $100,000 bond, and report the bond to the commissioner. Diversion of the funds is prohibited.
(a) The plan administrator shall have the responsibilities of a trustee for all funds received, accumulated, or collected under this chapter. (b) The plan administrator, upon receipt of funds intended for payment to a person providing legal services pursuant to this chapter, shall maintain the funds at all times in a federally insured account with a bank, savings and loan association, or financial services loan company located in Hawaii, separate from the plan's own funds or funds held by the plan administrator in any other capacity, in an amount at least equal to the funds collected and unpaid to the persons providing legal services, unless otherwise approved by the commissioner. Only additional funds that are reasonably necessary to pay bank, savings and loan association, or financial services loan company charges may be commingled with the funds accumulated pursuant to this section. If the bank, savings and loan association, or financial services loan company account is an interest earning account, the plan shall not retain the interest earned on accumulated funds for the plan or plan administrator's own use or benefit without the prior written consent of the person entitled to the funds. A plan trustee account shall be designated on the records of the bank, savings and loan association, or financial services loan company as a "trustee account established pursuant to section 488-4, Hawaii Revised Statutes", or words of similar import. (c) The plan administrator shall obtain a $100,000 bond, which shall be executed by the plan administrator and a surety company authorized to do business in the State as a surety. The bond shall run to the State for the benefit of any claimants against the plan to secure the faithful performance of the obligations of the plan. The aggregate liability of the surety shall not exceed the principal sum of the bond. The plan administrator shall provide the commissioner with proof of the bond at the time of the initial request for approval and at any time thereafter as requested by the commissioner. The plan shall not release the bond without the commissioner's approval. In lieu of the bond required by this section, the commissioner may accept letters of credit, certificates of deposits, or other evidence of security in form and amounts deemed appropriate by the commissioner. (d) Any person, including a plan administrator, owner, operator, officer, employee, or representative who, not being lawfully entitled to do so, diverts or appropriates funds accumulated pursuant to this section or any portion of accumulated funds for the person's own use, shall be subject to penalties as provided by law. [L 1976, c 156, pt of §1; am L 1992, c 78, §2; am L 2010, c 47, §1(4); am L 2011, c 186, §6]