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From the SRD (p78-79) "Here’s how to determine a character’s total for a passive check: 10 + all modifiers that normally apply to the check ... For example, if a 1st-level character has a Wisdom of 15 and proficiency in Perception, he or she has a passive Wisdom (Perception) score of 14."
(Bold text my emphasis.) Since Elves automatically have proficiency in Perception, the total of 14 is correct for an Elf. I've just made a 1st level test elf in HL and I get +4 for Perception, so HL is working correctly.
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