An Act To Decrease Insurance Fraud in This State (AFTER DEADLINE)
Maine Legislature, Session 121, LD 1939
Committee: Insurance and Financial Services
Sponsors: BUNKER, LAFOUNTAIN, O'NEIL, PERRY, DOUGLASS
Amends: 24-A MRSA §2186

12lst MAINE LEGISLATURE 
Legislative Document 
No. 1939 
H.P.1435 
House of Representatives, March 18,2004 
An Act To Decrease Insurance Fraud in This State 
(AFTER DEADLINE) 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
205. 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
17/~ 
frl.7Ilac~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative BUNKER of Kossuth Township. 
Cosponsored by Senator LAFOUNTAIN of York and 
Representatives: O'NEIL of Saco, PERRY of Calais, Senator: DOUGLASS of Androscoggin. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRS A §2186, sub-§I, ,C is enacted to read: 
C. 
"Fraud unit" means 
the Insurance Fraud Investigative 
Unit established in section 2188. 
Sec. 2. 24-A MRSA §2186, sub-§4, ~A, as enacted by PL 1997, c. 
675, §2, is amended to read: 
A. 
An insurer shall, annually on or before March 1st or 
within 
any 
reasonable 
extension of 
time 
granted 
by 
the 
superintendent, file with the 
s\:lpe!;':i:a:seaeeat: fraud unit a 
report 
relating 
to 
fraudulent 
insurance 
acts 
that 
the 
insurer 
knew 
or 
reasonably 
believed 
had 
been 
committed 
during the previous calendar year. 
The report must contain 
information required by the s\:lpe!;':i:at:eaeeat: fraud unit in the 
manner 
prescribed by 
the 
s\ipe!;':i:at:eaeeat: 
fraud unit. 
The 
information must be reported on an aggregate basis and may 
not contain any information identifying any individuals or 
entities. 
The superintendent shall adopt by January 1, 1999 
rules 
necessary to define 
the 
information that must 
be 
reported. 
Rules 
adopted pursuant to this subsection are 
routine technical rules as defined in Title 5, chapter 375, 
subchapter ~~-A 2-A. 
Sec. 3. 24-A MRS A §2186. sub-§5.~~C and D. as enacted by PL 
1997, c. 675, §2, are amended to read: 
C. 
Provide 
for 
the 
R:i:!;':i:a~--&~-~--~~~~~~-~e~--f!;'a\:le 
:i:aves~:i:~at:e!;'s establishment of a special investigative unit 
as reguired by subsection 5-A; and 
D. 
Report insurance fraud to 
appH~p~ia~e--J.-aw--eRfe!;'eemeRt 
aae- - -r;:.e.g.u-1-a-t-o-r-y- - - -att-t.f1-e-£.,i-t·,i.e·s-- -:i:a - - -t.-be,.-- .,i.ffi.1-e-s-t.,i~.,i-&n- - - aae 
p!;'esee\:lt::i:ea--o-t--:i:aS\:l!;'aaee the fraud unit. 
An insurer that 
believes that a fraudulent insurance act has been committed 
shall, within 60 days of forming that belief. send to the 
fraud unit. 
on a 
form prescribed by the fraud unit. 
the 
information reguested and any other information relative to 
the claim and 
any information relative to other parties 
claiming loss or damage because of the claim as _the fraud 
unit may reguire. 
Sec. 4. 24-A MRSA §2186, sub-§5-A is enacted to read: 
5-A. 
Insurer antifraud units. 
Every insurer writing direct 
insurance who in the previous calendar year reported $10,000,000 
or more in direct written premiums in this State, except for an 
insurer writing only credit, 
home 
warranty, 
travel or title 
Page l-LR2673(1) 
insurance, shall establish a 
special investigative unit. 
The 
duties of the special investigative unit are to detect. help 
prosecute and prevent fraudulent insurance acts committed against 
that insurer. 
The special investigative unit shall report the 
results of its investigation to the fraud unit. 
The special 
investigative unit must include fraud investigators, who may be 
employees of the insurer or independent contractors. 
Sec. 5. 24·A MRSA §2188 is enacted to read: 
§2l88. 
Insurance Fraud Investigative Unit 
1. 
Fraud unit established: powers aIld duties. 
There is 
established in the bureau the Insurance Fracto Investigative Unit, 
referred to in, this section as "the fraud unit." 
The fraud unit 
shall assist the superintendent. or any law enforcement agency, 
in investigating fraudulent insurance acts, as defined in section 
2186, 
subsection 
1, 
paragraph 
A 
or 
other 
insurance-related 
criminal activity and in developing and implementing programs to 
prevent fraudulent insurance acts and abuse. The fraud' unit may 
subpoena witnesses and administer oaths in an investigation it 
conducts and compel the production of any books, papers or other 
memoranda or documents by subpoena duces tecum. The fraud unit 
shall promptly notify the Attorney General 
of any' insurance 
application, claim or activity that involves criminal conduct. 
When required by the superintendent and the Attorney General, the 
fraud unit shall cooperate with the Attorney General in the 
investigation and prosecution of criminal violations. 
2. 
Staff: 
assistance 
from 
Attorney 
General. 
The 
superintendent shall appoint 
to the 
fraud unit 
full-time, 
classified persons who are qualified by training and experience 
to perform the duties of their positions. 
When requested by the 
superintendent, 
the Attorney General 
may 
assign an assistant 
attorney general to assist the fraud unit in the performance of 
the fraud unit's duties . '  
3. 
Inspection of material outside State. 
If material the 
fraud unit seeks to obtain by reguest is located outside the 
State, with the permission of the holder of the materiaL the 
fraud unit or its representative may examine the material at the 
place 
where 
it is 
located. 
The 
fraud 
unit 
may 
designate 
representatives, including officials of the state in which the 
material is located, to inspect the material on behalf of the 
fraud unit and it may respond to similar requests from officials 
of other states. 
4. 
Review of fraudulent claims reports b.y insurers. 
The 
fraud unit shall review reports received from insurers pursuant 
to section 2186, 
subsection 5, 
paragraph D and select those 
claims that, in the judgment of the fraud unit, warrant further 
investigation. 
5. Immunity. 
In the absence of fraud, malice or bad faith L 
an insurer that furnished information relating to a suspected, 
anticipated or completed fraudulent insurance act is not liable 
for 
any 
damages 
in 
any 
civil 
action 
for 
furnishing 
the 
information if that information is furnished to or received from 
the fraud unit. This subsection is not intended to abrogate or 
modify in any way 
any 
common 
law or statutory privilege or 
immunity previously enjoyed by any person. 
6. 
Material 
information 
disclosure. 
The 
fraud 
unit's 
papers, documents, reports and evidence rel_ative to the subject 
of investigation under this section are confidential and are not 
public records as described in Title L 
section 407 and are not 
subject to public inspection or disclosure. Papers, documents, 
reports or evidence relative to the subject of an investigation 
under 
this 
section 
are 
privileged 
and 
are 
not 
subject 
to 
subpoena, discovery or disclosure in any proceeding other than 
the 
action 
initiated 
by 
the 
unit, 
except 
as 
specifically 
authorized in this chapter. 
For the purposes of this subsection, 
"investigative materials" includes the testimony of fraud unit 
personnel concerning any matter of which they have 
knowledge 
pursuant to a pending investigation by the fraud unit. 
7. 
Rulemaking. 
The 
superintendent 
shall 
adopt 
routine 
technical rules, as defined in Title 5, chapter 375 , subchapter 
2-A to carry out the purposes of this section. 
Sec. 6. 36 MRS A §2513·C is enacted to read: 
§2513-C. 
Special assessment for fraud prevention 
1. 
Generally: purpose. 
In addition to any other assessment 
imposed, 
every 
insurer writing direct 
insurance 
who 
in 
the 
previous calendar year reported $10,000,00) or more in direct 
written premiums in this State, except for an insurer writing 
only credit, home warranty, travel or title insurance, is subject 
to the assessment imposed by this section. 
The purpose of the 
assessment 
is 
to 
fund 
the 
Department 
of 
Professional 
and 
Financial 
Regulation, 
Bureau 
of 
Insurance, 
Insurance 
Fraud 
Investigative Unit, as established in Title 24-A, section 2188. 
2. 
Rate 
of 
assessment. 
Each 
insurer 
subject 
to 
the 
assessment shall pay to the Treasurer of State an amount up to 
0.1°'0 of the gross direct premiums written in this State less the 
amount of all direct return premiums on those policies and all 
dividends 
paid to policyholders 
on direct premiums 
on 
those 
policies. 
The assessment must be paid as provided in section 
2521-A. 
3. 
Annual rate determination. 
Annually, by June 1st, after 
taking into consideration any unexpended funds collected pursuant 
to this section, the Superintendent of Insurance shall adjust the 
rate of 
the 
assessment 
imposed pursuant to this section to 
produce the amount of revenue necessary to pay the expenses of 
the Department of Professional and Financial Regulation, Bureau 
of Insurance, Insurance Fraud Investigative Unit, as established 
in Title 24 A, section 2188, for the immediately following fiscal 
year. 
If the superintendent determines that the maximum rate 
specified in subsection 
will be 
insufficient to meet 
the 
expenses 
of 
the 
Insurance 
Fraud 
Investigative 
Unit, 
the 
superintendent 
may 
introduce legislation to the next regular 
session of the Legislature increasing the rate to an appropriate 
amount. 
4. 
Fund. 
The 
Treasurer 
of 
State 
shall 
deposit 
all 
assessments collected pursuant to this section into a separate 
nonlapsing fund that must be used solely to defray the expenses 
incurred 
by 
the 
Department 
of 
Professional 
and 
Financial 
Regulation, 
Bureau of Insurance, 
Insurance Fraud Investigative 
Unit, as established in Title 24-A, section 2188. 
All interest 
earned on the fund must be paid to the fund. 
SUMMARY 
Current law requires insurers to develop and implement an 
antifraud plan to prevent, detect and investigate all forms of 
insurance fraud. 
This bill strengthens the antifraud effort by: 
1. 
Establishing wi thin the Department of Professional and 
Financial Regulation, Bureau of Insurance a new Insurance Fraud 
Investigative 
Unit, 
which 
must 
include 
full-time 
staff 
members. 
The 
purpose 
of 
the 
fraud 
unit is 
to assist 
the 
Superintendent of Insurance, or any law enforcement agency, in 
investigating insurance fraud or other insurance-related criminal 
activity and in developing and implementing programs to prevent 
insurance fraud and abuse; 
2. 
Requiring insurers to create special investigative units 
wi thin their companies, 
using fraud investigators, who may be 
employees 
of 
the 
insurers 
or 
independent 
contractors. 
An 
insurance company that believes that an insurance fraud has been 
committed is required to report its findings along with any other 
information 
relative 
to 
the 
claim 
to 
the 
Insurance 
Fraud 
Investigative Unit; and 
3. 
Implementing an assessment on insurers of up to 0.1% of 
direct premiums written in the State to fund the Insurance Fraud 
Investigative Unit. 
The Superintendent of Insurance is required 
to review annually the rate of assessment and the expenses of the 
fraud unit to determine an appropriate rate of assessment to 
provide sufficient revenue to the fraud unit.