An Act Regarding the Maine Insurance Guaranty Association
Maine Legislature, Session 122, LD 2068
Committee: Labor
Sponsors: SMITH, STRIMLING
Amends: 24-A MRSA §4438, 24-A MRSA §4445, 39-A MRSA §153

Legislative Document 
No. 2068 
H.P.1463 
House of Representatives, March 14,2006 
An Act Regarding the Maine Insurance Guaranty Association 
Reference to the Committee on Labor suggested and ordered printed. 
11'/~ 117.77!~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative SMITH of Van Buren. (GOVERNOR'S BILL) 
Cosponsored by Senator STRIMLING of Cumberland. 
Printt:d nn n:cydt:'J paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §4438, sub-§l, ~A, as amended by PL 2001, c. 478, §8 and 
affected by § 11, is further amended to read: 
A. 
Be obligated to pay covered claims existing prior to the determination of the 
insolvency or arising within 30 days after the determination of insolvency, or before 
the policy expiration date if less than 30 days after the determination of insolvency, 
or before the insured replaces the policy or causes its cancellation, if within 30 days 
of the determination. The obligation must be satisfied by paying to the claimant: 
(1) Except as provided in this paragraph, the full amount of a covered claim for 
benefits, including interest and penalties, or unearned premium under workers' 
compensation insurance coverage; 
(2) An amount not exceeding $25,000 per policy for a covered claim for the 
return of an unearned premium; or 
(3) An amount not exceeding $300,000 per claim for all other covered claims. 
In no event is the association obligated to pay a claimant an amount in excess of the 
obligation of the insolvent insurer under the policy or coverage from which the claim 
arises. The association shall pay only that amount of unearned premium in excess of 
$50. Notwithstanding any other provisions of this subchapter, a covered claim does 
not include any claim filed with the association after the earlier of 24 months after the 
date of the order of liquidation or the fmal date set by the court for the filing of 
claims against the liquidator or receiver of an insolvent insurer. The association, in 
its discretion, may accept a late filed claim as a covered claim when the claimant 
demonstrates good cause. The demonstration of good cause by a claimant includes 
showing that the existence of the claim was not known to the claimant prior to the bar 
date and that the claimant filed the claim within 60 days of learning of the claim; 
Sec. 2. 24-A MRSA §4445, as amended by PL 1973, c. 585, §12, is further 
amended by adding at the end a new paragraph to read: 
The association is also subject to audit, enforcement and monitoring by the Workers' 
Compensation Board with respect to workers' compensation claims as provided for in the 
Maine Workers' Compensation Act of 1992. Notwithstanding any other provision of law, 
the association is liable for the payment of any compensation, interest, penalty or other 
obligation determined to be due by the Workers' Compensation Board as provided for in 
the Maine Workers' Compensation Act of 1992. 
Sec. 3. 39-A MRSA §153, sub-§9, as amended by PL 1999, c. 354, §2, is further 
amended to read: 
9. 
Audit and enforcement. 
The executive director shall establish an audit, 
enforcement and monitoring program by July 1, 1998, to ensure that all obligations under 
this Act are met, including the requirements of section 359. The functions of the audit 
and enforcement program include, but are not limited to, auditing timeliness of payments 
and claims handling practices of insurers, self-insurers, the Maine Insurance Guaranty 
Association and 3rd-party administrators; determining whether insurers, self-insurers, the 
Maine Insurance Guaranty Association and 3rd-party administrators are unreasonably 
Page I - 122LR3215(1)-1 
contesting claims; and ensuring that all reporting requirements to the board are met. 
When auditing the Maine Insurance Guaranty Association, the program shall consider 
when the Maine Insurance Guaranty Association obtained the records of an insolvent 
insurer. The program must be coordinated with the abuse investigation unit established 
by section 153, subsection 5 as appropriate. The program must monitor activity and 
conduct audits pursuant to a schedule developed by the deputy director of benefits 
administration. Audit working papers are confidential and may not be disclosed to any 
person outside of the board except the audited entity. For purposes of this subsection 
"audit working papers" means all documentary and other information acquired, prepared 
or maintained by the board during the conduct of an audit or investigation, including all 
intra-agency and interagency communications relating to an audit or investigation and 
draft reports or any portion of a draft report. 
The final audit report, including the 
underlying reconciled information, is not confidential. 
At the end of each calendar 
quarter, the executive director shall prepare a compliance report summarizing the results 
of the audits and reviews conducted pursuant to this subsection. The executive director 
shall submit the quarterly compliance reports to the board, the Bureau of Insurance and 
the Director of the Bureau of Labor Standards within the Department of Labor. An 
annual summary must be provided to the Governor and to the joint standing committees 
of the Legislature having jurisdiction over labor and banking and insurance matters by 
February 15th of each year. The quarterly compliance reports and the annual summaries 
must be made available to the public following distribution. 
Sec. 4. 39-A MRS A §359, sub-§l, as enacted by PL 1991, c. 885, Pt. A, §8 and 
affected by § § 9 to 11, is amended to read: 
1. 
Audits. The board shall audit claims, including insurer, self-insurer, Maine 
Insurance Guaranty Association and 3rd-party administrator claim files, on an ongoing 
basis to determine whether insurers, self-insured employers, the Maine Insurance 
Guaranty Association and 3rd-party administrators have met their obligations under this 
Act and to identify the disputes that arose, the reasons for the disputes, the method and 
manner of their resolution, the costs incurred, the reasons for attorney involvement and 
the services rendered by the attorneys. 
If as a result of an examination and after providing the opportunity for a hearing the board 
determines that any compensation, interest, penalty or other obligation is due and unpaid 
to an employee, dependent or service provider, the board shall issue a notice of 
assessment detailing the amounts due and unpaid in each case and shall order the amounts 
paid to the unpaid party or parties. 
Sec. 5. 39-A MRS A §359, sub-§2, as enacted by PL 1991, c. 885, Pt. A, §8 and 
affected by §§9 to 11, is amended to read: 
2. 
Penalty. In addition to any other penalty assessment permitted under this Act, 
the board may assess civil penalties not to exceed $10,000 upon finding, after hearing, 
that an employer, an insurer, the Maine Insurance Guaranty Association or ~ 3rd-party 
administrator for an employer has engaged in a pattern of questionable claims-handling 
techniques or repeated unreasonably contested claims. The board shall certify its findings 
to the Superintendent of Insurance, who shall take appropriate action so as to bring any 
such practices to a halt. This certification by the board is exempt from the provisions of 
the Maine Administrative Procedure Act. 
SUMMARY 
This bill specifically provides that the Workers' Compensation Board may engage in 
audit. enforcement and monitoring of the Maine Insurance Guaranty Association and the 
Maine Insurance Guaranty Association's existing obligation to pay interest and penalties 
determined to be due pursuant to the Maine Workers' Compensation Act of 1992. This 
bill also establishes that the board, when auditing the Maine Insurance Guaranty 
Association, shall consider when the Maine Insurance Guaranty Association obtained the 
records of an insolvent insurer.