An Act To Create the Insurance Fraud Division within the Bureau of Insurance
Maine Legislature, Session 122, LD 1990
Committee: Insurance and Financial Services
Amends: 24-A MRSA §2179, 24-A MRSA §2187

Legislative Document 
No. 1990 
H.P.1394 
House of Representatives, February 1,2006 
An Act To Create the Insurance Fraud Division within the Bureau 
of Insurance 
Reported by Representative PERRY of Calais for the Joint Standing Committee on 
Insurance and Financial Services pursuant to Resolve 2005, chapter 47. 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed under Joint Rule 218. 
Printed on recycled paper 
77J~/J7.11!~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §2179, as amended by PL 1973, c. 585, §12, 
is repealed. 
Sec. 2. 24-A MRS A §2186, as amended by PL 1999, c. 5, §1 and 
affected by §2, is repealed. 
Sec. 3. 24-A MRSA §2187, as amended by PL 2005, c. 433, §1 
and affected by §28, is repealed. 
Sec. 4. 24-A MRSA c. 89 is enacted to read: 
CHAPTER 89 
IRSQRAHCE FRAUD 
S700l. 
Definitions 
For 
the 
purposes 
of 
this 
chapter, 
unless 
the 
context 
indicates 
otherwise, 
the 
following 
terms 
have 
the 
following 
meanings. 
1. 
Act. 
"Act" includes nonaction or the failure to take 
action. 
2. 
Authorized agency. 
"Authorized agency" or "authorized 
agencies" means: 
A. 
The Administrator of the Office of Securities within the 
Department of Professional and Financial Regulation; 
B. 
The Attorney General; 
C. 
A district attorney responsible for prosecution in the 
municipality where the fraud occurred: 
D. 
The 
Federal 
federal 
agency, 
subsection 1; 
Bureau 
only for 
of 
Investigation, 
the purposes 
of 
or 
any 
section 
other 
7005, 
E. 
An international association of insurance supervisors: 
F. 
The International Criminal Police Organization; 
G. 
A national insurance crime bureau: 
H. 
Insurance supervisors or 
law enforcement authorities 
outside the United States; 
I. 
The State Fire Marshal within the Department of Public 
Safety: 
J. 
The superintendent: 
K. 
The Superintendent of Financial Institutions within the 
Department of Professional and Financial Regulation: 
L. 
The United States Attorney's office when authorized or 
charged with investigation or prosecution of the insurance 
fraud in question, only for the purposes of section 7005, 
subsection I: 
M. 
The State Police or local law enforcement officials: 
N. 
A national association of insurance commissioners: or 
0. 
The Workers' Compensation Board. 
3. 
Deceptive 
insurance practices. 
"Deceptive 
insurance 
practices" has the same meaning as in Title 17-A, section 901-A. 
4. 
Fraudulent insurance act. 
"Fraudulent insurance act" 
means 
any of the following acts or omissions when committed 
knowingly; 
A. 
Presenting, or causing to be presented, or preparing any 
information 
containing 
false 
representations 
as 
to 
a 
material 
fact 
with 
the 
intent 
to 
defraud 
an 
insurer, 
insurance producer or other person engaged in the business 
of insurance concerning any of the following; 
(1) 
An application for the issuance or renewal of an 
insurance policy; 
(2) 
The rating of an insurance policy; 
( 3 ) 
A claim for payment or benefit pursuant to an 
insurance policy; 
(4) 
Payments 
made 
in accordance with an insurance 
policy; or 
(5) 
Premiums paid on an insurance policy; 
B. 
Presenting, or causing to be presented, or preparing any 
information 
containing 
false 
representations 
as 
to 
a 
material 
fact 
with 
the 
intent 
to 
defraud 
an 
insurer, 
insurance producer or other person engaged in the business 
of insurance concerning any of the following; 
(1) 
A document filed with the superintendent or the 
insurance 
regulatory 
official 
or 
agency 
of 
a 
jurisdiction outside this State: 
(2) 
The financial condition of an insurer: 
(3) 
The 
formation. 
acquisition. 
merger. 
reconsolidation. dissolution or withdrawal from one or 
more lines of insurance in all or part of this State by 
an insurer: 
(4) 
The issuance of written evidence of insurance: or 
(5) 
The reinstatement of an insurance policy: 
C. 
Soliciting or accepting new or renewal insurance risks 
on behalf of an insurer or other person engaged in the 
business of insurance by a person who knows or should know 
that the insurer or other person responsible for the risk is 
insolvent at the time of the transaction: 
D. 
Removing. concealing. altering or destroying the assets 
or records of an insurer or other person engaged in the 
business of insurance; 
E. 
Embezzling. 
exercising unauthorized 
control 
over 
or 
converting money. funds. premiums. credits or other property 
of an insurer or other person engaged in the business of 
insurance; 
F. 
Transacting the business of insurance in violation of 
laws requiring a license. certificate of authority or other 
legal authority for 
the transaction of 
the business of 
insurance; or 
G. 
Attempting 
to 
commit. 
aiding 
or 
abetting 
in 
the 
commission of. or conspiring to commit the acts or omissions 
described in this subsection. 
5. 
Insurance deception. 
"Insurance deception" has the same 
meaning as in Title 17-A. section 354-A. 
6. 
Insurer. 
"Insurer" 
means 
an 
authorized 
insurance 
company. reinsurer. surplus lines insurer. unauthorized insurer. 
nonprofit 
hospital 
and 
medical 
service 
organization. 
health 
maintenance 
organization. 
risk 
retention 
group 
or 
multiple 
employer 
welfare 
organization. 
"Insurer" 
also 
includes 
an 
insurance producer or other person acting on the behalf of an 
insurer. 
~ 
Policy. 
"Policy" means an individual or group policy, 
group 
certificate, 
contract 
or 
arrangement 
of 
insurance 
or 
reinsurance affecting the rights of a resident of this State or 
bearing 
a 
reasonable 
relation to this State, 
regardless 
of 
whether delivered or issued for delivery in this State. 
8. 
Reinsurance. 
"Reinsurance" means a contract, binder of 
coverage, including a placement slip, or arrangement under which 
an insurer procures insurance for itself from another insurer as 
to all or part of an insurance risk of the originating insurer. 
§7002. Insurance Fraud Diyision 
I. 
Diyision established. 
The 
Insurance Fraud Division, 
referred to in this chapter as "the division," is established 
within the bureau. 
The division shall work in coordination with 
other bureau sections and staff and other regulatory and law 
enforcement agencies to accomplish its duties. 
2. 
Duties. 
The duties of the division are to: 
A. 
Initiate independent inQuiries and conduct independent 
investigations when the division has cause to believe that a 
fraudulent insurance act, insurance deception or deceptive 
insurance practice may be or has been committed: 
B. 
Review 
reports 
or 
complaints 
of 
alleged 
fraudulent 
insurance 
activities, 
insurance 
deception 
and 
deceptive 
insurance 
practices 
from 
federal, 
state 
and 
local 
law 
enforcement and regulatory agencies. persons engaged in the 
business of insurance and the public to determine whether 
the reports or complaints reQuire further investigation and 
to conduct these investigations; 
C. 
Conduct independent examinations of alleged fraudulent 
insurance 
acts 
and 
undertake 
independent 
studies 
tQ 
determine the extent of fraudulent insurance acts; 
D. 
Assist the superintendent in developing and implementing 
programs to prevent fraudulent insurance acts and 
abus~ 
deceptive insurance practices and insurance deception; and 
E. 
Assist the Attorney General in the prosecution and 
prevention of insurance fraud. deceptive insurance practices 
and insurance deception and prepare any reports regarding 
insurance fraud reguired by law. 
3. 
Authority. 
The division has the authority to: 
A. 
Inspect, copy or collect records and evidence: 
B. 
Serve subpoenas: 
C. 
Administer oaths and affirmations: 
D. 
Share records and evidence with federal, state and local 
law enforcement and regulatory agencies in accordance with 
the reguirements of section 216, subsection 5: 
E. 
Make criminal referrals to prosecuting authorities: and 
F. 
Conduct 
investigations 
outside of 
this State. 
If, 
during 
an 
investigation, 
the 
division 
seeks 
to 
obtain 
information located outside this State and the person from 
whom 
the 
information 
is 
sought 
makes 
that 
information 
available for examination at the place where the information 
is 
located, 
the 
division 
may 
designate 
representatives, 
including officials of the state in which the matter is 
located, to inspect information on behalf of the division. 
The division may respond to similar reguests from officials 
of other states. 
§7003. 
Fraudulent insurance acts prohibited 
A person may not commit a fraudulent insurance act. 
§7004. 
Insurance fraud prevention 
1. 
Fraud warning required. 
Fraud warnings are reguired in 
accordance with this subsection. 
A. 
All applications and claim forms for insurance used by 
insurers 
in 
this 
State, 
regardless 
of 
the 
form 
of 
transmission, 
must contain the 
following statement or 
a 
substantially simil~tatement permanently affixed to the 
application or claim form: 
"It is a 
crime to knowingly 
provide false, 
incomplete or misleading information to an 
insurance 
company 
for 
the 
purpose 
of 
defrauding 
the 
company. 
Penalties may include imprisonment, 
fines or 
a 
denial of insurance benefits." 
B. 
The 
lack or omission of 
the 
statement reguired in 
paragraph A does not constitute a defense in any criminal 
prosecution or civil action for a fraudulent insurance act. 
C. 
This 
subsection 
applies 
to 
all 
insurers 
except 
reinsurers. 
2. 
Annual 
reporting 
Qf 
fraudulent 
insurance 
acts. 
Fraudulent insurance acts must be reported on an annual basis in 
accordance with this subsection. 
A. 
An insurer shall, annually on or before March 1st or 
within any 
reasonable extension of time granted by the 
superintendent. 
file 
with 
the 
superintendent 
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 superintendent in the manner prescribed by 
the superintendent. The information must be reported on an 
aggregate 
basis 
and 
may 
not 
contain 
any 
information 
identifying any individual s or enti ties, The superintendent 
shall adopt rules necessary to define the information that 
must be reported. Rules adopted pursuant to this paragraph 
are routine technical rules as defined in Title 5« chapter 
375, subchapter 2-A. 
B. 
On or before July 1st of each year, the superintendent 
shall 
report 
to 
the 
joint 
standing 
committee 
of 
the 
Legislature having jurisdiction oyer insurance matters. 
The 
report 
must 
include 
aggregate 
information detailing 
the 
fraudulent insurance activity experienced by insurers in 
this State. 
3. 
Reporting 
Qf 
specific 
fraudulent 
insurance 
acts. 
Fraudulent insurance acts must be reported on an individual basis 
in accordance with this subsection. 
A. 
A person 
en.ggg~ in the business of insurance having 
knowledge or a reasonable belief that a fraudulent insurance 
act is being. will be or has been committed shall provide to 
the superintendent the information required by. 
and in a 
manner prescribed by, the superintendent. 
B. 
Any person having knowledge or a reasonable belief that 
a fraudulent insurance act is being, will be or has been 
committed may provide to the superintendent the information 
required 
by, 
and 
in 
a 
manner 
prescribed 
by, 
the 
superintendent. 
4. 
Insurer antifraud plans. 
Every insurer writing direct 
insurance shall prepare and implement an antifraud plan. This 
subsection does not apply to any agency, producer or other person 
acting on behalf of an insurer. 
The superintendent may review an 
insurer's antifraud plan to determine if the plan complies with 
the requirements of this subsection. 
The antifraud plan must 
outline 
specific 
procedures-,-------appropriate 
to 
the 
lines 
of 
insurance the insurer writes in the State, to: 
A. 
Prevent. detect and investigate all forms of insurance 
fraud: 
B. 
Educate appropriate employees on the antifraud plan and 
fraud detection: 
c. 
Provide for the hiring of or contracting for 
fraud 
investigators: and 
D. 
Report insurance fraud to appropriate law enforcement 
and regulatory agencies in the investigation and prosecution 
of insurance fraud. 
§700S. 
Insurance fraud reporting immunity 
1. 
Information 
disclosed. 
An 
authorized 
agency 
investigating 
insurance 
fraud 
may, 
in writing, 
require 
the 
insurance company at interest to release to the requesting agency 
any relevant information or evidence determined to be important 
to 
the authorized agency that the 
company 
may 
have 
in its 
possession relating to the insurance fraud in question. 
This 
information includes, but is not limited to: 
A. 
A history of previous claims made by the insured: 
B. 
Insurance policy information relevant to fraud under 
investigation and any application for that policy; 
C. 
Material 
relating 
to 
the 
investigation 
of 
a 
loss 
including statements and proof of loss; and 
D. 
Policy premium payment records. 
2. 
Ezchange 
of 
information. 
An 
authorized 
agency 
or 
insurer provided with information pursuant to this section may 
release or provide that information to 
any other authorized 
agency or insurer with an interest in the insurance fraud under 
investigation. 
3. 
Right to receive upon regyest. 
Any insurer providiI!9 
informatibn to an authorized agency pursuant to this section has 
the right, upon request, to receive other information relevant to 
the fraud from that authorized agency within 30 days. 
4. 
Immunity. 
In the absence of fraud, malice or bad faith, 
any 
person, 
including, 
but 
not 
limited 
to, 
an 
insurer 
or 
authorized 
agency, 
that 
furnished 
information 
relating 
to 
suspected, anticipated or completed fraudulent insurance acts is 
not liable for any damages in any civil action for furnishing the 
information if that information is furnished to or received from 
an 
authorized 
agency. 
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. 
S7006. 
Confidentiality 
1. 
Documents, materials and other information. 
Documents, 
materials and other information in the possession or control of 
the bureau that are provided pursuant to section 7005 or obtained 
by the superintendent in an investigation of s~pected or actual 
fraudulent insurance acts are confidential by law and privileged, 
are not subject to disclosure as public records under Title L 
chapter 13, are not subject to subpoena and are not subject to 
discovery or admissible in evidence in any private civil action, 
except 
that 
the 
superintendent 
is 
authorized 
to 
use 
the 
documents, materials and other information in the furtherance of 
any 
regulatory 
or 
legal 
action 
brought 
as 
a 
part of 
the 
superintendent's official duties. 
2. 
TestimoAY in civil action. 
The superintendent or any 
person who 
received documents, materials or other information 
while acting under the authority of the superintendent may not be 
permitted or required to testify in any private civil action 
concerning any confidential documents or information subject to 
subsection 1. 
3. 
Superintendent may share or receive documents. 
In order 
to assist in the performance of the superintendent's duties, the 
superintendent may share or receive documents, materials or other 
information, including the confidential and privileged documents, 
materials or information subject to subsection 1 in accordance 
with section 216, subsection 5. 
4. 
Sharing of documents for law enforcement purposes. 
This 
section does 
not prohibit 
the 
superintendent 
from 
providing 
information to or receiving information from any local, state, 
federal or international law enforcement authorities, including 
any prosecutorial authority, or from complying with subpoenas or 
other lawful process in criminal actions or as may otherwise be 
provided in this chapter. 
5. 
.No waiver. 
No waiver of any applicable privilege or 
claim of confidentiality in documents, materials or information 
occurs as 
a 
result of their disclosure to the superintendent 
under this chapter or as a result of sharing as authorized in 
subsection 3. 
§7007. 
Civil penalties 
Any 
person 
who 
violates 
this 
chapter 
is 
subject 
to 
suspension or revocation of license or certificate of authority 
issued pursuant to Title 24 or this Title or civil penalties and 
other 
remedies 
as 
provided 
in 
section 
12-A 
or 
both. 
Notwithstanding section 2165-A, subsection 1, the superintendent 
may issue emergency cease and desist orders on the basis of 
conduct involving fraudulent insurance acts. 
§7008. 
Recoveey costs 
In a civil action in which it is proven that a 
person 
committed 
a 
fraudulent 
insurance 
act. 
the 
court 
may 
award 
reasonable attorney I s fees and costs to the plaintiff insurer. 
In a civil action in which the insurer alleges that a party 
committed a fraudulent insurance act that is not established at 
trial. the court may award reasonable attorney I s fees and costs 
to the party if the allegation is not supported by any reasonable 
basis of law or fact. 
§7009. 
Rulemaking 
The superintendent may 
adopt rules as necessary for the 
administration of this chapter. 
Rules adopted pursuant to this 
section are 
routine technical 
rules 
as 
defined in Title 5. 
chapter 375. subchapter 2-A. 
§7010. 
Construction 
1. 
Other law enforcement or regulatory authority. This 
chapter does not preempt the authority or relieve the duty of 
other 
law enforcement or regulatory agencies 
to investigate, 
examine and prosecute suspected violations of law. 
2. 
Voluntary disclosure concerning insurance fraud. 
This 
chapter does not prevent or prohibit a person from disclosing 
voluntarily information 
concerning 
insurance 
fraud. 
insurance 
deception or deceptive insurance practices to a law enforcement 
or regulatory agency other than the division. 
3. 
No limitation on superintendent. This chapter does not 
limit the powers granted elsewhere by the laws of this State to 
the superintendent or the division to investigate and examine 
possible violations of law and to take appropriate action against 
wrongdoers. 
SUMMARY 
This bill establishes the Insurance Fraud Division within 
the Department of Professional and Financial Regulation, Bureau 
of Insurance to investigate acts of insurance fraud. 
The bill 
retains 
existing 
statutory provisions 
requiring 
insurers 
to 
include fraud warnings on insurance applications and claim forms, 
to file antifraud plans and to file annual reports with the 
Superintendent of Insurance. The bill requires persons in the 
business of insurance with knowledge or suspicion of fraudulent 
insurance acts to report those to the Superintendent of Insurance. 
Page lO-LR3088(1)