An Act To Create an Insurance Fraud Unit within the Bureau of Insurance (AFTER DEADLINE)
Maine Legislature, Session 122, LD 1561
Committee: Insurance and Financial Services
Sponsors: PERRY, FISHER, MARRACI-IE
Amends: 24-A MRSA §2

Legislative Document 
No. 1561 
H.P.1099 
House of Representati ves, April 7, 2005 
An Act To Create an Insurance Fraud Unit within the Bureau of 
Insurance 
(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. 
Presented by Representative PERRY of Calais. 
!r/~ 
frl.11!d£~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: FISHER of Brewer, MARRACI-IE of Waterville. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 5 MRSA §I2004-G, sub-§2I-C is enacted to read: 
21-C. 
Insurance 
Board of 
Insurance 
Fraud 
Not 
Authorized 
24-A MRSA 
§2l92 
Sec. 2. 24-A MRSA c. 23 is amended by inserting before §2l5l 
the following: 
SUBCHAPTER 1 
INSURAHCE FRAUD 
Sec. 3. 24-A MRSA c. 23, sub-c. 2 is enacted to read: 
SUBCHAPTER 2 
INSURANCE FRAUD UBIT 
§2191. 
Insurance Fraud Unit 
1. 
Insurance Fraud-Dnit. 
There is established within the 
bureau the Insurance Fraud Unit, referred to in this subchapter 
as "the unit. " 
2. 
Duties. 
The duties of the unit are: 
A. 
To initiate inguiries concerning and review complaints 
and conduct investigations of suspected insurance fraud: 
B. 
To 
assist 
the 
super intendent 
in 
developing 
and 
implementing programs to prevent fraudulent insurance acts 
and abuse: 
C. 
To 
review 
reports 
of 
insurance 
fraud 
submitted 
by 
insurance 
companies, 
special 
investigation 
groups 
under 
section 2194 and law enforcement agencies; 
D. 
To assist the Attorney General in the prosecution and 
prevention of insurance fraud: and 
E. 
To investigate and prosecute organized fraud. 
§2192. 
Board of Insurance Fraud 
The Board of Insurance Fraud as established in Title 5, 
section 12004 G, 
subsection 21-C is the policy-making authority 
and governing body of the unit. 
1. 
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.... b"'-"<e .... r .... s_.Y.o--.f_-"t""h..."e'---"B .... 
o.."a....,r...,d"'----'o~f 
Insurance Fraud: 
A. 
Three members 
appoin~ed by the Governor after nomination 
by an association representing licensed insurance companies 
in the State: 
B. 
Two members of the general public, appointed by the 
Governor: 
C. 
Two representatives of State Government, one of whom is 
~~ted by the Pr~sident of the Senate and one of whom is 
appointed by the Speaker of the House of Representatiyes: 
D. 
One member appointed by the Superintendent of Insurance: 
.arul 
E. 
One member appointed by the Governor after nomination by 
a statewide association of licensed private investigators. 
~2~._~C~h~a~i~r~.~_T~h~e_~B~o~a~r-"d 
Qf 
Insurance 
Fraud shall 
choose 
annually one of its members to serve as chair. 
3. 
Duties 
an..~-PQ"ers. 
The duties and powers of the Board 
of Insurance Fraud are: 
A. 
Appointing and overseeing the activities of the director: 
B. 
In the absence of the director. appointing the chief 
investigator: 
C. 
Approving the mission of the unit; 
D. 
A.Q.Q.Qting 
rul~~minister the unit and to carry out 
the purposes of this chapter pursuant to section 2197; 
E. 
Adjudging fines ag;;!.inst insurers and self-ins.1lrers for 
violations 
of 
this 
chapter, 
provisions 
in 
this 
Title 
concerning 
the 
reporting 
of 
insurance 
fraud 
and 
rules 
adopted by the BQard of Insurance Fraud and for misconduct 
of special investigation groups under section 2194. 
A fine 
adjudged under this paragraph must be deposited in the 
Insurance Fraud Fund under section 2196, subsection 2: 
F. 
Reviewing 
and 
approving 
the 
budget 
for 
the 
unit 
submitted by the director; 
G. 
Assisting 
the 
superintendent 
in 
carrying 
out 
the 
purposes of this chapter: and 
H. 
Borrowing money as approved by the Legislature. 
4. 
MeetingJO. 
The Board of Insurance Fraud shall meet at 
least 4 times a year at regular intervals. 
5. 
Tegu;. 
The 
t..e.rJ!L.Qf~_mELrnDer of the Board of In.s..u~ 
Fraud is 4 years. A member may be appointed for consecutive terms. 
6. 
Report. 
The 
Board of 
Insurance 
Fraud shall report 
annually on the state of the unit and its operations to the joint 
standing committees of the Legislature having jurisdiction over 
insurance matters and over criminal matters. 
7. 
Oversight by superintendent. 
The superintendent shall 
oversee the activities of the Board of Insurance Fraud. 
§2193. 
Staff 
1. 
Director. 
The Director of the Insurance Fraud Unit, 
referred to 
in this 
subchapter 
as 
"the director," 
has 
the 
following powers and duties: 
A. 
Supervising the operation of the unit in accordance with 
this 
subchapter 
and 
with 
the 
rules 
adopted 
under 
this 
subchapter: 
B. 
Acting as the chief administrative and executive officer 
of the unit, having general charge of the office and records 
and employing such personnel as may be necessary to fulfill 
the purposes of this subchapter: 
C. 
Acting as executive secretary of the Board of Insurance 
Fraud: 
D. 
Admi~exing the Insurance Fraud Fund under section 
2196, subsection 2: 
E. 
Appointing and overseeing the chief investigator: and 
F. 
Acting as the chief financial officer of the unit, 
including administering the financial operations of the unit 
and preparing and presenting the annual budget to the Board 
of Insurance Fraud prior to the beginning of the fiscal year. 
2. 
Chief investigator. 
The chief investigator, appointed 
by the director, has the following powers and duties: 
A. 
Supervising the day to day operation of the unit: 
B. 
Hiring and supervising field investigators and office 
staff; 
C. 
Assigning cases; 
D. 
Supervis...ing 
the 
conduct 
of 
and 
disciplining 
unit 
personnel; and 
E. 
Determining and overseeing the investigatory procedures 
~nd other 
technical 
tasks 
carried 
out 
by 
the 
unit's 
personnel. 
3. 
Field investigators. 
The 
unit 
shall 
employ 
field 
investigators as necessary to carry out the purposes of the 
unit. 
A field investigator under this subsection must have 
gualifications 
reguired 
to 
perform 
the 
duties 
of 
field 
investigator, 
including prior experience as 
a 
law enforcement 
officer or an insurance fraud investigator. 
4. 
PrQsec~s. 
The 
Attorney 
General 
shall 
assign 
an 
9~p~ant attorney 9~~L~~~11-time, permanent basis to tb~ 
unit for the prosecution of insurance fraud cases. 
The assistant 
attorney general assigned pursuant to this subsection is the lead 
prosecutor for 
the unit 
and is responsible directly to 
the 
Attorney 
General. 
An 
assistant 
district 
attorney 
may 
be 
temporarily assigned to 
the unit 
as 
necessary 
and 
upon 
the 
approval of the district attorney from the prosecutorial district 
in 
which 
the 
assistant district 
attorney 
is 
employed. 
The 
assistant attorney general assigned to the unit pursuant to this 
subsection is the supervisor of an assistant district attorney 
assigned to the unit pursuant to the subsection. The personnel 
~ts of a prosecutor assigned to the unit pursuant to 
th~ 
subsection must be paid for through the Insurance Fraud Fund 
established in section 2196, subsection 2. 
5. 
PQvers 
an~ties. 
Personnel of .the unit have 
the 
p_owers 
of 
law 
enforcement 
officers 
in 
carryin~ut 
law 
enforcement functions as defined in Title 3Q-A, 
section 451, 
.su~~~tiori 11 to fulfill tlliL-PJ.ilJ2.Qll.S of this subchapLer. 
In 
performing 
law 
enforcement 
functions 
under 
this 
subsection, 
personnel of the unit have the following powers and duties: 
A. 
Initiating inve~t_j.g9tions of alleged fraudulent conduct 
involving insurance claims; 
B. 
Initiating investigptions of alleged fraudulent conduct 
of insurers and self -insured entities, including, but not 
limited 
to, 
claims 
of 
injury, 
loss, 
death, 
material 
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n,,,,c"'e'-','--_-"'d"'e~c<..Se'_.lp:!.'t"'-'~,!,..· VY.Si.e 
practices or any other fraudulent conduct as described in 
this chapter: 
C. 
Executing warrants: 
D. 
Requesting court orders: 
E. 
Su~.aing wi~~ses and administering oaths pursuant 
to an investigation: and 
F. 
Compelling_th.ELj2.r;:9J~\'H.::J;_i_on of books, 
pap~, reports or 
other documents or electronic files by subpoena duces tecum. 
§2194. 
Special investigation groups 
An insurer or self-insured entity licensed or authorized 
under this Title shall create 
a 
special investigation group 
within the insurer's or self-insured's organization. 
The special 
investigation group must consist of at least one employee or 
outside contractor who 
is licensed as 
a private investigator 
under Title 32, chapter 89 and has experience in insurance fraud 
investigations and 
moni~ng. 
A special investigation group 
under this section shall monitor the organization under which it 
is 
formed 
for 
instances 
of 
insuranGe 
fraud 
and 
report all 
fraudulent claims 
and other fraudulent activity to 
the unit 
pursuant to section 2186 and provide assistance as requested by 
the unit. 
§2195. 
Confidentiality and privilege 
All papers, documents, files, reports and evidence related 
to an investigation by the unit are confidential and not public 
records pursuant to Title 1, section ~ubsection 3, paragraph 
A. 
All papers, documents, files, reports and evidence related to 
an investigation by the unit are privileged and not subject to 
subpoena, discovery or disclosure in any proceeding except in a 
related action initiated by the unit. 
§2196. 
Funding 
1. 
AsseSSment. 
A 25¢ fee must be assessed on an insurance 
policy for direct insurance in the State, except an insurance 
policy for credit. home warranty or title insurance. 
For every 
insurance 
policy 
in 
which 
a 
fee 
is 
assessed 
under 
this 
subsection, the insurance contract for that insurance policy must 
state the following: 
"A fee of 25¢ has 
be~ssesse_d on this 
policy to fight insurance fraud in the State of Maine." 
The fee 
assessed pursuant to this subsection must be deposited in the 
Insurance Fraud Fund established under subsection 2. 
2. 
Insurance 
Fraud 
Fund. 
There 
is 
established 
the 
Insurance 
Fraud 
Fund, 
a 
nonlapsing, 
interest-bearing account 
referred to in this subsection as "the fund," administered by the 
director. 
The fund receives money from the fee assessed pursuant 
to subsection 1 and fines adjudged by the Board of Insurance 
Fraud pursuant 
to 
section 
2192, 
subsection 
3, 
paragraph 
E. 
Interest accrued by the fund must remain in the fund. 
All mone~ 
deposited in the fund and the earnings on that money remain in 
the 
fund 
and 
may 
be 
used 
to 
fund 
the 
operations 
and 
administration of the unit, the personnel costs associated with 
the assignment of an assistant attorney general and any assistant 
district 
attorneys 
to 
the 
unit 
pursuant 
to 
section 
2193, 
subsection 4 and for the necessary administrative and personnel 
costs associated with the management of the fund. 
§2197. 
Rules 
The Board of Insurance Fraud may adopt rules to carry out 
the purposes of this subchapter. 
Rules adopted pursuant to this 
section are routine technical rules pursuant to Title 5, chapter 
375, subchapter 2-A. 
Sec. 4. Initial funding and appointments for Bureau of Insurance, 
Insurance Fraud Unit. 
1. 
Initial funding. 
The Superintendent of Insurance shall 
transfer all funds held by the Bureau of Insurance that are not 
encumbered in the fiscal year in which this Act becomes effective 
to the Insurance Fraud Fund established in the Maine Revised 
Statutes, Title 24-A, section 2196, subsection 2. 
Within 30 days 
of its first meeting, the Board of Insurance Fraud established in 
Title 
5, 
section l2004-G, 
subsection 2l-C shall adopt 
rules 
pursuant to Title 24-A, section 2197 to assess the fee required 
by Title 24-A, section 2196, subsection 1, which must be assessed 
on every applicable 
insurance policy entered into after the 
effective date of this Act. 
The Board of Insurance Fraud may 
borrow money and issue evidences of indebtedness to finance the 
expenses 
associated 
with 
the 
formation 
of 
the 
Bureau 
of 
Insurance, Insurance Fraud Unit, established under Title 24-A, 
section 2191, pursuant to Title 24-A, section 2192, subsection 3, 
paragraph H, and to provide for the security and payment of those 
evidences of indebtedness and for the rights of the holders of 
them, except that any borrowing pursuant to that provision may 
not exceed in the aggregate principal amount outstanding at any 
time 30% of the start-up expenses associated with the Bureau of 
Insurance, Insurance Fraud Unit, and except that no borrowing may 
be effected pursuant to this section unless the amount of the 
borrowing is submitted to the legislative Office of Fiscal and 
Program Review for review by the joint standing committee of the 
Legislature having jurisdiction over appropriations and financial 
affairs at least 60 days before closing on such borrowing for the 
project or projects is to be initiated. 
2. 
Initial appointments and staff. 
Within 30 days of the 
effective date of this Act, the appointing authorities under the 
Maine Revised Statutes, Title 24-A, section 2192, subsection 1 
shall make those appointments. 
Notwithstanding the provisions of 
Title 24-A, section 2192, subsection 3, paragraph A, the Governor 
shall appoint the initial Director of the Insurance Fraud Unit 
within the Bureau of Insurance under Title 24-A, section 2193, 
subsection 1 and the Attorney General shall assign an assistant 
attorney general to the Insurance Fraud Unit pursuant to Title 
24-A, section 2193, subsection 4. 
Within 30 days of appointment, 
the Director of the Insurance Fraud Unit shall prepare an initial 
budget for review by the Board of Insurance Fraud pursuant to 
Title 24-A, section 2193, subsection 1, paragraph F and appoint a 
chief investigator of the Insurance Fraud Unit pursuant to Title 
24-A, section 2193, subsection 2. 
Within 30 days of appointment, 
the chief investigator shall hire 
as initial staff 
field 
investigators under Title 24-A, section 2193, subsection 3 and 
any clerical staff as needed. 
SUMMARY 
This bill creates the Bureau of Insurance, Insurance Fraud 
Uni t, overseen by the Board of Insurance Fraud and administered 
by a director. 
The personnel of the Insurance Fraud Unit include 
the director, a chief investigator, field investigators, clerical 
staff and an assistant attorney general permanently assigned to 
the unit. 
Assistant district attorneys may also be temporarily 
assigned to 
the 
Insurance 
Fraud Unit. 
The 
purpose 
of 
the 
Insurance 
Fraud 
Unit 
is 
to 
respond 
to 
complaints 
of 
and 
investigate and prosecute instances of insurance fraud. 
This 
bill requires insurers and self-insureds in the State to create 
special investigation groups within their organizations that have 
at least one licensed private investigator who 
is either an 
employee 
or 
independent 
contractor 
to 
report 
any 
suspected 
insurance fraud to the Insurance Fraud Unit. 
Personnel of the 
Insurance Fraud Unit have law enforcement powers to carry out 
their investigatory duties, 
including the 
power 
to 
subpoena, 
administer oaths, execute warrants and request court orders as 
part of their investigations. 
The Insurance Fraud Unit is funded 
by a 
25¢ fee on certain insurance policies and the Board of 
Insurance Fraud is authorized to borrow up to 30% of the start-up 
costs of the Insurance Fraud Unit.