An Act To Enhance Oversight of Fraternal Benefit Societies
Maine Legislature, Session 124, LD 0157
Committee: Insurance and Financial Services
Sponsors: TREAT, ALFOND, PRIEST
Amends: 24-A MRSA §12-A, 24-A MRSA §2186, 24-A MRSA §4126, 24-A MRSA §4127, 24-A MRSA §4138, 24-A MRSA §4138-A, 24-A MRSA §4139

FIRST IlEGULAR SESSION-2009 
Legislative Document 
No. 157 
H.P.136 
House of Representatives, January 20,2009 
An Act To Enhance Oversight of Fraternal Benefit Societies 
Submitted by the Department of Professional and Financial Regulation pursuant to Joint 
Rule 204. 
Reference to the Committee on Insurance and Financial Services suggested and ordered 
printed. 
Presented by Representative TREAT of Hallowell. 
Cosponsored by Senator ALFOND of Cumberland and 
Representative: PRIEST of Bnmswick. 
Printed nn i'cL:ydcd paper 
11J~d:; 1h.1J?II£~{ 
MILLICENT M. MacFARLAND 
Clerk 
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Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 24-A MRSA §12-A, sub-§4, as enacted by PL 1989, c. 269, §3, IS 
amended to read: 
4. Refunds of overcharges. In the event that any insurer, fraternal benefit society, 
nonprofit hospital service plan, nonprofit medical service plan, nonprofit health care plan, 
health maintenance organization or preferred provider organization makes charges to any 
person whleh that are not in conformity with a filing whleh that it is required to submit 
for approval or disapproval by this Title or Title 24, the superintendent may order that 
refunds of any overcharges be made. 
Sec. 2. 24-A MRSA §2186, sub-§l, ~, as amended by PL 1999, c. 5, § 1 and 
affected by §2, is further amended to read: 
B. 
"Insurer" means an authorized insurance company, fraternal benefit society, 
reinsurer, surplus lines insurer, unauthorized insurer, nonprofit hospital and medical 
service organization, health maintenance organization, risk retention group or 
multiple employer welfare organ ization. 
"Insurer" also includes an insurance 
producer or other person acting on the behalf of an insurer. For the purposes of this 
section, "insurer" also means the state Medicaid program. 
Sec. 3. 24-A MRSA §4126, sub-§6 is enacted to read: 
6. Nothing in this section may be construed as limiting the superintendent's authority 
to take enforcement action under section 12-A in connection with violations of applicable 
provisions of this Title. 
Sec. 4. 24-A MRSA §4127, as amended by PL 1977, c. 694, §432 and PL 1999, c. 
547, Pt. B, §78 and affected by §80, is repealed. 
Sec.S. 24-A MRS A §4127-A is enacted to read: 
§4127-A. Suspension, revocation or refusal of license of foreign or alien society 
The superintendent may suspend, revoke or refuse the license of a foreign or alien 
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society transacting or applying to transact business in this State as set out in this section. 
1. Investigation. If, upon investigation, the superintendent finds that a foreign or 
alien society transacting or applying to transact business in this State has exceeded its 
powers, has failed to comply with any of the provisions of this chapter, is not fulfilling its 
contracts in good faith or is conducting its business fraudulently or in a manner hazardous 
to its members or creditors or the public, the superintendent shall notify the society of the 
deficiency or deficiencies and state in writing the reasons that warrant suspension, 
revocation or refusal of the society's license. The notice must require that the deficiency 
or deficiencies be corrected. 
After receipt of the notice, the society has 30 days to comply with the superintendent's 
request for correction, and if the society fails to comply, the superintendent shall notify 
the society of the fmdings of noncompliance and require the society to show cause, on a 
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date set by the superintendent, why its license should not be suspended, revoked or 
refused. If on that date the society does not present good and sufficient reason why its 
authority to do business in this State should not be suspended, revoked or refused, the 
superintendent may suspend or refuse the license of the society to do business in this 
State until satisfactory evidence is furnished to the superintendent that the suspension or 
refusal should be withdrawn or the superintendent may revoke the authority of the society 
to do business in this State. 
2. Continue contracts. Nothing in this section may be construed as preventing any 
foreign or alien society from continuing in good faith all contracts made in this State 
during the time the society was legally authorized to transact business in this State. 
3. Enforcement action. Nothing in this section may be construed as limiting the 
superintendent's authority to take enforcement action under section 12-A in connection 
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with violations of applicable provisions of this Title. 
Sec. 6. 24-A MRSA §4138, as amended by PL 2001, c. 421, Pt. B, §§91 and 92 
and affected by Pt. C, § 1, is repealed. 
Sec~ 7. 24-A MRSA §4138-A is enacted to read: 
§4138-A. Enforcement; unfair methods of competition and unfair and deceptive 
acts and practices 
A society authorized to do business in this State is subject to the provisions of section 
12-A and chapter 23. Nothing in such provisions may be construed as applying to or 
affecting the right of any society to determine its eligibility requirements for membership 
or as applying to or affecting the offering of benefits exclusively to members or persons 
eligible for membership in the society by a subsidiary corporation or affiliated 
organization of the society or the offering of benefits only to its members .. 
Sec. 8. 24-A MRSA §4139, as enacted by PL 1969, c. l32, §1, is repealed. 
SUMMARY 
This bill gives the Superintendent of Insurance similar administrative and 
enforcement authority over fraternal benefit societies as the superintendent currently has 
relating to nonfraternal entities such as insurers and multiple employer welfare 
arrangements. 
The superintendent's current authority is significantly restricted and 
inadequate to ensure compliance with Maine law by such entities authorized to operate in 
Maine. 
The bill also amends the definition of "insurer" to include fraternal benefit 
societies. In addition, the bill brings Maine law more up to date with the regulation of 
fraternal benefit societies in other states.