An Act To Amend the Audit and Enforcement Functions of the Workers' Compensation Board
Maine Legislature, Session 125, LD 1078
Committee: Labor, Commerce, Research and Economic Development
Sponsors: CUSHING, COURTNEY, CRAY, CURTIS, PARKER, PRESCOTT, WEAVER, PLOWMAN, THIBODEAU
Amends: 24-A MRSA §4438, 39-A MRSA §153, 39-A MRSA §358-A, 39-A MRSA §359

Legislative Document 
No. 1078 
H.P. 813 
House of Representatives, March 15, 2011 
An Act To Amend the Audit and Enforcement Functions of the 
Workers' Compensation Board 
Reference to the Committee on Labor, Commerce, Research and Economic Development 
suggested and ordered printed. 
HEATHER J.R. PRIEST 
Clerk 
Presented by Representative CUSHING of Hampden. 
Cosponsored by Senator COURTNEY of York and 
Representatives: CRAY of Palmyra, CURTIS of Madison, PARKER of Veazie, PRESCOTT 
of Topsham, WEAVER of York, Senators: PLOWMAN of Penobscot, THIBODEAU of 
Waldo. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  24-A MRSA §4438, sub-§1, ¶I, as enacted by PL 2009, c. 129, §4 and 
affected by §13, is amended to read: 
I.  Pay all penalties, sanctions, forfeitures and fines provided for under the Maine 
Workers’ Compensation Act of 1992 including penalties payable to the Workers’ 
Compensation Board and the General Fund, except the penalty provided for in Title 
39-A, section 359, subsection 2. No penalty, fine, forfeiture, attorney’s fees or other 
sanction may be imposed on the association if: 
(1)  The Workers' Compensation Board finds that the association was prevented 
from complying with the Maine Workers’ Compensation Act of 1992 because the 
association was unable in the exercise of reasonable diligence to obtain the 
records of the insolvent insurer; or 
(2)  The Workers' Compensation Board finds that the association was prevented 
from complying with the Maine Workers’ Compensation Act of 1992 because of 
circumstances beyond its reasonable control. 
Sec. 2.  39-A MRSA §153, sub-§9, as amended by PL 2005, c. 603, §3, 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 
contesting claims; and ensuring that all reporting requirements to the board are met. The 
executive director shall establish an audit and enforcement program to determine if 
obligations under this Act are met.  The audit and enforcement program must be focused 
on the timeliness of payments and the reporting requirements to the board.  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. 3.  39-A MRSA §358-A, sub-§1, as enacted by PL 1997, c. 486, §8, is 
amended to read: 
1.  Workers' compensation system annual report.  The board, in consultation with 
the Superintendent of Insurance and the Director of the Bureau of Labor Standards within 
the Department of Labor, shall submit an annual report to the Governor and the joint 
standing committees of the Legislature having jurisdiction over labor and banking and 
insurance matters by February 15th of each year regarding the status of the workers' 
compensation system.  At a minimum, the report must include an assessment of the 
board's implementation of the following provisions: 
A.  The number of individual cases monitored to ensure the provision of benefits in 
accordance with law, pursuant to section 152, subsection 10; 
B.  The number of cases monitored to ensure the payments are initiated within the 
time limits of sections 205 and 324 and the adequacy of compensation provided 
pursuant to section 153, subsection 1; 
C.  The number of investigations performed pursuant to section 153, subsection 7; 
D.  The number of lump-sum settlements cases monitored and a summary of 
postsettlement employment experience pursuant to section 352, subsection 6; 
E.  The number of audits performed and an assessment of compliance with this Act 
based on audit results pursuant to section 359, subsection 1; and 
F.  The number of penalties assessed and the reasons for the assessments pursuant to 
section 205, subsection 3; section 313, subsection 4; section 324, subsections 2 and 3; 
section 359, subsection 2; and section 360; and. 
G.  The results of the monitoring program giving side-by-side information 
compilations for the past 5 years pursuant to section 359, subsection 3. 
The report must contain specific data regarding compliance, including benchmarks 
measuring individual insurer's, self-insurer's, or 3rd-party administrator's compliance with 
the provisions of this Act and any penalties assessed.  Benchmarks must be developed by 
the board with input from insurers, self-insurers and 3rd-party administrators and other 
parties the board considers appropriate. The board shall also report on the utilization of 
troubleshooters, advocates and retained legal counsel, with correlating outcomes. 
Sec. 4.  39-A MRSA §359, as amended by PL 2009, c. 129, §11 and affected by 
§13, is further amended to read: 
§359.  Audits; ongoing evaluation 
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. When the board has probable cause to believe that 
an insurer, self-insurer, the Maine Insurance Guaranty Association or a 3rd-party 
administrator has not met an obligation under this Act, the board shall audit the matter to 
determine whether that obligation has been met. 
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, service provider or any other entity, 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. 
2.  Penalty.  In addition to any other penalty assessment permitted under this Act, the 
board may assess civil penalties not to exceed $25,000 upon finding, after hearing, that an 
employer, insurer 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.  The 
amount of any penalty assessed pursuant to this subsection must be directly related to the 
severity of the pattern of questionable claims-handling techniques or repeated 
unreasonably contested claims.  All penalties collected pursuant to this subsection must 
be deposited in the General Fund.  An insurance carrier's payment of any penalty assessed 
under this section may not be considered an element of loss for the purpose of 
establishing rates for workers' compensation insurance. 
3.  Ongoing evaluation.  No later than July 1, 1993 the The board shall implement a 
monitoring program to evaluate and compare the cost, utilization and performance of the 
workers' compensation system for each calendar year beginning with 1988.  The 
information compiled must include the number of injuries occurring and claims filed as 
compared to employment levels, the type and cost of the benefits provided, attorney 
involvement and litigation levels, and the long-term, postinjury economic status of 
injured workers, as well as any other data that is actuarially valid and can be utilized to 
accomplish the purposes of this Act, including rulemaking and recommending legislation. 
SUMMARY 
This bill amends the audit and enforcement functions of the Workers' Compensation 
Board. 
1.  It eliminates the duty of the board to monitor the claims handling practices of 
insurers, self-insurers, the Maine Insurance Guaranty Association and 3rd-party 
administrators and eliminates the monitoring program. 
2.  It requires that, in order for the board to audit an insurer, self-insurer, the Maine 
Insurance Guaranty Association or a 3rd-party administrator, the board have probable 
cause to believe that an insurer, self-insurer, the Maine Insurance Guaranty Association 
or a 3rd-party administrator has not met an obligation under the Maine Workers' 
Compensation Act of 1992. 
3.  It eliminates the board's authority to assess penalties on employers, insurers or 
3rd-party administrators that engage in a pattern of questionable claims-handling 
techniques or repeated unreasonably contested claims.