An Act To Establish an Insurance Fraud Division within the Department of Professional and Financial Regulation, Bureau of Insurance
Maine Legislature, Session 125, LD 0892
Committee Amendment CA_A_S211 (Senate)
Amends: 24-A MRSA §2179, 24-A MRSA §2186, 24-A MRSA §2187

COMMITTEE AMENDMENT ,. A " to S.P. 280, L.D. 892, BilL "An Act To 
Establish an Insurance Fraud Division within the Department of Professional and 
Financial Regulation, Bureau of Insurance" 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 16 lVIRSA §614, sub-§I, as amended by PL 1999, c. 155, Pt. A, *5, is 
further amended to read: 
1. 
Limitation on dissemination of intelligence and investigative information. 
Reports or records that contain intelligence and investigative information and that are 
prepared by, prepared at the direction of or kept in the custody of a local, county or 
district criminal justice agency; the Bureau of State Police; the Department of the 
Attorney General; the Maine Drug Enforcement Agency: the Office of State Fire 
Marshal; the Department of COtTections: the Department of Professional and Financial 
Regulation, Bureau of Insurance, Insurance Fraud Division: the criminal law enforcement 
units of the Department of Marine Resources or the Department of Inland Fisheries and 
Wildlife; or the Department of Conservation, Division of Forest Protection when the 
reports or records pertain to arson are confidential and may not be disseminated if there is 
a reasonable possibility that public release or inspection of the repOlts or records would: 
A. 
Interfere with law enforcement proceedings; 
B. 
Result in public dissemination of prejudicial info11TIation concerning an accused 
person or concerning the prosecution's evidence that will interfere with the ability of 
a court to impanel an impartial jury; 
C. 
Constitute an unwarranted invasion of personal privacy; 
D. 
Disclose the identity of a confidential source; 
E. 
Disclose confidential info11nation furnished only by the confidential source; 
COMMITTEE AMENDMENT 
COMMITIEE AMENDMENT" A" to S.P. 280, L.D. 892 
F. 
Disclose trade secrets or other confidential commercial or financial information 
designated as such by the owner or source of the information or by the Department of 
the Attorney General; 
G. 
Disclose investigative techniques and procedures or security plans and 
procedures not generally known by the general public; 
H. 
Endanger the life or physical safety of any individual, including law 
enforcement personnel; 
I. 
Disclose conduct or statements made or documents submitted by any person in 
the course of any mediation or arbitration conducted under the auspices of the 
Department of the Attorney General; 
J. 
Disclose information designated confidential by some other statute; or 
K. 
Identify the source of complaints made to the Department of the Attorney 
General involving violations of consumer or antitrust laws. 
Sec. 2. 24-A MRSA §2179, as amended by PL 1973, c. 585, §l2, is repealed. 
Sec. 3. 24-A MRSA §2186, as amended by PL 2009, c. 13, §2, is repealed. 
Sec. 4. 24-A MRSA §2187, as amended by PL 2005, c. 433, §1 and affected by 
§28, is repealed. 
Sec. 5. 24-A MRSA c. 89 is enacted to read: 
CHAPTER 89 
fflSURANCEFRAUD 
§7001. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Authorized agency. "Authorized agency" 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 Bureau of Investigation, or any other federal agency, only for the 
PUll'oses of section 7004, subsection 1; 
E. An international association of insurance supervisors; 
F. An international criminal police organization; 
G. A national insurance crime bureau; 
H. Insurance supervisors or law enforcement authorities outside of the United States; 
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COMMITTEE AMENDMENT" A" to S.P. 280, L.D. 892 
I. The State Fire Marshal; 
J. The superintendent; 
K. The Superintendent of Financial Institutions; 
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 
7004, subsection 1; 
M. The State Police or local law enforcement officials; 
N. The National Association ofInsurance Commissioners; or 
O. The Workers' Compensation Board. 
2. 
Deceptive insurance practice. 
"Deceptive insurance practice" means an 
occurrence described in Title 17-A, section 901-A. 
3. 
Fraudulent insurance act. 
"Fraudulent insurance act" means any of the 
following acts or omissions when committed knowingly: 
A. Presenting, 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, 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 another jurisdiction; 
(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 
msurer; 
(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 
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COMMITTEE AMENDMENT" A" to S.P. 280, L.D. 892 
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 
msurance; or 
G. Attempting to commit. aiding or abetting in the commission of, or conspiring to 
commit the acts or omissions described in this subsection. 
4. Insurance deception. "Insurance deception" means an occurrence described in 
Title 17-A, section 354-A. 
5. Insurer. "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 organization. "Insurer" includes an insurance producer or other 
person acting on the behalf of an insurer. 
6. 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. 
7. Reinsurance. "Reinsurance" means a contract, binder of coverage, including a 
placement slip, or arrangement under which .an insurer procures insurance for itself in 
another insurer as to all or part of an insurance risk of the originating insurer. 
§7002. Insurance Fraud Division 
1. Division 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 division shall: 
A. Initiate independent inquiries and conduct independent investigations when the 
division has cause to believe that a fraudulent insurance act, insurance deception or a 
deceptive insurance practice may be or has been committed; 
B. Review reports or complaints of alleged fraudulent insurance acts, 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 require further investigation and to 
conduct these investigations; 
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COMMITTEE AMENDMENT "A" to S.P. 280, L.D. 892 
C. Conduct independent examinations of alleged fraudulent insurance acts, insurance 
deception or deceptive insurance practices and undertake independent studies to 
determir.e the extent of fraudulent insurance acts; 
D. Assist the superintendent in developing and implementing programs to prevent 
fraudulent insurance acts, deceptive insurance practices and insurance deception; 
E. 
Assist the Attorney General in the prosecution and prevention of fraudulent 
insurance acts, deceptive insurance practices and insurance deception; and 
F. Prepare any reports regarding insurance fraud required by law. 
3. Authority. The division may: 
A. Inspect, copy and collect records and evidence; 
B. Issue subpoenas under the authority of the superintendent; 
C. Administer oaths and affirmations; 
D. Subject to section 216, subsection 5, share records and evidence with federal, 
state or local law enforcement or regulatory agencies and regulatory associations, 
including the National Association of Insurance Commissioners; 
E. Make criminal referrals to prosecuting authorities; and 
F. 
Conduct investigations within and outside this State. If the information the 
division seeks to obtain is located outside this State, the division may examine the 
information at the place where the infonnation is located. 
The division may 
designate representatives, including officials of the state in which the infonnation is 
located, to inspect the information on behalf of the division, and the division may 
respond to similar requests from officials of other states. 
4. Records; confidentiality. Records that are prepared by, prepared at the direction 
of or kept in the custody of the division that contain investigative information are subject 
to the requirements of Title 16, section 614, except that the superintendent may share 
information with an authorized agency. Except as provided in Title 16, section 614 or as 
required for a criminal or civil proceeding, an authorized agency shall hold the 
information in confidence and may not release the information to any person other than 
an authorized agency. 
5. 
Funding. 
The superintendent may assess insurers for necessary costs and 
expenses of the division to the extent permitted by section 237. 
§7003. Insurance fraud prevention 
1. Prohibited activities. A person may not commit a fraudulent insurance act, 
deceptive insurance practice or insurance deception. 
2. Fraud warning required. 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 similar statement 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." 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" A" to S.P. 280, L.D. 892 
The lack or omission of the statement required in this subsection does not constitute a 
defense in any criminal prosecution or civil action for a fraudulent insurance act. 
This subsection applies to all insurers except reinsurers. 
3. Insurer antifraud plans. An insurer writing direct insurance shall prepare and 
implement an antifraud plan. This subsection does not apply to any insurance agency, 
insurance 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 authorities 
in the investigation and prosecution of insurance fraud. 
4. Reporting of specific fraudulent insurance acts. The reporting of infonnation 
to the division relating to a fraudulent insurance act, deceptive insurance practice or 
insurance deception must be done in accordance with this subsection. 
A. An insurer having knowledge or a reasonable belief that a fraudulent insurance 
act, deceptive insurance practice or insurance deception is being, will be or has been 
committed shall provide to the division the infonnation required by the 
superintendent in a manner prescribed by the division. 
B. 
A person other than an insurer under paragraph A having knowledge or a 
reasonable belief that a fraudulent insurance act, deceptive insurance practice or 
insurance deception is being, will be or has been committed may provide relevant 
information to the division, and the division may establish fonus and procedures to 
facilitate the reporting of such information in a manner useful to the division. 
5. Annual report of aggregate information. Aggregate information related to 
fraudulent insurance acts must be reported to the division 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 division, file with the division 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 division in the manner prescribed by the division. The information 
must be reported on an aggregate basis and may not contain any information 
identifying any individuals or entities. 
B. On or before July 1st of each year, the division shall report to the joint standing 
committee of the Legislature having jurisdiction over insurance matters. The report 
must include aggregate information detailing fraudulent insurance acts experienced 
by insurers in this State. 
COMMITTEE AMENDMENT 
COMMITIEE AMENDMENT" A" to S.P. 280, L.D. 892 
§7004. Insurance fraud reporting; immunity 
1. 
Information disclosed. 
An authorized agency investigating a fraudulent 
insurance act, deceptive insurance practice or insurance deception may, in writing, 
require the insurer at interest to release to the requesting authorized agency any relevant 
information or evidence determined to be important to the authorized agency that the 
insurer may have in its possession relating to the fraudulent insurance act, deceptive 
insurance practice or insurance deception in question. This information includes, but is 
not limited to: 
A. A history of previous claims made by the insured; 
B. Policy information relevant to the insurance fraud under investigation and any 
application for that policy; 
C. Material relating to the investigation of the loss including statements and proof of 
loss; and 
D. Policy premium payment records. 
2. 
Exchange 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. Immunity. In the absence of fraud, malice or bad faith, a person, including, but 
not limited to, an insurer or authorized agency, that furnishes infonnation relating to 
suspected, anticipated or completed fraudulent insurance acts is not liable for any 
damages in any civil action for furnishing the infonnation if that information is furnished 
to or received from an authorized agency. Nothing in this subsection is intended to 
abrogate or modify in any way any common law or statutory privilege or immunity 
previously enjoyed by any person. 
§7005. Violations; penalties 
1. Suspension or revocation; civil penalties. A person who violates this chapter is 
subject to suspension or revocation of any 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. 
2. 
Emergency cease and desist order. 
Notwithstanding section 2165-A, the 
superintendent may issue an emergency cease and desist order on the basis of conduct 
involving fraudulent insurance acts. 
3. Recovery of costs in civil action. An insurer may maintain a civil action against 
a person whom the insurer alleges has committed a fraudulent insurance act in violation 
of section 7003, subsection 1. In a civil action in which it is proven that a person 
committed a fraudulent insurance act, the court may award reasonable attorney's fees and 
costs to the 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's fees and costs to the party if the allegation is not supported by any reasonable 
basis of law or fact. 
COMMITTEE AMENDMENT 
COMMITIEE AMENDMENT" A "to S.P. 280, L.D. 892 
§7006. Rulemaking 
The superintendent may adopt rules to carry out the purposes of this chapter. Rules 
adopted pursuant to this section are routine technical rules as defined by Title 5, chapter 
375, subchapter 2-A. 
§7007. Construction; other law enforcement or regulatory authority 
This chapter may not be construed to: 
1. Preempt authority of other law enforcement or regulatory agency. Preempt 
the authority or relieve the duty of other law enforcement or regulatory agencies to 
investigate, examine and prosecute suspected violations of law; 
2. Prevent voluntary disclosure. Prevent or prohibit a person from voluntarily 
disclosing information concerning insurance fraud, insurance deception or deceptive 
insurance practices to a law enforcement or regulatory agency other than the division; or 
3. Limit powers of superintendent. 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. 
Sec. 6. Appropriations and allocations. The following appropriations and 
allocations are made. 
ATTORNEY GENERAL, DEPARTMENT OF THE 
Administration - Attorney General 0310 
Initiative: Allocates funds for one Assistant Attorney General position and general 
operating expenses to support the Insurance Fraud Division within the Department of 
Professional and Financial Regulation to be funded by the Bureau of Insurance. 
OTHER SPECIAL REVENUE FUNDS 
POSITIONS - LEGISLATIVE COUNT 
Personal Services 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
ATTORNEY GENERAL, DEPARTMENT OF 
THE 
DEPARTMENT TOTALS 
OTHER SPECIAL REVENUE FUNDS 
DEPARTMENT TOTAL-ALL FUNDS 
2011-12 
1.000 
$68,273 
$4,218 
$72,491 
2011-12 
$72,491 
$72,491 
PROFESSIONAL AND FINANCIAL REGULATION, DEPARTMENT OF 
COMMITTEE AMENDMENT 
2012-13 
1.000 
$96,694 
$2,218 
$98,912 
2012-13 
$98,912 
$98,912 
COMMITIEE AMENDMENT" A "to S.P. 280, L.D. 892 
Administrative Services - Professional and Financial Regulation 0094 
Initiative: Allocates funds for operating expenses to establish and administer the 
Insurance Fraud Division. 
OTHER SPECIAL REVENUE FUNDS 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
Insurance - Bureau of 0092 
2011-12 
$24,994 
$24,994 
2012-13 
$30,517 
$30,517 
Initiative: Allocates funds for one Public Service Manager II, 2 Staff Attorney, 3 Senior 
Market Conduct Examiner and one Auditor II positions and for general operating 
expenses to establish and administer the Insurance Fraud Division. 
OTHER SPECIAL REVENUE FUNDS 
POSITIONS - FTE COUNT 
Personal Services 
All Other 
OTHER SPECIAL REVENUE FUNDS TOTAL 
PROFESSIONAL AND FINANCIAL 
REGULATION, DEPARTMENT OF 
DEPARTMENT TOTALS 
OTHER SPECIAL REVENUE FUNDS 
DEPARTMENT TOTAL-ALL FUNDS 
SECTION TOTALS 
OTHER SPECIAL REVENUE FUNDS 
SECTION TOTAL - ALL FUNDS 
SUMMARY 
2011-12 
7.000 
$387,660 
$162,308 
$549,968 
2011-12 
$574,962 
$574,962 
2011-12 
$647,453 
$647,453 
2012-13 
7.000 
$550,464 
$180,444 
$730,908 
2012-13 
$761,425 
$761,425 
2012-13 
$860,337 
$860,337 
This amendment replaces the bill. The amendment proposes substantially what the 
bill proposes but enacts a separate chapter that establishes the Insurance Fraud Division 
within the Department of Professional and Financial Regulation, Bureau of Insurance. 
The amendment requires insurers with knowledge or suspicion of fraudulent insurance 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" A "to S.P. 280, L.D. 892 
acts to report those activities to the Insurance Fraud Division. The amendment provides 
for the confidentiality of records relating to insurance fraud investigations in a manner 
similar to the provision of confidentiality under current state law for investigative and 
intelligence information in the possession of other law enforcement entities. The 
amendment permits the Insurance Fraud Division to share investigatory information with 
certain state, municipal, national and international agencies. The amendment clarifies 
that the Insurance Fraud Division may be funded by an assessment on insurers. 
The amendment also adds an appropriations and allocations section to provide funds 
for the administration of the Insurance Fraud Division. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Revised: 05/23111 ..-ae 
LD892 
LR 1739(02) 
An Act To Establish an Insurance Fraud Division within the Department of Professional and Financial 
Regulation, Bureau of Insurance 
Fiscal Note for Bill as Amended by Committee Amendment" A" S'" 2., J 
Committee: Insurance and Financial Services 
Appropriations/Allocations 
Other Special Revenue Funds 
Revenue 
Other Special Revenue Funds 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
FY2011-12 
FY 2012-13 
$647,453 
$860,337 
$647,453 
$860,337 
Projections 
FY 2013-14 
$898,199 
$903,304 
Projections 
FY 2014-15 
$938,285 
$948,751 ; 
Provides the Bureau oflnsurance in the Department of Professional and Financial Regulation with an Other Special 
Revenue Funds allocation of $549,968 in 2011-12 and $730,908 in 2012-13 to establish and administer the new 
Insurance Fraud Division. This allocation assumes the creation of 7 new positions and related operating costs in the 
Bureau. Also provides the Administrative Services Division in the Department of Professional and Financial 
Regulation with an Other Special Revenue Funds allocation of $24,994 in 2011-12 and $30,517 in 2012-13 for this 
purpose. This fiscal note also assumes the Department of the Attorney General will require an Other Special Revenue 
Funds allocation of$72,491 in 2011-12 and $98,912 in 2012-13 for an Assistant Attorney General position to be 
funded by the Bureau of Insurance. The Bureau of Insurance estimates it will be required to exercise its assessment 
authority to support the costs of the new Insurance Fraud Division. 
LR1739(02) - Fiscal Note - Page 1 of 1