An Act To Improve Workers' Compensation Protection for Injured Workers Whose Employers Have Wrongfully Not Secured Workers Compensation Insurance
Maine Legislature, Session 129, LD 1500
Committee: Labor and Housing
Sponsors: JACKSON, CUDDY, SYLVESTER, TUCKER
Amends: 39-A MRSA §102, 39-A MRSA §105-B, 39-A MRSA §205, 39-A MRSA §324, 39-A MRSA §355, 39-A MRSA §359, 39-A MRSA §360, 39-A MRSA §362

Legislative Document
No. 1500
S.P. 462
In Senate, April 4, 2019
An Act To Improve Workers' Compensation Protection for Injured 
Workers Whose Employers Have Wrongfully Not Secured Workers' 
Compensation Insurance
Reference to the Committee on Labor and Housing suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by President JACKSON of Aroostook.
Cosponsored by Representative CUDDY of Winterport and
Representatives: SYLVESTER of Portland, TUCKER of Brunswick.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  39-A MRSA §102, sub-§16-A is enacted to read:
16-A.  Prime contractor.  "Prime contractor" means a person that contracts with a 
person to perform work, but does not include an owner or occupant of real property who 
hires a prime contractor or subcontractor to perform work on that real property.
This subsection is repealed July 1, 2022.
Sec. 2.  39-A MRSA §102, sub-§18-A is enacted to read:
18-A.  Subcontractor.  "Subcontractor" means a person who contracts with a prime 
contractor or another subcontractor to perform work.
This subsection is repealed July 1, 2022.
Sec. 3.  39-A MRSA §105-B is enacted to read:
§105-B.  Contractor's liability for subcontractors
1.  Liability.  Notwithstanding section 102, subsection 11, paragraph A, 
subparagraph (8), when a subcontractor fails to secure the payment of compensation 
required by this Act, the prime contractor is liable for compensation under this Act to the 
employees of the subcontractor unless there is an intermediate subcontractor who has 
secured the payment of compensation in conformity with this Act.
2.  Indemnification.  This subsection governs contractors' liability for 
subcontractors.
A.  A prime contractor or subcontractor or the prime contractor's or subcontractor's 
insurance carrier who becomes liable under subsection 1 for the payment of 
compensation on account of injury to or death of an employee of a subcontractor may 
recover from that subcontractor the amount of the compensation paid or for which 
liability is incurred and reasonable attorney's fees and expenses.
B.  A claim for recovery under paragraph A constitutes a lien against any money due 
or to become due to a subcontractor from the prime contractor or another 
subcontractor.
C.   A claim for recovery under paragraph A does not affect the right of an injured 
employee or the dependents of a deceased employee to recover compensation due 
from the prime contractor or subcontractor or the prime contractor's or 
subcontractor's insurance carrier.
3.  Exceptions.  This section does not apply to:
A.  A person who regularly operates a business or practices a trade, profession or 
occupation, whether individually or in partnership or association with other persons 
or as a member of a limited liability company, and who has not elected to be 
personally covered as provided in section 102, subsection 11, paragraph B;
B.  A person who has waived all the benefits and privileges provided by the workers' 
compensation laws as provided in section 102, subsection 11, paragraph A, 
subparagraphs (4) and (5); or
C.  An owner or occupant of real property who hires a prime contractor or 
subcontractor to perform work on that real property.  The prime contractor or 
subcontractor hired by the owner or occupant is subject to this section.
4.  Effective date.  This section takes effect January 1, 2020.
5.  Repeal.  This section is repealed July 1, 2022.
Sec. 4.  39-A MRSA §205, sub-§4-A is enacted to read:
4-A.  Payment of bills for medical or health care services prior to July 1, 2022.  
Notwithstanding subsection 4, prior to July 1, 2022, when there is not an ongoing dispute, 
if bills for medical or health care services are not paid within 30 days after the carrier has 
received notice of nonpayment, $50 or the amount of the bill due, whichever is less, must 
be added and paid to the provider of the medical or health care services or, if the bill was 
paid by the employee, to the Employment Rehabilitation Fund under section 355 for each 
day over 30 days in which the bills for medical or health care services are not paid. Not 
more than $1,500 in total may be added pursuant to this subsection. For purposes of this 
subsection, "carrier" includes the Maine Insurance Guaranty Association under Title 
24-A, chapter 57, subchapter 3.
This subsection is repealed July 1, 2022.
Sec. 5.  39-A MRSA §324, sub-§2, ¶A, as amended by PL 2007, c. 265, §1, is 
further amended to read:
A.  Except as otherwise provided by section 205, if an employer or insurance carrier 
fails to pay compensation as provided in this section, the board may assess against the 
employer or insurance carrier a fine of up to $200 for each day of noncompliance.  If 
the board finds that the employer or insurance carrier was prevented from complying 
with this section because of circumstances beyond its control, a fine may not be 
assessed.
(1)  The fine for each day of noncompliance must be divided as follows:  Of each 
day's fine amount, the first $50 is paid to the employee to whom compensation is 
due and the remainder must be paid to the board and be credited to the Workers' 
Compensation Board Administrative Fund.
(1-A) Notwithstanding subparagraph (1), prior to July 1, 2022, the fine for each 
day of noncompliance must be paid to the Employment Rehabilitation Fund 
under section 355.
This subparagraph is repealed July 1, 2022.
(2)  If a fine is assessed against any employer or insurance carrier under this 
subsection on petition by an employee, the employer or insurance carrier shall 
pay reasonable costs and attorney's fees related to the fine, as determined by the 
board, to the employee.
(3)  Fines assessed under this subsection may be enforced by the Superior Court 
in the same manner as provided in section 323.
(4)  Notwithstanding subparagraph (3), prior to July 1, 2022, fines assessed under 
this subsection may be enforced by the Superior Court in the same manner as 
provided in section 361, subsection 2.
This subparagraph is repealed July 1, 2022.
Sec. 6.  39-A MRSA §355, sub-§10-A is enacted to read:
10-A.  Employees working for uninsured employers.  The provisions of this 
subsection apply when an employee is working for an uninsured employer.  For the 
purposes of this subsection, "uninsured employer" means an employer who has failed to 
secure the payment of compensation in conformity with this Act.
A.  The fund must be used to pay to an injured employee of an uninsured employer 
for whom there is no other responsible prime contractor or subcontractor the same 
benefits the employee would have received if the employer had secured coverage as 
required by this Act.
B.  The fund must be used to pay the costs of adjusting and representing the fund in 
any actions relating to claims for benefits made by employees working for uninsured 
employers.
C.  The board is entitled to recover from the uninsured employer the amount of the 
compensation paid under this subsection, interest and all other costs associated with 
the claim, including, but not limited to, adjusting and representing the fund.
D.  If an uninsured employer fails to reimburse the board as set forth in this 
subsection, the uninsured employer shall also pay the costs of recovering the amounts 
due, including reasonable attorney's fees.
E.  The board, by contract, may delegate day-to-day administration and adjusting of 
claims against the fund to a service agent.  A service agent may subcontract with 
attorneys approved by the board to advise or represent the fund in actions under this 
subsection as necessary. Expenses of the service agent and attorneys retained by the 
service agent, upon approval by the board, are paid from the fund.
This subsection is repealed July 1, 2022.
Sec. 7.  39-A MRSA §359, sub-§2-A is enacted to read:
2-A.  Penalty prior to July 1, 2022.  Notwithstanding subsection 2, prior to July 1, 
2022, 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 Employment Rehabilitation Fund under section 355. An insurance 
carrier's payment of any penalty assessed under this subsection may not be considered an 
element of loss for the purpose of establishing rates for workers' compensation insurance.
This subsection is repealed July 1, 2022.
Sec. 8.  39-A MRSA §360, sub-§4, ¶D is enacted to read:
D.  Notwithstanding paragraph C, prior to July 1, 2022, all penalties assessed under 
this section in connection with employees injured on or after the effective date of this 
paragraph are payable to the Employment Rehabilitation Fund under section 355.
This paragraph is repealed July 1, 2022. 
Sec. 9.  39-A MRSA §362 is enacted to read:
§362.  Payment to the Employment Rehabilitation Fund; enforcement; prior to July 
1, 2022
Notwithstanding section 361, prior to July 1, 2022, the following provisions apply to 
penalties assessed under this Act.
1.  Payment.  All penalties assessed under this Act are payable to the Employment 
Rehabilitation Fund under section 355, unless otherwise provided by law.
2.  Enforcement and collection.  All penalties assessed under this Act are 
enforceable by the Superior Court under section 323. 
A.  The Attorney General shall prosecute any action necessary to recover penalties 
payable to the Employment Rehabilitation Fund under section 355 or the board may 
retain private counsel for that purpose.
B.    If a person fails to pay a penalty assessed under this Act that is payable to the 
Employment Rehabilitation Fund under section 355 and enforcement by the Superior 
Court is necessary:
(1)  That person shall pay the costs of prosecuting the action in Superior Court, 
including reasonable attorney's fees; and
(2)  If the failure to pay was without due cause, any penalty assessed on that 
person under this Act must be doubled.
3.  Application; repeal.  This section applies notwithstanding section 361 and is 
repealed July 1, 2022.
SUMMARY
This bill amends the Maine Workers' Compensation Act of 1992 to create protections 
for injured workers whose employers have not secured workers' compensation insurance 
in accordance with current law.  The bill creates liability for situations when an employee 
is injured while working for an uninsured subcontractor.  In such situations, the prime 
contractor will be responsible for payment of workers' compensation benefits as if it were 
the direct employer of the injured employee, unless there is an intermediate subcontractor 
with workers' compensation insurance coverage, in which case, the intermediate 
subcontractor is responsible for payment of all benefits due under the Act.  These 
provisions take effect January 1, 2020 and are repealed July 1, 2022.
The bill also amends the laws governing the Employment Rehabilitation Fund.  Until 
July 1, 2022, the fund will be used to pay workers' compensation benefits to injured 
employees working for illegally uninsured employers when there is no other prime 
contractor or subcontractor liable for payment of benefits.  Until July 1, 2022, the fund 
will not transfer a portion of its funds to the General Fund and penalties recovered for 
violations of the Maine Workers' Compensation Act of 1992 will be directed to this fund 
exclusively, instead of being shared with the Workers' Compensation Board 
Administrative Fund or the General Fund.