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Legislative Proposals

DPF-

An Act to Enhance Oversight of Fraternal Benefit Societies

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 which are not in conformity with a filing which 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 §4126, sub-§6 is enacted to read:

6. Nothing in this section shall 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. 3. 24-A MRSA §4127, as amended by PL 1999, c. 547, Pt. B, §78 and affected by Pt. B, §80, is repealed.

Sec. 4. 24-A MRSA §4127-A is enacted to read:

§4127-A. Suspension, revocation or refusal of license of foreign or alien society

1. When the superintendent upon investigation finds that a foreign or alien society transacting or applying to transact business in this State:

A. Has exceeded its powers;

B. Has failed to comply with any of the provisions of this chapter;

C. Is not fulfilling its contracts in good faith; or

D. Is conducting its business fraudulently or in a manner hazardous to its members or creditors or the public;

the superintendent must notify the society of such deficiency or deficiencies and state in writing the reasons for his or her dissatisfaction. The superintendent must at once issue a written notice to the society requiring that the deficiency or deficiencies which exist are corrected. After such notice the society shall have a 30-day period in which to comply with the superintendent's request for correction, and if the society fails to comply the superintendent must notify the society of such findings of noncompliance and require the society to show cause on a date named why its license should not be suspended, revoked or refused. If on such 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 such suspension or refusal should be withdrawn or the superintendent may revoke the authority of the society to do business in this State.

2. Nothing contained in this section shall be taken or construed as preventing any such society from continuing in good faith all contracts made in this State during the time such society was legally authorized to transact business herein.

3. Nothing in this section shall 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. 5. 24-A MRSA §4138, as amended by PL 2001, c. 421, Pt. B, §91 and affected by Pt. C, §1, is repealed.

Sec. 6. 24-A MRSA §4138-A is enacted to read:

§4138-A.Enforcement; unfair methods of competition and unfair and deceptive acts and practices

Every society authorized to do business in this State shall be subject to the provisions of section 12-A and chapter 23; provided, however, that nothing in such provisions shall be construed as applying to or affecting the right of any society to determine its eligibility requirements for membership, or be construed 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 offering benefits only to its members.

Sec. 7. 24-A MRSA §4139, as enacted by PL 1969, c. 132, §1, is repealed.

SUMMARY

This bill would give the Superintendent of Insurance similar administrative and enforcement authority over fraternal benefit societies as the Superintendent currently has relating to non-fraternals, e.g., insurers, MEWAs, etc. The Superintendent’s current authority is significantly restricted and inadequate to ensure compliance with Maine law by such entities authorized to operate in Maine. In addition, the bill would bring Maine law more up to date and consistent with the regulation of fraternals in other states.

 

Last Updated: August 22, 2012