02-031 C.M.R. ch. 550
Certain employers seek to gain an unfair competitive advantage by paying for workers’ compensation insurance at out-of-state premium rates for activities conducted in Maine and subject to Maine workers’ compensation law. Insurers share in the responsibility to protect the integrity of the workers’ compensation system from such abuses, and are under a continuing duty to exercise due diligence in auditing their clients. Although Maine is an open-competitive rating state, each insurer is required to file its rates and rating plans with the Superintendent for approval, and those rates may not discriminate unfairly between similar risks.
The Superintendent adopts this Rule pursuant to 24-A M.R.S.A. §§ 212 and 2151-B, for the purpose of enforcing the prohibitions against unfair insurance practices set forth in 24-A M.R.S.A. §§ 2152, 2162(2), and 2178, and the reporting requirements set forth in 24-A M.R.S.A. §§ 2384-B and 2384-C and 39-A M.R.S.A. § 357. This Rule shall be enforced as provided in 24-A M.R.S.A. §§ 12-A and 2387.
This Rule applies to any insurance policy used to satisfy an employer’s obligation to secure workers’ compensation payment under 39-A M.R.S.A. § 403(1), whether Maine coverage is expressly stated in the terms of the policy or provided only on an incidental basis, except where the reciprocity provisions of 39-A M.R.S.A. § 113 apply.
“Policy, insurer and employer” refer to any workers’ compensation insurance policy within the scope of this Rule and to the parties to that policy.
"Maine exposure" means all business activity covered by the policy that is subject to Maine workers' compensation law and not simultaneously subject to a law of some other state that would permit the insurer to charge a higher workers' compensation premium.
"Maine rate" means the premium rate filed by the insurer and approved by the Maine Superintendent of Insurance for use for the risks covered by the policy.
"Rating Plan" means a plan approved by the Maine Superintendent of Insurance which allows for a schedule of credits or debits based upon risk factors which are not reflected in an insurer's manual rates or an employer's experience modification factor.
5. Apportionment of premium
If the policy also covers risks other than Maine exposure, its premium shall be calculated as follows:
(a) all Maine exposure must be accurately measured and subject to a separately itemized charge calculated on the basis of the Maine rate; and
(b) the remainder of the premium must be calculated in a manner that is reasonably designed to reflect the employer's exposure under the worker's compensation laws of other states, and that does not have the effect of avoiding the intent of this Rule.
6. Penalties against employers
It is a false representation within the meaning of 24-A M.R.S.A. § 2178 for the employer to fail to make an accurate report of its Maine exposure to the insurer. For each violation of this section, subject to the limitations of 24-A M.R.S.A. § 12-A(1), the Superintendent shall assess a civil penalty no less than three times any underpayment of premium resulting from the violation, and shall take whatever further enforcement action is warranted by the violation.
7. Penalties against insurers
It is a violation of 24-A M.R.S.A § 2382, an unfair trade practice, and an unfair method of competition for the insurer, knowingly or negligently:
(a) to use a workers' compensation rate unless the rate has been filed with the Superintendent for approval ;
(b) to use a workers' compensation rate after it has been disapproved by the Superintendent; or
(c) to refuse to submit information requested by the Superintendent as part of the approval process.
For each violation of this section, subject to the limitations of 24-A M.R.S.A. § 2387, the Superintendent shall assess a civil penalty no less than three times the difference between the approved Maine rate and the unauthorized rate used by the insurer, and shall take whatever further enforcement action is warranted by the violation.
8. Each day a separate violation
If the use of an unauthorized rate results in a violation of section 6 or 7 of this Rule, each day that the unauthorized rate is in use gives rise to a separate violation.
9. Severability
If any section, term, provision, or application of this Rule shall be adjudged invalid for any reason, such judgment shall not impair or invalidate any other section, term, provision, or application, and the remainder of this Rule shall continue in full force and effect.
10. Effective date
The effective date of this Rule is February 25, 1998.
HISTORY:
STATUTORY AUTHORITY: 24-A M.R.S.A. §§ 212 and 2151B.
EFFECTIVE. May 14, 1990.
EFFECTIVE DATE (ELECTRONIC CONVERSION): January 14, 1997
AMENDED: February 25, 1998