Maryland Malpractice Insurer To Leave Subsidy Program Early

Main Category: Litigation / Medical Malpractice
Also Included In: Health Insurance / Medical Insurance
Article Date: 26 Sep 2007 - 10:00 PDT

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The Maryland Insurance Administration on Monday released details of a plan filed by Medical Mutual Liability Insurance Society of Maryland to drop out of the state's malpractice insurance premium subsidy program two years early and return $32.5 million of $72.4 million it received, the Baltimore Sun reports.

The proposal is part of the insurer's plan to pay a $68.6 million dividend. However, Maryland Insurance Commissioner Ralph Tyler last week ordered Med Mutual not to proceed until the plan was reviewed and it was determined how much money would go to physicians and how much to the state. Neither Med Mutual nor Tyler last week would say how the money would be divided. As a mutual company, Med Mutual is owned by the policyholders, and any dividend to them would come in the form of credit against premiums.

The plan means Med Mutual is "saying that, with the cost of claims declining, it no longer needs a subsidy to keep premiums stable for doctors in the short term," according to the Sun. Karen Barrow, a spokesperson for the insurance administration, said the state still is reviewing the proposal to ensure Med Mutual's calculations comply with state law.

A hearing on the plan is scheduled for Oct. 5. Gary Larcher, an actuary for Aon Consulting, said that the trend of declining malpractice claims in Maryland also is seen nationwide. The amount of money paid to Maryland physicians in medical liability claims fell 28% in the last three years, compared with an 18% decline nationwide.

State Sen. Brian Frosh (D), chair of the Judicial Proceedings Committee, said that the trend shows that lawmakers were right in not enacting tort reform in addition to creating the subsidy program. Martin Wasserman -- executive director of MedChi, Maryland's professional society for physicians -- said, "While we have a current reprieve from the crises of 2003-2004, the need to address all of the problems associated with medical liability costs has not gone away." He added, "There will be another crisis. The concerns I have are that this can lead people into complacency and to the arguments that there never was a crisis" (Salganik, Baltimore Sun, 9/18).

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