Maryland Insurance Administration, Medical Malpractice Insurer Dispute Dividend

Main Category: Health Insurance / Medical Insurance
Also Included In: Litigation / Medical Malpractice
Article Date: 16 Oct 2007 - 4:00 PDT

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The Maryland Insurance Administration earlier this month said that the Medical Mutual Liability Insurance Society of Maryland -- the state's largest malpractice insurer -- must pay its full $68.6 million dividend to the state or reduce its 2008 premiums, not distribute a portion of the funds to its policyholders as planned, the Baltimore Sun reports. The insurer declared the dividend last month and said it would pay about two-thirds of it to the state in return for almost $80 million in state premium subsidies paid since 2005. It intended to distribute the remaining $24.4 million to doctors as a credit against next year's liability premiums. However, state regulators blocked that payment for further review.

Kathleen Birrane, principal counsel for MIA, argued in a legal memorandum that Med Mutual must pay the state the full amount of the subsidies before it can distribute any money to its policyholders. Without receiving a portion of the dividend or any state subsidies, Med Mutual said physicians would face a 22% increase in premiums next year.

Jeffrey Poole, Med Mutual's CEO and executive vice president, said that insurance rules prevent the company from applying any surplus of funds to reduce premiums, so a dividend distribution would be the only way to insulate premiums from high increases next year. The issue will be settled by the state insurance commissioner. Lawyers on both sides have two weeks to file legal documents (Salganik, Baltimore Sun, 10/6).

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