Maryland Insurance Administration, Medical Malpractice Insurer Dispute Dividend
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 $68.6million dividend to the state or reduce its 2008 premiums, notdistribute a portion of the funds to its policyholders as planned, the Baltimore Sun reports. The insurer declared the dividend last month and said it wouldpay about two-thirds of it to the state in return for almost $80million in state premium subsidies paid since 2005. It intended todistribute the remaining $24.4 million to doctors as a credit againstnext year's liability premiums. However, state regulators blocked thatpayment for further review.
Kathleen Birrane, principalcounsel for MIA, argued in a legal memorandum that Med Mutual must paythe state the full amount of the subsidies before it can distribute anymoney to its policyholders. Without receiving a portion of the dividendor any state subsidies, Med Mutual said physicians would face a 22%increase in premiums next year.
Jeffrey Poole, Med Mutual'sCEO and executive vice president, said that insurance rules prevent thecompany from applying any surplus of funds to reduce premiums, so adividend distribution would be the only way to insulate premiums fromhigh increases next year. The issue will be settled by the stateinsurance commissioner. Lawyers on both sides have two weeks to filelegal documents (Salganik, Baltimore Sun, 10/6).
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