Maryland Malpractice Insurer Told Its $69 Million Dividend Belongs to State

October 9, 2007

Maryland’s largest medical malpractice insurer should return its entire $68.6 million dividend to the state, instead of the $32.5 million it has proposed as part of its exit from a subsidy program designed to lower doctor premiums, officials with the Maryland Insurance Administration said at a hearing.

Kathleen A. Birrane, an assistant attorney general representing the insurance administration, said Medical Mutual Liability Insurance Society of Maryland could have used the $68.6 million to reduce rates for the doctors it insured, but instead decided to declare a dividend, and now should return the money to the state.

However, Jeffrey M. Poole, executive vice president and chief operating officer for the insurer, said the surplus can’t be applied to rate reductions because state law requires rates to be reasonable and adequate based on projected claims and expenses.

The insurer has proposed returning $32.5 million of the $72.4 million it has received so far under the subsidy program. The insurer says it no longer needs the subsidy to stabilize premiums for doctors because the cost of claims is dropping.

The four-year subsidy program was enacted by the state legislature in an emergency Christmas week session in 2004 after rising claims led Med Mutual to impose rate increases of 28 percent and 33 percent. The rate increases prompted an Annapolis rally by doctors whothey would be forced from practicing in the state. Three other insurers participate in the subsidy program, but Med Mutual has received about three-quarters of the money paid out.

Insurance Commissioner Ralph S. Tyler, the hearing officer in the case, will have to decide whether to uphold the interpretation of his department. Lawyers in the case have two weeks to file legal arguments; Tyler said he would try to decide the case as quickly as possible after that.

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Information from: The (Baltimore) Sun

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Information from: The (Baltimore) Sun,
http://www.baltimoresun.com

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