Maryland Rules Medical Mutual $69 Million Dividend Owed to State

November 20, 2007

Maryland Insurance Commissioner Ralph S. Tyler has ruled that Medical Mutual Liability Insurance Society of Maryland should be required to pay its entire $68.6 million dividend to the state, not to policyholders.

The dividend, reported by the insurer in September, is due to the state as reimbursement for subsidies paid under the Medical Provider Rate Stabilization Fund, according to Tyler.

Tyler has delayed for 30 days Medical Mutual’s payment obligation in the hopes that an alternative can be achieved that uses the dividend to reduce policyholder’s insurance premiums. If that alternative is accepted, he said his order that the entire amount be paid to the state can be rescinded.

Tyler said the Maryland Insurance Administration also has opened an investigation of the appropriateness of Medical Mutual’s current rates.

“Upon review, it is clear that the legislature intended for the dividend to refund subsidy payments, making the entire $68.6 million refundable to the rate stabilization fund,” said Tyler. “However, I have left the door open for Medical Mutual to rescind its dividend declaration and propose a solution to mitigate rates next year.”

This decision comes after testimony and legal arguments at a hearing on October 5, 2007 and continued on October 26, 2007.

Officials said this decision does not prohibit Medical Mutual from making an alternative proposal.

The Final Order of the MIA is available at

Soiurce: Maryland Insurance Administration

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