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Shapiro & Appleton

Virginia

Earlier this year, Medical Mutual Liability Insurance Society of Maryland, the state’s largest malpractice insurer declared that it would pay a portion of its $68.6 million dividend to physicians. 

 

Not so fast.  The Maryland Insurance Administration is demanding that the entire dividend be returned to the state.  Maryland is arguing that Med Mutual could have used the revenue bonus to reduce rates charged to physicians, but can not repay the physicians in the form of a dividend.  If the money is to be paid out as a dividend, the state argues, it must be paid to the state. 

 

Med Mutual filed with the insurance administration on September 12, attempting to return $32.5 million to the state and pay the rest to its doctor-members.  State Insurance Commissioner Ralph Tyler froze the dividend payment pending a October 5 hearing. 

 

Since 2005, the state of Maryland has subsidized physician payments to the mutual company because of the fear that malpractice payouts would cripple the state’s insurance system.  Over the duration of the program, the state has paid over $100 million in subsidies to insurance companies. 

 

The program was enacted after record high malpractice claims in 2003-04.  However, in every year since 2003-04, malpractice claims have dropped both in Maryland and across the nation.  In fact, this year, Med Mutual was able to drop its rates by 8% and still ended up with a $62 million surplus.  The subsidy law specifically stated that if claims declined, then some money would need to be repaid to the state.  However, the two sides disagree on how that repayment should be calculated.

 

Med Mutual has stated that it will be declining the $11 million subsidy this year, as well as the projected $16 million subsidy in 2008.  Med Mutual insures nearly 70% of Maryland’s physicians.

 

All of which begs the question: Was there ever really a medical malpractice crisis in Maryland?  The $62 million surplus suggests that things were never as bad as the anti-plaintiff lobby wanted the general public to believe.  In the wake of the 2003-04 year, Maryland enacted several laws that restricted plaintiff’s recovery and capped the liability of negligent doctors.

Randy E. Appleton
Personal Injury & Wrongful Death Lawyer Serving Va Beach, Norfolk, Chesapeake & all of Virginia
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