Maryland wants its share of liability insurance credit

While physicians in some states will see a break in their medical liability premiums next year, Maryland insurance officials are questioning a proposal by the state's largest medical liability insurance carrier to issue a credit to its physician policyholders on Jan. 1, 2008.

In a Sept. 13 order, Maryland Insurance Commissioner Ralph S. Tyler halted Medical Mutual Liability Insurance Society of Maryland's plans to pay a portion of a $68.6 million dividend to policyholders as a premium discount. The company allotted some of the money to reimburse the state because it subsidizes Medical Mutual's premiums under a program set up in 2005 to ensure that doctors have access to medical liability insurance.

But Tyler said the doctor-owned carrier didn't give the insurance department advance notice of the dividend, nor an opportunity to review the firm's methodology, as required by state law. The money Medical Mutual planned to pay Maryland may not account for amounts owed before 2007, the order states. Tyler set an Oct. 5 hearing to determine how much money the state and doctors are entitled to.

A Medical Mutual spokesman said the order prevents the company from commenting on the matter.

Martin P. Wasserman, MD, executive director of MedChi, the Maryland State Medical Society, said they are concerned that the hearing will motivate additional groups, such as doctors and legislators, to get involved to stake their claim on the funds and further confuse the distribution process. He said MedChi would try to urge a resolution between the two parties without a hearing.

Meanwhile, insurers in Mississippi and Texas attributed the premium cuts their policyholders will see Jan. 1, 2008, to tort reform.

Medical Assurance Co. of Mississippi President and CEO Michael D. Houpt said the company's decision to slash rates by 15.5% was due in significant part to the state's $500,000 noneconomic damages cap. The 2004 measure helped level off lawsuit filings and average claims payments, Houpt said.

Texas Medical Liability Trust will drop rates by 6.5% -- the fifth reduction since voters in 2003 approved a $250,000 cap on noneconomic damages in medical liability cases in the form of a constitutional amendment.

Doctors renewing policies in 2008 also will receive a credit equal to 22% of their expiring premiums that will apply to next year's policy. The physician-owned insurer saw more than a 50% drop in claims filings between 2003 and 2006, TMLT statistics show.

Elsewhere, Connecticut Medical Insurance Co. will keep rates the same in 2008. The company also increased the rebates it offers to doctors who have been covered for at least five consecutive years.