ANNAPOLIS, MD (December 13, 2007) – Governor Martin O’Malley joined with Maryland Insurance Commission Ralph S. Tyler today to announce that Medical Mutual Liability Insurance Society of Maryland (Medical Mutual) will return nearly $100 million to the State of Maryland and local physicians. The move by Medical Mutual comes after a number of public hearings held by Tyler and the Maryland Insurance Administration.
“Today, Maryland is reaping the benefits of having independent and professional regulators back on the job at the Maryland Insurance Administration,” said Governor O’Malley. “Working together with Medical Mutual and physicians, Commissioner Tyler has negotiated a settlement that will protect Maryland taxpayers and physicians, and at the same time lower costs for health care providers in our State.”
Under a Consent Order released today and a modified dividend declaration totaling $97,875,699, Medical Mutual has agreed to fully reimburse the State for all medical liability rate subsidy payments received totaling $84,075,699. In addition, the remaining $13.8 million will be returned to policyholders as a credit against future premiums, along with an 8 percent rate reduction for 2008 from 2007 rates. The affect of this dividend credit and the rate reduction will be that providers will see stable premiums in 2008. Medical Mutual also will not participate further in the subsidy plan.
“This resolution accomplishes all my objectives,” said Tyler. “I was bound to enforce the law that requires the State to be made whole first and Medical Mutual found a way to give back to the physicians in this State by keeping rates stable. It was always my hope that physicians could be assisted to the greatest degree possible.”
“We are extremely pleased with the agreement we have worked out with Commissioner Tyler because it helps our physicians,” stated Medical Mutual C.E.O. David L. Murray.
“Based on the Commissioner’s interpretation of the law, we crafted a solution that keeps premiums level for 2008. It also is consistent with the original intent of the unique subsidy relief passed by the Maryland General Assembly that succeeded in stabilizing medical malpractice premiums at a critical time for our physicians."
The law currently provides that these subsidy payments of $84 million be returned to the subsidy fund. The fund is scheduled by statute to continue through 2009. At that point, any funds remaining are to be applied to Medicaid provider reimbursement rates.
Commissioner Tyler’s original decision in November had delayed for 30 days Medical Mutual’s payment obligation in the hopes that an alternative could be achieved to use the dividend funds to reduce policyholder’s insurance premiums. That decision was made based on testimony and legal arguments at a hearing on October 5, 2007 and continued on October 26, 2007. The purpose of those proceedings was to decide who was entitled to receive the proposed distribution of Medical Mutual’s original dividend proposal of $68.6 million.
The Final Consent Order of the MIA is available on our website, www.mdinsurance.state.md.us.
In 2005, the Maryland General Assembly created the Maryland Health Care Provider Rate Stabilization Fund, which consists primarily of tax revenue collected from health maintenance organizations and managed care organizations.
The Fund is divided into three sub-funds: the Rate Stabilization Account, the Medical Assistance Program Account, and a third component consisting of funds that are not allocated to either.
Monies allocated to the Rate Stabilization Account are to be used to pay authorized medical professional liability insurance premium subsidies ("State Subsidies") to medical professional liability insurers who wish to participate in the Fund ("Participating Insurers") on behalf of policyholders who are eligible health care providers. State Subsidies are available only to licensed physicians and certified midwives. State Subsidies are not available to corporate entities through which they practice or to other health care providers.
The Maryland Insurance Administration (MIA), founded as the Maryland Insurance Division in 1872, is an independent State agency located in downtown Baltimore. This agency regulates Maryland’s $26 billion insurance industry and makes certain that insurance companies, health plans and producers (agents and brokers) comply with Maryland insurance law. The MIA also licenses over 110,000 producers and approximately 1,500 insurance companies, regulates insurance rates, monitors insurer solvency, investigates consumer complaints and travels across the State providing consumers with educational materials on insurance. These materials may also be found at www.mdinsurance.state.md.us.