A physician-owned insurance company will return $84 million it had received in government subsidies financed mostly by taxes the state of Maryland imposed on health maintenance and managed-care organizations in 2005 under a plan designed to stabilize the cost of malpractice insurance for the state's doctors. The plan apparently worked, and the Medical Mutual Liability Insurance Society of Maryland declared a dividend of $68.6 million on Sept. 12.
Under a consent order and modified dividend declaration that was increased to almost $97.9 million announced today, Medical Mutual will reimburse the state more than $84 million and distribute $13.8 million to its 6,400 physician policy holders as a credit against future premiums. Under the order, the company will also lower its 2008 rates by 8% from its 2007 rates.
Medical Mutual had previously announced its intention to distribute $24 million of the original $68.6 million dividend to policy holders. Maryland Insurance Commissioner Ralph Tyler responded on Nov. 20 by announcing his intention to have the entire amount paid back to the state.
In a statement released today, Tyler said this new resolution accomplishes his objectives of enforcing the law that "requires the State to be made whole first" while finding ways to keep insurance rates stable.