- MLMIC Demutualization Plan Will Yield Substantial Cash Distributions To Eligible Policyholders:
- August 9, 2018
- Law Firm: - Office
The demutualization of Medical Liability Mutual Insurance Company (“MLMIC”) is underway. The process will include the issuance of cash distributions to eligible medical malpractice policyholders. Physician practice leaders who historically paid medical malpractice premiums for individual providers within their practice group need to take affirmative action to ensure their receipt of allocable distributions. Failure to take prompt action may result in the misdirection or loss of substantial cash payments.
The MLMIC demutualization is a result of the acquisition of MLMIC by Berkshire Hathaway, through its subsidiary, National Indemnity Company. In connection with this, on May 22, 2018, MLMIC received permission from the New York State Superintendent of Financial Services to file an application for approval of a plan of conversion from a mutual insurance company into a stock insurance company. On May 31, 2018, MLMIC’s board of directors unanimously adopted the Plan.
Berskshire Hathaway is paying $2.502 billion for the acquisition, and those funds will be distributed to MLMIC’s policyholders based on premiums paid for specifically “Eligible Policies.” These have been defined in the Plan as policies that were in effect for some portion of time between July 15, 2013 and July 14, 2016.
According to the Plan, MLMIC is distributing the acquisition payment to policyholders. The universe of policyholders targeted to receive distributions in many instances include providers who themselves did not make the underlying insurance premium payments for the 2013-16 medical malpractice coverage. This group predictably includes individual providers who were employed by a medical practices – and afforded malpractice insurance incidental to their employment arrangement.
MLMIC has established procedures for practice administrators seeking to ensure their recovery of cash distributions fairly allocable to premiums paid during the relevant period. A hearing is scheduled to take place in connection with the Demutualization Plan on August 23, 2018. Deadlines have been established for notifying MLMIC in those instances where the intended recipient of the cash distribution was not the premium payor, or where the amount of proposed allocation is subject to challenge.RMF has established an action group dedicated to assisting physician practice leaders and administrators in connection with the MLMIC Demutualization Plan and the looming deadlines. The group is led by Health Law Chair Jay Silverman and Litigation Department Chair Mark S. Mulholland and Litigation Associate Ross J. Kartez. We are available to assist with all aspects of the demutualization process.