As you may be aware, Medical Malpractice Insurance, New York (“MLMIC”) is currently in the process of being acquired by National Indemnity Company (“NICO”), a Berkshire Hathaway subsidiary. Currently, MLMIC is a mutual insurance company, meaning it is owned by its policyholders/insured physicians. Once the sale to NICO is complete, however, the company will be transitioned to a stock insurance company owned by NICO’s shareholders.
Any provider who was a MLMIC policyholder between July 15, 2013 and July 14, 2016 will be entitled to a distribution from the NICO transaction. It is currently estimated that the distribution for each policyholder will equal approximately 1.9 times the annual premiums paid by that provider during the eligible period. For instance, if a physician was insured for the entire three-year period and paid total malpractice insurance premium of $100,000, the physician would be entitled to $190,000 from the distribution.
MLMIC intends to make distributions directly to individual policyholders, regardless of whether the policyholder’s malpractice insurance premiums were paid by his or her employer. Individual policyholders have the option to affirmatively appoint a designee (such as an employer) to receive his or her portion of the distribution, but can choose to not do so.
Even if the individual policyholder fails to designate his or her employer to receive the distribution, MLMIC has put a mechanism in place for employers to dispute the distributions to which they feel that they, rather than the individual policyholder, are entitled. Employers are required to send notices to MLMIC and the employee stating that they believe they are entitled to the distribution in lieu of the individual policyholder, and explaining the basis for their position, no later than August 23, 2018.
In the event that a proper objection to a distribution is received by MLMIC, upon the closing of the NICO transaction, the disputed distribution payment will be placed in an escrow account until the individual and employer agree on the manner of its release, or until MLMIC is ordered to release the funds by a court or arbitration panel.
Whether you are an employer who has employed providers insured through MLMIC between July 2013 and July 2016, or an individual provider who has been covered a MLMIC policy while employed by a practice, hospital, or other entity, you may want to promptly take affirmative steps to protect your potential interest in the distribution.
Our firm is available to assist you with respect to matters arising out of the MLMIC/NICO transaction and the potential distributions from MLMIC. If you have employees who were covered by MLMIC during the applicable period or if you are a physician who believes that you are entitled to the NICO payment, or if you wish to discuss any other issues related to the MLMIC/NICO transaction, please contact one of our attorneys for more information. Given the impending August 23, 2018 deadline, your prompt attention to this issue is very important.
More information about the Berkshire Hathaway transaction can be found here.
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