MDNews - Central New York

M E D I C A L L I A B I L I T Y M U T U A L INSURANCE COMPANY, in business since July 1, 1975, is in the process of becoming part of National Indemnity Company, a sub- sidiary of Berkshire Hathaway, a Warren Bu‹ett enterprise. MLMIC's Executive Committee met with Buffett and some of his associates earlier this year. Among those in attendance was Duane Cady, MD, a longtime MLMIC Executive Committee member, past president of the Onondaga County Medical Society and the Medical Society of the State of New York, and a past chair of the AMA's Board of Trustees. Dr. Cady, a retired general surgeon, was impressed with Bu‹ett's low-key manner and his stated intention that National Indemnity Company will have no role in the operations of MLMIC and would have no one from its company on MLMIC's Board of Directors. Bu‹ett called MLMIC a "gem" and highly praised the role of MLMIC in addressing the needs of policyholder physicians and hospitals. Edward J. Amsler, Esq., Chief Executive Ocer of MLMIC, reports that the company currently insures approximately 14,000 physicians and 30 hospitals in New York state. In July, MLMIC's Executive Committee a ppr o ve d t he Na t ion a l I n dem n it y Company proposal and MLMIC's inten- tion to become a stock insurance company. Completion of the entire process is hoped to occur by the end of 2017. A leng thy outline of the proposal, including a com- prehensive a section with 13 questions and answers, was released after the Executive Committee action. Future approvals must come from policyholders and the state's Department of Financial Services. With the change, MLMIC "will become a member of a group that includes other i nsurers t hat specia li ze i n liabi lit y insurance coverage to healthcare pro- viders …. Such aliation will enhance MLMIC f ina ncia l streng th a nd w i ll provide MLMIC with greater resources to back its obligations to policyholders and to underwrite additional business. Such aliation will provide MLMIC with increased flexibility to support the growth of product lines." Dr. Robert Menotti, MLMIC President of the Board of Directors, points out that t he Cla ims Rev iew Com m it tee w i l l remain in place. He is Chair of the com- mittee, which also includes three other representatives of MLMIC and three appointees by MSSNY. Policyholders who were insured by MLMIC for the last three policy years, July 1, 2013–2016, will receive a projected return equal to the total premiums paid by the policyholder for the entire three- year period. If the premiums were paid by an employer, that amount will go to the employer, not the physician. MLMIC was established following the ma lpractice crisis in 1975 when commercials insurance carriers across the country f led the medica l liability marketplace. At a National Conference on Medical Malpractice that year, Warren Cooper, Vice President and actuary for Chubb & Son Inc. said, "the main reasons for the availability crunch was inability as insurance people to project the price that we really feel should be charged for this line of business, for in our economic scheme, the business really operates e‹ec- tively only if they can accurately project what they should charge." Cooper was critical of the physicians' lack of knowl- edge about insurance. Cooper commented that "physicians forget what insurance is — a pool of risk. If we could predict their losses, we would advise them to set their own money." Booz A llen Consulting Actuaries of California said that "the current mal- practice crisis has been caused in part by poor pricing by the insurance industry." Some members of the New York State Senate, including the Senate Minority Leader Manfred Ohrenstein, blamed doctors for the crisis. Fellow Democrat Sen. Fred Isabella of Schenectady, a dentist, was o‹ended by Ohrenstein's comments. Isabella retorted that "I take exception, and I disagree, and I am hurt because of my minority leader tearing down the medical profession. I come from a medically oriented family, one nurse, three dentists and one physician." On May 19, 1975, a final compromise bill passed the State Senate (56–4) and the State Assembly (120–27). On May 30, 1975, the State Insurance Depa r tment approved MLMIC's f irst prem iums, wh ich took ef fect Ju ly 1, 1975. The rates ca lled for a 20 percent increa se, fa r less tha n the A rgonaut 's or i g i na l request for a 196. 8 percent increase, which led to the ava ilabilit y crisis a nd ultimately the formation of M L MIC. The St ate Medica l Societ y l o a n e d M L M IC $ 1 0 0 , 0 0 0 t o h e l p t he compa ny get st a r t ed . Physicia n policyholders had to pay subordinated loans of $1,750 each to become MLMIC insureds. Those loans were later repaid with interest. Gerald N. "Jerry" Homan was chief executive ocer of the Onondaga County Medical Society from 1981 until his retire- ment Jan. 31, 2014, and is co-author of two books, Medical Malpractice Insurance: A Legislator's View, and The History of Local Medical Care, 1806-2006. ■ Bright Future For MLMIC BY JERRY HOFFMAN M D N E W S . C O M /// M D N E W S C E N T R A L N E W Y O R K ■ 2 016 H E A LT H C A R E P E R S P E C T I V E 0 5

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