New Maryland Med-Mal Bill Will Chase Insurers: AIA

By Matt Brady

NU Online News Service, Jan. 12, 8 :12 p.m. EST?The Maryland legislature's passage of a bill that would tax health maintenance organizations to help pay increased medical malpractice insurance costs will deter new carriers from entering the market an industry trade group said today.[@@]

That prediction from the American Insurance Association came after Republican Gov. Robert Erhlich's Monday veto was repealed by the Democrat-controlled legislature by a vote of 85-50 in the Assembly and 31-15 in the Senate.

Included in the bill is the creation of a "people's counsel' to represent consumers' interests in homeowners and medical malpractice insurance.

Tammy Velasquez, assistant vice president for the AIA mid-Atlantic region said it was a provision that will duplicate the Maryland Insurance Administration's authority, add no benefit to the consumer but would put "greater increased administrative and financial burdens on insurers" and "will undoubtedly be a disincentive for new insurers to enter the Maryland market."

The legislation, she complained, "is short-sighted and without stronger tort reform measures the legislature is going to be forced to confront this same problem in just a few years."

Gov. Ehrlich made a similar assessment of HB 2 in a letter to state House Speaker Michael Busch, D-Anne Arundel County, accompanying his veto said the "people's insurance counsel" division within the state Attorney General's office, which will be funded via an assessment on insurers operating in Maryland, is, "an unnecessary and costly addition" to medical liability and homeowners insurance.

The additional costs, he said, will make Maryland a less attractive for insurers and could threaten its accreditation by the National Association of Insurance Commissioners.

In addition to establishing the "people's counsel" the bill also establishes certain requirements for expert witnesses, bars statements of apology from being used against a provider in court, and levies a tax on health maintenance organizations.

The bill also requires that the Medical Mutual Liability Insurance Society of Maryland to submit rate filings which would be subject to review and reduction by the insurance commissioner.

The commissioner could be barred from approving a rate increase under some circumstances, but would have the power to determine that the society's surplus is excessive.

The measure also establishes a rate stabilization fund and the Medical Assistance Program Account within that fund, which would oversee the disbursement of funds to some healthcare providers. It does not include a cap on non-economic damages in medical malpractice cases, which the governor had sought.