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Medical Malpractice Insurance is made Available


The issue before the court has to do with the Medical Malpractice Reform Act of 1986 that requires the Medical Malpractice Insurance Association to refund the stabilization reserve fund charges that had been collected for excess policies and applied by statute to offset deficits. The plaintiff in the case is challenging the constitutionality of the implementation and enforcement of certain provisions of this act.

Background Information

The Medical Malpractice Insurance Association or MMIA is a non-profit unincorporated association that is a legal entity separate from its members. The MMIA in NYC was created by chapter 109 section 17 of the laws created in 1975. The association was created after the insurer that covered the majority of surgeons and physicians for professional liability stated that they would no longer underwrite this type of insurance policy in the state of New York. The MMIA’s purpose was to provide a market for medical malpractice insurance that was not otherwise readily available.

The MMIA is required to provide medical malpractice insurance to any physician applicant. The primary policy limits provided to the physicians have limits of $1,000,000 per claim and $3,000,000 for all claims in any single year. In 1985 a mandate was created by the legislature that required the primary policy limits to provide excess coverage of at least $1,000,000 per claim and a $3,000,000 aggregate for any policy year to the physicians they insured. In addition, MMIA was required to provide excess coverage to all applicants irrespective of the placement of their medical malpractice coverage.

From the beginning the MMIA has been required to maintain a stabilization reserve fund for the purpose of offsetting its deficits. When this particular action began the MMIA in Manhattan had over $10,000,000 in stabilization reserve fund charges. There was also an unpaid balance for stabilization reserve fund charges that were earned on excess policies that were in effect between July first of 1985 through the 30th of June, 1986.

In July of 1986 the Medical Malpractice Reform Act amended a section of the Insurance Law. The amendment requires the MMIA to refund any excess stabilization reserve fund charges to the hospitals that have paid the premium and surcharge on behalf of their doctors between July first 1985 and June 30th, 1986.

Case Issues and Discussion

MMIA has moved for an order to enjoin the implementation of the provision of the legislations that requires the association to refund stabilization refund charges. The defendants cross moved to dismiss the complaint of MMIA for failure to state a cause of action. The cross motion by the defendant was denied by the motion court and the court enjoined the state from requiring that the MMIA

The main issue at hand is whether or not the new legislation can be implemented retroactively.

Case Decision

The court has reviewed the facts of the case and there is no argument about the fact that the MMIA currently has a deficit of over $80 million. Allowing this law to be retroactively implemented would be detrimental to the association. Therefor the court has ruled in favor of the plaintiff.

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