Baltimore Circuit Court Judge Joseph H. H. Kaplan has issued an injunction against Physicians National Risk Retention Group, prohibiting the Baton Rouge, La., medical malpractice insurer from issuing any additional policies in Maryland.
The action was taken yesterday after Attorney General J. Joseph Curran Jr. filed suit against Physicians National, claiming the company is insolvent with a negative net worth of about $6.5 million.
The suit also asks that Insurance Commissioner John A. Donaho be appointed the conservator of Physicians National's assets in Maryland.
A show-cause hearing has been scheduled for June 20, at which time Judge Kaplan is to rule on whether Donaho will be put in charge of Physicians National assets.
Officials for Physicians National, a subsidiary of Physicians National Reliance Group, were not available for comment.
Officials for the Louisiana Department of Insurance, which has jurisdiction over Physicians National, did not return a telephone call.
Physicians National collected $1.4 million in premiums in Maryland in 1989, according to court papers filed by the state.
There were no figures for 1990 premiums.
Eric Hempelman, vice president of operations for Medical Mutual Liability Insurance Society of Maryland, estimated that Physicians National insures a relatively small number of doctors, totaling less than 100.
Medical Mutual, which was created in 1975, insures about 85 percent of the 7,000 individual practitioners in the state that need malpractic insurance, Hempelman said.
Because Physicians National is governed by federal statute and does not have to comply with state reporting regulations, the state's in
surance division could not say how many Maryland doctors are covered by the company, according to Ralph Tyler, a state assistant attorney general.
Also because of its federal nature, Physicians National is not covered by the Property and Casualty Insurance Guaranty Corp., the Maryland fund that backs the policies of other insurance companies, Tyler said.
"This lawsuit has been filed to protect doctors from purchasing what may be inadequate, perhaps non-existent coverage, and to protect consumers who may be potential future malpractice claimants," Curran said in a prepared statement.
Physicians National technically is not an insurance company, but rather a "risk retention group."
This is an alternative form of insurance in which members of a similar profession or business band together to insure their own risks.
This is the not the first time that Physicians National has had trouble with state regulators.
Last year the company agreed to stop writing any new business or renew policies in Florida after state regulators found Physicians National was in "hazardous financial condition," according to a Dec. 21 article in Medical Liability Monitor, a trade publication.
The article also said Physicians National said the largest number of physicians that it insures are in five states: Texas, 1,278; Virginia, 627; Florida, 469; Arizona, 327 and California, 302.