Md.regulators bar out-of-state insurer from writing policies

April 18, 1991|By Peter H.Frank

A Louisiana-based insurer that has been writing medical malpractice policies in Maryland has been barred from accepting any new business in the state after regulators here found the insurer to be more than $6 million in the hole.

The Maryland Insurance Division, in a lawsuit filed yesterday, asked the court to ban immediately Physician's National Risk Retention Group from writing new policies. Baltimore City Circuit Judge Joseph H. H. Kaplan granted the temporary injunction.

Regulators also have asked that the court appoint the Maryland Insurance Commissioner conservator over any assets owned by Physician's National in the state and that the group be barred permanently from conducting business here. The insurer has 60 days to respond.

While it was not known how many doctors in Maryland were covered by policies issued by Physician's National, regulators said nearly $1.4 million in premiums was collected from Maryland doctors by the group in 1989, the most recent year for which figures are available. A statement for 1990 has not been delivered to the Maryland insurance division as required by state and federal law, regulators said.

"Should it be determined that the insurer is, indeed, insolvent, as all preliminary evidence indicates, then physicians who have paid substantial sums of money for this coverage, are irreparably harmed," said Maryland Insurance Commissioner John A. Donaho. "Not only will physicians have lost their premium dollars, but worse, they will be without coverage, retroactive to the date they originally purchased their policies."

Physician's National, formed by Physicians Reliance Association Inc. differs from a typical insurance company in that it is owned by the doctors who have bought policies through the group. Physicians Reliance, which created the group in 1987, administers the insurer, regulators said.

The group ran into problems in Maryland four years ago when it was ordered to leave the state after it began writing policies without first receiving authorization. The necessary documents were obtained later and the insurer returned at the end of 1988 to Maryland, one of 32 states where the group writes policies.

Yesterday's action comes just a month after the Louisiana Insurance Commissioner, Doug Green, was convicted of mail fraud, money laundering and conspiracy in connection with another financially troubled insurance company in Baton Rouge, Champion Insurance Co.

State regulators suggested that Maryland doctors who have policies written by Physician's National contact the Maryland Insurance Division at (301) 333-6300.

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