Medical Malpractice Insurance Execs Give Back Profits
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If anybody believes the false the inurance industry generated propaganda that there is a medical malpractice crisis, they should consider the recent revelation concerning Medical Mutual Insurance Company of North Carolina and its four top executives including its CEO.
According to the Raleigh, North Carolina News and Observer, the North Carolina Department of Insurance, after an investigation and audit , concluded that the insurance company violated state law that forbids insurance companies from making investments in which its directors or officers are substantially involved.
The office of the North Carolina Insurance Commissioner revealed that Medical Mutual had cut its top executives in on various real estate deals.
The executives denied any wrong doing and the attorney for Medical Mutual stated that he believed even now that this was a permissible investment. State law bars an insurance company from investing alongside its executives.
The executives' combined investments in the partnerships ranged from $240 to $6,860, and their combined ownership stakes ranged from 24 percent to 94.8 percent. The company's ownership stake was much smaller, ranging from 2.34 percent to 60 percent, despite its larger investment. The total investment was $ 9.8 million.
The regulatory authorities contended that the money should go back to the company's owners. Since Medical Mutual is a mutual insurance company, its owners are the policyholders, the doctors of North Carolina whom it insures.
According to the News and Observer, Medical Mutual Insurance Company of North Carolina, which is the state's largest medical malpractice insurer has agreed to pay a $75,000.00 penalty to settle the allegations that part of its executive compensation plan violated state law. In effect, if Medical Mutual paid this penalty rather than the top executives of the company, the doctors of North Carolina paid the penalty. Is that fair?
The top executives did however give up their ownership stakes in the $9.8 million real estate deal as well as any profits they have received up to now.
When medical malpractice insurance companies feed their doctors and the general public their old standard line about a medical malpractice crisis, perhaps the doctors should reflect upon the Medical Mutual Insurance Company of North Carolina case and contemplate the real reason for their high insurance premiums.
For more information on this subject, please refer to the section on Medical Malpractice and Negligent Care.