Important MLMIC Demutualization and Sale Update: Nolan Heller Kauffman obtains New York Court of Appeals Landmark Ruling that Policyholders – not their employers – are entitled to receive the proceeds of the October 1, 2018 demutualization and sale of Medical Liability Mutual Insurance Company

On October 1, 2018, Medical Liability Mutual Insurance Company (“MLMIC”) was converted from a mutual insurance company to a stock company and sold to Berkshire Hathaway for $2.502 billion in cash consideration. Following MLMIC’s sale, litigation ensued throughout New York State between healthcare providers and their employers or former employers over which of them was entitled to receive the cash proceeds of sale:  (i) the employees/healthcare providers, who became MLMIC policyholders—and thereby acquired an ownership interest in MLMIC—as part of the bargained-for exchange of consideration under their employment agreements; or (ii) their employers, who paid the MLMIC premiums pursuant to, and in exchange for their employees’ services under, the employment agreements.

On May 19, 2022, the New York Court of Appeals issued its Opinion in Columbia Mem’l Hosp. v. Hinds, Schoch v. Lake Champlain OB-GYN, P.C., Maple Medical, LLP v. Scott et al., 2022 N.Y. LEXIS 943, 2022 NY Slip Op 03306, 38 N.Y.3d 253 (2022), resolving on a state-wide basis the competing claims of the physician and other medical provider-policyholders and their employers or former employers to the MLMIC cash consideration.

Nolan Heller Kauffman LLP has represented more than 100 healthcare professionals in over 50 cases throughout New York State relating to disputes over MLMIC cash consideration, including those in two of the three Appellate Division cases that went up on appeal to the Court of Appeals:  See Maple Med., LLP v. Scott, 191 A.D.3d 81 (2d Dep’t 2020); Schoch v. Lake Champlain Ob-Gyn, P.C., 184 A.D.3d 338 (3d Dep’t 2020)., and represented the Policyholders in those cases before the Court of Appeals.

As a result of Court of Appeals’ recent decision, it is now settled law throughout New York State that “when an employer pays premiums to a mutual insurance company to obtain a policy of which its employee is the policyholder, and the insurance company demutualizes, absent contrary terms in the contract of employment, insurance policy, or separate agreement, the policyholder is entitled to the proceeds from the demutualization.”  Columbia Mem. Hosp. v Hinds, 38 NY3d 253 (2022).

If you are or were a MLMIC policyholder and have questions, or would like to learn more about this subject, please contact Justin A. Heller, Esq. at jheller@nhkllp.com, or call us at (518) 449-3300.

Nolan Heller Kauffman LLP is a preeminent, award-winning business law firm based in Albany, New York, and serving clients throughout New York State.

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