Medical Liability Mutual Insurance Company (MLMIC) recently completed two milestones in its process to demutualize and be acquired by an affiliate of Berkshire Hathaway. Earlier this month, the New York State Department of Financial Services (DFS) approved the proposed conversion of the company from a mutual to a stock insurance company and the proposed sale. MLMIC then held its policyholder vote on September 14 to adopt the plan of conversion. The results should be announced shortly.
In approving the conversion, DFS directed MLMIC to honor all the objections filed by entities that have a good faith legal basis to believe they were designated as the “policy administrator” on the insurance policies that now entitle their policyholder to payment of the cash distribution as part of the conversion. The policy administrator is often an entity that paid the premiums on behalf of the policyholder, a common practice among hospitals that employ physicians. An objection triggers the escrow of the cash distribution that would otherwise be paid to the named policyholder, pending dispute resolution.
MLMIC had taken the position that only certain policy administrators could file objections. GNYHA supported the conversion but had urged DFS, in keeping with the language of the proposed plan of conversion, to direct MLMIC to be more expansive.
The transaction is expected to close some time prior to September 30, assuming the policyholders vote to approve the plan and there are no legal or other challenges that affect that timeline.