New York hospitals fight physicians over payout from $2.5B sale of malpractice insurer

Hospitals and physicians across New York are engaged in a legal battle over who is entitled to the proceeds of the sale of the state's largest medical malpractice insurance company.

A subsidiary of Berkshire Hathaway acquired Medical Liability Mutual Insurance Co. in October for $2.5 billion. The proceeds of the sale must be divided among MLMIC's policyholders because it was a customer-owned mutual company. The process of divvying up the proceeds has led to hospitals and medical practices across the state filing lawsuits against physicians, nurses and other medical professionals, according to Syracuse.com.

The hospitals and medical practices argue they're entitled to the proceeds from the sale because they paid the malpractice insurance premiums. The physicians and other healthcare providers disagree, arguing the proceeds should go to them under state law.

While some of the legal disputes are ongoing, two courts have issued conflicting rulings on the issue.

The Erie County Supreme Court ruled in March that the policyholders — certified nurse anesthetists employed by an anesthesiology practice — were entitled to the proceeds from the sale. In April, the New York Supreme Court Appellate Division, First Department, ruled that a radiology practice was entitled to the payout because the practice paid the insurance premiums, according to the report.

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