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Another Appellate Court Rules That MLMIC Conversion Funds Belong to the Named Insured, Regardless of Who Paid the Premiums

The Appellate Division, Third Department, of the New York State Supreme Court, is now the third judicial department to issue a decision on the question of who is entitled to receive the proceeds from the Medical Liability Mutual Insurance Company (MLMIC) demutualization – the named MLMIC policyholder or the practice owner who paid the policy premiums.

In Schoch v. Lake Champlain Ob-Gyn, P.C., the Appellate Court held that it is the named MLMIC policyholder who is entitled to receive the funds, regardless of who paid the premiums. Thus, the score now stands 2-1 in favor of the named MLMIC policyholders, with the Third and Fourth Departments siding with the policyholders and the First Department siding with the practice owners who paid the premiums (albeit in a limited ruling that arguably has little, if any, precedential value).

The Second Department is the only remaining Department in New York’s judicial system that has not yet spoken to the issue. This case will need to go to the New York State Court of Appeals for it to resolve the split among the Departments.

To read the complete court opinion in Schoch v. Lake Champlain Ob-Gyn, P.C., please click here