G en. 117] 117
HEAL TH OCCU P AT I ONS
M ALPRACTI CE I NSURANCE

– I NT E RPR E T AT I ON OF S TATUT E C RE AT I NG T E MPORA RY S TATE S UBS IDY F O R M A L P RA C T I CE I NSURANCE P R E MI U MS

Sept ember 6, 2005
M r. A l f red W

. R edm er, Jr. C om m is s i oner Mar yl and I ns ur ance Adm i nis t r at i on
Y ou have a s ked forouri nt erpr et at i on of a r ece nt l y - enac t ed l aw t hates t abl i s hes a for m ul a fora S t at e s ubs i dyof phy s i ci an m alpra cti ce insu ran ce p re m iu m s o v er a fo u r-y ea r pe ri o d

. In par t i cul ar , y ou as k w het hera su b si dys houl d be pai d i f an i ns ur er deci des nott o al t eri t s pr emi um r at e for2006.
T h e sta tu to rylan g u a g e th a t d e f in e s th e su b sid y f

o rm u la, if appl i ed l i t er al l y , w oul d r es ul ti n no s ubs i dybei ng pai d i n 2006 i f an in su re r’s p re m iu m ra te d o e s n o t c h a n g e ; b yc o n tra st, it co u ld re su lt in a v e rysu b sta n tial su b sid yin a su b se q u e n t y e a r if e v e n a sm a ll rate i ncr ea se became effe ct i ve. T hi s appea r s t o be at t r i but abl e t o an o v e rsig h t in th e d ra f

tin g o f th e sta tu te. T h e st a tu te a s a w h o le demonst r at es a l egi s l at i ve i nt ent t o s ubs i di ze phy s i ci an mal pr act i ce pr emi um s fo r a l i m i t ed per i od ata gr adual l ydecl i ni ng r at e. T he l egi s l at i ve hi s t or yconfi r m s t hati nt ent

. A ccor di n g ly , i ti s our opi ni on t haty ou s houl d di s r ega rd the port i on of t he s t atut e t hat re f lec ts th e d ra f

tin g o v e rsig h t an d a p p lyth e su b sid yf o rm u la to a c h ie v e th e le g isla tiv e p u rp o se e v e n if a n in su re r d o e s n o t alte r its pr emi um r at e for2006.
I Backg r ound
A
. E m er

gency Legis lati on at

2004 Special

Ses s i on
D ur i ng i t s s peci al s es s i on i n l at e 2004 and e ar l y2005, t he G ener al A s s embl ypas s ed emergencyl egi s l at i on ent i t l ed t he M ar y l and Pat i ent s ’ A cce s s t o Q ual i t yH eal t h C ar e A ct o f 2004.1 1 8 [9 0 O p
. A tt ’y

The bill wa s vetoed by the Gover nor on J anuar

y 10, 2005, but the 1 G e n e r a l A s s e mb l y o v e r

r o d e th e v e t o th e n e x td ay. A leg islative repor

t noted that the State’s larg est medica l 2 malprac tic e i nsurer

had obtained a

pproval of rate increase s of 28% a nd 33% in those year s for c alen d ar year s 2004 and 2005, re spectively

. See Recommendations of the Senate Special Commissi on on Medica l Malp ra ct ice L iability

Insuranc e (D ece mber 2004), pp. 1- 2. The Gover nor’s e x ecutiv eo rd er

c o nv en ingthe spec ial session likewise alluded to theri sin gc os t of

ma lpra c tic e pr e miums a s p art of a he a lthc arec ri sis to be addressed in the spe cial session. See Ex ecutive Orde r 01.01.2004.70.
The emerg ency leg islation pa ssed during the 2004 specia l session 3 contained virtually identical languag e. SeeI N §19-104.1(c )(1) as enacte d in Chapter 1, L aws of Ma ryland 2004 (Spec ial Session). C hapt er 5, L aw s of M ar y l and 2004 ( Speci al Ses s i on)

. T hatl aw w as 1 des i gned t o r es pond t o a dr amat i c i ncr eas e i n m edi cal m al pr act i ce i ns ur ance pr emi um s i n 2003 and 2004. T o r educe m al pr acti ce 2 cl ai m s and l i abi l i t yi n t he l ong r un, t he l aw m ade a num berof change s i n t or tl aw and i n l aw s reg ul at i ng phy s i ci an di s ci pl i ne, i ns ur er s , t or t cl ai m s , and pat i ent s afe t y , among ot her s
. T o l i m i tt he in c re a se in m a lp ra c tice in su ra n c e p re m iu m s in th e sh o rt ru n , it c re a ted th e M a ry lan d M e d ica l P ro f e ss io n a l L iab ili tyIn su ra n c e R a te S tab ili z a tio n F u n d w h ich w o u ld su p p o rt a re in su ra n c e m e c h a n ism to c a p p re m iu m s
. B
. Cr eati on of

N ew Subsi dy Mechanis m at 2005 Ses s i on S h o rt lyaf

ter i t ena cted the e m erg en c y legislat ion an d b ef o re the n ew fu n d h ad co ll ec ted o r pa id o u t any m o n ey , the L eg isl ature c o n v e n e d in it s 2 0 0 5 re g u lar se ss io n a n d e n a c ted leg isla tio n to c hange the m echan i sm for l i m i t i ng m al pract i ce i nsurance p rem i um s. C hapt er1, L aw s of M ar y l and 2005. T hatl aw r epea l ed t he p r o v i s i o n s e s t a b l i s h i n g a s p e c i a l f u n d a n d r e i n s u r a n c e me c h a n i s m. In its p lac e , itc re a ted th e M a ry lan d H e a lth C a re P ro v id e r R a te S t a b i l i z a t i o n F u n d ( “ F u n d ” ) a n d s e tf o r t h a m e t h o d f

o ru s i n g m o n e ys f r o m t h e F u n d t o d i r e c t l y s u b s i d i z e ma l p r a c t i c e i n s u r a n c e p r e mi u ms of phy s i ci ans and nur s e m i dw i ves
. T hos e pr ovi s i ons w er e codi fi ed atA nnot at ed C ode of M ar y l and, I ns ur ance A r t i cl e ( “I N ”) , §19- 801 et s eq. A s w i t h t he emer gencyl egi s l at i on, one of the keypurpos es of t he l aw w as “t o retai n heal t h car e pr ovi der s i n [M ar y l and] by al l ow i ng [m al pr act i ce i ns ur er s ] t o col l ect r at es t hatar e l es s t han t he [a p p rov ed rates]. ” IN § 1 9 -80 2 (b)(1 ). 3G en. 117] 119

In a dditi on to th e RateSta bil izatio n A c c ount t

hat is de sc ribe d in 4 the text, the F und is also co mprised of a Medica l Assistance Program Acc ount, from which disburse ments relate d to the M edicaid program a re to be made, a

nd an “unallocated ba lance .” SeeL etter of Assistant Att o r n e y G e n e r a l Ro b e rt N. M cD o n a ld to Co mm is s io n e r

A lf r e d W. Redmer, Jr. (May

10, 2005).
Duri ngF isc a l Y e ar 2 00 6, $5 2 mi llion is alloc ate d to theRS 5 Acc ount to fund subsidies premium subsidi es for cal en d aryear

2005. Duri ngF isc a l Y e ar 2 00 7, $4 5 mi lli on is allo c ate d to theRS A c c ount t o pay subsidies for calendar

year 2006. DuringFiscal Ye ar 2 0 0 8, $35 milli on is allocate d to the R S Acc ount for subsidies in ca lendar year 2007. F inally , d uringF isc a l Year 20 09 , $ 25 mil lio n is a llo c ate d to theRS Acc ount for subsidies in cale ndar year 2008. 1. M aryl and H eal t h C are Provi der R at e St abi l i zati on Fund
T h e F u n d c o n s i s t s p r i m a r i l y o f r e v e n u e g e n e r a t e d b y a prem i um t ax im po sed on heal t h m ai ntenance o rgani zat i on s ( H M O s) an d m an ag ed ca re o rga n izati o n s (M C O s). IN § § 6 -10 2 , 1 9 -80 2 (c). T he Fund i s a s peci al , non- l aps i ng fund that is nots ubj ectt o t he requi r ement t hat uns pent bal ance s r ever t t o t he G ener al Fund

. IN § 1 9 -80 2 (d).
M on e y s i n the Fun d a r e t o b e de vo t e d t o s e ve r a l pu rpo s es: su b sidi zi ng m al pr act i ce i ns ur ance pr emi um s forphy s i ci ans and nur s e mi dw i ves fors ever al y ear s ; i ncr eas i ng fee

- for

- s er vi ce r at es p a id to p ro v id e rs b yth e M e d ica id p ro g ra m , a s w e ll a s p a y m e n ts to M C O s t hats er ve t hatpr ogr am; pay i ng fort he admi ni s t r at i on of t he Fund byt he I ns ur ance C om m i s s i onerdur i n g the y ear s t hat m a lp ra c tic e in s u ra n c e p re m iu m s a re s u b s id iz e d . IN § 1 9 -8 0 2 (b ).
T he Fund i s es sen ti all ydi vi ded i nt o t hr ee s ubfunds

. T he p e rtin e n t su b f

u n d , fo r p u rp o se s o f

th is o p in io n , is k n o w n a s th e R a te St abi l i zat i on A ccount( “R S A ccount ”)

. I N §19- 802 ( g) ( 1)

. Funds 4 i n t hi s acc ountar e t o be u sed t o s ubs i di ze mal pr act i ce i ns ur ance p re m iu m s. T h e sta tu te a llo c a tes a d e c lin in g p o rtio n o f th e F u n d to t h e R S A cc ountovera per i od of foury ear s t o payfors ubs i di es d u rin g 2 0 0 5 th ro u g h 2 0 0 8

. IN § 1 9 -8 0 3 (b )(3 ). T h e d isb u rse m e n ts 5 from t he R S A ccountar e t o be us ed onl yt o payt he s ubs i dyas det er m i ned byt he s t atut or yfor m ul a. I N §19- 804( b) , ( c) ( 2)

. Funds t hatar e all ocat ed t o t he R S A ccounti n one of thos e y ear s , butnot sp e n t o n su b sid ies , rem a in in th e a c c o u n t f o r su b se q u e n t y e a rs u n til1 2 0 [9 0 O p
. A tt ’y

After J un e 3 0 , 2 0 0 9 – i.e. , th e e nd of F isc a l Y e ar 2 00 9 –

theRS 6 Acc o unt e s s e nti a lly d is a

p p e ar s an d a ll th e mo n e y in th e F un d w il l be direc ted to other purpose s specifie d by th e s t atute. SeeI

N §19- 803(b)( 3)(vi).
We u sethete rm

“po lic y ho lde rs ” throu gho ut t

he re ma ind e r of

thi s 7 opinion t o re fe r to the phy sicians and nur se midwives who are the benef iciarie s of the subsidy

under thestatute.
A policy holder who opts out would, of course , be re quired to pay 8 the full amount of the pr emium billed by the insurer . I

N §19-805(d)

. t he s ubs i dyends i n 2009. I N §19- 804( c)

. I f t her e ar e i ns uffi ci ent 6 funds i n t he R S A ccountt o payt he ful l amount of t he s ubs i dyunder t he s t atut or yfor m ul a, t he s ubs i dyi s t o be re duced pr o r at a. I N §19- 804(d). I f a ne w i ns ur erent er s t he St at e t o s el l m al pr act i ce i ns ur ance pol i ci es , t he C om m i s s i onerm ayr es er ve up t o 5% of t he R S A ccountt o p rov ide s ubs i di es fori t s pol i cyhol der s
. I N §19- 7 8 0 3 (d).
2. S u b si d y M ech an i sm
T h e sta tu te d o e s n o t re q u ire a n in su re r o r its in su re d s to p a r t i c i p a t e i n t h e s u b s i d y p r o g r a m ; r a t h e r , p a r t i c i p a t i o n i s v o l u n t a r y. I N §19- 805( a)

. I f an i ns ur erdeci des t o par t i ci p at e and s eek re im bu rs em ent fr om t he F un d, i tm ust ann uall yprovide each o f i ts pol i cyhol der s w i t h an es t i m at e of t h e pol i cyhol der ’ s s ubs i dyand g iv e th e p o lic y h o ld e r a n o p p o rt u n ity to o p t o u t o f th e b e n e f

it. I d. 8

T o o b tain re im b u rse m e n t f ro m th e R S A c c o u n t o n b e h a lf o f its p o li cy h o lders, an insu rer m u st ap p lyto the In su ran ce C o m m issi o n er, w h o is c h a rg e d w ith a d m in ist r a ti o n o f th e F u n d , ac c o rd in g to pr ocedu res thatt he C om m i s s i oneradopt s
. I N §19- 805( e)

. T he i ns ur erm us tpr ovi de t he Co mmi s s i o n e rwi t h i nfor m at i on conce r ni ng t he number of pol i cyhol der s , t hei rcl as s i fi cat i ons , t he appr oved pr emi um r at e w i t h r es pectt o t hos e pol i cyholders, t he ac t ual pr emi um s char ged byt he i ns ur er , and t he t ot al r ei m bur s ement s o u g h t, a m o n g o th e r t h in g s
. I d. Th a t i n f

o r ma t i o n i s s u b

j ect t o an a n n u a l a u d it b yth e C o m m is s io n e r. I N § 1 9 -8 0 5 (i ).G en. 117] 121

Under cert ain circumstances, theamounts to be disbursed to the 9 Medica l Mutual L iab i l i ty Insuranc e Society

of Mar yland (“ Medica l Mutual”), the la

rg est malpract i ce insurer in the State, a nd to mutual ins ur anc e c omp anie s g e ne rally arelim ite d. I

N §1 9- 80 5(h) (p ay

me nts to mutual insure rs to be reduc ed by the amount of any divid en d ; M ed i cal Mutual no t to re c e ivedis burs eme nt i f C omm iss ion e r d e te rm ine s th at it s surplus is “excessive”)

. T he C om m i s s i oner i s t o di s bur s e funds fr om t he R S A ccount to insu rers o n a q u arterl yb asis. IN § 1 9 -80 5 (f). T h o se a m o u n ts are 9 t o be us ed byt he i ns ur ert o r educe r at es , pr ovi de a c r edi t , ori s s ue a r efund, t o a pol i cyhol der dependi ng on t he par t i cul arci r cumst ance s o f th e p o li cy h o lder. IN § 1 9 -80 5 (g).
3. For m ul a f

or Pre m i um Subs i dy
T h e a m o u n to f

t h e s u b s i d y p a i d e a c h ye a ri s d e t e r m i n e d b y a form ula. T he st at ute defi nes t he fo rm ula for the sub si dyas fol l ow s:

. . . t he s ubs idypr ovi ded t o eac h pol i cyhol der sh a ll: (1 ) F o r m e d ica l p ro f e ss io n a l li a b ili ty insu ran ce p o li cies su b

ject t o rates tha t w ere appr oved for an i ni t i al eff ect i ve dat e on or aft erJ anuary1, 2005, butpr i ort o J anuary1, 2006, t he amount of a pr em ium inc r eas e t hat is g re a te r th a n 5 % o f

th e a p p ro v e d ra tes in eff ec t1 y earpr i ort o t he ef fec t i ve dat e of the pol i cy ; and (2 ) F o r m e d ica l p ro f e ss io n a l li a b ili ty insu ran ce p o li cies su b

ject t o rates tha t w ere appr oved foran i ni t i al eff ect i ve dat e on or af t e r J a n u a r y 1 , 2 0 0 6 , a p e r c e n t a g e o f t he pol i cyhol der ’ s pr emi um fort he pr i ory eart hat equal s t he quot i ent , m eas ur ed as a per cent age of t he bal ance of t he r at e s t abi l i zat i on acc ount for t he cur r ent cal endar y ear di vi ded by t he ag g r egat e amount of pr emi um s form edi cal p ro f e ss io n a l li a b ili tyin su ra n c e th a t w o u ld have be en pai d by heal t h car e pr ovi der s att he ap p rov ed rate d u ri n g the p ri o r ca lend ar y ea r.1 2 2 [9 0 O p
. A tt ’y

The subsidy

may be reduce d from the amount deter mined by the 10 formula if thebalanc e in the RS Account is insufficie nt to p ay the subsidies. I

N §19- 8 0 4 (d). Also, the statute c ontains a proviso that the c omp utatio n o f t

hesu bs idy is n ot to inc lud e the po rt ion of a rateinc re a se re s u lt in g f

r o m a p r e mium s ur c h arg e o r th e lo s s o f a d is c o unt due to a health ca re provider’s loss experienc e. I N §19-805(c ). The Commissioner is also to report by Dec ember

1 to the 11 L eg islative Poli cy

Commi ttee thes u

b s id y fac tor for thefollowingyear , the money availableto eac h insurer, a nd the number of health ca re providers e lig ibl e fo r the su

bs idy

. I N §19 -8 06 (b )( 2)

. Th e Commis sio ne r m us t a lso make annual repor

ts to the L eg islative Policy Commi ttee in March of eac h year providinginformation about the prior year ’s subsidies

. I N §19- 808(c)

. I N §19- 805( b)

. T he s ubs i dy des cr i bed for t he y ear s 2006 t hr ough 10 2008 i s al s o r efe r r ed t o as t he “s ubs i dyfac t or
. ” S e e als o IN §19- 801( g) ( d e f

i n i n g “ s u b s i d yf

a c t o r ” i n l a n g u a g e i d e n t i c a l t o I N §1 9- 8 0 5 (b)(2 )).
T he C om m i s s i oneri s t o det erm i ne t he s ubs i dyfac t orby N ovember 1 eac h y ear an d n o t i fyi ns ur er s byD ece m ber1 of t hat f ig u re
. IN § 1 9 -8 0 6 (a ), ( b )( 1 ).

11

II

A n a ly sis
I n y ourr eques tfort hi s opi ni on y ou as ked t hat w e as s um e t hat an insur er s ou gh tand ob t ai ned a prem i um rate i ncrease t hat fi rs t beca m e ef

fec t i ve d u r i ng 2005 and t hatel i gi bl e pol i cyhol der s w ho had mal pr act i ce pol i ci es w i t h t hi s i ns ur err ece i ved s u b s i d i e s f r om t he R S A ccount for 2005 pur s uant t o I N §19- 805( b) ( 1)

. Y ou al s o as k us t o as s um e t hat t he s ame i ns ur erhas el ect ed nott o al t eri t s pr emi um rat es f o r 2 00 6, bu trather t o co nti nu e i t s 200 5 rat es. Y ou ask
w het hert he el i gi bl e pol i cyhol der s i ns ur ed by t hi s companyw oul d be e n tit led to a su b sid yo f

th e ir 2 0 0 6 p re m iu m s f

ro m th e R S A c c o u n t.
A
. L iter a l A

p p lica tio n o

f S ta tu te
1. H y pot het i cal Si t uat i on - N o R at e I ncreas e i n 2006
U ndert he fa ct s y ou hypot hes i ze, t he i ns ur erhas an appr oved r at e for 2005 t hatexce eds t he i ns ur er ’ s pr emi um r at e for2004. T he a p p ro v e d r a te n e c e ss a rilyh a d a n in iti a l ef f e c tiv e d a te p rio r toG en. 117] 123

This g eneralization is, of cour se, subject to various qualifications 12 related t o the i ndividual circumstanc es of the policy holder a nd the insurer

. F or e xamp le , th e po lic y

ho lde r w ou ld n ot b e prote c te d f ro m an in c re a sein the pre mium due to loss ex perie nce, a nd the subsidy would be re duced by the amount of any

dividend issued if the insurer wer e a mutual insura

nce c o mp any. Ja n u a ry1 , 2 0 0 6 . T h u s, th e f o rm u la f o r th e su b sid yin 2 0 0 5 w o u ld be d et erm i ned byrefer ence to IN § 19 -805(b)( 1). If the incr ease w er e gr eat ert han 5% , t he i ns ur er ’ s pol i cyhol der s w oul d gener al l ybe ent i t l ed, underI N §19- 805( b) ( 1) , t o a s ubs i dyequal t o t he di ffe r ence b etw ee n the a m o u n t o f th e a ctua l i n cre ase an d a 5 % incre ase
. In 12 ot herw or ds , t he sub s i dyw oul d pr ot ectt he pol i cyhol der s fr om exper i enci ng m or e t han a 5% incre ase i n t hei rpr emi um s for m al pr act i ce i ns ur ance
. Y ou pos i tt hatt he i ns ur erdoes nots eek a n i ncr eas e ornew appr oved r at e for2006. I n t hatcas e, t her e w o u l d be no s ubs i dy un d e r t h e l i t e r a l l a n g u a g e o f I N § 1 9

- 8 0 5 ( b ) ( 1 )

. Under t hat provis i on , t he subsi dy equ al s “the am ou nt of t he prem i um i ncrease t hat i s gr eat er t han 5% of t he a p p ro v e d ra tes in e

ffec t 1 y e a r p rio r to t he ef f ect i ve dat e of

t he pol i cy
. ” I n t he ci r cumst ance s y ou have des cr i bed, the pre m i um r at e for2006 w oul d be t he s ame as t he “appr ov ed rate in e ffe ct1 y earpr i ort o t he ef fec t i ve dat e of the po l i cy
. ” T hu s, t he 200 6 prem i um w ou l d n ot exceed a 5 % i ncrease overt he 2005 pr emi um
. T her e w oul d be no s ubs i dyunderI N §19- 8 0 5 (b)(1 ).
N orw oul d a s ubs i dybe ava i l abl e undert he for m ul a i n I N §19- 805( b) ( 2)

. T hatfor m ul a l i t er al l yappl i es onl yi n t he ca s e of a p rem ium “a p p rov ed fo r an init ial ef fe cti v e d ate o n o r af

ter Jan u ary 1, 2006. ” The pr emi um r at e in q u est i on w oul d have ha d an i ni t i al eff ect i ve dat e i n 2 0 0 5

. T hus , I N §19- 805( b) ( 2) s i m pl yw oul d not a p p l y. 2. H y pot het i cal Si t uat i on - Sm al l R at e I ncreas e i n 2007
T hi s appl i cat i on of t he l i t er al l anguage of t he subs i dyfor m ul a, how ever , appea r s t o be contr ar yt o t he evi dentpurpos e of the s t atut e. A hypot het i cal exampl e t hati ncorpor at es th e fac t s y ou have des cr i bed i s i l l us t r at i ve. Suppose m al pr act i ce i ns ur er s obt ai ned ap p rov al of

rate inc rea ses o n the o rde r of 2 0 % fo r 2 0 0 5

. U n d er IN §1 9-805 (b) (1) , a po l i cy ho l der w ou l d ex peri ence o nlya 5% i ncrease and t he s ubs i dyfr om t he R S A ccountw oul d co v er t he r emai ni ng1 2 4 [9 0 O p
. A tt ’y

On e c an im a g ineoth e r v ari atio ns on thi s sc e na

ri o w ithe qu a lly 13 odd res ult s. F or

e xamp le , if

on e ins ur e r w itha

larg e mark e t sh arehe ld pr e mium r ate s st e a dy

in 2 00 6 a fter a subs tanti a l in c re a sein 2 00 5, wh ile an insurer with a small market sha

re obta ined just a small increa se, the policy holders of theformer

insurer w ould rec eive no subsidy for 2006 wh ilethoseof

thelatte r m ight re c e ivea ve ry su bs tanti a l su

bs idy . It is dif fi c ult to i ma g ineany

ratio na l ba sis fo r t

hat r e su lt. 15 %

. S up po se t he insur ers cho se not t o seek ap proval of an increas e pr emi um for2006. U nderthe li t er al l anguage of t he s t atut e, as ex p lai n ed ab o v e, t h ere w o u ld b e n o su b sidyan d the p o li cy h o lders
w oul d exper i ence t he ful l b run t of t he 20% i ncr eas e i n 2006. H o w ev er, f

u n d s w o u ld ac cu m u lat e in th e R S A cc o u n t fo r t h at y ea r. S up po se t he insur ers t hen ob t ai ned app r ov a l of a sm al l i ncrease f o r 2 0 0 7 . T h a t r a te in c re a se w o u ld h a v e a n in iti a l ef f e c tiv e d a te aft erJ anuary1, 2006 and t he i ns ur er s w oul d be ent i t l ed t o a s ubs i dy a c c o rd in g to th e f

o r m u la in IN § 1 9 -8 0 5 (b )(2 ). U n d e r th a t f o rm u la t he s ubs i dyi s a per cent age of t he new pr emi um t hatequal s a fr act i on c o m p o se d o f th e b a lan c e o f th e R S A c c o u n t d iv id e d b y th e a g g re g a te am o u n t of

p rem ium s at t h e a p p rov ed rate fo r th e p ri o r y ea r. A ccor di ngl y , t he l ar gert he bal ance of t he R S A ccount , t he gr eat er t he per cent age s ubs i dy

. B ecaus e t he bal ance of t he R S A ccount w o u ld c o n sis t o f

th e a llo c a tio n s f

o r b o th 2 0 0 6 a n d 2 0 0 7 , the re w o u ld b e a v e r y su b sta n tial su b sid yf o r 2 0 0 7 . T h is s u b sid yw o u ld undoubt edl yabs orb t he ent i r e i ncr eas e i n the 2007 pr emi um and l i kel yr educe t he amount pai d bya pol i cyhol derw el l bel ow t he amount t he pol i cyhol der pai d i n 2006. I ti s even c oncei vabl e t hatt he l ar ge s ubs i dyfor 2 0 0 7 w oul d r educe t he amount pai d by pol i cyhol der s bel ow t he amount s pai d i n 2005 and 2004.
T he neteff

ectof t hi s s t r i ctappl i cat i on of t he l anguage o f t he s t a t u t e w o u l d b e t h a t t h e s u b s i d y w o u l d r i s e a n d f a l l l i k e a yo - yo o v er th is p e ri o d w ith the p rem ium s ac tuallyp aid b yp o li cy h o lders risin g a n d f

a lli n g e q u a llyra d ica llyin th e o p p o site d ire c tio n
. It is 13 d ifficu lt to b eli ev e tha t th is i s the so luti o n that the L eg isl ature i nt ended to r es ol ve t he per cei ved cr i s i s i n m al pr act i ce i ns ur ance m ar ketpl ace
. N ori s t hi s a pat t er n one w oul d expec t to f i nd i n a for m ul a fora “r at e s t abi l iz at i on s u b s id y .”G en. 117] 125
B
. G i vin g E

ff ect to L egis lati ve P u rpose 1. P ri nci pl es of

St at ut ory C onst ruct i on
T he C ourt o f A ppeal s has decl ar ed t hat , w her e a l i t er al con st ruct i on of st at utor yl ang uag e w o u ld y i el d a resul tso in c o n sis ten t w ith th e a p p a re n t leg isla tiv e p u rp o se a s to d e m o n stra te a dr aft i ng er r or , “t he pl ai n m eani ng r ul e i s not r i gi d. ” Kacz or ow s ki
v. C i t y of Ba l t i m ore , 3 0 9 M d

. 5 0 5 , 5 1 3 , 5 2 5 A

. 2 d 6 2 8 (19 8 7 ). In t hats i t uati o n , i f t he l egi s l at i ve purpos e ca n be det er m i ned fr om an exami nat i on of t he s t atut e’ s cont ex t and hi s t or y , a non- l i t er al cons t r uct i on t hat gi ves eff ect t o t hat purpos e i s t o be adopt ed, even if th a t c o n stru c tio n v a rie s f ro m a n u n a m b ig u o u s, b u t ill-d ra f ted tex t. S ee , e. g. , Kacz or ow s ki , 3 0 9 M d

. a t5 1 1

- 2 0 ( h o l d i n g t h a tp r o v i s i on re p e a lin g a u th o rity f

o r l o c a l in d u stria l d e v e lo p m e n t au th o ritysh o u ld b e d isre g a rd e d ); B ro w n v . S ta te , 359 M d. 180, 753 A

. 2d 84 ( 2000) (c o n str u in g sta tu te th a t d e c lar e d th a t o n e sp o u se “ in c o m p e ten t” to t es t i fyw i t h r es pectt o confi dent i al comm u n i cat i ons w i t h ot her spou se t o creat e a t est i m on i al pri vil ege rat her t han a rul e of w i t ness c o m p e ten c y ); see al

so 85 O p in io n s o

f th e A tto rn e

y G e n e ra l 120 (2 0 0 0 ) (c o n c lu d in g th a t E lec tio n L a w re q u ire d S ta te o f f icia ls to m a k e d e ter m in a tio n s c o n c e rn in g law p a ss e d b yG e n e ra l A s s e m b ly des pi t e l anguage t hatl i t er al l yas s i gned t as k t o count yat t or ney ) ; 84 O p in io n s o

f th e A tto rn e

y G e n e ra l 138 ( 1999) (co n cl udi ng t hat M ar y l and H os pi t al B ond Pr ogr am w as avai l abl e for bonds i s s ued by t he M ar y l and I ndus t r i al D evel opm entFi nanci ng A ut hor i t yeven t hough s ect i on coul d be r ead t o r es t r i ctpr ogr am to pol i t i cal s ubdi vi s i ons ) ; 82 O

p in io n s o

f th e A tto rn e

y G e n e ra l 165 ( 1997) ( concl udi ng t hatr et ai l er s coul d cont i nue t o col l ect “bad c heck f ee” not w i t hs t andi ng t he appar ent r epea l of l egi s l at i on aut hor i zi ng s uch fe es).
2
. L e g isla tiv e H isto r y o f S u b sid y F o r m u la
A li teral i n terpretati o n o f th e s u b sidyfo rm u la ap p ea rs i ncons i s t entw i t h t he or i gi n and st at ed purpos e of the Fund. M any of t he fe atur es i n t he 2004 and 2005 l egi s l at i on can be t r ace d t o t he r epor tof a Senat e com m i s s i on t hatm ade va r i ous r ecomm endat i ons for l e g i s l a t i o n t h a twou l d i mpa c tme d i c a l ma l p r a c t i c e i n s u r a n ce ra tes . In p a rticu lar , itre c o m m e n d e d th a t a f u n d b e c re a ted to p ro v id e “ im m e d iate re lief ” to p h y sic ia n s b ya llo w in g th e m to pur chas e l i abi l i t yi ns ur anc e at a r educe d cos tt hr ough a r ebat e or i ns ur ance r at e r educt i on. I tw as cont empl at ed i n t he r epor tt hats uch a subsi dypro g ram w ou l d rem ai n in effect for fou r y ears
.1 2 6 [9 0 O p
. A tt ’y

For examp l e, th e E co n o m i c G ro wthan d T ax R el i ef

R ec o nciliation 14 Act of 2001, Pub.L

. No. 107-16, 115 Stat. 38, provides for the phaseout and repea l o f the fe deral estate tax by 2010 and its resurrection at prior rate s in 2011. R ecomm endat i ons of t he Senat e Spec ial C om m i s s i on on M edi cal M al pr act i ce Li abi l i t yI ns ur ance ( D ece m ber2004) atpp. 7, 14.
T he por t i on of t he 2005 l egi s l at i on t hat cr eat ed t he Fund w as clea rl yd esig n ed to ca rryo u t th o s e p arts of the C o m m issi o n ’s r ecomm endat i ons
. T he Legi s l atur e s peci fi ed i n t he s t atut e t hatone of i t s purpos es w as t o r et ai n heal t h care p rovi der s i n M ar y l and by al l ow i ng m al pr act i ce i ns ur er s “t o col l ect r at es t hat ar e l es s t han t he [ a p p ro v e d ] ra tes

.. .” IN § 1 9 -8 0 2 (b )(1 ). In a d d iti o n , the sta tu te al l ocat es m oney s t o t he R S A ccount– the par tof t he Fund t hat supp ort s m al pract i ce i nsurance sub si dies – for a peri od of f ou r y ears
. U n d e ra l i t e r a l r e a d i n g o f t h e s u b s i d yf

o r mul a , t h i s i nt ent i on w oul d be def

eat ed as a mal pr act i ce insu r erw oul d col l ectt he a p p ro v e d ra te in 2 0 0 6 , e v e n th o u g h th a t ra te r e p re se n ted a d ra m a tic i ncr eas e overt he r at es col l ect ed i n t he p ri o r y earand eve n t hough th e re w o u ld b e su b sta n tial f u n d s in th e R S A c c o u n t f o r th e sp e c if

ic p u rp o s e o f

s u b s id iz in g th o s e in s u ra n c e p re m iu m s
. I ti s nott ot al l yi nconce i vabl e t hat a l egi s l atur e mi ghtpr ovi de fort he el i m i nat i on of a monet ar ybenef i tfol l ow ed b y it s s udden re a p p e a ra n c e
. H o w e v e r, if s u c h w e r e th e c a se h e re , o n e w o u ld 14
e x p e c t a c lea r e x p lica tio n a n d u n d e rsta n d in g o f th is s e e m in g ly i l l ogi cal appr oach i n t he l egi s l at i ve r ecor d. W e fi nd none. I ns t ead, th e leg isla tiv e re c o rd su g g e sts th a t th e G e n e ra l A ss e m b ly cont empl at ed t hat phy s i ci ans w oul d r ece i ve a s i gni fi cants ubs i dyfor t hei rm al pr act i ce i ns ur ance pr emi um s forfoury ear s w hi l e t he ot her r efor m s enac t ed dur i ng t he 2004 Speci al Ses s i on and t he 2005 Ses s i on t ook eff

ectand l ow er ed t he ant i ci pat ed l i abi l i t yand r el at ed prem i um rat es.
T he bi l l t hatcr eat ed t he Fund, as i tw as or i gi nal l yi nt r oduced, a r t i c u l a t e d t h e f

o r mu l a f o r c a l c u l a t i n g t h e s u b s i d yi n d i f f e r e n tt e r ms f ro m th e la n g u a g e th a t w a s u ltim a te ly en a c te d

. See Senat e B i l l 836 ( 2005) – fi r s t r eade r
. I n par t i cul ar , undert he or i gi nal ver s i on of t he bil l , po l i cy ho l ders w ou l d p aya “st abil i zed r at e” that w ou l d incr ease m or e gra dual l y over a four

- y ear per i od t han t he appr oved r at e. T he s ubs i dyw oul d m ake up the di ffe r ence
.G en. 117] 127

Proposed I

N §19-801(d) (1) de scribed the“incr ease d ratefac tor” 15 (continued...) A s or i gi nal l ypr opos ed, t he subs i dyw i t h r es pectt o eac h pol i cyhol derw oul d equal the di ffe r ence bet w een the pr emi um char ged byt he i ns ur eratt he appr oved r at e and the pr emi um char ged att he “s t abi l i zed r at e. ” I d. , Pr opos ed I N §19- 805( b)

. T he “s t abi l i zed r at e” w as defi ned es s ent i al l y as t he appr oved r at e fort he pol i cyhol deri n eff

ect for t he pr i ory earm ul t i pl i ed byan “i ncr eas ed rate fa ctor.” P rop o sed IN § 1 9 -80 1 (h). T h e “ incre ase d rate fa ctor” w as i n tur n d efi ned as:

(1 ) F o r m e d ica l p ro f e ss io n a l li a b ili ty insu ran ce p o li ce s su b

ject t o rates tha t w ere appr oved foran i ni t i al eff ect i ve dat e on or aft erJ anuary1, 2005, butpr i ort o J anuary1, 2 0 0 6 , 1 0 5 % o f

th e a p p ro v e d ra tes in e f f e c t 1 ye a rp r i o rt o t h e e f

f e c t i v e d a t e o f

t h e p o l i c y; and (2) F o r po li cies e ff ec tiv e fo r t h e 3 y ea rs s ubs equent t o t he per i od s et for t h i n par agr aph ( 1) of t hi s su b sect i on, a per cent age, as det er m i ned annua l l y by t he C om m i s s i oner , of t he appr oved r at es i n eff ect 1 y earpr i ort o t he e f f e c t i v e d a t e o f

t h e p o l i c y.
P ro p o se d IN § 1 9 -8 0 1 (d ). T h u s , it a p p e a re d th a t th e in ten t w a s to al l ow foran i ncr eas e o f 5 % in the ef fec t i ve pr emi um pai d by p h y sic ian s f

o r 2 0 0 5 . F o r th e y e a rs 2 0 0 6 th ro u g h 2 0 0 8 , the sta tu te au t hor i zed the C om m i s s i onert o s ett he r at e of s ubs i dy

. T he C om m i s s i onerw as to set the r at e byr efe r ence t o t he amount al l ocat ed t o t he R S A ccountfort he par t i cul ary ear , w hi ch w as t o be us ed s ol el yforpurpos es of fundi ng s ubs i di es
. Pr o pos ed I N §19- 806( a)

. I ti s evi dentfr om decl i ni ng al l o cat i ons t o t he R S A ccount in the statu te f

o r t h e p eriod 2 0 0 6 thro u g h 2 0 0 8 that the L eg isl ature expec t ed t hatt he amount of t he s ubs i dyw oul d gr adual l ydecl i ne.
H o w e v e r, th e lit e ra l lan g u a g e o f th e f o rm u la s e t f

o rth in Pr opo sed IN §19- 801( d) di d notachi eve thatr es ul t

. W hi l e t he “i ncr eas ed r at e fa ct or ” w as evi dent l yi nt ended t o be a pe r cent age f i g u re , th e n u m b e r d e s c ri b e d in th e d e f in itio n w a s n o t ac tu a l l y a p e rc e n tag e a n d , li ter a llya p p lied , w o u ld h a v e re su lted in c o m p u tatio n s f

a r a f ield f ro m th e a p p a re n t leg isla tiv e in ten t. 151 2 8 [9 0 O p
. A tt ’y

(...continued) 15 for 2005 a s “105% of

the appr o ved rate in eff ect 1 year

prior to the eff ective date of the policy .” That languag e litera lly describes the produc t of a pe rce ntag e figure ( 105%) mu l t i p l ied by a dollar f

igure (theprior year ’s pre mium). The re sult of that computation would be a dollar figure rathe r than the pe rce ntag e that wa s undoubtedly intended. For example, if the approved premium for 2004 had been $200, the “incr ease d ratefac tor ” un d er this l anguag e would be 105% of $200, or $210. The ne x t step would be to c ompute the “stabilized rate” for 2005, which wa s defined a s th e ap proved rate f or the prior

year ($200) multipl ied by

the “increase d ratefac tor” ($210), or, i n this case , $42,000. Thus, literal application of the formula in the proposed bill would haveled to a bs urd r e su lts tha

t w e rec le arly

fo re ign to thepurp os e of thebil l. The de finition of “incre ased rate factor” for the subsequent year s of the subsidy

suffe red f

rom the sam e technical def ect. Proposed I

N §19- 801(d)( 2).
Th e MIA s ub mis sio n s tate d, wi th re sp e c t to the su bs idy fo rm ula 16 in t heorig inal bi ll:

This formula does not accurately describe the subsidy . The s ubsidy

is not int ended to bea reduc tion of premium owed at the approved rate; it is i ntended t o b e a por tion of any

approve d incre ase in the prior year ’s pre mium. Thus , the (continued...) A tt he Senat e hea r i ng on t he pr opos ed bi l l , t he M ar y l and I ns u r a n c e Admi n i s t r a t i o n ( “ M I A”) s u g g e s t e d t h a t t h e l a n g u a g e of t h e b i l l b e a m e n d e d i n a n u m b e ro f r e s p e c t s
. Am o n g t h e i t e ms i dent i fi ed byM I A as w or t hyof amendm entw as t he for m ul a fort he su b sidyan d related term s. Itp rop o sed that the term “su b sidyfa ctor” b e su b stitu ted f

o r “ sta b ili z e d ra te” a s a m o re a c c u ra te c h a ra c te ri z a tio n o f

t h e p u rp o s e o f

th e c o m p u ta tio n
. See M IA ’s Poi nt s of C l ar i fi cat i on R egar di ng t he R ate S ta bi l i zat i on Fund as M odi fi ed i n SB 836/ H B 1359 atp. 1. C ons i s t entw i t h t hatappr oach, M IA su g g ested that itw o u ld b e c o n fu sing to su g g est t h at i n su rers w oul d be chargi nga r at e di ffe r entfr om t he appr oved r at e and that t he s tat u te s houl d s i m pl yr efl ectt hatt heyw oul d col l ect a r educe d a m o u n t f ro m p o lic y h o ld e rs in a n tic ip a tio n o f th e S ta te s u b s id y
. I d. T he M I A al s o s ugges t ed t hat t he for m ul a for t he subs i dybe r evi s ed. I t s w r i t t en cr i t i que of the s ubs i dyfor m ul a i s s om ew hatconfus i ng and s us cept i bl e of a num ber of i nt erpr et at i ons , per haps beca us e, as the M IA w itn ess testi fied at t h e h ea ri n g , itw as p u t t o g ethe r on v ery sh o rtn o ti ce
. In a n yev en t, itd o es a p p e a r clear tha t th e M IA

16G en. 117] 129

(...continued) 16 languag e should b e amende d to identify the subsidy as the premium charg ed by the ca rrier on the policy at wh at is curr ently called the “stabilized rate,”minus the rate in e ffe ct one year p ri o r t o th e e f f e c t i v e d at e o f

th e p o l i c y. MIA’s Poin t s of Clarification Rega rdingthe Rate Stabiliz ation Fund a s Mo dif ie d in SB 83 6/H B 13 59 at p. 2. Th e re fe re nc e s to “pr e mium”in t his pa ragra phareso me wh at un c le ar a s th e fo rm ula in the ori gina l bi ll c onta ine d r e fe re nc e s to dif fe re nt ty pe s of ra te s wh ile theMIA e arl ie r i n it s writt e n s ub mis sio n s e e me d to su g g e st a more lim ite d u se of th e te rm
. Depe nding on how

those t erm s ar e employed, the se cond and third se nte nc e s o f t

his pa ragra pha pp e a r t o d e sc ribedif

fe rent c a lc ulatio ns
. bel i eved that th e L egi s l atur e i nt ended t o m oder at e i ncr eas es fr om “t he pr i ory ear ’ s pr emi um
. ”
A t th e h ea ri n g o n the b il l, a re p res e n ta tiv e o f M IA char act er i zed the for m ul a i n t he b il l as “aw kw ar dl yw or ded, ” but s ai d t hat M I A r epr es ent at i ves had been abl e t o agr ee w i t h l egi s l at i ve s t aff t o w or k outs ubs t i t ut e w or di ng. T he cha nge w as des cr i bed as a “t echni cal amendm ent

. ” Test i m onyof A s s oci at e C om m iss i oner P a m e la R a n d i Jo h n so n b e f o re S e n a te F in a n c e C o m m itt e e o n S e n a te B il l 83 6 (F eb rua ry2 3 , 2 0 0 5 ). T h ere w as n o su g g est io n that M IA w a s p ro p o sin g th a t th e G e n e ra l A ss e m b ly d e v iate f ro m th e e f

f o rt to pr ovi de a gr adual l ydi m i ni s hi ng s ubs i dyto p o li cyhol der s overt he four

- y earper i od.
A new ver s i on of t he s ubs i dy for m ul a w as added t o t he bi l l by
w ayof fl ooramendm enti n t he Senat e. In d escr i bi ng t he s ig n if ica n c e o f

th e a m e n d m e n t, th e f lo o r m a n a g e r o f

th e b ill expl ai ned t hat i t di d not change t he s ubs t ance of t he s ubs i dy , butw as rec om m ended f

ort echni cal r eas ons byM I A

. She r ecomm ended adopt i on of t he pr opos ed amendm enton t he basi s t hatt he I ns ur ance C om m i s s i onerw as char ged w i t h ad m ini s t r at i on of t he s ubs i dy pr ogr am and t hati ns ur ance i ndus t r yr epr es ent at i ves had al s o agr eed t o t he amendm ent

. R emar ks of Senat orD ol or es K el l eyconce r ni ng flo o r am en d m en ts t o S en ate B il l 83 6 (M arc h 1 0 , 2 0 0 5 ).
On c e a g a i n , h o we v e r , t h e d r a f t e r s h a d e n c o u n t e r e d s o me di ffi cu l t ye x p r e s s i n g t h e a g r e e d

- u p o n c o n c e p t s i n wor d s
. I twas appar ent ly eas i ert o des cr i be t he s ubs i dyt o be pr ovi ded i n 2005 as oppos ed t o s ubs equenty ears. M any of t he keyfac t s w er e al r eady know n for2005 – e .g
. , t he amount of t he appr oved r at e i ncr eas e for1 3 0 [9 0 O p
. A tt ’y

This assumption was apparently based on historical experience

. 17 For example, we under stand that the State’s larg est m alpractice insure r had obtained a

new approval of its rateplan ea ch year for the pa st deca de. I llustrative examples of subsidy computations provided by M IA to the General Asse mbly

assumed that malpra ctice insure rs would see k and obtain approval of rateincre ases of 20% in 2006. 2005 and t he l i kel ypr ocee ds fr om t he new t ax t hatw oul d fund t he su b sid yf o r th a t y e a r. T h e re a p p a re n tlyw a s s u f f icie n t co n f

id e n c e in t h o s e e s t i ma t e s f

o r t h e r e t o b e a c o mmo n u n d e r s t a n d i n g t h a tt h e RS A c c o u n t c o u ld su p p o rt a su b sid yth a t allo w e d p o licyh o ld e rs to exp eri ence o n ly a 5% i ncrease i n thei r m al pract i ce prem i um s. H o w ev er, fo r fu ture y ea rs, so m e o f t h e c ri ti ca l variab les w ere unknow n. W hatpr emi um w oul d t he i ns ur er s s eek i n t he futur e? W oul d t he M I A appr ove t hatr ate? H o w m uch r evenue w oul d be col l ect ed t o fund t he s ubs i dy ? T he cha l l enge w as t o devi s e l anguage th a t ac c u ra telyd e s c r ib e d th o se v a ria b les in a f o rm u la th a t w o u ld gi ve t he C om m i s s i oneradequa t e di r ect i on as t o the su bs i dyt o be di s bur s ed.
T he amendm entcl ear l ydefi ned t he s ubs i d y fo r 2005 as t he amount of t he appr oved r at e i n exce s s of 105% of t he 2004 r at e. For t he y ear s 2006 t hr ough 2008, t he for m ul a fi r s tcomput ed t he amount in th e R S A c c o u n t f

o r th e c u rre n t y e a r as a p e rc e n tag e o f a g g re g a te pr emi um s att he appr oved r at e fort he pr i ory ear and w oul d r educe t he cur r ent y ear appr oved pre m i um by t hat amount

. T hatappr oach appea r ed t o r epl i cat e t he met hod us ed fort he 2005 s ubs i dyw i t hout c o mm i t t i n g t o a s p e c i f

i c p e r c e n t a g e f

i g u r e , i n l i g h to f

t h e u n k n o wn var i abl es
. H ow ever , i n di s t i n g ui s hi ng t he for m ul a for2005 fr om th a t f o r th e su b se q u e n t y e a rs, th e a m e n d e d lan g u a g e a p p e a re d to assum e thatt her e w oul d be a new ap p rov ed rate fo r ea ch y ea r. 17 T hus , t he s t atut e di s t i ngui s hes t he t w o par t s of the formul a by r efe r ence t o t he “ i ni t i ale f f e c tiv e d a te ” o f

a p re m iu m ra te

. H ow ever , t he l anguage w oul d have i ncorpor at ed a di s t i nct i on bet w een t he t w o par t s of t he for m ul a eve n i f t he w or d “i ni t i al ” had been omi t t ed. M or eover , i f t he w or d “i ni t i al ” w er e omi t t ed, t he l i t er al appl i cat i on of t he s t atu te, b ot h i n t he ci r cumst ance s y ou hy p o t h e s i z e a n d i n t h e e x a mpl e we g a v e a b o v e , wou l d r e s ul t i n a g rad u all yd im inishing su b sidyfo r po li cy h o lders tha t th e L eg isl ature a p p a re n tlyin ten d e d . N e ith e r th e in iti a l re in su ra n c e m e c h a n ism in t he 2004 emer gencyl egi s l at i on, nort he or i gi nal pr opos al fort he s ubs i dyfor m ul a i n t he 2005 l egi s l at i on, r equi r ed t hatan i ns ur er obt ai n a new appr oved r at e for2006 or s ubs equenty ear s i n or derforG en. 117] 131

Industry representatives who revie wed the floor ame ndment and 18 a dv ise d th e fl oo r m ana g e r o f t he ir a sse nt a pp are ntly a lso faile d to gra sp the literal significanc e of theinclusion of the term “ initial”in the new formu l a. SeeL e tt e r

o f D av i d M

. F unk , E s qu i r e , t o D av i d L

. M ur r ay, President, Medical Mutual L iability In s uranc e Society of Mar yland (August 12, 2005) at p. 13 n.1.
For example, the Gene ral A ssembly may wish to consider whe ther 19 any allowanc e should be made in theformula f or circ umstances in which ani n s ur e r l o w e r s r at e s d

uri n gth e f

o ur - ye ar p e ri o d o f th e s u b s i dy. i t s pol i cyhol der s t o be el i gi bl e fort he pr emi um s ubs i dy

. N one of t he des cr i pt ion s o f t he fl ooramendm ents ugges t ed t hatanyof t he i nt er es t ed par t i es i nt ended t o pl ace s uch a c ondi t i on on el i gi bi l i t yfor a s u b s id y
. I n t h e s e c ir c u m s ta n c e s , Kacz or ow s ki and i t s pr ogeny

18 i ndi cat e t hatan i nt erpr et at i on o f the s t atut e t hatfur t her s t he l egi s l at i ve purpos e s houl d be favor ed overa l i t er al i nt erpr et at i on at odds w i t h t hatpurpos e. A ccor di ngl y , i n ouropi ni on, y ou s houl d not g ive e ff ec t t o the u se o f th e w o rd “ init ial ” in IN § 1 9 -80 5 (b)(2 ).
W e re c o m m e n d th a t th e G e n e ra l A ss e m b ly re v ise th e f o rm u la t o confi r m i t s i nt entas w e have cons t r ued i t

. I n addi t i on, t he L egi s l atur e mayal s o w i s h t o cons i derw het hert he for m ul a s houl d be revi sed i n o t her r espect s. 19

III
C oncl usi on
I n ouropi ni on, t he l i t er al l anguage of IN §19- 805( b) ( 2) i n t he ci rcu m stance s t haty ou envi s i on w oul d y i el d a r es ul ti ncons i s t ent w i t h t he purpos e of the s t atut e. T hi s appea r s t o be at t r i but abl e t o an ov ers i gh ti n the draft i n g o f t he sub si dyform ula. T he st at ute as a w hol e demonst r at es a l egi s l at ive int entt o s ubs i di ze phy s i ci an m al pr act i ce pr emi um s fora l i m i t ed per i od at a g radua l l ydecl i ni ng ra te. T h e leg isla tiv e h isto ry c o n f irm s th a t in ten t. In a c c o rd a n c e w ith t he rules o f s t atut or ycons t r uct i on, y ou s houl d di s r egar d t he one
w o rd th a t w o u ld d e f

e a t th e leg isla tiv e in ten t a n d a p p lyth e sta tu te to a c h ie v e th e le g is la tiv e p u rp o s e
.1 3 2 [9 0 O p
. A tt ’y
In o u r op inion , this sho u ld b e d o n e b yign o ri n g the u se o f th e w o rd “i ni t i al ” i n I N §19- 805( b) ( 2) and a p pl y i ng t he for m ul a i n t hat p a ra g ra p h to a ra te e f

f e c tiv e a f ter Ja n u a ry1 , 2 0 0 6 , w h e th e r o r n o t it s i ni t i al eff

ect i ve dat e pr ece ded t hatdat e. W e al s o r ecomm end t hat th e G e n e ra l A ss e m b lya m e n d th e sta tu te to c o n f irm th is in te rp re ta tio n o f

its p u rp o s e
. J. Jo sep h C u rran , Jr. A t t or ney G ener al
R o b e rt N . M c D o n a ld C hi ef C ouns el O pi ni ons & Advi ce