Government warns it may stop recognising MDU

The Government has warned that it may refuse to recognise indemnity cover provided for hundreds of GPs in the medical card scheme by the Medical Defence Union (MDU) if concerns persist as to how the organisation is being run.

In a letter sent last night to the chairman of the MDU board, the Department of Health sought a full report in relation to recent resignations of non-executive directors of the organisation. It also requested "an indication of how the MDU proposes to satisfy its own members and other interested parties that it is able and willing to adhere to contemporary standards of corporate governance".

The department has forwarded the letter to the financial regulators in the Republic and the UK.

The MDU is a UK-based medical indemnity organisation which provides cover for doctors in Ireland. It is estimated that about 500 GPs in the General Medical Services (GMS) scheme have insurance cover through the MDU. In addition, several hundred hospital doctors are understood to have discretionary indemnity cover with the MDU.

If the organisation was delisted, GPs would have to seek alternative insurance cover.

The Irish Times revealed last month that a number of non-executive directors had resigned from the MDU in a boardroom row over corporate governance issues and in particular over the disclosure of the remuneration of senior management. The directors filed a report to the insurance regulator in the UK following their resignation.

The MDU said in its most recent annual report that it received about £4 million (€5.9 million) in revenue from doctors in Ireland. The Government provides about €1.5 million in reimbursement of subscriptions paid to the MDU by GPs.

The MDU has refused to provide details regarding the boardroom dispute. However, last weekend it was reported in Britain that the row centred around calls by the non-executive directors for greater transparency in the recording of remuneration to senior management. Media reports said senior executives of the MDU received salaries from both the organisation itself and an associated company, MDU Services Ltd.

The MDU said in a statement at the weekend that its chief executive, Dr Michael Saunders, received a salary of £394,000 last year. However, the annual report said its highest paid director received £229,000. Media reports said the bulk of Dr Saunder's salary came from MDU Services and it was another executive who received the £229,000 from the MDU.

In its letter, the Department of Health said Minister for Health Mary Harney expected all companies to adhere to the highest standards. "The Minister's concern . . . arises from the fact that the MDU continues to provide discretionary indemnity to some consultants in Ireland and MDU Services sells insurance and other services to Irish GPs. You will be aware that it is a requirement that GPs providing services under the GMS scheme should be able to satisfy the scheme that they have a satisfactory professional indemnity in place.

"At present, membership of the MDU is still accepted as meeting this requirement. Obviously if concerns persist about the manner in which the MDU is run, then this situation may have to be reviewed, in the interests of Irish patients and doctor," the department said.