Doctors hit by soaring malpractice insurance premiums this year will be getting relief this week - the result of emergency legislation crafted by a special session of the General Assembly.

The state's largest malpractice insurer will send out bills this week that credit doctors with the full amount of a state subsidy created as part of the malpractice reform package.

The insurer, physician-owned Medical Mutual Liability Insurance Society of Maryland, had raised the premiums it charges doctors by an average of 33 percent this year, blaming the rising payments in court decisions and settlements. That followed a 28 percent boost last year.

But with the state payment, doctors will end up paying just 5 percent more.

"Without the subsidy, we would probably have had to make one of us stop" delivering babies, Dr. Samuel R. Akman, an obstetrician with offices in Lutherville and Owings Mills, said yesterday.

Of the seven doctors in his practice, Dr. Akman said, two gave up obstetrics and limited their practice to gynecology to reduce malpractice premiums for the group.

He said annual premiums for doctors who deliver babies will be between $80,000 and $90,000, but would have been $110,000 to $120,000 without the state fund to help doctors pay for coverage. For gynecology alone, he said, the premium will be between $20,000 and $30,000.

The threat of doctors retiring, curtailing their practices or leaving the state prompted the General Assembly to approve the fund to hold down premiums in a session called by Gov. Robert L. Ehrlich Jr. in December. But Ehrlich vetoed the bill because he said it didn't do enough to reform the malpractice system and because he opposed the tax on HMO premiums that financed it.

Lawmakers overrode the veto in January, then passed another bill this spring spelling out how the fund would operate. The state didn't start collecting the tax until April, and state insurance regulators originally interpreted the bill as saying the subsidy couldn't be paid until the new fiscal year began July 1.

An attorney general's opinion this month cleared the way for Ehrlich to approve a budget amendment and allow the subsidy to be applied immediately.

Med Mutual, which has about 7,000 members, is estimated to insure more than three-quarters of the private practice physicians in the state. Alfred W. Redmer Jr., state insurance commissioner, said his department has been "working diligently" with the other three malpractice insurers that cover Maryland doctors, but that they hadn't completed the process to receive subsidies.

Med Mutual's subsidy represents just under $27 million, according to John Franklin, a Med Mutual spokesman. The bills, due in about three weeks, will apply the full subsidy for the year to the payment due for the third quarter, making the third-quarter bills very small. Doctors who are paid up for the full year have a choice of getting a refund or applying the subsidy to their premiums for next year.

"It's a good thing for us - we'll have very little to owe," said Dr. Dan Levy, a pediatrician in Owings Mills. He said his practice pays about $13,000 a quarter to cover three pediatricians (they pay a much lower rate than obstetricians because rates are set to reflect the likelihood of claims against each specialty), and the subsidy would be between $10,000 and $13,000.

He said the saving was significant "in a pediatric practice, where cash flow is so tight."

Levy and other doctors, however, said the subsidy was a temporary solution, and that more changes in the malpractice system were needed before the subsidy ends in four years. "It's a stopgap measure, a finger in the dike," he said.

Redmer said the Ehrlich administration will seek further changes in the system as well. "Insurance 101 says pricing of premium begins with the aggregate payout for claims," he said, so only reducing the amount that's paid would solve the problem in the long run.

With commercial health insurers paying doctors less for their services than in most other states and "an unfavorable liability climate," Maryland is finding its position "uncompetitive for recruiting and keeping physicians," said T. Michael Preston, executive director of MedChi, the state medical society.

The Maryland Trial Lawyers Association noted declining payouts by Med Mutual last year ($57 million, down 26 percent from 2003) in saying further changes weren't needed.