January 23, 2020 MedCo Escrow Agreement – MRO update
This month, MedCo has released the 2019 update of its Guidance on MoJ Qualifying Criteria (Guidance). This is vital reading for any Medical Reporting Organisation (MRO).
An update on the requirements of the financial instrument that MRO’s are required to maintain as part of the MedCo registration regime follows.
The Guidance maintains previous the previous position that and MRO must purchase a financial instrument that meets four criteria. Namely it must:
- Operate in the event of the failure of the MRO and solely in favour of its contracted medical experts;
- If activated, be operated by a named independent third-party administrator that has agreed to provide this service. That named party cannot be the MRO, MedCo or “medical experts”;
- State that the beneficiaries are any MedCo-registered expert that has been instructed by the MRO to produce a MedCo report for it; and
- Not be capable of being cancelled, lapsed or otherwise rendered ineffective through the sole actions, inactions or failure (including administration, solvent/insolvent liquidation, creditors’ arrangement, dissolution or other corporate event that results in an inability to pay its debts as they fall due in full) of the MRO.
MedCo confirms that it is only aware of one type of financial instrument that meets all of these criteria – a standard escrow agreement. Money deposited in a solicitors’ client account will not comply.
New as part of the 2019 Update is the requirement that such a financial instrument must include a clause that ensures that a minimum 18-month run-off period is in place, such that no expert is disadvantaged by a MRO’s decision to cease to trade, exit MedCo business or switch from one approved bond provider to another.
Elemental’s standard MedCo Escrow Agreement has been fully reviewed following the publication of the Guidance and meets all of the requirements.
If you are an MRO and would like to discuss our Medco escrow agreement, please contact us.
Elemental CoSec Limited
23 January 2020