MDU Vs Insurance – Historic Payment Requests

Historic payment requests (“earnings audits”) – what clinicians need to know

What are they?

Some Medical Defence Organisations (MDOs) base your subscription on estimated private-practice income or earnings banding. If, later, they believe your actual earnings were higher than declared, they may review (an “earnings audit”) and demand an additional lump-sum to “true up” your subscription – and, in some cases, withdraw or decline assistance if they conclude you didn’t pay the correct rate.
Medical & Dental Defence Union of Scotland (MDDUS) states subscriptions for private practice are calculated on an estimate of private earnings, and urges members to review accuracy during the year; MPS explicitly says you must have paid the correct subscription rate and that certain subscriptions are based on estimated annual income for activities needing indemnity.¹

Why it matters

With discretionary indemnity, an MDO can decide whether to assist you at the time you seek help. There are reported cases where assistance was withdrawn mid-claim when income declarations were found inaccurate (e.g., Hussain v MDU & MDU Services Ltd). That ruling and multiple summaries record that support was withdrawn due to under-declaration of income, underscoring the risk to clinicians of retrospective re-rating and potential loss of discretionary backing.²

Government context

The UK Department of Health & Social Care (DHSC) has highlighted structural risks with discretionary arrangements (no contractual obligation to pay claims; no legal reserve requirements; no FCA/PRA conduct regulation), noting many consultation respondents considered discretionary indemnity “not fit for purpose” and favoring regulated insurance for clinicians outside state schemes. This is directly relevant when an MDO retrospectively revisits earnings and exercises discretion to refuse/withdraw assistance.⁴

Typical scenarios we see

• “You under-declared” letter: MDO reviews banked income, invoices, clinic lists, or procedure numbers and concludes earnings exceeded your declared band. They re-band you and request a back payment for past membership periods.¹
• Payment or protection ultimatum: Pay the difference (sometimes as a lump sum) to maintain assistance going forward or risk reduced support; in some instances, support may be withdrawn (even mid-claim) where declarations are judged inaccurate.²
• Retrospective exposure: If discretionary support is withdrawn or membership is cancelled retrospectively, you may be left without effective indemnity for that period. This risk is one reason the DHSC flagged concerns with discretionary models.⁴

What to do if you receive an “earnings audit” or historic payment request

1. Don’t ignore the deadline. Acknowledge the letter promptly and request their calculation basis (periods, income sources, band thresholds). Keep everything in writing.
2. Assemble evidence fast. Collate practice accounts, invoices, lists, remittances, and split NHS vs private income. Demonstrate the scope of activities that actually require indemnity (some income may fall outside). MPS materials show subscription assessments can be tied to specific income streams requiring indemnity.³
3. Challenge errors, not principles. If their figures include non-clinical or already state-indemnified activity, challenge that. Ask them to explain the banding rules that apply to you (MDDUS/MPS documentation relies on estimates that must be kept up to date).¹
4. Negotiate terms. If a balance is genuinely due, ask for installments or staged payments so you’re not forced into sudden cash outlay.
5. Protect the here-and-now. If there’s any hint of withdrawal of assistance due to past under-declaration (as in Hussain v MDU), prioritise securing certain (contractual) protection for ongoing practice.²
6. Close any historic gap. Consider contractual malpractice insurance that can provide retroactive (past-acts) cover for the period previously under discretionary membership. This can de-risk the retrospective cancellation problem highlighted by DHSC’s concerns about discretionary models.⁴
7. Document improvements. Put in place a quarterly income check and a simple policy: “if private income changes by ≥10%, notify indemnity provider within 14 days.” This reduces the chance of future re-banding shocks.

How Enhance Insurance helps in these cases

• Rapid audit of the ask: We review the basis of the MDO’s recalculation, separate indemnified vs non-indemnified income, and push back where overreach is evident. (Evidence-led letters help.)
• Bridging the risk gap: If there’s a real chance of withdrawn support, we arrange contractual, FCA/PRA-regulated malpractice insurance with bespoke retroactive dates to protect the at-risk period, and clear run-off for the future. This aligns with the government’s stated preference for regulated cover.⁴
• Cash-flow sensitive solutions: Where a balance is unavoidable, we’ll negotiate payment plans and ensure your current practice isn’t left uninsured while you resolve the past.

Need help right now?

Send the letter to our team. We’ll (1) validate the numbers, (2) protect your ongoing practice with contractual certainty, and (3) work to defuse the historic payment demand on fair terms.

Sources (key)

1. MDDUS: Private practice subscriptions are calculated on estimated private earnings; members should review accuracy during the year. MDDUS
2. Case law: Hussain v MDU & MDU Services Ltd – assistance withdrawn over under-declared income (reporting and case summary). Casemine
3. MPS: Members must have paid the correct subscription rate; certain protections are based on estimated annual income for work needing indemnity. Medical Protection
4. GOV.UK (DHSC): Consultation summary records widespread concerns with discretionary cover and notes many respondents considered it “not fit for purpose,” favoring regulated insurance.