I'd be interested to see how anyone with NH medical practice clients that received a distribution from the NHMMJU are treating those distributions. They seem taxable to me as "refunds" of prior malpractice premiums paid. Or, their share of earnings on those invested premiums. But perhaps the situation is more akin to the dissolution of mutual insurance companies. I have seen no 1099s issued.
From what I have read the legal people handling the distributions state that one should contact one's tax advisor to determine the tax status. I see that the NHMMJU did file returns with the IRS and received a substantial refund in the last year or so.
I have just 2 clients who have received distributions from the fund and, of course, they have "heard" that the payments are tax-free. The two clients are both retired.