Federal Judge Denies Plan to Take $200M Out of Medical Malpractice Fund in PAA little good news for medical malpractice victims: On May 17, a federal judge pulled $200 million from Pennsylvania’s state budget by tossing a law that appropriated the surplus from a state-created medical malpractice fund. Stating that the 2017 law violated the U.S. Constitution, U.S. District Judge Christopher Conner sided with the plaintiff, Pennsylvania Professional Liability Joint Underwriting Association.

In his decision, as reported by the Associated Press, Conner wrote, “The fund has a perceptible benefit: it assures availability of medical professional liability coverage throughout the commonwealth at no public cost. By the same token, it also has a consequence: the General Assembly cannot claim carte blanche access to the association’s assets.” He further stated that the fund is private property, and cannot be seized by the government for its own use without fair compensation.

The fund is made up of money from policyholder premiums and investments, and is managed by a board of directors. The association had no comment on the decision.

Governor Tom Wolf signed the law regarding transferring the $200 million from the medical malpractice fund to the state on October 30, 2017, citing a decline in claims to justify drawing from the fund. The transfer never actually happened, as the association obtained an injunction against the state in November.

The AP article also reported Governor Wolf’s spokesperson called the transfer “one of the many mechanisms passed by the General Assembly and signed into law to eliminate the deficit.” He also noted the administration was reviewing the decision.

However, Conner pointed out that the association’s function is essentially private and, at its core, an insurance company. In his decision he wrote that it does not “’exist wholly to serve the state,’ nor is it engaged in work otherwise tasked by statute to the state’s insurance commissioner…that the association’s private operations work an incidental public benefit does not render its function a public one.”

The medical malpractice fund was created by the state in 1975 as they faced a looming malpractice crisis. Today it insures about 250 policyholders. A typical policy lasts about one year, with a limit of $500,000 per claim, aggregate limits of $1.5 million for individuals, and $2.5 million for hospitals. The fund had a surplus of just under $270 million at the end of 2016.

House Republican spokesperson Steve Miskin said he and other state lawmakers are reviewing their options after Judge Connor’s decision, noting their concerns “in light of what appears to be an absolutely overly broad order — that goes way beyond the legality of the case.” Because Conner’s decision could potentially affect the entire Fiscal Code portion of the state’s budget, lawmakers were concerned that unrelated budget items would be needlessly put in danger.

Miskin’s concerns appeared to be legitimate, as the judge amended his order the very next day.

“Judge Conner quickly realized that he fundamentally erred in his remedy,” said Drew Crompton, a spokesman for the Pennsylvania Senate’s majority Republican caucus.

If you or a member of your family has been injured due to medical malpractice, talk to the attorneys at Crandall & Pera Law. Our lawyers have years of experience with these types of cases, and will advocate for you and seek compensation on your behalf. Please call our medical malpractice lawyers in Ohio or Kentucky at 877-686-8879. You can also fill out our contact form to schedule a no-obligation consultation.