Court Rules in Physicians’ Favor on Raid of Mcare Funds

The Commonwealth Court ruled (4-1) today in favor of the Pennsylvania Medical Society (PAMED) in two landmark legal actions for physicians filed in 2008 and 2009 by PAMED and The Hospital and Health System Association of Pennsylvania.

At issue was money removed from two funds related to the state-run liability insurance program for physicians and hospitals. The total amount taken by the state is estimated at $566 to $716 million. One lawsuit contended that the administration wrongly transferred $100 million from the Mcare Fund to the state’s general fund.

PAMED President James A. Goodyear, MD, said in a statement today, “The Pennsylvania Medical Society is deeply gratified that the Commonwealth Court agreed with our argument that the state should not have taken money from the Mcare Fund and the Health Care Provider Retention Account that’s intended to help compensate successful malpractice claims.”

Essentially, PAMED won the argument that the Mcare Fund raid took dollars that were paid out of physicians’ pockets for medical liability insurance coverage.

In the second lawsuit, the court found that the commonwealth failed to transfer up to $616 million from the Health Care Provider Retention Account to the Mcare Fund to pay for premium relief enacted by the General Assembly between 2003 and 2007.

The court found that physicians had a vested right to that relief that could not be overturned by a subsequent act of the legislature. The exact amount of the abatement under-funding has yet to be determined by the courts. The Rendell administration has already said they will appeal.

PAMED has contended that Pennsylvania physicians already pay some of the highest liability insurance costs in the nation. Taking Mcare Fund money instead of using it to lower premiums was exactly the wrong thing for the administration to do.

“We worked tirelessly with all parties at the capitol to avoid the current situation. Needless to say, we were disappointed that we had no choice but to pursue legal actions when Pennsylvania’s physicians and hospitals were wronged,” Dr. Goodyear said.

PAMED will update Pennsylvania physicians once the next steps are known.