On June 22, 2018, Gov. Tom Wolf approved a bill (House Bill 1851) with amendments to the Insurance Department Act that would place the Pennsylvania Professional Liability Joint Underwriting Association (JUA) under the “control, direction and oversight” of the Pennsylvania Insurance Department (PID). The JUA was created by state law in 1976 to provide medical professional liability insurance to health care providers who cannot conveniently obtain medical professional liability insurance through ordinary methods at rates not in excess of those applicable to similarly situated health care providers.
The JUA responded by filing a federal lawsuit asking that the law be declared unconstitutional. The JUA is also requesting a preliminary injunction to prevent the law from taking effect before the case can be heard. The Pennsylvania Medical Society (PAMED) will be filing an amicus (“friend of the court”) brief in support of the JUA’s latest case.
The new law, now known as Act 41 of 2018, is the state’s latest attempt to transfer $200 million from the JUA to the commonwealth’s General Fund. The JUA receives no money from the Commonwealth and never has.
How Act 41 Would Affect the JUA
Act 41 asserts that a “review of the [JUA’s] plan of operation and rate filing…has identified a need to modernize the association in order produce needed economical and administrative efficiencies.” The bill also asserts that “placing the association within the Department will give the Commissioner more oversight of expenditures and ensure better efficiencies in operation of the association.”
Within 30 days of the effective date of the law, all of JUA’s administrative documents and other assets would be transferred to the PID. The authority to act on behalf of the Board will be transferred to the executive director hired by the Commissioner. Act 41 allows the Commissioner to appoint an acting executive director until an executive director has been hired.
The legislation vests a Board, appointed by the Governor and the leaders of the General Assembly, with governance of the JUA. Board members would serve a four (4) year term. It also provides additional powers and duties of the Board, which includes, subject to the Commissioner’s approval, the ability to place a portion of the JUA’s funds in a restricted receipt account in the Treasury. Funds placed in treasury account would be appropriated for the purposes required in the Mcare Act, the Article, and as may otherwise be directed by the Board.
The day-to-day management of the association would be the responsibility of an executive director and administrative staff, to be identified and hired by the PID.
The legislation would prohibit JUA members and health care providers insured by the JUA from bringing claims against the current or future funds, profits, investments or losses of the association, including upon dissolution.
For background on the state’s attempts to transfer $200 million from the JUA to Pennsylvania’s General Fund, an effort which began with legislation passed in 2016, check out PAMED’s JUA Timeline of Events.
PAMED will provide additional updates on the JUA as they become available.