The Wisconsin Supreme Court has decided that the state’s taking of $200 million from the Wisconsin’s Injured Patients and Families Compensation Fund (IPFCF) to help balance the general budget was unconstitutional.
The state must now pay back the full amount plus interest. It is also prohibited from taking money out of the fund “for an improper purpose” in the future.
The fund, created in 1975, provides excess medical malpractice coverage for Wisconsin health care providers. Most health care professionals purchase medical liability policies from private insurance carriers that pay claims up to $1,000,000 for each claim arising from an occurrence in a year or $3,000,000 for all claims arising from all occurrences in a year.
The fund covers claims in excess of those amounts; no taxpayer money contributes to the fund, according to the Wisconsin Medical Society. It is funded by fees paid by health care providers.
At the urging of the Gov. Jim Doyle, in order to help balance Wisconsin’s 2007-2009 budget the state legislature transferred $200 million from the IPFCF to the Medical Assistance Trust Fund.
According to the opinion filed by the Wisconsin Supreme Court, the “$200 million was to be transferred in two separate transfers: $71.5 million for fiscal year 2007-08 and $128.5 million for fiscal year 2008-09. … The legislature then reduced general purpose revenue (GPR) funding for the MATF by $200 million.”
The Wisconsin Medical Society, which represents nearly 12,500 physicians statewide sued the state for raiding the fund, calling the legislature’s action unconstitutional.
A Dane County judge dismissed the case in 2008. The Society appealed the decision, and the Court of Appeals requested that the Supreme Court accept the case, which it did.
“We are extremely gratified with today’s Supreme Court ruling because it is a great victory for patients, their families and health care professionals across Wisconsin,” said Society President Thomas Luetzow, MD. “This ruling sends an important message that the Fund is not a piggy bank. The raid was wrong, and justice has been served.”
The Court concluded “that the health care providers have a constitutionally protected property interest in the Fund,” which is defined in state statute “as an irrevocable trust.” Health care providers are specifically named as beneficiaries of the trust. Therefore, the court found, they, not the state, “have equitable title to the assets of the Fund.”
“The Court’s decision reaffirms our position that the Fund’s assets are not general revenue. These dollars are held in a trust that may only be used for the benefit of injured patients, their families and contributing health care professionals,” said Ruth Heitz, JD, the Society’s General Counsel.
The court’s decision did not detail a timeline for returning the money. It sent the case back to the lower court to carry out the provisions of the ruling.
The Associated Press reported that State Rep. Mark Pocan, co-chairman of the Legislature’s budget-writing committee, said it’s unknown whether the decision would force lawmakers back into session before they are scheduled to return in January.
The state budget is projected to finish the current fiscal year on June 30 with a balance of $45 million, not enough to absorb a $200 million hit.
Lawmakers could be forced to return if the state Department of Administration determines emergency action needs to be taken to keep the budget in balance, the AP reported.
The case is Wisconsin Medical Society Inc. and David M. Hoffman, M.D. v. Michael L. Morgan; Case No. 2009AP728.
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