Pennsylvania Medical Society v. Department of Public Welfare

994 A.2d 33, 2010 Pa. Commw. LEXIS 194, 2010 WL 1491269
Commonwealth Court of Pennsylvania·Decided April 15, 2010·No. 584 M.D. 2008, 585 M.D. 2008·Published·Cited by 9 cases

Opinions

OPINION BY

Judge BUTLER.

The Pennsylvania Medical Society, on behalf of itself and all of its members; and Peter M. Daloni, M.D., Karen A. Rizzo, M.D. and Martin D. Trichtinger, M.D.; and the Hospital & Healthsystem Association of Pennsylvania, Geisinger Health System, St. Vincent Health Center and Abington Memorial Hospital (Petitioners) filed an application for summary relief based on the Court’s July 24, 2009 en banc opinion disposing of preliminary objections filed by the Department of Public Welfare (DPW) and the Office of the Budget of the Commonwealth of Pennsylvania (collectively, the Commonwealth). For the reasons that follow, we grant Petitioners’ application for summary relief.

Under Section 711(d) of the Medical Care Availability and Reduction of Error (MCARE) Act,1 health care providers are, with certain exceptions, required to maintain minimum medical professional liability coverage. In addition, Section 712 of the MCARE Act2 establishes a medical professional liability fund commonly known as the MCARE Fund. The MCARE Fund is used to pay claims against providers for losses or damages awarded in medical professional liability actions in excess of their basic insurance coverage. The MCARE Fund is funded by an “assessment” on each participating health care provider. The amount of the assessment is determined by the provider’s prior claim history and private medical malpractice insurance premiums. Accordingly, Pennsylvania health care providers are required to maintain private professional liability insurance and to contribute to the MCARE Fund.

In 2003, the General Assembly enacted the Health Care Provider Retention (HCPR) Program3 (Abatement Law) to alleviate the threat that many physicians would leave Pennsylvania if the exorbitant cost of professional liability insurance was not addressed. The Abatement Law served to provide abatements to physicians and other participating MCARE providers (excluding hospitals), thereby reducing their annual MCARE assessments. The Abatement Law provided eligible physicians in high risk practices 100% abatement of their annual assessment, and other [36] eligible health care providers 50% of their annual MCARE assessment. When originally enacted, the Abatement Law was limited to the 2003-2004 MCARE assessments. Subsequent legislation, however, extended the abatement program to the 2005, 2006, and 2007 MCARE assessments.4

In order to fund the abatement program and reduce providers’ MCARE Fund assessments, the General Assembly established a special account known as the HCPR Account, from which the abate-ments were to be paid. Section 1112(a) of the Abatement Law5 provides:

(a) Fund established. There is established within the General Fund a special account to be known as the [HCPR] Account. Funds in the account shall be subject to an annual appropriation by the General Assembly to [DPW]. [DPW] shall administer funds appropriated under this section consistent with its duties under section 201(1) of ... the Public Welfare Code.[6]

DPW was the administrator of these funds because it could, it was thought, receive matching federal Medical Assistance funds. According to Section 201(1) of the Public Welfare Code, DPW has the power and the duty to apply for, receive and use such federal funds “for the financing in whole or in part of programs in fields in which the department has responsibility.” It is undisputed that, in 2004, 2005, 2006 and 2007, the General Assembly appropriated to DPW a total of $737 million for health care provider retention.

The General Assembly raised funds to pay for the abatements by increasing the tax on cigarettes by 25 cents per pack (18.52% of the cigarette tax). Section 1211 of the Cigarette Tax Law,7 required that a portion of the tax collected be deposited into the HCPR Account:

There is established in the General Fund a special account to be known as the [HCPR] Account. Eighteen and fifty-two hundredths per cent of the proceeds of the tax imposed by section 1206 shall be deposited in the account. Funds in the account shall be subject to an annual appropriation and shall be administered as provided by law.

In addition, motor vehicle violation surcharge revenue was available, pursuant to Section 712(m) of the MCARE Act to help fund the program. See Section 6506 of the Vehicle Code, 75 Pa.C.S. § 6506.

In 2004, the Budget Secretary was appointed to make transfers from the HCPR Account to the MCARE Fund, and to determine the amount of such transfers up to a specified limit. Specifically, Section 1112(c) of the Abatement Law8 provides: “The Secretary of the Budget may annually transfer from the [HCPR] account to the [MCARE] Fund an amount up to the aggregate amount of abatements granted by the Insurance Department under section 1104(b).”

It is undisputed that the Commonwealth has granted physicians and other partici[37] pating health care providers abatements from their 2003-2007 MCARE assessments in the amount of $946 million as follows:

Calendar Year Value of Abatements
2003 $203,000,000
2004 $245,000,000
2005 $208,000,000
2006 $158,000,000
2007 $132,000,000

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Pennsylvania Medical Society v. Department of Public Welfare, 994 A.2d 33, 2010 Pa. Commw. LEXIS 194, 2010 WL 1491269 (Pa. Ct. App. 2010).

994 A.2d 33 (Pennsylvania Medical Society v. Department of Public Welfare) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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