The Associated Press July 20, 2010, 11:37AM ET

Court says Wis. must repay malpractice fund $200M

The Wisconsin Supreme Court ruled Tuesday that the state must repay a medical malpractice fund more than $200 million it took to balance the budget three years ago, potentially throwing the current budget into disarray.

In its 5-2 decision, the court agreed with the Wisconsin Medical Society that taking the money from the fund used to help pay malpractice claims was unconstitutional. It sent the case back to a lower court with directions that it order the state to pay back the money with interest and lost earnings.

The ruling did not say when the money would have to be paid back. That was left to the lower court to determine.

The money should be repaid as soon as possible to ensure the fund remains solvent, said Dr. Tim Bartholow, senior vice president of the Wisconsin Medical Society. He called the court's ruling a "big win for Wisconsin citizens" who will know there is adequate money available to pay medical malpractice claims.

About 13,000 health care providers participate in the fund, which was created in 1975 and has been credited with keeping malpractice insurance rates low. It pays for claims that are more than a provider's primary malpractice insurance covers, which is generally $1 million per case.

A state audit in March found that the fund was in poor shape because of the raid, the downturn in the economy and an increase in payments to malpractice victims. The fund was projected to be $109 million short of what is needed to pay all projected liabilities as of June 30.

State Rep. Mark Pocan, co-chairman of the Legislature's budget-writing committee, said it was too early to know whether the decision would force lawmakers back into session to take action before they are scheduled to return in January.

"We just really don't know at this point," Pocan said.

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. Dan Schooff, secretary of the department, said he was reading the court's opinion and would comment later Tuesday.

Lawmakers and Gov. Jim Doyle agreed in 2007 to the transfer to pay for other medical programs as part of a deal that ended a lengthy budget stalemate. The state never intended to restore the money it took.

Pocan, a Democrat from Madison, said it was "infinitely fair" to pin blame for the raid on Republicans, who controlled the Assembly when the budget in question was approved. However, Democrats also played a key role in the move. Doyle, a Democrat, backed it and it was also approved by the Democratic-controlled state Senate.

Pocan himself voted for the budget agreement, which cleared the Assembly on a bipartisan 60-39 vote.

Senate Majority Leader Russ Decker, D-Weston, did not immediately return a call seeking comment. A Doyle spokesman also did not immediately return a message for comment.

The Medical Society, which represents doctors, argued the transfer amounted to an illegal raid. A Dane County judge dismissed the case in 2008, but the Medical Society appealed. An appeals court sent the case directly to the Supreme Court, which ruled in favor of the doctors saying health care providers have a protectable property interest in the fund and raiding it amounts to the taking of private property without compensation.

The court, in its opinion written by Justice David Prosser, also ordered that money never be taken by the state from the fund again.

"The Legislature created a 'trust' for health care providers and their patients and families, and it pronounced that trust 'irrevocable,'" Prosser wrote. "We take the Legislature at its word."

Chief Justice Shirley Abrahamson and Justice Ann Walsh Bradley dissented, calling the majority opinion "contrived." Just because health care providers receive benefits from the fund does not make them beneficiaries with property rights, Abrahamson wrote.

The Medical Society argued that the transfer threatened the soundness of the Injured Patients and Families Compensation Fund and resulted in an increase in the annual assessments charged to health care providers to make up for the transfer.

Last year fees charged to doctors were raised 9.9 percent.


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