Pa. court sides with providers on malpractice fund

HARRISBURG, Pa. (AP) — A state court overruled Pennsylvania’s top insurance regulator in a decision made public Monday, siding with hospital officials and doctors who said a supplemental medical malpractice insurance fund is keeping too much of their money.

Commonwealth Court’s 5-2 ruling directed Insurance Commissioner Michael Consedine to recalculate assessments levied on health care providers through the MCare program for 2009, 2010 and 2011.

The 2002 MCare program — the acronym stands for Medical Care Availability and Reduction of Error — was designed to help providers cope with soaring malpractice insurance rates by providing coverage beyond what the law requires providers to buy on their own.

At issue is whether state officials should have counted the accrued balance in the MCare fund when calculating the annual assessments. The state contends that the balance — more than $125 million at the end of last year — should be excluded from the assessment formula.

Currently, the assessments are set at 110 percent of the fund’s claims and expenses for the previous year, according to court papers.

But the court agreed with the petitioners in concluding that the law clearly intended for such balances to be part of the calculation — presumably resulting in a reduction of provider assessments that have been growing by 18 to 21 percent a year.

Writing for the majority, Judge Mary Hannah Leavitt said the state’s claim that allowing the balances to accrue provides stability for the MCare fund “misses the mark.”

“Stability is not a value expressed in the MCare act, but a reduction in the cost of medical malpractice insurance is an expressed value,” Leavitt said.

If claims and expenses exhaust the fund in a given year, the law authorizes the fund to borrow the money, and the loan payments would be folded into future assessments, she said.

The department declined to comment on the ruling.

Judges Bonnie Brigance Leadbetter and Dan Pellegrini dissented. Leadbetter argued the Legislature would have explicitly required that balances be included in the assessment calculation were that its intention.

An executive of the 17,000-member Pennsylvania Medical Society called the ruling significant because it affirms that MCare is a “pay-as-you-go” program not able to carry surpluses.

The decision “establishes the rules of the game going forward in a way that we think is appropriate,” said Denise Zimmerman, the society’s executive vice president.

The accrued balance in the MCare fund was about $129 million at the end of 2012, said Martin Ciccocioppo, vice president of research for the hospital group.

That excludes $100 million that was transferred from the MCare surplus to the state’s general fund to pay for other programs in 2009. The Commonwealth Court has ruled that the transfer was illegal and an appeal by the state is pending before the Pennsylvania Supreme Court.

It was not immediately clear how the surplus funds would be returned, although one possibility would be to apply the sum against future assessments so it is widely distributed among the current providers, he said.

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