News

July 21, 2010 NHRMA Mutual, MPIC News and Updates

Med Mal Funds and Budget Problems

In response to increasing med mal claims, in 1975 the Wisconsin legislature adopted an “exclusive procedure for a person to pursue a malpractice claim against a health care provider” including a requirement to maintain professional liability insurance or qualification as a self-insurer of this coverage.  In general, as long as the health care provider had insurance of the statutorily required amount and met other requirements of the overall procedure, liability of the provider was limited to the coverage limits.  Any amount paid in excess of those limits was made by a Fund, created in that same legislation and in which participation was mandatory and maintained by annual assessments, adjusted to meet Fund needs, of its participants (failure to participate could have resulted in suspension of the professional license). 

As part of the 2007-2009 Wisconsin state budget, the legislature transferred $200 million from the Fund to the Medical Assistance Trust Fund (MATF) and simultaneously reduced the general revenue fund appropriation of the same to the MATF.  In a 5-2 decision, the Wisconsin Supreme Court held the transfer unconstitutional as a taking of private property without compensation. 

The Court held that the 1975 legislation, in its language, created an irrevocable formal trust for the sole benefit of participating health care providers and proper claimants.  The court further held the beneficiaries had  property rights in the assets and that the duty of the Fund’s Board, as trustee, was to manage the Fund for the “sole benefit” of the named beneficiaries which is the factor missing in most state funds which set aside money for a specific purpose and are “trust funds” in name only.   The Wisconsin Department of Administration was ordered to reimburse the Fund $200 million, plus interest that would have been earned and not to make further raids on the Fund.   Wisconsin Medical Society et al v. Michael L. Morgan (Docket 2009AP728, July 20, 2010)