Judge halts Pa. lawmakers’ efforts to raid insurance surplus

Since 2016, Pennsylvania lawmakers have been trying to move $200 million from a medical malpractice insurer into the general fund.

But this week, a federal judge blocked their third try at doing so.

Although the state created the insurer in the mid-‘70s, Middle District Judge Christopher Conner said it is functionally a private entity — and doesn’t have to give up the money.

Conner initially ruled in May that the state can’t take the Joint Underwriting Association’s cash without violating the Constitution’s illegal takings clause.

In that case, lawmakers had merely tried to transfer the money.

This time around, they moved to fold the JUA fully into the Insurance Department, and then switch the cash to the state’s general fund.

Conner’s latest opinion is just a preliminary injunction. But he hearkened back to his first decision, reiterating his belief the JUA is private and saying that has enough merit to warrant intervention.

Drew Crompton, a lawyer for Senate Republicans, maintained the association can’t be treated like any other private insurer.

“The next logical question is, if the General Assembly can create something, what powers does it have to abolish that entity or revise that entity?” he said. “It’s not a private entity of the usual sorts. It’s a private entity that was specifically spelled out and organized via state law.”

Conner noted in his new opinion that the Legislature’s claim it  can make certain private funds public is “offered with no jurisprudential support.”

The state is still appealing Conner’s first ruling. Crompton said he thinks lawmakers have a better chance in the new case.

In passing the law, the state argued the JUA’s clients are dwindling, and its stated purpose — providing malpractice insurance to hard-to-insure doctors and medical practitioners — is no longer as necessary as it once was.

A spokesman for Gov. Tom Wolf said the administration is considering its next steps.

In their budget projections, lawmakers assumed they would get $200 million from JUA surpluses. That cash will have to come from somewhere else if the state can’t legally find a way to dissolve the association.