Hosp. & Healthsystem Ass'n of Pa. v. Commonwealth
| Decision Date | 26 September 2013 |
| Docket Number | No. 21 MAP 2010,No. 20 MAP 2010,J-75A&B-2011,20 MAP 2010,21 MAP 2010 |
| Court | Pennsylvania Supreme Court |
| Parties | THE HOSPITAL & HEALTHSYSTEM ASSOCIATION OF PENNSYLVANIA, GEISINGER HEALTH SYSTEM, ST. VINCENT HEALTH CENTER AND ABINGTON MEMORIAL HOSPITAL v. THE COMMONWEALTH OF PENNSYLVANIA, THE DEPARTMENT OF INSURANCE, THE TREASURY DEPARTMENT, AND THE OFFICE OF THE BUDGET OF THE COMMONWEALTH OF PENNSYLVANIA APPEAL OF: COMMONWEALTH OF PENNSYLVANIA, THE DEPARTMENT OF INSURANCE AND THE OFFICE OF THE BUDGET OF THE COMMONWEALTH OF PENNSYLVANIA THE PENNSYLVANIA MEDICAL SOCIETY, ON BEHALF OF ITSELF AND ALL OF ITS MEMBERS v. THE COMMONWEALTH OF PENNSYLVANIA, THE DEPARTMENT OF INSURANCE, THE TREASURY DEPARTMENT, AND THE OFFICE OF THE BUDGET OF THE COMMONWEALTH OF PENNSYLVANIA APPEAL OF: COMMONWEALTH OF PENNSYLVANIA, THE DEPARTMENT OF INSURANCE AND THE OFFICE OF THE BUDGET OF THE COMMONWEALTH OF PENNSYLVANIA |
[MO: Saylor, J.]
Commonwealth Court at No. 522 MD 2009 dated April 15, 2010
Commonwealth Court at No. 523 MD 2009 dated April 15, 2010
The Pennsylvania Medical Society and Hospital & Healthsystem Association of Pennsylvania ("Appellees") began this action against the Department of Insurance and the Office of the Budget (collectively, "Commonwealth Parties") by filing petitions for review under the Medical Care Availability and Reduction of Error Act ("MCARE Act" or the "Act"), 40 P.S. § 1303.101 et seq., seeking a declaration that the transfer of $100 million from the Medical Care Availability and Reduction of Error Fund ("MCARE Fund" or the "Fund") to the Commonwealth's General Fund impaired Appellees' vested right in having existing MCARE Fund monies used exclusively for MCARE purposes, such that their right could not be infringed by the legislation directing the transfer. Appellees grounded their assertion of vested rights on the Due Process and Remedies Clauses. See U.S. CONST. amend. XIV; PA. CONST. art I, §§ 1, 9; and PA. CONST. art. I, § 11. The Majority appears to credit Appellees' argument that the nature of the MCARE Act created a vested entitlement to have the money in the Fund utilized in the manner directed by statute. The Majority also, however, holds that Appellees' vested rights are immaterial if the money transferred from the Fund represented a surplus, deems the existence of a surplus to be a material fact in dispute, and remands for factual development in this regard. Because I believe that Appellees have demonstrated that they have a constitutionally protected vested right to the monies in the MCARE Fund irrespective of whether there was a surplus, I would conclude that under the RemediesClause, the transfer of monies out of the Fund unconstitutionally impaired that vested right. Accordingly, I dissent from the Majority's remand.
Preliminarily, I note my agreement with Sections I and II of the Majority opinion. My disagreement is solely with Section III(A), addressing the merits of Appellees' vested rights argument, and Section IV, the basis of the Majority's analysis of this argument. Consequently, I would not reach Appellees' tax uniformity argument, which the Majority addresses in Section III(B).
As the Majority correctly observes, the MCARE Act created the MCARE Fund as a "special fund" in the Commonwealth's Treasury, which is administered by the Pennsylvania Department of Insurance and which pays damages awarded in medical professional actions in excess of the primary professional liability insurance MCARE requires that health care providers maintain. 40 P.S. §§ 1303.713(a), 1303.712(a). To be licensed to practice medicine in Pennsylvania, providers must maintain both private professional liability insurance and contribute to the MCARE Fund via annual assessments. Id. § 1303.712(d). When the Insurance Commissioner determines the private insurance market has the capacity to handle the professional liability requirements of health care providers, the MCARE Fund will, within a specified period from that determination, cease providing coverage and terminate. Id. §§ 1303.711(d)(3)-(4), 1303.712(c)(2). At that time, once all of the Fund's liabilities are satisfied, any money remaining in the Fund will be distributed to those health care providers who contributed to the Fund in the year preceding the distribution. Id. § 1303.712(k) ().
Appellees' vested rights argument, which the Majority rejects, is that these provisions of the MCARE Act created a vested right in physicians and hospitals in the MCARE Fund. They argue that Section 712 demonstrates that the creation of the MCARE Fund was the result of a legislative bargain that requires all money in the Fund to be used for MCARE purposes, 40 P.S. § 1303.712(a), requires participating health care providers to pay assessments into the MCARE Fund in order to be licensed, id. § 1303.712(d), and mandates the return of the balance of the Fund to participating health care providers who paid assessments the year prior to termination, id. § 1303.712(k).
The legal foundation for Appellees' vested rights argument is twofold: the Remedies Clause of the Pennsylvania Constitution, see PA. CONST. art. 1, § 11, and the Due Process Clauses of the Federal and Pennsylvania and Constitutions, see U.S. CONST. amend. XIV, PA. CONST. art. I, §§ 1, 9. As the Majority notes, these concepts are intertwined. The Majority chooses to address Appellees' argument in terms of due process rather than the Remedies Clause because we have often considered the Remedies Clause as being directed to protecting accrued causes of action and defenses, and Appellees do not contend that they have a cause of action that has been undermined by legislative action. Although the Majority is correct that we have considered the Remedies Clause as protecting accrued causes of action and defenses, I am persuaded by Appellees' argument that under these circumstances, a statutory guarantee can similarly be protected as a vested right.
The Remedies Clause guards and protects vested rights. See PA. CONST. art. 1, § 11 (). Consequently, the law cannot retroactively impinge vested rights. See Konidaris v. Portnoff Law Assoc., 953 A.2d 1231, 1241 (Pa. 2008); Menges v. Dentler, 33 Pa. 495, 1859 WL 8742, at *4 (Pa. 1859) ( ). See also Krenzelak v. Krenzelak, 469 A.2d 987, 991 (Pa. 1983) (); Gibson v. Commonwealth, 415 A.2d 80 (Pa. 1980) (); Lewis v. Pennsylvania R.R. Co., 69 A. 821 (Pa. 1908) (); Kay v. The Pennsylvania R.R. Co., 65 Pa. 269, 1870 WL 8539 (Pa. 1870) ().
Based on this concept of vested rights, I agree with the Commonwealth Court and Appellees that the statutory guarantee created by the MCARE Act accrued in Appellees a vested right to have monies in the MCARE Fund used for MCARE purposes. The passage of the MCARE Act reflected a legislative compromise resulting from concern for health care providers and victims of medical malpractice in the Commonwealth. In exchange for health care providers funding the MCARE Fund through their assessments, 40 P.S. § 1303.712(d), Pennsylvania assured access to affordable and reasonable professional liability coverage, see 40 P.S. § 1303.102, and, in furtherance of this objective, the MCARE Fund would be used exclusively to pay covered claims against participating health care providers, 40 P.S. § 1303.712(a); would be augmented by public money, 40 P.S. § 1303.712(m); and any excess funds would be returned to the health care providers who paid assessments the preceding year upon the termination of the Fund, 40 P.S. §1303.712(k).
Specifically, under Section 711(d), health care providers are, with certain exceptions, required to maintain minimum medical professional liability coverage and, under Section 712(d), to pay assessments into the MCARE Fund based upon the prevailing primary premium for each participating health care provider. Because providers have paid the required assessments into the MCARE Fund, the Fund has been able not only to pay all covered claims and otherwise meet its obligations, but also accumulated the $100 million surplus. This balance is comprised primarily of assessments from the health care providers in accord with the statutory funding formula in Section 712(d)(1), and accumulated under the legal compulsion that, absent formal participation, health care providers could not practice medicine in Pennsylvania. Whenthe providers made...
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