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Pennsylvania Court Sides With Hospitals and Doctors on Malpractice Fund

Copyright 2013 Associated Press:

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 accrued balances in the MCare fund when calculating the annual assessments. The state contends that those balances — which totaled $104 million in 2008 — 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.

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

The department declined to comment on the ruling.

Calls to the petitioners — including the Hospital & Healthsystem Association of Pennsylvania and the Pennsylvania Medical Society — were not returned.