Commonwealth Court: Pennsylvania overcharged doctors
A Commonwealth Court ruling raises the likelihood that hospitals, doctors and other medical providers next year will receive more than $100 million in refunds or credits from a state-run medical malpractice liability fund.
Though consumers won't benefit directly, it's good news for them long term, said Stephen Foreman, an associate professor of health care administration at Robert Morris University.
Private and government insurers constrain how much doctors and hospitals may charge for services, but anything that makes their operations more expensive eventually drives up consumer costs or drives medical providers out of the state, Foreman said.
“An excess tax on physicians in this state always hurts consumers,” he said.
In the case of the Mcare fund, the state has overcharged medical providers since 2004 by insisting that money remaining at year-end cannot be used to reduce the next year's assessments, said Martin Ciccocioppo, vice president of research for the Hospital & Healthsystem Association of Pennsylvania.
The annual assessments increased while the amount paid annually in claims decreased until 2010, he said.
“That's how we ended up with a surplus,” he said.
The hospital group, the Pennsylvania Medical Society and the Pennsylvania Podiatric Medical Association sued the state over the Mcare payment calculations.
Insurance Department spokeswoman Melissa Fox said the agency hasn't decided whether to appeal the ruling and declined further comment.
Established in 2002 to keep down the cost of medical malpractice insurance, the Mcare fund isn't an insurance program that builds up a reserve that's invested to cover future claims. It's a pay-as-you-go program that covers claims on a year-by-year basis.
Medical providers obtain their first $500,000 of coverage from private insurers, and the state fund provides the next $500,000 of coverage.
The program is supposed to phase out if the insurance commissioner determines the private market can provide the entire $1 million coverage at affordable prices.
In a 5-2 ruling late Friday, the court said the clear language of the law creating the fund doesn't allow the state to build up a surplus. The state argued that building up a surplus — $129 million as of Dec. 31 — provided stability by creating a reserve to cover sudden increases in claims.
Judge Mary Hannah Leavitt said the General Assembly created the program as a short-term measure to keep malpractice insurance affordable.
“Stable, unchanging assessments hold no logic for a statutory fund scheduled for ever reducing liabilities,” she said in the majority opinion. “In this context, ‘stability' is just another word for ‘excessive.' ”
Ciccocioppo said if the state decides not to appeal the ruling, or the state Supreme Court were to uphold the ruling, it's unclear how the state would return the surplus. One possible option is a one-time reduction, by about half, in what hospitals and doctors pay into the fund.
Denise Zimmerman, executive vice president of the medical society, said the ruling has a significant effect on physicians in specialties such as obstetrics and gynecology who could easily pay six figures in malpractice insurance each year.
“We're talking thousands of dollars, even for a family physician,” she said.
Michael Davis, executive director of the podiatrist association, said providers have to pay into the fund to keep their licenses, so the ruling is a welcome relief.
“We will have an accurate assessment, as opposed to an arbitrary assessment,” he said.
Keeping the fund from building a surplus would keep it from “becoming a target for the Legislature,” Davis said.
In 2009, the Legislature took $100 million from Mcare to balance the state budget. Commonwealth Court ruled in a separate case that the transfer was illegal, but the state has an appeal pending with the Supreme Court.
Brian Bowling is a Trib Total Media staff writer. Reach him at 412-325-4301 or email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Gulls fleeing frozen Great Lakes fill skies over Pittsburgh’s Point
- CMU software eases task of mining prostitution ads
- Overnight snow delaying schools in Western Pa.
- New CEO eager to revitalize Pittsburgh International Airport
- Beaver County man arrested in 24-year-old Clinton County cold case
- Pa. Turnpike claims software fraud, wants $45M
- Pittsburgh mayor denies ethics investigation into his ‘Undercover Boss’ performance
- Week before sentencing, Ferrante seeks acquittal or new trial
- Penn Hills water main break creates car-swallowing sinkhole
- Uber gains PUC approval to operate in most of Pa. for 2 years
- 2nd lawsuit filed against Gov. Wolf seeking reinstatement of open records director