On April 15, 2010, the Commonwealth Court made several favorable rulings in response to two separate lawsuits filed by the Pennsylvania Medical Society (PAMED) and the Hospital & Healthsystems Association of Pennsylvania (HAP) against the Rendell Administration. First Court Opinion The first lawsuit was filed to prevent the Governor and the General Assembly from transferring, or otherwise diverting, any money from the Health Care Provider Retention Account (HCPRA) for any purpose other than physician abatements. If you recall, the General Assembly increased the cigarette tax by $.25 a pack in order to help physicians and hospitals with Mcare assessments. Additionally, funds from the motor vehicle surcharge were to be used for assisting physicians and hospitals with their Mcare assessments. Physicians in the highest risk classifications received 100% abatement and all others (including most family physicians) received 50% abatement of their annual Mcare assessment levied on them. From 2004-2007, the Mcare abatement program used $330 million from the HCPRA monies. However, it amassed a “surplus” of approximately $700 million. The term “surplus” is actually very misleading, because in 2005, 2006 and 2007, abatements were still being provided for the 100% abatement physician category, while not one penny was used from the HCPRA. Therefore, the physicians in the 50% abatement category and hospitals were footing the lion’s share of the bill for the “abatements” made in those years. Nonetheless, in October 2009, a budget was enacted that transferred all of the monies from the HCPRA into the General Fund to balance its deficit. Today’s Commonwealth Court ruling appears to reverse the $700 million transfer made by the enactment of last year’s budget. The Commonwealth Court’s action granted summary relief to the PAMED and HAP court petitions on the matter. Second Court Opinion A second opinion was also rendered by the Court in response to another lawsuit filed by PAMED and HAP. This lawsuit asked the Court to grant summary relief and to reject last year’s budget transfer of $100 million “off the top” of the Mcare Fund into the state’s General Fund. Unlike the Health Care Provider Retention Account, there were essentially two sources of monies deposited in the Mcare Fund: from physicians, hospitals and other providers required to participate by law in the Mcare Fund; and from the motor vehicle surcharge. Monies in the Mcare Fund are to be used for Mcare assessments only. However, because some of the monies in the Mcare Fund were considered tax monies transferred from speeding ticket surcharges, the General Assembly and the Rendell Administration apparently reasoned they could transfer $100 million of what was in the Mcare Fund to the General Fund and pass Constitutional muster. The Commonwealth Court appears to have disagreed with those assumptions when it granted summary relief to HAP and the PAMED in its second ruling today. What Does this Mean? What Happens Next? At this very early point, lawyers for both sides are no doubt reviewing the Court opinions and will ultimately make resulting determinations and plans of action. It is also clear that the Court made a pure interpretation of the law without a trial. This is unusual because the court in this case appears to be granting full relief to the PAMED and HAP petitions. The Administration may well appeal the Commonwealth Court ruling to the Supreme Court, likely delaying any immediate action. In fact, the PAFP’s General Counsel, Charles I. Artz, Esq. has advised the PAFP an automatic appeal to the PA Supreme Court is allowed by right. Unlike most cases, where parties have to file briefs just to ask the Supreme Court to review the case, and the Supreme Court only grants about 5% of those requests, the Supreme Court must take this case if the Rendell Administration files the appeal. As a result, an automatic “stay” or stopping the decision from going into effect can be obtained, whereas here the law is determined to be unconstitutional. The budgetary implications these rulings contain for the 2010-2011 budget negotiations are potentially surmountable. These rulings appear to require the Commonwealth to replace the approximately $800 million it took from the HCPRA and Mcare Account respectively. How these actions will be administered, when they will be administered, or if they will be administered, will likely be decided in the subsequent time that transpires from these court opinions today. For its part, the PAFP has publicly supported both PAMED and HAP on each lawsuit initiated. PAFP will analyze these decisions and keep its membership informed as the details begin to formulate on these very important legal matters. For more information go to the Commonwealth Court opinions through the links below: http://www.aopc.org/OpPosting/Cwealth/out/584MD08_4-15-10.pdf http://www.aopc.org/OpPosting/Cwealth/out/522MD09_4-15-10.pdf |