Judge hears arguments over Wis. medical fund

By SCOTT BAUER |Associated Press Writer

MADISON, Wis. – A Dane County judge is considering the legality of a $200 million fund transfer made to help balance the state budget.

Judge Michael Nowakowski declined to rule following oral arguments Monday, saying the issue was too complex for a quick decision. If he rules against the state, it could create another hole in the state budget.

The Wisconsin Medical Society sued last year after the Legislature approved the transfer. The society argued that taking money out of the fund used to pay medical malpractice claims was an illegal raid that puts patients and doctors at risk.

But Gov. Jim Doyle and state lawmakers who supported the transfer argued the fund had a surplus that could be used for other health care programs. The state argued in briefs filed with the court that the Legislature has the right to decide how to spend money like that contained in the fund.

The transfer is similar to others made over the years to help balance the state budget, state attorneys argued.

But the Medical Society, which represents about 60 percent of the state’s doctors, said the large transfer makes the fund unstable and will result in an increase in charges to doctors and hospitals.

Doctors, hospitals and other health care providers pay premiums into the Patients’ Compensation Fund, created in 1975, which is tapped to pay for medical malpractice claims over $1 million.

The fund ended its most recent fiscal year in the red for the first time since the mid-1990s. As of June 30, it had a deficit of $190 million. It had $735.7 million in assets and $925.6 million in liabilities, which include projected claims.

Even with a 25 percent fee increase each of the next five years, the fund will have a $400 million deficit, according to an actuarial study presented in December to the board overseeing the fund.

The Medical Society pointed to that projection as a reason why the $200 million should be repaid.

The board considered raising fees 25 percent but did nothing because of the pending lawsuit.

The issue being fought in court is similar to what happened in 1987 when the Legislature took money out of the state’s employee trust fund. After a court fight that lasted more than a decade, the state Supreme Court ordered the money repaid.

This lawsuit comes just three months after lawmakers had to fix a $527 million budget hole and a month after the Supreme Court ruled against the state in a tax case. That resulted in an immediate $28 million hit to the budget with a potential impact of up to another $265 million.

Another pending federal court fight revolves around whether the Ho-Chunk tribe will pay the state $100 million in gambling payments the tribe says it doesn’t owe but that the state is counting on to balance the budget.

The condition of the budget will come into clearer view on Nov. 20 when new estimates are released showing how much money the state will be receiving from taxes compared with how much it has to pay in bills and other commitments.

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