MADISON -- The Wisconsin Supreme Court ruled Tuesday that the state must repay a medical malpractice fund more than $200 million it took to balance the budget three years ago, potentially throwing the current budget into disarray.
In its 5-2 decision, the court agreed with the Wisconsin Medical Society that taking the money from the fund used to help pay malpractice claims was unconstitutional. It sent the case back to a lower court with directions that it order the state to pay back the money with interest and lost earnings.
The ruling did not say when the money, or exactly how much given interest, would have to be paid back. That was left to the lower court to determine.
The money should be repaid as soon as possible to ensure the fund remains solvent, said Dr. Tim Bartholow, senior vice president of the Wisconsin Medical Society. He called the court's ruling a "big win for Wisconsin citizens" who will know there is adequate money available to pay medical malpractice claims.
About 13,000 health care providers participate in the fund, which was created in 1975 and has been credited with keeping malpractice insurance rates low. It pays for claims that are more than a provider's primary malpractice insurance covers, which is generally $1 million per case.
A state audit in March found that the fund was in poor shape because of the raid, the downturn in the economy and an increase in payments to malpractice victims. The fund was projected to be $109 million short of what is needed to pay all projected liabilities as of June 30.
Department of Administration Secretary Dan Schooff blasted the court's ruling saying it "will not benefit any injured patients, it will not benefit anyone's health - it will only benefit the peace of mind of a few members of the state Medical Society."
Schooff threatened to cut rates paid to doctors and providers in the Medicaid and BadgerCare Plus programs as well as other areas to come up with the money needed to repay the fund. He said his department will work with legislative leaders on a repayment plan.
It may not be up to the current administration to deal with it. A new governor will be elected in November since incumbent Democratic Gov. Jim Doyle decided not to seek a third term.
State Rep. Mark Pocan, current co-chairman of the Legislature's budget-writing committee, said it was too early to know whether the decision would force lawmakers back into session to take action before they are scheduled to return in January.
The state budget is projected to finish the current fiscal year on June 30 with a balance of $45 million, not enough to absorb a $200 million hit.
Lawmakers and Doyle agreed as part of a bipartisan deal in 2007 to the transfer to pay for other medical programs as part of a deal that ended a lengthy budget stalemate. The state never intended to restore the money it took.
Pocan, a Democrat from Madison, said it was "infinitely fair" to pin blame for the raid on Republicans, who controlled the Assembly when the budget in question was approved. However, Democrats also played a key role in the move. Doyle, a Democrat, backed it and it also passed the Democratic-controlled state Senate with no Republican votes.
Pocan himself voted for the budget agreement, which cleared the Assembly on a bipartisan 60-39 vote.
Anyone who voted for the deal, including the 23 Assembly Republicans, are at fault, said state Sen. Ted Kanavas, R-Brookfield.
"Everybody's to blame," he said. "It's just ridiculous."
Senate Majority Leader Russ Decker, D-Weston, did not immediately return a call seeking comment. A Doyle spokesman also did not immediately return a message for comment.
The Medical Society, which represents doctors, argued the transfer amounted to an illegal raid. A Dane County judge dismissed the case in 2008, but the Supreme Court took the case after the Medical Society appealed.
The court, in its opinion written by Justice David Prosser, said health care providers have a protectable property interest in the fund and raiding it amounts to the taking of private property without compensation.
The court also ordered that money never be taken by the state from the fund again.
"The Legislature created a 'trust' for health care providers and their patients and families, and it pronounced that trust 'irrevocable,'" Prosser wrote. "We take the Legislature at its word."
Chief Justice Shirley Abrahamson and Justice Ann Walsh Bradley dissented, saying just because health care providers receive benefits from the fund does not make them beneficiaries with property rights.
The Medical Society argued that the transfer threatened the soundness of the Injured Patients and Families Compensation Fund and resulted in an increase in the annual assessments charged to health care providers to make up for the transfer.
Last year fees charged to doctors were raised 9.9 percent.
Medical Society spokesman Mark Grapentine said it was too early to know whether the ruling will mean lower rates for doctors, but at the very least it means they won't go up as much.