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Federal Judge Temporarily Blocks $200 Million JUA Transfer Needed To Balance State Budget

The Associated Press reported Friday a federal court judge temporarily blocked the transfer of $200 Million from the Professional Liability Joint Underwriting Association until a trial can be held on the issue.

If this transfer is ultimately blocked or held up like it was last year by court action, the state budget will be out of balance by $200 million.

U.S. District Judge Christopher Conner granted a request sought by the Pennsylvania Professional Liability Joint Underwriting Association, suspending the state's December 1 deadline for the transfer until the association's lawsuit can go to trial.

Conner has not scheduled a trial date on the Association's Nov. 14 lawsuit, but said in court papers that he's prepared to expedite a trial.

In its lawsuit, the association characterized the state's attempt to take most of its reserves as an unconstitutional nationalization of a nonprofit organization that would "seriously imperil" its ability to make good on its coverage obligations to policy holders.

The AP said Gov. Wolf's office is considering its options in the case, but would not say specifically whether the administration will appeal Conner's decision.

In his decision Wednesday, Conner poured cold water on claims that the association's reserves belong to the state.

State lawyers argued that the association's governing plan establishes that the money ultimately belongs to the state if it shuts down. But Conner wrote that that argument "misinterprets" the plan's wording that says the association's board will decide how to distribute its assets, subject to the approval of the state insurance commissioner, who is appointed by the governor.

Conner also found that the association would be saddled with irreparable harm, such as an estimated $20 million in transaction fees to liquidate investments to pay the $200 million. The state cannot be held liable for those costs should its demand for the $200 million later be found to be unconstitutional, Conner wrote.

The association, created by the state in 1975 amid a medical malpractice crisis, provides coverage to more than 600 health care providers. The Pennsylvania Medical Society is backing it in the lawsuit.

NewsClips:

AP: Judge Blocks PA’s Demand For $200 Million From Medical Insurer

Judge Temporarily Blocks Transfer Of $200M From JUA Insurance Fund To Balance State Budget

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[Posted: Nov. 24, 2017]


11/27/2017

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