Lead Opinion
OPINION
In this direct appeal, we determine the constitutionality of legislation mandating a one-time transfer of money from the Medical Care Availability and Reduction of Error Fund to Pennsylvania’s General Fund.
In 2002, the General Assembly enacted the Medical Care Availability and Reduction of Error Act (the “MCARE Act”),
Under the MCARE Act, Pennsylvania physicians, hospitals, and certain other health care providers, as a condition of practicing in Pennsylvania, are required to purchase medical professional liability insurance (or provide self-insurance) in the amount of $500,000 per occurrence or claim, and to participate in the MCARE Fund. See 40 P.S. § 1303.711(a), (d)(2), (e). The MCARE Fund provides a secondary layer of liability coverage to providers by paying, subject to the fund’s liability limits, damages awarded in medical malpractice actions in excess of the required minimum level of professional liability coverage. See id. § 1303.711(g). Presently, the fund’s liability limit is $500,000 per occurrence. See id. § 1303.712(c). The MCARE Fund is funded by annual assessments levied upon health care providers based on a statutory formula, and loans secured, when needed, from other state funds, such as the Catastrophic Loss Benefits Continuation Fund. See id. §§ 1303.712(d), 1303.713(c).
Although the MCARE Fund is similar to a supplemental insurance carrier, there are differences, the main one for present purposes being that there is no risk transfer in exchange for premiums. Rather, the statutory formula for assessments levied against health care providers is designed to: (i) reimburse the fund for the payment of reported claims that became final during the preceding year; (ii) pay expenses of the fund incurred during the preceding year; (iii) pay principal and interest on monies that the fund borrowed; and (iv) create a reserve that is ten percent of the sum of (i)-(iii) above. See 40 P.S. § 1303.712(d). At any time there may be unfunded liability arising from unreported or unresolved claims. If and when the Insurance Commissioner determines that the private insurance market has the capacity to satisfy professional liability requirements, the MCARE Fund will cease providing coverage for new liability. See id. §§ 1303.712(c)(2), 1303.711(d)(4). The fund will not immediately terminate, however, as it will still be responsible for excess coverage on unreported or unresolved claims stemming from events that occurred during coverage years. Because assessments are based on the claims paid in the prior year, the MCARE Fund will continue to collect assessments until all claims for which it is responsible have been satisfied. The fund’s actuaries have projected that it may continue to pay claims — and thus, collect assessments — for forty years after the fund ceases to provide coverage. At that time, monies remaining in the fund are to be distributed to health care providers in proportion to their assessments during the preceding year. See id. § 1303.712(k).
On October 13, 2009, Appellees filed petitions for review in the nature of complaints for declaratory judgment and in-junctive relief in the Commonwealth Court’s original jurisdiction.
Concerned that the Commonwealth might effectuate the transfer and dissipate the funds, Appellees filed an application for preliminary injunctive relief in the nature of a temporary restraining order. They alleged that the only way to preserve the status quo pending the outcome of the litigation would be to retain the monies in the MCARE Fund, since there was no guarantee that the Commonwealth could reconstitute the funds from any other source. The Commonwealth responded that a preliminary injunction was unwarranted because, inter alia, it was not needed to prevent immediate and irreparable harm. See generally Warehime v. Warehime,
The petitions were eventually consolidated, whereupon Appellees filed an application for summary relief. See Pa.R.A.P. 1532(b). On April 15, 2010, the Commonwealth Court granted Appellees’ request in a published opinion, holding that the transfer of monies from the MCARE Fund to the General Fund was unlawful in that it impaired Appellees’ vested rights. See Hosp. & Healthsystem Ass’n of Pa. v. Commonwealth,
First, the court disagreed with the Commonwealth’s assertion that Appellees were not entitled to summary relief because there were material facts in dispute and discovery remained outstanding, reasoning that the issue before the court regarding the lawfulness of the $100 million transfer was a question of law that needed no additional factual development. See id. at 396-97 & n. 9. Next, the court rejected the Commonwealth’s contention that Appellees did not have standing to bring their respective actions. Finding that the transfer of $100 million from the MCARE Fund diverted those monies from their intended purpose of providing insurance coverage to participating health care providers and prevented them from ultimately being refunded to those providers upon the MCARE Fund’s termination, the court concluded that Appellees were aggrieved and had standing to bring the present legal challenge. See id. at 397-98.
With respect to Appellees’ argument that they have vested rights in the monies in the MCARE Fund, the majority acknowledged that the General Assembly is free to repeal and amend legislation, but observed that Section 1976 of the Statutory Construction Act, as well as the Remedies Clause of the Pennsylvania Constitution, protect vested rights and accrued causes of action from impairment by subsequent legislation. See Pa. Const, art. I, § 11 (“[Ejvery man for an injury done him ... shall have remedy by due course of law[.]”); 1 Pa.C.S. § 1976(a) (“The repeal of any civil provisions of a statute shall not affect or impair any ... right existing or accrued....”). The court indicated, first, that “the depletion of the MCARE Fund leaves participating providers with a deficit they must make up in the event that claims must be paid thereafter.” HAP I,
As to Appellees’ alternative argument, the court concluded that the transfer did not implicate uniformity concerns. See Pa. Const, art. VIII, § 1 (“All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.”). The court reasoned that, because the assessments paid into the MCARE Fund are intended to reduce the high costs of medical liability insurance, are placed in a special fund within the state treasury, and do not raise revenue or generate interest income for the Commonwealth, the assessments are akin to license fees, rather than taxes that must conform to uniformity requirements. See HAP I,
Judge (now President Judge) Pellegrini dissented, incorporating the dissent he filed in PAMS I. In that matter, he had concluded that: Appellees did not have vested rights to the monies at issue; there were disputed facts in need of resolution that precluded the grant of summary relief; the members of PAMS and HAP lacked standing; the Commonwealth was unable to comply with the majority’s order and transfer funds from the General Fund to any other account without first obtaining express authorization from the General Assembly; the General Assembly was an indispensable party, and as such, its absence deprived the court of jurisdiction; and the entire matter was nonjusticiable under the political question doctrine. See id. at 403 (Pellegrini, J., dissenting) (citing PAMS I,
The Commonwealth appealed to this Court, raising threshold issues pertaining to justiciability and standing, arguing that Appellees had no vested interest in the money that was transferred to the General Fund, and contending that summary relief was premature because contested factual issues remained, requiring further discovery. ’
II. Justiciability
A. Political Question
One threshold question forwarded by the Commonwealth pertains to whether this case is non justiciable under the political-question doctrine, a principle that derives from the separation of powers among the three coordinate branches of government. See Pa. Sch. Bds. Ass’n v. Commonwealth Ass’n of Sch. Adm’rs,
Appellees respond that, although this case may have financial implications for the Commonwealth, that is true of many judicial decisions involving the Commonwealth. They reason that courts should not shrink from their duty to protect citizens’ constitutional rights, whether or not the dispute arises in a political context. Appellees also proffer that the Commonwealth waived this issue by failing to raise it before the Commonwealth Court.
“Ordinarily, the exercise of the judiciary’s power to review the constitutionality of legislative action does not offend the principle of separation of powers.” Sweeney v. Tucker,
In Sweeney, this Court highlighted a difference between controversies where the judiciary determines whether another branch did or did not act within the power conferred on it by the Constitution, and matters involving non justiciable political questions. Drawing on scholarship, Sweeney indicated that eases falling into the latter category occur where the determi
To illustrate, Sweeney referenced Powell, which involved whether the House of Representatives could refuse to seat a duly-elected member. The challenge was deemed justiciable because the Constitution sets forth express qualifications for membership, and Congress is not at liberty to add new qualifications. See Powell,
Finally, the need for courts to fulfill their role of enforcing constitutional limitations is particularly acute where the interests or entitlements of individual citizens are at stake. See Sweeney,
A determination that an issue is a non-justiciable political question is essentially a matter of judicial abstention or restraint. As our Supreme Court has said: “To preserve the delicate balance critical to a proper functioning of a tripartitesystem of government, this Court has exercised restraint to avoid an intrusion upon the prerogatives of a sister branch of government....”
Here, Petitioners allege various constitutional violations. In such cases, we will not abdicate our responsibility to “insure that government functions within the bounds of constitutional prescription ... under the guise of deference to a co-equal branch of government.... [I]t would be a serious dereliction on our part to deliberately ignore a clear constitutional violation.”
Jubelirer v. Singel,
As in Jubelirer, Appellees here allege constitutional violations, namely, that Act 50 violates their constitutionally-guaranteed rights to due process and uniformity of taxation. This is significant because, regardless of the extent to which the political branches are responsible for budgetary matters, they are not permitted to enact budget-related legislation that violates the constitutional rights of Pennsylvania citizens. Applying the guidelines set forth in Baker, moreover, we find that determining whether Act 50’s transfer of $100 million from the MCARE Fund to the General Fund violated the Constitution is not a matter that has been textually committed to a coordinate branch of government, nor is there an unusual need for unquestioning adherence to the legislative decision already made, particularly as the Commonwealth has represented that it can comply with an order granting relief. Furthermore, this case does not present any of the other characteristics of a non justiciable political question mentioned in Baker. For example, there is no “potentiality of embarrassment from multifarious pronouncements by various departments on one question.” See supra note 10. Notably, in this respect, the political question doctrine does not exist to remove a question of law from the Judiciary’s purview merely because another branch has stated its own opinion of the salient legal issue. See Council 13, AFSCME, AFL-CIO ex rel. Fillman v. Rendell,
The Commonwealth also contends that Appellees lack standing to challenge the $100 million transfer. Primarily, it alleges that Appellees lack a direct and immediate interest in the resolution of the legal question presented. Its argument has two parts. First, it argues that any prospective distribution of the remaining balance in the MCARE Fund to health care providers upon the fund’s termination is remote and speculative. Second, it asserts that the statutory formula for the computation of yearly assessments does not depend, directly or indirectly, on the fund’s balance at the end of the preceding year. Hence, the argument goes, Appellees’ future assessments would not be reduced even if their legal argument prevails and $100 million is transferred back into the MCARE Fund. See Brief for Commonwealth at 44^16.
“The requirement of standing under Pennsylvania law is prudential in nature, and stems from the principle that judicial intervention is appropriate only where the underlying controversy is real and concrete, rather than abstract.” City of Phila. v. Commonwealth,
Appellees averred in their petitions that the $100 million transfer diverted monies that they paid into the MCARE Fund under compulsion of law and, as such, (a) violated their right, protected by the Due Process Clause, to have the funds used to satisfy judgments against them pursuant to the MCARE Act, and (b) constituted an impermissible, non-uniform tax upon health care providers. They also claimed that the re-infusion of $100 million back into the MCARE Fund would reduce their assessments under the statutory formula (an issue on which litigation is pending, as discussed below), and would additionally act as a buffer to protect them against spikes in assessments due to unfunded liabilities.
We conclude that Appellees’ claims satisfy all three prongs of the standing test as enumerated above. Prior to the enactment of Act 50, the money in the MCARE Fund was legally dedicated for MCARE purposes only, i.e., to satisfy judgments against Appellees. Appellees’ interest in ' having that money used for such purposes clearly surpasses the common interest of all citizens in seeing that laws are obeyed. Also, the transfer of funds is the direct and immediate cause of the alleged infringement of Appellees’ vested entitlements, as well as the alleged non-uniform taxation.
III. Merits
A. Vested Interests
We now turn to the merits of Appellees’ claim that, at the time Act 50 was passed, they had a constitutionally-protected vested interest in having existing MCARE monies used for MCARE purposes, such that the interest could not be infringed by the legislation under review. Appellees’ present advocacy intermixes concepts of vested rights under the Due Process Clause and causes of action under the Remedies Clause. See Brief for Appellees at 29-41. Although they place much of their emphasis on the Remedies Clause, see Pa. Const. art. I, § 11 (“All courts shall be open; and every man for an injury done him in his lands, goods, person or reputation shall have remedy by due course of law[.]”), we consider the due process aspect of Appel-lees’ argument sufficiently developed to preserve that claim as such. See, e.g., Brief for Appellees at 29-30 (arguing that due process prohibits interference with vested rights, and quoting cases reflecting this prohibition).
The Commonwealth argues that Appel-lees did not have a vested right in the MCARE monies because the MCARE
The Commonwealth additionally maintains that nothing in the MCARE Act created vested rights as to the use of MCARE monies. It acknowledges that Section 712(a) of the MCARE Act states that Fund monies “shall be used to pay claims against” health care professionals. The Commonwealth reasons, however, that statutory pledges are unenforceable as against subsequent General Assemblies, and that, in any event, the money has never been promised to providers themselves, but to the victims of their alleged malpractice. As well, the Commonwealth develops that, in the pre-budget-crisis timeframe, the fund received well over $100 million derived from cigarette taxes and motor vehicle violation surcharges, which was used to fund abatements to provider assessments under the state’s Health Care Provider Retention Program (addressed more fully in PAMS II). Thus, in the Commonwealth’s view, it was entitled to reallocate at least $100 million on that basis alone. The Commonwealth contends further that the MCARE Fund has always met its statutory obligations, and there is no reason to believe that any future claim will remain unpaid as a result of the transfer of $100 million. Overall, the Commonwealth argues that, to hold that the already-paid-in money could not be diverted to another governmental use would restrain legislative bodies from reacting to changing priorities and circumstances.
Alternatively, the Commonwealth asserts that, even assuming Appellees had a vested interest in the money transferred out of the MCARE Fund, Act 50 did not impair that interest, for two reasons. First, the Commonwealth avers that the funding formula for calculating assessments is independent of the balance in the fund and, as such, it is independent of the amount diverted from the fund. Second, the Commonwealth maintains that, because the MCARE Fund has covered all claims for which it has been liable, Appel-lees have received the benefits to which they were entitled under the MCARE Act. Rather than suffering an impairment of a vested right, according to the Commonwealth, Appellees have received — and will continue to receive — fair exchange for their assessments.
Appellees respond that their interest in the transferred money was indeed vested because Section 712 establishes a quid pro quo whereby health care providers are required to pay assessments to be licensed to practice in Pennsylvania, while the money in the fund is to be used to satisfy judgments against them. In this respect, Appellees note that the language of Section 712(a) is mandatory, providing that
Further, Appellees suggest that Act 50 impaired their vested rights because every dollar taken from the MCARE Fund is necessarily a dollar that providers will have to pay into the fund in the future to cover claims. Thus, because the MCARE Fund pays liabilities by levying annual assessments according to the statutory funding formula, and future liabilities are unfunded, Appellees reason that they will be subject to higher annual assessments to pay for present and future claims as a result of Act 50. In this respect, they also argue that, in the event the MCARE Fund has insufficient funds to pay claims and expenses, it will have to borrow money, a cost providers will have to bear via the following year’s assessments. Accordingly, Appellees state that it is immaterial whether they have received all to which they are entitled, as the Commonwealth highlights. Rather, Appellees aver that, regardless of the MCARE Fund’s history of claims payments leading up to Act 50, providers remain obligated to pay assessments sufficient to cover claims that will become payable in the future, and that the subtraction of a substantial amount of money from the fund to balance the 2009-10 budget cannot help but increase their future payments.
“An application for summary relief may be granted if a party’s right to judgment is clear and no material issues of fact are in dispute.” Jubelirer v. Rendell,
Applying these principles to the present case, it is important to note, preliminarily, that the challenged provision of the Fiscal Code is not directed to any funding to be obtained after the date of its enactment. Rather, it mandates that $100 million that had already been paid into the MCARE Fund be transferred to the General Fund. See 72 P.S. § 1717.1-K(1). At the time those monies were paid in, the governing statute provided that they “shall be used to pay claims against participating
The MCARE Act is unusual in that it amounts to something very similar to a government-run supplemental insurance program. It was enacted to abate a malpractice insurance exigency serious enough to require legislative intervention. As such, MCARE comprises social legislation specifically designed (among other things) to ensure that Pennsylvania citizens have access to the care they need by incentivizing health care professionals to stay in Pennsylvania, or move to Pennsylvania, and fulfill those needs. See, e.g., 40 P.S. §§ 1303.102 (“It is the purpose of th[e MCARE] act to ensure that medical care is available in this Commonwealth through a comprehensive and high-quality health care system.”); 1303.502 (“Ensuring the future availability of and access to quality health care is a fundamental responsibility that the General Assembly must fulfill as a promise to our children, our parents and our grandparents.”); 1303.514. To this end, MCARE conditions a medical provider’s ability to practice in Pennsylvania on participation in the MCARE Fund, which entails the payment of substantial monetary assessments within a statutory scheme that mandates that all such assessments be used to satisfy claims against the providers. See 40 P.S. § 1303.712(a). This latter condition is the linchpin to having the system work as intended. The assessment program was never intended as a general mechanism to raise tax revenue and, furthermore, there is a rational relationship between the monies paid in and their mandated use under Section - 712(a) so as to prevent the condition-of-doing-business aspect of MCARE from having extortive overtones.
Within that context, the 2009 budget law redirected the MCARE Fund’s monies to close a general budgetary gap— a measure having nothing to do with the MCARE statute or its purposes. We mention this not as a criticism of the Legislature’s judgment, since this Court is not tasked with evaluating the wisdom of that body’s policy choices. Rather, the point is that the Legislature encouraged providers to rely on a scheme that it designed, participation in which was mandatory, and under which assessments extracted from medical providers were required to be used in a manner rationally related to the carrying on of their practices. Accordingly, the providers were led to believe that they could depend upon the program as established in making major practice-related decisions.
This state of affairs elevated MCARE Fund monies above the status of standard budgeting allocations that all af
On the other hand, courts have recognized that legislative bodies retain authority to control the fate of special funds in order to serve the changing needs of the government. See Washington, D.C. Ass’n of Realtors, Inc. v. District of Columbia,
Notably, the question was in dispute during the proceedings in the Commonwealth Court. As the Commonwealth correctly observes, the court’s summary disposition rested, at least in part, on its assumptions that “the depletion of the MCARE Fund leaves participating providers with a deficit they must make up in the event that claims must be paid thereafter,” HAP I,
This factual circumstance also serves to highlight a more general legal issue that was never addressed by the Commonwealth Court, namely, how to determine whether a surplus exists within the framework of the MCARE Fund. At least two features of the fund appear relevant to such an inquiry. First, the annual assessment formula does not expressly take into account the size of the reserves already
In sum, then, we hold that the October 2009 amendment to the Fiscal Code transferring $100 million from the MCARE Fund to the General Fund implicated the providers’ due process rights, but that the question of whether the legislation was finally unconstitutional requires further factual development. Accordingly, we will reverse the Commonwealth Court’s order granting summary relief and remand for further proceedings.
B. Tax Uniformity
Finally, Appellees seek to preserve the judgment in their favor by renewing an argument they made to the Commonwealth Court, namely, that the $100 million diversion to the General Fund amounts to a discriminatory tax in violation of the Uniformity Clause of the Pennsylvania Constitution. See Pa. Const, art. VIII, § 1 (requiring that taxes be (a) uniform on the same class of subjects, and (b) collected under general laws). Appellees submit that the Commonwealth Court improperly disposed of this issue by viewing it as a challenge to the initial collection of the assessments, which the court described as license fees, see HAP I,
In matters of taxation, this Court has historically analyzed the limitations imposed by the state Uniformity Clause and the federal Equal Protection Clause as being “largely coterminous.” Clifton v. Allegheny Cnty.,
Because Act 50 directed the transfer of $100 million from the MCARE Fund to the General Fund in an effort to balance the state budget, Appellees make a colorable argument that that money was, in effect, converted into tax revenue. Nevertheless, even if we assume, without deciding, that the $100 million diversion amounted, in practical effect, to a tax on health care providers, it does not follow that the Uniformity Clause has been offended. This is because, as noted, taxing classifications are constitutionally permissible if they are reasonable. In light of our disposition of Appellees’ due process claim, there remains an outstanding question of whether the $100 million constituted a surplus. If it did, then that in itself will supply an adequate basis for the legislative treatment of such money differently from the fees paid by other Pennsylvania citizens, particularly in light of the contribution from sources other than provider assessments. Therefore, at the present juncture, Appellees’ uniformity theory cannot supply an independent justification for af-firmance.
IV. Conclusion
Accordingly, the Commonwealth Court’s order granting summary relief to Appel-lees is reversed and the matter is remanded for further proceedings.
Former Justice ORIE MELVIN did not participate in the decision of this case.
Chief Justice CASTILLE and Justices EAKIN and McCAFFERY join the opinion.
Justice BAER files a dissenting opinion.
Justice TODD files a dissenting opinion.
Notes
. This case was reassigned to this author.
. Act of Mar. 20, 2002, P.L. 154, No. 13 (as amended 40 P.S. §§ 1303.101-1303.1115).
. At the time MCARE became law, the MCARE Fund was also funded by surcharges on motor vehicle violations. See 75 Pa.C.S. § 6506(b) (repealed). That provision was repealed by the Act of June 30, 2011, P.L. 159, No. 26, § 13. Vehicle surcharges are now deposited in the Commonwealth’s General Fund. See id. § 9; 72 P.S. § 1798-E.
. Act of Apr. 9, 1929, P.L. 343, No. 176.
. Pennsylvania is required to have a balanced budget. See Pa. Const, art. VIII, §§ 12, 13; Jubelirer v. Rendell,
. Two petitions were filed, one by the Pennsylvania Medical Society ("PAMS”) on behalf of itself and its members, and the other by Hospital & Healthsystem Association of Pennsylvania ("HAP”) on behalf of itself and its members, Geisinger Health System, St. Vincent Health Center and Abington Memorial Hospital. The petitions were consolidated on November 9, 2009.
.The Treasury Department was later dismissed from the actions on the basis of a stipulation entered by the parties.
. Because the accompanying order granted the application for summary relief without further elaboration, see id. at 403, it implicitly subsumed a directive to the Commonwealth to return $100 million to the MCARE Fund. See Application for Summary Relief, at 9, ¶ 44, reproduced in R.R. 226a (reflecting that the prayer for relief includes a request for such a directive).
Separately, on the same day the Commonwealth Court also granted summary relief to PAMS and several physicians in a distinct matter, in which the petitioners challenged a portion of Act 50 that repealed the MCARE Act’s Health Care Provider Retention Program and directed the transfer of $708 million from the Health Care Provider Retention Account ("HCPRA”) to the General Fund. See Pa. Med. Soc’y v. Dep’t of Pub. Welfare,
. The Commonwealth also suggests that it lacks the power to transfer money back into the MCARE Fund and, as such, it cannot comply with any remedy requiring such a monetary transfer. See Brief for Commonwealth, at 49. As Appellees correctly note, however, see Brief for Appellees at 50-51, the Commonwealth is judicially estopped from making this argument because, as explained, it prevailed on an opposite contention when opposing Appellees’ request for a preliminary injunction. See generally New Hampshire v. Maine,
. The often-quoted passage from Baker states:
Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question.
Id.
. Compare, e.g., Mapp v. Lawaetz,
. The Commonwealth states briefly that there are no judicially manageable standards to apply, and that the constitutionality of the challenged legislation can only be decided with an initial, legislative policy determination. "Simply put,’’ the Commonwealth continues, "where is the money to come from and what other programs should be defund-ed?” Brief for Commonwealth at 48. Such questions need not be answered in order to resolve whether the initial transfer of the money violated Appellees’ constitutional rights. As will be seen, moreover, there are judicially manageable standards for making that assessment.
The Commonwealth also asserts that any ruling in favor of Appellees would express a "lack of the respect due coordinate branches of the government.” Id. (quoting, indirectly, Baker,
. In view of our holding, we need not presently decide whether a political-question argument may be waived — an issue on which this Court has not spoken. See generally Commonwealth v. Hughes,
. It also appears that the Hospital & Health-system Association of Pennsylvania and the Pennsylvania Medical Society each has associational standing as a representative of its members. See Warth v. Seldin,
. The state and federal due process provisions, see Pa. Const, art. I, §§ 1, 9; U.S. Const. amend. XIV, are "substantially equivalent” in their protective scope. Krenzelak v. Krenzelak,
.See, e.g., Ieropoli v. AC & S Corp.,
. The Commonwealth also argues that the provision for distribution of proceeds under Section 712(k) decades in the future did not create any vested right harmed by the 2009 legislation. We will discuss this aspect of the MCARE Act below, in addressing whether the transferred funds amounted to surplus monies within the MCARE Fund.
. The summary relief standard under this rule is similar to the summary judgment standard under the Pennsylvania Rules of Civil Procedure. See PAMS II,
. Although, as the Commonwealth points out, some of the monies in the MCARE Fund may have originated from sources other than assessments, the fact remains that all such monies were commingled and, upon entering the MCARE Fund, were dedicated to the fund’s purposes.
The Pennsylvania Senate, as amicus, adds that the. General Assembly must retain the authority to "re-appropriate [funds] as the public’s needs change from year-to-year," and emphasizes that the 2009 budget crisis was severe. Senate's Amicus Brief at 15-16. To clarify, we are not suggesting that Section 712(a) binds subsequent legislatures on how MCARE monies may be used going forward. The question is whether the General Assembly was free to redirect assessment monies already paid into the MCARE Fund at the time the 2009 budget legislation was enacted. If the Constitution precluded it from doing so, the severity of the fiscal crisis is immaterial, as the Senate acknowledges. See id. at 15.
. Accord Bible v. Dep’t of Labor & Indus.,
.In dissent, Mr. Justice Baer relies on Daugherty’s holding to the effect that monies in a trust fund cannot be supplanted if they are necessary to accomplish the fund's objectives. We have no disagreement with that proposition, and reference Daugherty only insofar as its dispositive and persuasive rationale does not preclude the transfer of monies when they are no longer needed or when such a diversion would not "interfere ... with the objects for which [the] fund was created.” Daugherty,
. The declaration was attached as an exhibit to the Commonwealth's Memorandum in Opposition to Petitioners' Application for Summary Relief.
. As we have determined that the MCARE monies were effectively held in trust, the government bears the burden of demonstrating that the diverted funds were in the nature of a surplus. See 500 James Hance Court v. Pa. Prevailing Wage Appeals Bd.,
. The Commonwealth Court recently held that the statutory formula accounts for extant reserves via direct implication of its express language. See Hosp. & Healthsystem Ass’n of Pa. v. Ins. Comm’r,
. Appellees do not argue that the alleged tax is invalid on the basis that it was not levied under a general law. Also, the Commonwealth has not provided any advocacy on this issue.
.In some contexts the Uniformity Clause has been recognized as reflecting more stringent limitations. See, e.g., Downingtown Area Sch. Dist. v. Chester Cnty. Bd. of Assessment Appeals,
Dissenting Opinion
dissenting.
The Pennsylvania Medical Society and Hospital & Healthsystem Association of Pennsylvania (“Appellees”) began this action against the Department of Insurance and the Office of the Budget (collectively, “Commonwealth Parties”) by filing petitions for review under the Medical Care Availability and Reduction of Error Act (“MCARE Act” or the “Act”), 40 P.S. § 1303.101 et seq., seeking a declaration that the transfer of $100 million from the Medical Care Availability and Reduction of
Preliminarily, I note my agreement with Sections I and II of the Majority opinion. My disagreement is solely with Section 111(A), addressing the merits of Appellees’ vested rights argument, and Section IV, remanding on the basis of the Majority’s analysis of this argument. Consequently, I would not reach Appellees’ tax uniformity argument, which the Majority addresses in Section III(B).
As the Majority correctly observes, the MCARE Act created the MCARE Fund as a “special fund” in the Commonwealth’s Treasury, which is administered by the Pennsylvania Department of Insurance and which pays damages awarded in medical professional actions in excess of the primary professional liability insurance MCARE requires that health care providers maintain. , 40 P.S. §§ 1303.713(a), 1303.712(a). To be licensed to practice medicine in Pennsylvania, providers must maintain both private professional liability insurance and contribute to the MCARE Fund via annual assessments. Id. § 1303.712(d). When the Insurance Commissioner determines the private insurance market has the capacity to handle the professional liability requirements of health care providers, the MCARE Fund will, within a specified period from that determination, cease providing coverage and terminate. Id. §§ 1303.711(d)(3)-(4), 1303.712(c)(2). At that time, once all of the Fund’s liabilities are satisfied, any money remaining in the Fund will be distributed to those health care providers who contributed to the Fund in the year preceding the distribution. Id. § 1303.712(k) (“Any balance remaining in the fund upon such termination shall be returned by the department to the participating health care providers who participated in the fund in proportion to their assessments in the preceding calendar year.”).
Appellees’ vested rights argument, which the Majority rejects, is that these provisions of the MCARE Act created a vested right in physicians and hospitals in the MCARE Fund. They argue that Section 712 demonstrates that the creation of the MCARE Fund was the result of a legislative bargain that requires all money in the Fund to be used for MCARE purposes, 40 P.S. § 1303.712(a), requires participating health care providers to pay assessments into the MCARE Fund in order to be licensed, id. § 1303.712(d), and mandates the return of the balance of the Fund to participating health care provid
The legal foundation for Appellees’ vested rights argument is twofold: the Remedies Clause of the Pennsylvania Constitution, see Pa. Const, art. 1, § 11, and the Due Process Clauses of the Federal and Pennsylvania and Constitutions, see U.S. Const, amend. XIV, Pa. Const, art. I, §§ 1, 9. As the Majority notes, these concepts are intertwined. The Majority chooses to address Appellees’ argument in terms of due process rather than the Remedies Clause because we have often considered the Remedies Clause as being directed to protecting accrued causes of action and defenses, and Appellees do not contend that they have a cause of action that has been undermined by legislative action. Although the Majority is correct that we have considered the Remedies Clause as protecting accrued causes of action and defenses, I am persuaded by Appellees’ argument that under these circumstances, a statutory guarantee can similarly be protected as a vested right.
The Remedies Clause guards and protects vested rights. See Pa. Const, art. 1, § 11 (“All courts shall be open; and every man for an injury done him in his lands, goods, person or reputation shall have remedy by due course of law, and right and justice administered without sale, denial or delay.”). Consequently, the law cannot retroactively impinge vested rights. See Konidaris v. Portnoff Law Assoc.,
Based on this concept of vested rights, I agree with the Commonwealth Court and Appellees that the statutory guarantee created by the MCARE Act accrued in Appellees a vested right to have monies in the MCARE Fund used for MCARE purposes. The passage of the MCARE Act reflected a legislative compromise resulting from concern for health care providers and victims of medical malpractice in the Commonwealth. In exchange for health care providers funding the MCARE Fund through their assessments, 40 P.S. § 1303.712(d), Pennsylvania assured access to affordable and reasonable professional liability coverage, see 40 P.S. § 1303.102, and, in furtherance of this objective, the MCARE Fund would be used exclusively to pay covered claims against participating health care providers, 40 P.S. § 1303.712(a); would be augmented by public money, 40 P.S. § 1303.712(m); and
Specifically, under Section 711(d), health care providers are, with certain exceptions, required to maintain minimum medical professional liability coverage and, under Section 712(d), to pay assessments into the MCARE Fund based upon the prevailing primary premium for each participating health care provider. Because providers have paid the required assessments into the MCARE Fund, the Fund has been able not only to pay all covered claims and otherwise meet its obligations, but also accumulated the $100 million surplus. This balance is comprised primarily of assessments from the health care providers in accord with the statutory funding formula in Section 712(d)(1), and accumulated under the legal compulsion that, absent formal participation, health care providers could not practice medicine in Pennsylvania. When the providers made contributions to the Fund via assessments pursuant to Section 712(d), the law afforded them the right to have the monies in the Fund used for specific purposes or returned to them upon termination. The balance in the Fund that was depleted by the 2009 budget legislation was the accumulation of these assessments. Indeed, between 2002 and 2008, health care providers paid nearly $1.5 billion in assessments to the MCARE Fund for its administration and for the medical professional liability coverage this special fund was created to provide.
Additionally, the statutory language of Section 712(a) defining the purpose of the MCARE Fund is phrased in mandatory terms: “Money in the fund shall be used to pay claims against participating health care providers for losses or damages awarded in medical professional liability actions” within the Fund’s coverage, to pay liabilities assumed from its predecessor, and for the administration of the Fund. 40 P.S. § 1303.712(a) (emphasis added). The Fund was created for this sole and exclusive purpose; it was never intended to be a source of general funding for the Commonwealth to deplete or use at will. At the time health care providers paid the assessments that resulted in the Fund’s balance, the law granted them the right to have those assessments used exclusively for the benefit of the Fund, not as the Commonwealth might otherwise provide in the future.
Moreover, any money remaining in the Fund upon termination is the property of certain health care providers. Section 712(k), also part of the MCARE Act since its inception, gave participating health care
The language of the Act, particularly Section 712(a), (d), and (k), guaranteed that, for the life of the Fund, money therein was to be used solely for statutory purposes or returned to contributing providers thereafter without any statutory provision providing for the diversion of assessment funds to the Commonwealth’s General Fund. All of these provisions created in the Commonwealth the obligation to preserve the Fund for MCARE purposes and to use it in accord with the narrow provisions of the Act. Appellees’ right to have the assessment balance in the Fund used for MCARE purposes is vested. It is more than a mere expectation, and rises to the level of an accrued cause of action which cannot be infringed by the 2009 budget legislation. See Konidaris,
The Commonwealth’s power to alter the entitlements that attach to completed transactions is limited by the constitutional protection afforded to vested rights. Ieropoli v. AC & S Corp.,
I would therefore conclude that the participating health care providers’ vested right to the use of MCARE Funds for MCARE purposes and to the balance of the MCARE Fund that accumulated under the law granting those rights may not be extinguished by subsequent legislation, and that by diverting the $100 million from the MCARE Fund pursuant to the 2009 budget legislation, the Commonwealth impinged the health care providers’ right to have money in the Fund used for Fund purposes or returned to them upon termination. The 2009 budget legislation retroactively changed the conditions affecting assessments already paid and presently eliminated the health care providers’ vest
The Majority recognizes that the transfer of monies from the MCARE Fund to the General Fund is retrospective in nature because it attaches new legal consequences to assessments providers paid into the Fund in reliance on the MCARE Act, therefore raising due process concerns regarding the infringement of vested rights, and that providers retained a vested entitlement to have money in the Fund utilized in a manner directed by the Act. Maj. Slip Op. at 22, 24. The Majority holds, however, that whether the contested $100 million represented a surplus in the Fund is a fact that is material to the outcome of Appel-lees’ due proeess/vested rights argument. Maj. Slip Op. at 25 (citing Washington, D.C. Ass’n of Realtors, Inc. v. District of Columbia,
Respectfully, I find no support for the Majority’s holding that the legislature retains authority to transfer any surplus of monies protected by vested entitlements. The Majority cites Washington, D.C. Ass’n of Realtors,
Similarly, in Flynn v. Department of Admin.,
Finally, in Daugherty, the California Supreme Court stated that although the legislature may utilize a surplus that exists in a special fund, if it transfers money from such a fund to the general fund, it is a loan that the legislature is required to repay to the special fund:
What has been said is not to deny power upon the part of the Legislature to transfer a special fund reserve temporarily from one purpose to another under the authority of ... the Political Code or other authority to like effect. But when these diversions are made the transfers are under the section deemed a loan from the special fund to be returned to that fund as soon as funds are available. This right of transfer established by [the Political Code] is specifically declared not to warrant the transfer of any money from any fund so as to interfere in any manner with the objects for which such fund was created.
I am therefore unable to agree with the Majority that it is relevant whether the transferred funds represented a surplus, particularly considering that the distribution of the reserves upon the Fund’s termination in accord with Section 712(k) precludes the possibility of such reserves being characterized as a surplus. I would instead accept Appellees’ vested rights argument and affirm the Commonwealth Court. Therefore, I respectfully dissent.
. In this regard I observe, as the Majority Opinion and the Dissenting Opinion by Madame Justice Todd have done, that the Commonwealth Court has recently decided that the statutory assessment formula, 40 P.S. § 1303.712(d)(1), implicitly accounts for any surplus in the fund, and that any assessment calculation must, therefore, include any unspent balances from the prior year. See Hosp. & Healthsystem Ass'n v. Ins. Comm’r of Pa.,
. Although not binding, I find the reasoning of the following cases supportive of Appellees’ position: Wisconsin Med. Soc’y, Inc. v. Morgan,
Dissenting Opinion
dissenting.
I would hold our decision pending a final order in Hosp. & Healthsystem Ass’n v. Ins. Comm’r of Pa.,
I. The Commonwealth Court’s Decision in Hosp. & Healthsystem.
As the majority alludes to, see Majority Opinion at 606 n. 24, in Hosp. & Healthsystem, the Commonwealth Court recently construed Section 712(d)(1) of the MCARE
The court concluded the assessment calculation must include any unspent balances from the prior year. First, the court observed that the statute used the phrase “produce an amount sufficient to” cover the sum of (i) through (iv), not an amount equal to that sum. Hosp. & Healthsystem,
Most importantly, the MCARE Act says nothing about the accumulation of unspent balances in excess of the 10% reserve. It does not authorize them. Accordingly, it provides no direction on when and how to use them. Likewise, the MCARE Act provides no guidance on the income generated by an accumulation of unspent balances, which can be considerable given the present unspent balance of $104 million. The MCARE Act’s silence on these matters makes perfect sense only if the legislature never intended that such an accumulation would develop.
Hosp. & Healthsystem,
The legislature has addressed the possibility of an unspent balance in only one place in the statute. Section 712(k) of the MCARE Act provides that upon termination of the MCARE Fund, “[a]ny balance remaining in the fund” shall be returned to the healthcare providers who paid “assessments in the preceding calendar year.” 40 P.S. § 1303.712(k) (emphasis added). The very wording of this directive is instructive. It presumes a small, if “any,” balance andsuggests that there should not be an unspent balance in any other year. Were it otherwise, the legislature would have directed the return of accumulated unspent balances to all the providers who, in preceding years, contributed to the accumulated unspent balances lest the providers in the final year enjoy a windfall.
Hosp. & Healthsystem,
In my view, if the Commonwealth Court’s interpretation of Section 712(d)(1) in Hosp. & Healthsystem is correct, an interpretation the Insurance Commissioner is challenging before this Court, the effect is twofold: First, any monies withdrawn from the Fund — for example, the $100 million transfer out of the Fund accomplished by Act 50 — are unavailable to offset the imposed aggregate assessment for the following year, thus resulting in proportionately higher assessments for the healthcare providers in that assessment year. Second, as a corollary, there will be no year-to-year surplus in the fund, as any excess created in a given year (generated when the 10% reserve required by Section 712(d)(l)(iv) is not needed to cover claims) will be returned to healthcare providers by way of lower assessments in the next year.
The Commonwealth Court’s determination, which is directly contrary to the Commonwealth’s contention herein, see, e.g., Commonwealth’s Brief at 36-37 (“the assessment level is entirely independent of the balance in the MCARE Fund”), has ripple effects throughout the present appeal, both on my resolution of the question of Appellees’ standing, as well as the merits.
II. Standing
In Pennsylvania, the requirement of standing stems from the principle that a
Thus, in practical terms, our standing doctrine is founded on the core concept that a party must be “aggrieved,” ie., “adversely affected,” by the matter he seeks to challenge in order to obtain a judicial resolution of his claim. William Penn Parking Garage v. City of Pittsburgh,
Under the test we have devised, a litigant may establish he is aggrieved, and thus, has standing, by stating facts that show he has a “substantial, direct, and immediate” interest in the outcome of the litigation. Id. A party’s interest is “substantial” if “his interest exceeds that of all citizens in procuring obedience to the law.” City of Philadelphia,
While I would agree with the majority that Appellees’ interest is substantial, I cannot agree at this juncture that Appel-lees also have demonstrated a direct and immediate interest. In that regard, the majority accepts Appellees’ assertion that the unavailability of $100 million in the MCARE Fund resulting from the 2009 transfer of fund monies harmed them and establishes their direct and immediate interest. The majority concludes this is so because, inter alia, “the transfer of funds is the direct and immediate cause of the alleged infringement of Appellees’ vested entitlements, as well as the alleged nonuniform taxation.” Majority Opinion at 599. I cannot agree, as, in my view, Ap-pellees must more concretely demonstrate that they are harmed by the $100 million transfer. Cf. Pittsburgh Palisades,
Although my standing analysis is contingent on the Commonwealth Court’s decision in Hosp. & Healthsystem, that decision likewise bears on my analysis of the merits of this appeal.
A. Vested Rights
I am skeptical of the majority’s conclusion that Appellees had a vested right to the monies in the MCARE Fund because the fund “is in the nature of a trust fund whose monies are held for the purpose designated by statute.” Majority Opinion at 604. The legislature expressly established the MCARE Fund as a “special fund” within the State Treasury, indicating that money in the Fund, which comes from assessments and other sources,
Regardless, I cannot join the majority's decision to remand this matter to the Commonwealth Court for a determination of whether a surplus exists in the Fund. As discussed above, in my view, that court has already determined in Hosp. & Healthsys-tem that the assessment mechanism provided in Section 712(d)(1) of the MCARE Act contemplates there will be no surplus from year to year. Instead of a remand, I would hold the present appeal pending a final determination in Hosp. & Healthsys-tem.
B. Uniformity Clause
Like the majority, I would assume for present purposes that “the $100 million diversion amounted, in practical effect, to a tax on health care providers,” Majority Opinion at 607, implicating Appellees’ claim that the transfer was a violation of the Uniformity Clause. However, unlike the majority, I would not remand the issue to the Commonwealth Court for a determination of whether Act 50’s transfer of $100 million was from surplus monies. Again, in my view, that court has already decided that the assessment formula leaves no surplus. Furthermore, if the Commonwealth Court’s analysis in Hosp. & Healthsystem is correct, there would appear to be a direct correlation between the $100 million transferred out of the fund by Act 50 and an increase in the aggregate assessment on Appellees the following year. This would indicate, consistent with Appellees’ argument, that Appellees’ resulting assessment was, in fact, a general revenue tax. Accordingly, rather than remand the question to a court that has, in my view, essentially already decided the matter, I would hold our decision pending a final determination in Hosp. & Healthsystem.
For all these reasons, I respectfully dissent.
. The Insurance Commissioner filed a petition for allowance of appeal in this Court on September 9, 2013. Hosp. & Healthsystem Ass’n v. Ins. Comm’r of Pa., 681 MAL 2013. That petition is pending.
. Notably, the $100 million transfer authorized by Act 50, at issue in the instant case, occurred during this period, in 2009.
. The court provided the following illustration, based on a stipulation of the parties regarding the 2009 assessment. Therein, the MCARE Fund calculated the 2009 aggregate assessment to be approximately $204 million. Hosp. & Healthsystem,
. The court also concluded that any contrary interpretation would be constitutionally infirm because Section 712(d) does not give the MCARE Fund any direction on how to use unspent balances, and, thus, would be an unconstitutional delegation of legislative power. Id. at 1115-16,
. In addition to standing and political question, this case presents an additional threshold issue not addressed by the majority. That issue — whether the General Assembly is an indispensable party — was identified in the Commonwealth Court by Judge Pellegrini in his dissent, and was noted, but not resolved, by the majority herein. See Majority Opinion at 595. Specifically, Judge Pellegrini opined that the General Assembly, not joined in this action, is an indispensable party because the relief Appellees seek requires the passage of budget legislation to transfer $100 million from the General Fund back to the MCARE Fund. See Hosp. & Healthsystem Ass’n of Pennsylvania,
As the issue regarding the General Assembly’s status as an indispensable party implicates the Court’s jurisdiction, in my view, that threshold issue should have been resolved before Appellees’ claim was addressed on the merits. See City of Philadelphia v. Commonwealth,
Further, in declining to address the issue, I question the majority's reliance on the Commonwealth's representation during preliminary injunction proceedings below that it would comply with the Commonwealth Court's ultimate judgment. See Majority
. This analysis follows to a degree this Court’s determination in Pennsylvania Med. Soc. v. Dep't of Pub. Welfare,
. The record establishes that, between 2002 and 2008, the MCARE Fund received $330 million in transfers from the Health Care Provider Account under the Abatement Law (repealed in 2009), which was derived from general tax revenue on the sale of cigarettes, and more than $215 million derived from motor vehicle violation surcharges under Section 712(m) of the MCARE Act. See 40 P.S. § 1303.712(m) (repealed in June 2011).
. In Pennsylvania, the term "special fund” is a technical term and has acquired a particular meaning. See 1 Pa.C.S.A. § 1903 ("[Tjechnical words and phrases and such others as have acquired a peculiar and appropriate meaning ... shall be construed according to such peculiar and appropriate meaning or definition.”). The Governor’s Office Manual of Accounting (the "Manual”), adopted as the official accounting procedures document by the Commonwealth for Commonwealth agencies, which the parties here acknowledge, classifies and defines the various Commonwealth funds that may be established by legislative or administrative action. The Manual states, in pertinent part:
b. Special Revenue Funds. Special revenue funds account for transactions related to resources obtained from specific revenue sources (other than for expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. Special revenue funds account for federal grant programs, taxes levied with statutorily defined distributions, and other resources restricted as to purpose. The Commonwealth has over 50 such funds.
Special revenue funds, as with the General Fund, are subject to budgetary control. Controls derive from legislative mandate, as is the case with the State Lottery Fund and the Motor License Fund, or by direction of the Governor.
The Manual (Exhibit A to Petitioner’s Reply Brief in Support of Application for Summary Relief) at 32. By contrast, under the Manual, "fiduciary fund types,” classified as "Expendable Trust Funds,” "Nonexpendable Trust Funds,” "Pension Trust Funds,” or "Agency Funds,” are "held by the Commonwealth as a trustee or agent for some other entity or for itself.” Id. at 32-33.