State Case Studies

IV. State Case Studies

Wisconsin

Wisconsin’s PCF, created in 1975, functions as the only mandatory fund that provides its participants with unlimited coverage.[1] Perhaps as a result of this feature, it requires a high level of primary coverage for its participants ($1 million/$3 million). Physicians with similar specialties are grouped together in one of four classes, which are then assessed premiums based on the class’s loss exposure.[2] Premium rates are set annually by the Board of Governors with the approval of the state legislature. The Board bases its decision on an actuary’s assessment of the fund’s expected loss exposure and the overall financial position of the fund, and may or may not follow exactly the actuarial recommendation.[3]

Wisconsin’s fund is frequently cited as a success story, as its loss reserve funding over the years has left it solvent and allowed it to earn significant amounts of investment income.[4] In 2007, the fund reported $94,415,925.00 in excess of its liabilities.[5] Additionally, the state has malpractice insurance rates that are among the lowest and slowest-growing in the nation; for example, rates for Ob-GYNs from 1998 to 2002 rose 282.6 percent in Pennsylvania, 21.7 percent nationwide, and actually fell 1.6 percent in Wisconsin.[6] From 1975 until 2007, the fund has paid on 646 claims and paid out in excess of $666 million.[7]

However, the Wisconsin fund’s high threshold for coverage (awards in excess of $1 million) makes it impossible to project its experience onto Missouri’s current situation: Of 2,596 claims closed with payments in Missouri from 1999 to 2003, only 34 – 1.30 percent – involved awards in excess of $1 million.[8] Thus, a PCF such as Wisconsin’s would be of lesser value in Missouri.

The fund’s success has made it a constant target for political intervention. Wisconsin governor Jim Doyle signed into law the Wisconsin Act 20 on October 26, 2007.[9] The Act included a transfer of $200 million from Wisconsin’ Injured Patients and Families Compensation Fund to the Medicaid Trust Account.[10] The Act called for one-fourth of the fund’s money which many Wisconsin medical providers fear will cause assessments to increase to account for the deficit.[11] This action echoed similar proposals in his 2005 and 2003 budgets that the state legislature refused to pass.[12] In explaining his rationale for the move, Doyle wrote that the fund’s “sizeable balance … far exceeds the potential future expenditures of the fund … Independent analysis of the fund reserves indicated that liabilities have been overestimated and that revenues can be transferred without affecting the financial stability and long-term viability of the fund.”[13] Doyle’s argument suggests that the premiums paid into the fund by providers were not truly necessary and calls into question the ability of the state to accurately set reserve levels. A state senator went even farther in his defense of the move, writing to his constituents in justification of the proposal that “this fund … is not even taxpayer money.”[14] The Wisconsin Medical Society is suing the state of Wisconsin to block Act 20′s consumption of the Fund’s monies.[15]

[1] Wis. Stat. �655.27.

[2] State of Wisconsin Patients Compensation Fund Website, available at http://oci.wi.gov/pcf.htm#geninfo.

[3] Id.

[4] Tanay Albert, A Tale of Two States: Different Approaches to Tort Reform, Amednews.com, May 12, 2003. Available at: http://www.wisconsinmedicalsociety.org/uploads/legis/jfcmemo_pcfarticles.pdf (last visited July 2005).

[5] Wisconsin Commissioner of Insurance, Functional and Progress Report, 12, http://oci.wi.gov/pcf/progrpt2007.pdf.

[6] Tanay, supra note 48.

[7] Wisconsin Commissioner of Insurance, Functional and Progress Report, 4, http://oci.wi.gov/pcf/progrpt2007.pdf.

[8] Missouri Department of Insurance, 2003 Missouri Medical Malpractice Insurance, http://www.insurance.mo.gov/reports/medmal/section_I/section_1_09.pdf.

[9] Wisconsin Commissioner of Insurance, Functional and Progress Report, 8, http://oci.wi.gov/pcf/progrpt2007.pdf

[10] Id.

[11] Terry Rindfleisch, State raiding patient compensation fund upsets doctors, LaCrose Tribune.com , (November 4, 20070, http://lacrossetribune.come/articles/2007/11/04/news/z01.txt (last visited Nov. 10, 2008).

[12] State of Wisconsin Budget in Brief Feb. 2005, available at: http://www.doa.state.wi.us/debf/pdf_files/200507bib.pdf.

[13] Id. at 63.

[14]Joe Leibhan, Capital Connection: The Facts About the State Budget, 23 Feb. 2005, available at: http://www.legis.state.wi.us/senate/sen09/news/2005%20col/col2005-006.htm (last visited July 2005).

[15] Terry Rindfleisch, State raiding patient compensation fund upsets doctors, LaCrose Tribune.com , (November 4, 20070, http://lacrossetribune.come/articles/2007/11/04/news/z01.txt (last visited Nov. 10, 2008).