The opinion of the court was delivered by: Judge Butler
Argued: February 10, 2010
BEFORE: HONORABLE DAN PELLEGRINI, Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE JOHNNY J. BUTLER, Judge.
The Pennsylvania Medical Society, on behalf of itself and all of its members; and Peter M. Daloni, M.D., Karen A. Rizzo, M.D. and Martin D. Trichtinger, M.D.; and the Hospital & Healthsystem Association of Pennsylvania, Geisinger Health System, St. Vincent Health Center and Abington Memorial Hospital (Petitioners) filed an application for summary relief based on the Court's July 24, 2009 en banc opinion disposing of preliminary objections filed by the Department of Public Welfare (DPW) and the Office of the Budget of the Commonwealth of Pennsylvania (collectively, the Commonwealth). For the reasons that follow, we grant Petitioners' application for summary relief.
Under Section 711(d) of the Medical Care Availability and Reduction of Error (MCARE) Act,*fn1 health care providers are, with certain exceptions, required to maintain minimum medical professional liability coverage. In addition, Section 712 of the MCARE Act*fn2 establishes a medical professional liability fund commonly known as the MCARE Fund. The MCARE Fund is used to pay claims against providers for losses or damages awarded in medical professional liability actions in excess of their basic insurance coverage. The MCARE Fund is funded by an "assessment" on each participating health care provider. The amount of the assessment is determined by the provider's prior claim history and private medical malpractice insurance premiums. Accordingly, Pennsylvania health care providers are required to maintain private professional liability insurance and to contribute to the MCARE Fund.
In 2003, the General Assembly enacted the Health Care Provider Retention (HCPR) Program*fn3 (Abatement Law) to alleviate the threat that many physicians would leave Pennsylvania if the exorbitant cost of professional liability insurance was not addressed. The Abatement Law served to provide abatements to physicians and other participating MCARE providers (excluding hospitals), thereby reducing their annual MCARE assessments. The Abatement Law provided eligible physicians in high risk practices 100% abatement of their annual assessment, and other eligible health care providers 50% of their annual MCARE assessment. When originally enacted, the Abatement Law was limited to the 2003-2004 MCARE assessments. Subsequent legislation, however, extended the abatement program to the 2005, 2006, and 2007 MCARE assessments.*fn4
In order to fund the abatement program and reduce providers' MCARE Fund assessments, the General Assembly established a special account known as the HCPR Account, from which the abatements were to be paid. Section 1112(a) of the Abatement Law*fn5 provides:
(a) Fund established. There is established within the General Fund a special account to be known as the [HCPR] Account. Funds in the account shall be subject to an annual appropriation by the General Assembly to [DPW]. [DPW] shall administer funds appropriated under this section consistent with its duties under section 201(1) of . . . the Public Welfare Code.*fn6
DPW was the administrator of these funds because it could, it was thought, receive matching federal Medical Assistance funds. According to Section 201(1) of the Public Welfare Code, DPW has the power and the duty to apply for, receive and use such federal funds "for the financing in whole or in part of programs in fields in which the department has responsibility." It is undisputed that, in 2004, 2005, 2006 and 2007, the General Assembly appropriated to DPW a total of $737 million for health care provider retention.
The General Assembly raised funds to pay for the abatements by increasing the tax on cigarettes by 25 cents per pack (18.52% of the cigarette tax). Section 1211 of the Cigarette Tax Law,*fn7 required that a portion of the tax collected be deposited into the HCPR Account:
There is established in the General Fund a special account to be known as the [HCPR] Account. Eighteen and fifty-two hundredths per cent of the proceeds of the tax imposed by section 1206 shall be deposited in the account. Funds in the account shall be subject to an annual appropriation and shall be administered as provided by law.
In addition, motor vehicle violation surcharge revenue was available, pursuant to Section 712(m) of the MCARE Act to help fund the program. See Section 6506 of the Vehicle Code, 75 Pa.C.S. § 6506.
In 2004, the Budget Secretary was appointed to make transfers from the HCPR Account to the MCARE Fund, and to determine the amount of such transfers up to a specified limit. Specifically, Section 1112(c) of the Abatement Law*fn8 provides: "The Secretary of the Budget may annually transfer from the [HCPR] account to the [MCARE] Fund an amount up to the aggregate amount of abatements granted by the Insurance Department under section 1104(b)."
It is undisputed that the Commonwealth has granted physicians and other participating health care providers abatements from their 2003-2007 MCARE assessments in the amount of $946 million as follows:
Calendar Year Value of Abatements 2003 $203,000,000 2004 $245,000,000 2005 $208,000,000 2006 $158,000,000 2007 $132,000,000
¶ 19. It is also undisputed that, in 2004, $100 million was transferred from the HCPR Account to the MCARE Fund. In 2005, an additional $230 million was transferred. Thus, the Commonwealth has transferred $330 million from the HCPR Account to the MCARE Fund. Although abatements continued to be granted, and revenues to fund the awarded abatements continued to accumulate in the HCPR, no funds were transferred to the MCARE Fund after 2005. From 2004 through 2007, approximately $170 million of motor vehicle violation surcharge revenue was deposited into the MCARE Fund. The HCPR Account, as of July 31, 2009, had only approximately $723 million in it. It is unclear, according to Petitioners, how much of the motor vehicle violation surcharge revenue deposited into the MCARE Fund was available and used to fund abatements. Petitioners' claim, based upon these facts, that at least $446 million (if all of the motor vehicle surcharge violation revenue was available) and possibly as much as $616 million (if none of the motor vehicle surcharge violation revenue was available) was deposited into the HCPR Account for abatements, but was not transferred to the MCARE Fund.*fn9 The Commonwealth, on the other hand, has stated that, to the extent that it was required to fund the MCARE Fund, the Budget Secretary made transfers sufficient to allow the MCARE Fund to meet its statutory claims and expenses (the transfer in 2005 being the last one necessary), and that there was no requirement that dollar-for-dollar transfers be made in the total amounts of abatements granted.
On December 11, 2008, Petitioners filed petitions for review in this Court's original jurisdiction in the nature of a complaint for declaratory judgment seeking a declaration that the Commonwealth is required to fully fund the HCPR and to transfer those funds to MCARE under the applicable abatement statutes, and that the Commonwealth's failure to do so was a violation of the Uniformity Clause of the Pennsylvania Constitution.*fn10 The petitions for review also sought injunctive relief against the Commonwealth, ordering that it refrain from using funds dedicated for abatement for any other purpose, and provide an accounting of the MCARE Fund and HCPR Account since 2004.*fn11
On January 12, 2009, the Commonwealth filed preliminary objections asserting that Petitioners' claims failed as a matter of law because: (1) DPW's obligation to administer and fund MCARE abatements was contingent upon its success in securing matching federal funding, which it was ultimately unable to do; (2) the Budget Secretary's authority to transfer funds is discretionary and not mandatory; (3) the Budget Secretary's authority to make annual transfers expired December 31, 2008, by operation of law; and, (4) assessments levied under the MCARE Act are akin to insurance premiums and are not taxes.
As stated above, this Court, sitting en banc, issued an unreported memorandum opinion on July 24, 2009, sustaining the Commonwealth's preliminary objections as to the Uniformity Clause, but overruling the Commonwealth's preliminary objections as to the Commonwealth's duty and its failure to fund the subject accounts. On September 9, 2009, Petitioners filed this application for summary relief, stating that this Court ruled on the merits of Petitioners' claims in its July 24, 2009 opinion, when it held that the Commonwealth had a mandatory statutory duty to transfer sufficient funds from the HCPR Account to fully fund the MCARE Fund abatements; and stating that since the facts are not in dispute, Petitioners are entitled to judgment in their favor as a matter of law.
Petitioners aver that this Court ruled on the merits of Petitioners' claims in its July 24, 2009 opinion, when it held that the Commonwealth had a mandatory statutory duty to transfer sufficient funds from the HCPR Account to fully fund the MCARE Fund abatements. We disagree with Petitioners' contention, in light of the fact that the July 24, 2009 opinion examined a different question than what has been presented by the instant application. The opinion issued by this Court on July 24, 2009 considered and disposed of the Commonwealth's preliminary objections in the nature of a demurrer, which merely tested the legal sufficiency of the complaint. The Court held that Petitioners' pleadings were legally sufficient to allow the case to continue. The merits of the case, however, were not conclusively ruled upon at that time. The Honorable Bernard J. McGinley made this clear in his October 19, 2009 order denying Petitioners' re-application for special relief in the nature of a preliminary injunction when he stated that, in overruling most of the Commonwealth's preliminary objections on July 24, 2009, the Court was "leaving open the underlying question whether [the Commonwealth has] the legal duty to use the HCPR Account funds to fully fund previously granted abatements." McGinley, J., Order dated October 19, 2009,
¶ 4. The Court will now proceed to close that question.
Currently before this Court is an application for summary relief. In ruling on an application for summary relief we must "view the evidence of record in the light most favorable to the non-moving party and enter judgment only if there are no genuine issues as to any material facts and the right to judgment is clear as a matter of law." McSpadden v. Dep't of Corrs., 886 A.2d 321, 325 (Pa. Cmwlth. 2005). "The moving party has the burden of proving that there is no genuine issue of material fact." Bigansky v. Thomas Jefferson Univ. Hosp., 658 A.2d 423, 425 (Pa. Super. 1995). "A material fact is one that directly affects the outcome of the case." Kuney v. Benjamin Franklin Clinic, 751 A.2d 662, 664 (Pa. Super. 2000) (citing Stevens Painton Corp. v. First State Ins. Co., 746 A.2d 649, 653 (Pa. Super. 2000)).
Petitioners first argue that the facts claimed by the Commonwealth as necessary to establish Petitioners' claims are not in dispute, are immaterial or are not factual at all, and the fact that there are outstanding discovery requests does not preclude summary relief. Specifically, Petitioners aver that "the Pennsylvania Insurance Department has credited the abatements, without receipt of HCPR Account funds, against funds already in the MCARE Fund, thereby improperly paying the assessment abatements with MCARE funds supplied in part by Petitioners, rather than with funds transferred from the HCPR Account." PA Med. Society Pet. for Rev., ¶ 61; see also Hospital & Healthsystem Assoc. Pet. for Rev., ¶ 5. The Commonwealth argues that, in establishing the HCPR program, the General Assembly "did not link the HCPR Account directly, much less exclusively, to the Abatement Program," and that the appropriations made to the MCARE Fund need not be, and were not, related to the abatements previously granted. Comm. Answer and New Matter to PA Med. Society Pet. for Rev., ¶¶ 153, 155, 157. We agree with Petitioners.
The factors that directly affect the outcome of this case relate to: (1) whether the Commonwealth had a duty to make transfers from the HCPR Account to the MCARE Fund in the amount necessary to fully fund the abatements to providers in 2003-2007 under the HCPR program, and (2) whether the Commonwealth failed to make transfers from the HCPR Account to the MCARE Fund to fully fund the abatements awarded to providers in 2003-2007 under the HCPR program. The former question is a matter of statutory interpretation. In its July 24, 2009 en banc opinion, this Court stated:
When Section 1112 is read in conjunction with the rest of the HCPR statute, including its title, and the description of the purpose and funding mechanisms for the HCPR program, to give the Budget Secretary complete unfettered discretion to decide whether to fund the MCARE Fund, regardless of the need for the funds, is obviously inconsistent with the statutory scheme. It certainly appears that the General Assembly has mandated that the HCPR Account pay for the abatements.
The Pennsylvania Med. Soc'y v. Dep't of Pub. Welfare (Pa. Cmwlth. Nos. 584, 585 M.D. 2008, filed July 24, 2009) (The Pennsylvania Med. Soc'y), slip op. at 14. On the same reasoning, we now hold, as a matter of law and of statutory interpretation, that the Commonwealth had a duty to make transfers from the HCPR Account to the MCARE Fund in the amount necessary for abatements to be paid by the Fund, and not by providers.
Thus, the only remaining issue is whether there are any genuine issues of material fact which prevent establishing whether the Commonwealth failed to make transfers from the HCPR Account to the MCARE Fund to fully fund the abatements awarded to providers in 2003-2007. On that point, it is undisputed that, in 2004, $100 million was transferred from the HCPR Account to the MCARE Fund. In 2005, $230 million was transferred. Thus, the Commonwealth has transferred $330 million from the HCPR Account to the MCARE Fund. Comm. Answer and New Matter to PA Med. Society Pet. for Rev., ¶ 25; Stip. of Facts, filed October 15, 2009, ¶ 9. The Commonwealth has also admitted that, although abatements continued to be granted, and revenues to fund the awarded abatements continued to accumulate in the HCPR, none of those funds were transferred to the MCARE Fund after 2005. Comm. Answer and New Matter to PA Med. Society Pet. for Rev., ¶ 117.
The Commonwealth argues that transfers from the HCPR Account to the MCARE Fund were not necessary after 2005 since the MCARE Fund "has been able to fulfill its current obligations to pay claims and expenses" without further transfers from the HCPR Account. Comm. Br. at 36, citing Adams Decl. ¶¶ 4-5; Comm.
Answer and New Matter to PA Med. Society Pet. for Rev., ¶ 117. There is no dispute that the MCARE Fund has had the ability to pay its bills. The question before us, however, is not whether it can pay current claims, but whether the Commonwealth failed to make transfers from the HCPR Account to the MCARE Fund to fully fund the abatements awarded to providers in 2003-2007. This is an issue of fact, as to which the underlying material facts remain undisputed.*fn12
The Commonwealth claims that there are numerous additional material facts in dispute in this litigation, and there is outstanding discovery, such that the Court cannot be assured there is no genuine issue of material fact. See Commonwealth Br. in Opp. to Petitioners' Application for Summary Relief, App. A. It is clear, however, that those facts "in dispute" do not directly affect the outcome of this case. On the contrary, the undisputed facts and admissions of record reflect that the Commonwealth had a duty to fully fund the MCARE Fund with monies from the HCPR, but failed to do so. We hold, therefore, that there are no genuine issues of material fact.*fn13
Petitioners further argue that based on the record, they are entitled to judgment as a matter of law. The Commonwealth, however, contends that Petitioners have no clear right to relief since Petitioners lack standing to bring this action; Petitioners' reading of the pre-2009 statutory scheme is fundamentally flawed; there is a far more reasonable reading of the statute than that presented by Petitioners; there is no support for Petitioners' claim that the Commonwealth was required to make a dollar-for-dollar transfer in the amounts of the abatements; DPW was not required and has no authority to transfer money to the ...