Wisconsin governor wants liability pool money for health programs

Wisconsin doctors are sounding the alarm on Gov. Jim Doyle's plan to raid $175 million from the state's medical liability compensation fund to pay for health care programs.

Doctors, hospitals and other health care professionals pay annually into the Injured Patients and Families Compensation Fund, which covers medical liability claims that exceed their $1 million policy coverage. As part of his two-year budget for 2007-09, Doyle proposes to transfer money from that fund to finance state Medicaid programs, Medicaid reimbursement rates for doctors and hospitals, and an initiative to help doctors switch to electronic medical records through a newly created health care quality fund.

Doyle claims that the compensation pool has plenty of funds to spare, having accumulated $737 million in cash and investments, as of June 30, 2006, according to a March audit.

Doyle's office did not return calls for comment. The governor has defended the proposed transfer, saying initiatives such as promoting EMRs will help reduce medical errors and lawsuits, according to an Associated Press report.

But doctors and independent state auditors say dipping into the fund may not only be illegal but also would destabilize the fund, which has helped stabilize Wisconsin's medical liability climate.

"The fund has been run well, and that's why it's a target," said Mark M. Grapentine, senior vice president of government relations for the Wisconsin Medical Society.

"If you end up taking a gigantic amount of money out, the board of governors has a fiduciary responsibility to make sure it's sound, so they will raise rates," he warned.

Last year, the amount doctors had to pay into the fund spiked 25% after the state Supreme Court's decision in 2005 to strike down as unconstitutional the $350,000 inflation-adjusted cap on noneconomic damages. The award limit was reinstated at $750,000 in April 2006. The fund's board of governors recently approved a 5% increase in rates for 2007.

The fund still remains vulnerable to claims that are winding their way through the legal system, doctors say.

A March review by the state's nonpartisan Legislative Audit Bureau echoed the medical society's concerns.

The report states that in spite of the fund's financial strength, the $737.4 million in assets are there to help offset $685 million in estimated liabilities. Because those risks remain difficult to predict, siphoning $175 million from the account essentially would place it in a deficit, State Auditor Janice Mueller warned in a letter to state legislators.

Is it legal?

Doctors and auditors also question the legality of Doyle's plan. They say it may violate a 2003 state law passed to clarify the fund's purpose.

Under the law, which Doyle approved, the fund is meant to "curb the rising costs of health care by financing part of the liability incurred by health care providers as a result of medical malpractice claims and to ensure that proper claimants are satisfied."

Using the money for any reason other than compensating injured patients would go against that legislative intent, Grapentine said.

It's not the first time the governor has tried to divert fund money. In 2003, his biennial budget request included a $200 million transfer, and his 2005-07 plan proposed a $179.4 million withdrawal for similar initiatives. Wisconsin's Joint Committee on Finance rejected both plans by an overwhelming margin. Still, doctors remain vigilant in their fight.

If the Legislature were to go along with the governor's plan even once, Grapentine said, the fund could become a tempting solution to other budget shortfalls in the future.

The joint finance committee is conducting public hearings on the budget proposal throughout April. Voting is expected to begin early May.