Revisions/extensions (5:03 pm 7/20/2010) – After reviewing the roll call vote for the conference substitute amendment version of the budget (i.e. the version that passed the Legislature) anid finding both then-Speaker Mike Huebsch and current Minority “Leader” Jeff Fitzgerald on the aye side, I added the Assembly “Republican” “leadership” to the scorn list.
The Wisconsin Supreme Court, in a 5-2 decision, ruled that the “transfer” of $200 million from the Injured Patients and Families Compensation Fund by governor Jim Doyle, Assembyman (and candidate for lieutenant governor) Brett Davis, the Legislative Democrats, and what passed for Assembly “Republican” “leadership” for the purpose of allowing general spending to increase by $200 million more than it otherwise could was unconstitutional as the fund had all three elements of a trust, and as named beneficiaries, the Wisconsin Medical Society and a specific doctor who joined the lawsuit have a constitutionally-protected property interest in and an equitable title to the assets of the fund.
The end of the majority’s discussion sums things up rather well (emphasis in the original):
¶99 In sum, any removal of money from the Fund for an improper purpose is an unconstitutional taking of the health care providers’ property interest in the Fund because it infringes upon their rights to the security and integrity of the Fund, to realize the Fund’s investment earnings, and to have excess judgments paid to proper claimants. When money is improperly taken from the Fund, the health care providers are deprived of their right to have that money managed on their behalf. Furthermore, any such removal of money will almost certainly result in an increase in health care providers’ assessments. If assessments are not raised, the solvency of the Fund is jeopardized, increasing the risk that the Fund will be unable to pay excess judgments. If the Fund becomes unable to pay excess judgments, the cost of those judgments will have to be borne by either the health care providers or the proper claimants, both of whom are the express beneficiaries of the Fund….
¶101 We would be hard pressed to say that the legislature could not discontinue the Injured Patients and Families Compensation Fund prospectively, provided that it honored all loss liabilities created up to the date of discontinuation. The Fund is not immutable in its present form. But we are frankly taken aback by the Secretary’s position that the legislature could discontinue the Fund and seize all its assets, save only those assets necessary to pay off existing claims, and renege on the loss liabilities to existing victims whose claims are not yet perfected. This is not only the logical extension of the Secretary’s position, it is the actual articulation of the Secretary’s position, both to the circuit court and before this court. A failure on our part to recognize the property interests at stake in the Fund would be an open invitation to the legislature to take money from the Fund at will.
¶102 We are sensitive to the changing needs of state government and the basic principle that one legislature cannot bind another. But that cannot mean that anything goes, that recognized property interests evaporate when the winds shift. The legislature created a “trust” for health care providers and their patients and families, and it pronounced that trust “irrevocable.” We take the legislature at its word.
The financial situation of the fund as outlined in the “Background and Procedural History” section of the majority opinion (starting at paragraph 23) is even more devastating than the mere “transfer” of the money. At the end of FY2007 (i.e. June 30, 2007), before Davis and the Legislative Democrats approved Doyle’s “transfer” of the money, the fund had a net asset balance of +$94.4 million on total assets of $798.5 million.
At the time the first transfer of $71.5 million from the fund to another fund that had been shorted $200 million in general funds was made in October 2007, there were not enough liquid assets in the fund to allow the transfer to happen directly. The fund temporarily borrowed $51.3 million from a third state fund to make it happen, with repayments including interest charges.
The same lack of liquid assets occurred when the second transfer of $128.5 million happened in July 2008. The fund owed $76.8 million to the State Investment Fund as of June 30, 2009, and had incurred $2.5 million in interest.
Also as of June 30, 2009, the fund had assets of $645.1 million, total loss liabilities (what the fund expects to have to pay out for incidents that occured prior to June 30, 2009 whether or not claims had been filed by that date) of $675.4 million, and a net asset balance of -$109 million.
Of note, that net asset balance of -$109 million is larger than the $100 million supplemental appropriation made in the FY2008-2009 budget in case the fund couldn’t cover the judgements it was designed to cover.
That’s right – the Patient Compensation Fund did not have the cash to give, but Doyle, Davis, and the bipartisan Party-In-Government stole the money anyway.
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