Nearly fifty years ago, in response to a purported medical malpractice insurance “crisis” in the state, the General Assembly of the Commonwealth of Pennsylvania established the Joint Underwriting Association (“JUA”). The JUA’s primary function is to act as a professional liability insurer of last resort for high-risk medical providers, who pay the JUA directly for the policies it issues. The JUA has never received funding from the Commonwealth.
Since its inception, the JUA has amassed through investments a surplus of about $300 million. The JUA has no policy requiring the distribution of dividends to its policyholders; it has never paid any dividends to its policyholders; nor can it, consistent with statute, pay dividends or make distributions to its members.
Every year from 2016 to 2019, the Commonwealth took legislative action trying either to transfer the JUA’s surplus to
the Commonwealth’s General Fund or to assume control of the JUA. In response to the 2017, 2018, and 2019 statutes – Acts 44, 41, and 15, respectively – the JUA sued various combinations of defendants, including the Commonwealth’s
Governor, General Assembly, Insurance Commissioner, and four state representatives, asserting multiple federal claims. According to the JUA, the Defendants have violated the Takings Clause, the Contract Clause, the First Amendment, and the JUA’s rights to procedural and substantive due process. In response to the JUA’s challenges, the Defendants asserted, among other things, that the JUA was created by the Commonwealth and cannot assert constitutional claims against its creator. The District Court disagreed and entered an injunction, preventing the enforcement of most of the legislative changes to the JUA.
On appeal, the Defendants argued that the District Court erred in holding that the JUA is a private entity with
constitutional rights it can assert against its creator, the Commonwealth. They argued that the JUA is a “creature of the state” and without such rights. In response, the JUA argued that it is a private entity and that its assets and operations are largely beyond the reach of the Commonwealth. It further argued that the way the Commonwealth created and has regulated the JUA over decades has “created … conditions under which [it] acquired the right to protection from uncompensated takings.””
The United States Court of Appeals for the Third Circuit stated in its December 16, 2024 Opinion: “The primary issue before us in these appeals is whether the JUA is indeed a creature of the Commonwealth beholden only to the Commonwealth; in other words, whether it is a public entity rather than a private one. We hold that it is, because the Commonwealth delegated power to the JUA to support a public purpose within the state insurance market, and
because only the Commonwealth has a legally protectable interest in the JUA. As a public entity, the JUA lacks the
ability to maintain the constitutional claims it has asserted against the Commonwealth, its creator.”
Source Pennsylvania Professional Liability Joint Underwriting Association v. Governor of the Commonwealth of Pennsylvania, Nos. 18-2297 and 18-2323.
Perhaps the most significant aspect of this case that is not discussed in the federal appellate court opinion is the $300 million surplus that has accrued, which belies that there was a medical malpractice insurance “crisis” in Pennsylvania in the first place.
If you suffered harm due to medical negligence in Pennsylvania or in another U.S. state, you should promptly find a Pennsylvania medical malpractice attorney, or a medical malpractice attorney in your state, who may investigate your medical malpractice claim for you and represent you in a medical malpractice case, if appropriate.
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