The Wisconsin Supreme Court recently ruled that the state must repay $200 million that was taken from a medical malpractice fund to balance the state budget. The money was taken three years ago from the fund, which is now projected to be $109 million short of money necessary to pay projected liabilities for this fiscal year.

The fund was started in 1975 “to provide excess medical malpractice coverage for Wisconsin health care providers.” Health-care providers in the state are required to carry malpractice insurance in the amount of $1 million per occurrence and $3 million annual aggregate. Malpractice award coverage in excess of the required amounts is paid for via the fund. About 13,000 health care professionals contribute to the fund, and it has been credited with keeping malpractice insurance rates down in the state. In 2007, the Wisconsin governor and lawmakers decided to transfer $200 million out of the fund to help pay for other medical programs and balance the state’s budget; however the state never established a plan to return the money to the fund. Assessments charged to health care professionals increased by almost 10% last year in an attempt to make up for the siphoned funds.

The Wisconsin Medical Society sued, arguing that the transfer of funds was unconstitutional. Though the Medical Society lost at the circuit court level, the case was appealed up to the state Supreme Court. In its decision, the Supreme Court agreed, holding that “health care providers have a constitutionally protected property interest in the fund,” and that the state’s actions were illegal because it constituted “an unconstitutional taking of private property without just compensation.” The case was sent back to the circuit court with instructions to order the restitution of the money to the fund, “together with lost earnings and interest that has been charged to the fund.”