Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-21-01155/USCOURTS-ca3-21-01155-0/pdf.json

Parties Involved:
General Assembly of the Commonwealth of Pennsylvania
Appellee
Governor of Pennsylvania
Appellee
Pennsylvania Professional Liability Joint Underwriting Association
Appellant

Document Text:

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

Nos. 18-2297 and 18-2323

_____________

PENNSYLVANIA PROFESSIONAL LIABILITY JOINT 

UNDERWRITING ASSOCIATION

v.

GOVERNOR OF THE COMMONWEALTH OF 

PENNSYLVANIA, 

THE GENERAL ASSEMBLY OF THE 

COMMONWEALTH OF PENNSYLVANIA

 (Intervenor in District Court)

Governor of the Commonwealth of Pennsylvania,

 Appellant in 18-2297

The General Assembly of The Commonwealth of 

Pennsylvania,

 Appellant in 18-2323

_____________

Nos. 19-1057 and 19-1058

_____________

Case: 21-1155 Document: 58 Page: 1 Date Filed: 12/16/2024
2

PENNSYLVANIA PROFESSIONAL LIABILITY JOINT 

UNDERWRITING ASSOCIATION

v.

GOVERNOR OF PENNSYLVANIA; THE GENERAL 

ASSEMBLY OF THE COMMONWEALTH OF 

PENNSYLVANIA; PRESIDENT PRO TEMPORE 

PENNSYLVANIA SENATE; MINORITY LEADER 

PENNSYLVANIA SENATE; SPEAKER PENNSYLVANIA 

HOUSE OF REPRESENTATIVES; MINORITY LEADER 

PENNSYLVANIA HOUSE OF REPRESENTATIVES; 

INSURANCE COMMISSIONER PENNSYLVANIA

 President Pro Tempore Pennsylvania Senate; 

Minority Leader Pennsylvania Senate; Speaker Pennsylvania 

House of Representatives, Minority Leader Pennsylvania 

House of Representatives,

Appellants in 19-1057

 Governor of Pennsylvania,

 Insurance Commissioner Pennsylvania,

Appellants in 19-1058

_____________

Nos. 21-1099, 21-1112, and 21-1155

_____________

PENNSYLVANIA PROFESSIONAL LIABILITY JOINT 

UNDERWRITING ASSOCIATION

v.

Case: 21-1155 Document: 58 Page: 2 Date Filed: 12/16/2024
3

GOVERNOR OF PENNSYLVANIA; GENERAL 

ASSEMBLY OF THE COMMONWEALTH OF 

PENNSYLVANIA

 General Assembly of the Commonwealth of 

Pennsylvania,

 Appellant in 21-1099

Governor of Pennsylvania, 

Appellant in 21-1112

Pennsylvania Professional Liability Joint Underwriting 

Association,

Appellant in 21-1155

_______________

On Appeal from the United States District Court

For the Middle District of Pennsylvania

(D.C. Nos. 1-17-cv-2041, 1-18-cv-1308, and 1-19-cv-1121)

District Judge: Honorable Christopher C. Conner 

_______________

Argued

November 9, 2022

Before: CHAGARES, Chief Judge, JORDAN, and 

RESTREPO, Circuit Judges

(Filed: December 16, 2024)

_______________

Case: 21-1155 Document: 58 Page: 3 Date Filed: 12/16/2024
4

Nicole J. Boland

Pennsylvania State Police

Office of Chief Counsel

1800 Elmerton Avenue

Harrisburg, PA 17110

Sean A. Kirkpatrick

Keli M. Neary

Karen M. Romano

Office of Attorney General of Pennsylvania

Strawberry Square – 15th Floor

Harrisburg, PA 17120

 Counsel for Governor of Pennsylvania

Melissa Chapaska

Kevin J. McKoen

Dennis Whitaker

Hawke McKeon & Sniscak

100 North Tenth Street

P.O. Box 1778

Harrisburg, PA 17101

 Counsel for Pennsylvania Professional Liability

 Joint Underwriting Association

Karl S. Myers

Stevens & Lee

555 City Avenue

Suite 1170

Bala Cynwyd, PA 19004

Case: 21-1155 Document: 58 Page: 4 Date Filed: 12/16/2024
5

Michael D. O’Mara

Spencer R. Short

Jonathan F. Bloom

Stradley Ronon Stevens & Young

2005 Market Street – Suite 2600

Philadelphia, PA 19103

 Counsel for General Assembly of the

 Commonwealth of Pennsylvania,

 Minority Leader Pennsylvania Senate,

 Speaker Pennsylvania House of Representatives,

 Minority Leader Pennsylvania House of 

Representatives,

 President Pro Tempore Pennsylvania Senate, and

 Insurance Commissioner Pennsylvania

Karon Sarpolis

365 Rolling Hill Road

Elkins Park, PA 19027

 Pro Se Amicus

_______________

OPINION OF THE COURT

_______________

JORDAN, Circuit Judge.

Nearly fifty years ago, in response to a 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 

Case: 21-1155 Document: 58 Page: 5 Date Filed: 12/16/2024
6

the Commonwealth. Since its inception, it has amassed

through investments a surplus of about $300 million.

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.1

 The 2017, 2018, and 2019 statutes – Acts 44, 41, and 

15, respectively – are the focus of the appeals before us now. 

After each of those enactments, the JUA sued various 

combinations of defendants, including the Commonwealth’s 

Governor, General Assembly, Insurance Commissioner, and 

four state representatives (together, the Defendants), 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.

2 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 

1 The General Fund holds all money the Commonwealth 

receives from the Commonwealth Department of Revenue or 

“any other source” that is not required to be credited to another 

state fund. 72 P.S. § 302. 

2 Those clauses and amendments are found at the 

following: Takings Clause, U.S. Const. amend. V; Contract 

Clause, id. art. 1, § 10, cl. 1; First Amendment, id. amend. 1;

and due process, id. amend. XIV. 

Case: 21-1155 Document: 58 Page: 6 Date Filed: 12/16/2024
7

entered an injunction, preventing the enforcement of most of 

the legislative changes to the JUA.

3

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. Accordingly, and for 

the reasons explained herein, we will reverse in part, affirm in 

part, and remand. 

I. BACKGROUND4

Because our analysis of the JUA’s public nature must 

account for its role in the Commonwealth, we begin by 

explaining the JUA’s history, operations, powers, and duties. 

3 Portions of the acts unrelated to the JUA survived and 

are not at issue in this appeal. 

4 This appeal consolidates 3d Cir. Nos. 18-2297, 18-

2323, 19-1057, 19-1058, 21-1099, 21-1112, and 21-1155. The 

joint appendix filed in the appeals from Pennsylvania 

Professional Liability Joint Underwriting Ass’n v. Wolf (JUA 

I), 324 F. Supp. 3d 519 (M.D. Pa. 2018), and Pennsylvania 

Professional Liability Joint Underwriting Ass’n v. Wolf (JUA 

II), 381 F. Supp. 3d 324 (M.D. Pa. 2018), is cited as “C.A. No. 

18-2297 J.A.” The joint appendix filed in the appeals from 

Case: 21-1155 Document: 58 Page: 7 Date Filed: 12/16/2024
8

A. History and Operation of the JUA

The Commonwealth General Assembly established the 

JUA in 1975 in an effort to make medical professional liability

(“MPL”) insurance available at a reasonable cost.5

 The JUA 

is required to offer MPL insurance to health care providers and 

entities that “cannot conveniently obtain [MPL] insurance 

through ordinary methods at rates not in excess of those 

applicable to [those] similarly situated[.]”6 40 P.S.

§ 1303.732(a). All insurers authorized to write liability 

insurance in the Commonwealth must be members of the JUA. 

Id. § 1303.731(a). 

Pennsylvania Professional Liability Joint Underwriting Ass’n

v. Wolf (JUA III), 509 F. Supp. 3d 212 (M.D. Pa. 2020), is cited

as “C.A. No. 21-1099 J.A.”

5 The JUA was created by the Pennsylvania Health Care 

Services Malpractice (“PHCSM”) Act. PHCSM Act, P.L. 390, 

No. 111, § 802 (repealed 2002). The General Assembly 

replaced that Act in 2002 with the Medical Care Availability 

and Reduction of Error (“MCARE”) Act, 40 P.S. § 1303.101 

et seq., which “established” the JUA as a “nonprofit joint 

underwriting association,” id. § 1303.731(a). 

6 According to the record, the JUA’s insureds generally 

fall into four categories: (1) providers with a history of 

malpractice occurrences; (2) providers practicing high-risk

specialties; (3) providers who have gaps in coverage; or (4) 

providers reentering the medical profession after the loss or 

suspension of their licenses or voluntary withdrawal from 

practice.

Case: 21-1155 Document: 58 Page: 8 Date Filed: 12/16/2024
9

By statute, the JUA is supervised by the Insurance 

Department of Pennsylvania (the “Department”) and owes four 

duties to the Department: (1) to submit a plan of operations to 

the Commissioner of the Department for approval; (2) to 

submit rates and any rate modifications to the Department for 

approval; (3) to offer MPL insurance to health care providers; 

and (4) to annually file with the Commissioner updated rates 

for all health care providers, which, in turn, the Commissioner 

“shall review and may adjust” when calculating annual 

assessments for the health care providers. Id. § 1303.731(b) 

(incorporating id. § 1303.712(f)). The original legislation 

insulated the Commonwealth from the JUA’s debts and 

liabilities, but Act 41, enacted in 2018 and discussed in Section

I.B.2., infra, repealed that provision. Id. § 1303.731(c). 

The “powers and duties” of the JUA are “vested in and 

exercised by” its Board of Directors. Id. § 1303.731(a).

According to the JUA’s plan of operations, which is subject to 

the Commissioner’s approval, id. § 1303.731(b), the Board has

no more than fourteen directors, consisting of the president of 

the JUA, up to eight member-company representatives elected 

by the JUA’s members, up to four representatives from health 

care providers or the public nominated by the Board and 

appointed by the Commissioner, and one agent or broker 

elected by the JUA’s members, Pa. Pro. Liab. Joint 

Underwriting Ass’n v. Wolf (JUA II), 381 F. Supp. 3d 324, 328 

(M.D. Pa. 2018). The JUA has four employees, none of whom 

are paid by the Commonwealth; nor do they receive any 

benefits under the Commonwealth’s retirement system. Pa. 

Pro. Liab. Joint Underwriting Ass’n v. Wolf (JUA III), 509 F. 

Supp. 3d 212, 218 (M.D. Pa. 2020). The organization’s 

operating plan states that it may be dissolved by “operation of 

law” – like any nonprofit in the state, 15 Pa. C.S.A. 

Case: 21-1155 Document: 58 Page: 9 Date Filed: 12/16/2024
10

§ 9134(a)(5) – or dissolved at the request of its members,

“subject to the approval of the Commissioner[,]” JUA III, 509 

F. Supp. 3d at 218. At dissolution, the Board is tasked with

determining how the JUA’s assets are to be distributed, subject 

to the Commissioner’s approval. Id.

The JUA issues insurance policies directly to its 

policyholders, who pay premiums to the JUA.7

 Those

premiums – and the income earned on investments made with 

them – are now the JUA’s sole source of funding; neither its 

members nor the Commonwealth contribute any money to its 

operation. The JUA holds “contingency funds” in two separate 

accounting categories: first, in reserves, which represent the 

“best estimate” of the funds needed for claims “that have been 

incurred but not yet paid,” and second, in surplus, which is the

“capital after all liabilities have been deducted from assets.”

(C.A. No. 18-2297 J.A. at 613, 2363.) 

The JUA’s surplus funds underly the disputes here. In

December 2016, the JUA’s surplus was $268,124,490. By 

March 2020, it had grown to $298,276,876. By at least one 

metric, this was an exceptional stockpile. In the insurance 

business, a risk-based capital (“RBC”) ratio is the measure of 

the sufficiency of an insurer’s contingency funds to cover the 

7 The policyholders – those who seek insurance from the 

JUA in its role as a last-resort insurer – are different from the 

members of the JUA, who join “by virtue of becoming licensed 

carriers” of liability insurance in Pennsylvania. (C.A. No. 18-

2297 J.A. at 308.) The typical JUA policy is limited to one

year, with a limit of $500,000 per claim and aggregate limits of 

$1.5 million for individuals and $2.5 million for hospitals.

Case: 21-1155 Document: 58 Page: 10 Date Filed: 12/16/2024
11

“full range of potential exposure from [its] claims.”8 (C.A. No. 

18-2297 J.A. at 1162.) The Department expects insurers to 

maintain an RBC ratio of at least 300% of its potential 

exposure to claims by its policyholders. As of 2017, the JUA’s 

RBC was 13,477%.

Because of that extraordinarily high ratio, the 

Department sent the JUA a letter about “certain matters 

involving a lack of regulatory compliance and deviation from 

sound business practices[.]”9 (C.A. No. 18-2297 J.A. at 937.)

The Department asked the JUA to “determine an efficient 

amount of surplus to hold in order to run its operation” and to 

recommend in its plan of operations how it will divest itself of 

the “excess capital[.]” (C.A. No. 18-2297 J.A. at 938.) In 

response, the JUA said that the Board would develop and 

undertake a plan of action to address the excess surplus when 

so required, but it went on to state that it would be 

“inappropriate to identify an efficient surplus operating range” 

8 A company’s RBC ratio is calculated in accordance 

with a formula that “may adjust for the covariance between” 

the insurance company’s asset, credit, underwriting, and “[a]ll 

business and other risks[.]” 40 P.S. § 221.4-B. The formula is

set by the National Association of Insurance Commissioners, 

id. § 221.1-B, and a company’s RBC ratio is generally 

confidential, id. § 221.11-B(a).

9 At that time, when the JUA held more than $268 

million in surplus funds, an auditor recommended that the JUA 

needed only about $21.5 million in reserves for “unpaid losses” 

and “unpaid loss adjustment expenses.” (C.A. No. 18-2297 

J.A. at 1162.) 

Case: 21-1155 Document: 58 Page: 11 Date Filed: 12/16/2024
12

because of a “lack of legal authority” about how any excess 

surplus should be handled. (C.A. No. 18-2297 J.A. at 988-89.)

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.

10 See 15 Pa. C.S.A. 

§ 9114(d) (explaining that nonprofit associations can only use 

their profits for their nonprofit purposes); id. § 9132(a) (“[A] 

nonprofit association may not pay dividends or make 

distributions to a member or manager.”).

Meanwhile, as we explain below, the legislature made 

efforts to reach the JUA’s surplus capital. 

10 In the event of a budget deficit, which has never 

occurred, the Board must alert the Commissioner. 40 P.S. 

§ 1303.733(a). If the Commissioner approves, the JUA is 

authorized to borrow the funds needed to satisfy a deficit. Id.

§ 1303.733(b). An earlier version of the JUA’s plan of 

operations, adopted in 2005, explained that the JUA could also 

fund a deficit by assessing its members in proportion to each 

member’s participation, which the JUA would have to refund 

when it acquired the necessary funds through a loan or an 

increase in premiums. The JUA, however, has never borrowed 

money or assessed its members to fund its operations. Its CEO 

testified that the Insurance Department advised it to remove the 

assessment language from its plan of operations, and that the 

JUA “never intend[s]” to assess its members. (C.A. No. 18-

2297 J.A. at 1318, 1470). In 2018, the JUA removed from its 

plan of operations the specific language about its ability to 

assess its members. 

Case: 21-1155 Document: 58 Page: 12 Date Filed: 12/16/2024
13

B. The Commonwealth’s Legislation and the

JUA’s Lawsuits

The several cases consolidated in this appeal stem from 

three pieces of legislation and the lawsuits that challenged 

them. 

1. Act 44 of 2017 and Pennsylvania 

Professional Liability Joint Underwriting 

Ass’n v. Wolf (JUA I), 324 F. Supp. 3d 519 

(M.D. Pa. 2018)

In 2017, the legislature passed and the Governor signed

Act 44 to implement the annual budget for the Commonwealth. 

Act of Oct. 30, 2017, P.L. 725, No. 44, § 1 (“Act 44”). Act 44 

mandated that the JUA transfer $200 million into the 

Commonwealth’s General Fund.11 Id. § 1.3. It required 

payment by December 1, 2017, or the JUA would be abolished, 

and its funds transferred to the Commissioner. Id. Act 44’s

legislative findings included that the JUA “has money in 

excess of the amount reasonably required to fulfill its statutory 

mandate[,]” that its funds do not belong to its members or 

policyholders, and that it is an “instrumentality of the 

Commonwealth[.]” Id. 

11 Act 44 explicitly repealed Act 85, enacted in 2016, 

which had also demanded that the JUA transfer $200 million 

to the Commonwealth. JUA I, 324 F. Supp. 3d at 526. The 

JUA commenced a lawsuit following Act 85’s enactment, 

which has been held in abeyance pending the resolution of 

these appeals. Id. 

Case: 21-1155 Document: 58 Page: 13 Date Filed: 12/16/2024
14

A week after Act 44’s enactment, the JUA sued the

Governor in the U.S. District Court for the Middle District of 

Pennsylvania, seeking declaratory and injunctive relief for 

violations of the Constitution, specifically, substantive due 

process, the Takings Clause, and the Contract Clause. The 

JUA also moved for a temporary restraining order (“TRO”)

and preliminary injunction against enforcement of the JUArelated section of Act 44. The District Court denied the JUA’s 

request for a TRO and, upon motion by the General Assembly 

of Pennsylvania, granted leave for the General Assembly to 

intervene. After a hearing, the District Court granted the 

motion for a preliminary injunction, declaring that “[t]he 

uncompensable constitutional exigency imposed by Act 44 is 

one of extraordinary proportion.” Pa. Pro. Liab. Joint 

Underwriting Ass’n v. Wolf, No. 1-17-cv-2041, 2017 WL 

5625722, at *11 (M.D. Pa. Nov. 22, 2017).

The parties filed cross-motions for summary judgment. 

The Governor and General Assembly argued that the JUA 

could not assert constitutional claims against the 

Commonwealth because the JUA is nothing more than a 

creature of the Commonwealth itself.

12 JUA I, 324 F. Supp. 3d

12 The General Assembly argued that the JUA’s 

relationship with the Commonwealth is “sufficiently 

analogous” to that of a state with a municipality, so that it 

functions as a political subdivision and cannot bring a claim 

against its creator. JUA I, 324 F. Supp. 3d at 530. The District 

Court, however, distinguished the JUA from entities that 

generally fall under the political subdivision doctrine, stating 

that the JUA “has no power ... to tax, to issue bonds, or to 

exercise eminent domain” and that its mission is “inherently 

nongovernmental.” Id. at 531. The District Court also rejected 

Case: 21-1155 Document: 58 Page: 14 Date Filed: 12/16/2024
15

at 529, 532. The JUA responded that it “is not and never has 

been part of the state,” so Act 44 directed a taking of “private 

property” by the Commonwealth with “no hope of ‘just 

compensation[.]’” (M.D. Pa. 17-2041 D.I. 59 at 13-15.) 

The District Court’s analysis “beg[an] and end[ed] with 

the [JUA]’s Takings Clause claim.” JUA I, 324 F. Supp. 3d at 

528. After rejecting the arguments that the JUA was a political 

subdivision of the Commonwealth, or the Commonwealth

itself, the Court found guidance in out-of-circuit cases 

involving “state-created insurer[s]-of-last-resort” suing their 

creators.

13 Id. at 532-35. The District Court said those cases 

did not suggest that state creation of an entity was “alone 

determinative” as to whether the entity was public or private;

rather, the courts “holistically examined” the entity’s 

relationship with the state, using a “variety of factors[.]” Id. at 

535.

Following suit, the Court conducted its own holistic 

examination of the JUA’s relationship with the 

Commonwealth. It considered the JUA’s function, the degree 

the Governor’s argument that the JUA, like Amtrak (a 

“government entity” for the purposes of 42 U.S.C. § 1983

liability), is a government actor. Id. The Court reasoned that 

the Commonwealth had, at that time, disclaimed liability for 

the JUA and the JUA was not subject to extensive government

control, so the comparison to Amtrak was not appropriate. Id.

at 531-32.

13 See infra Section II.C (discussing out-of-circuit 

cases). 

Case: 21-1155 Document: 58 Page: 15 Date Filed: 12/16/2024
16

of control reserved to the Commonwealth in contrast with the 

degree of autonomy granted to the JUA, other aspects of the 

JUA’s treatment by statute, and the nature of the funds in 

dispute. Id. at 535-38. For three reasons, the Court held that

the JUA is a “private entity as a matter of law”: first, the JUA

is, “at its core, an insurance company” comprised of private 

members, governed by a private board, and supported by 

private employees; second, the JUA is subject to de minimis 

Commonwealth supervision in that it is only required to seek 

the Insurance Commissioner’s approval of its plan of 

operations and any plan to borrow funds in case of a deficit; 

and, third and finally, the JUA is exclusively funded by private 

premiums, the payment of which has no public end-use. Id.

In so ruling, the District Court emphasized the 

legislature’s choices in creating the JUA:

[I]n the same legislation that created the [JUA], 

the General Assembly relinquished control 

thereof. ... The legislature had the option to 

tightly circumscribe the [JUA’s] operations and 

composition of its board, to establish the control 

of the [JUA] as a special fund[14] ... , or to retain 

14 The District Court contrasted the Commonwealth’s

choice not to establish the JUA as a “special fund” with the 

Commonwealth’s choice to create the MCARE Fund as part 

of the MCARE Act (see supra n.5). JUA I, 324 F. Supp. 3d 

at 524. The MCARE Fund is administered by the 

Commonwealth Insurance Department and is used to “pay

claims against participating health care providers for losses 

or damages awarded in [MPL] actions against them in excess 

Case: 21-1155 Document: 58 Page: 16 Date Filed: 12/16/2024
17

meaningful control in any number of other ways. 

That the General Assembly chose to achieve a 

public health objective through a private 

association has a perceptible benefit: it assures 

availability of medical professional liability 

coverage throughout the Commonwealth at no 

public cost. By the same token, it also has a 

consequence: the General Assembly cannot 

claim carte blanche access to the [JUA’s] assets.

Id. at 538 (citations omitted). 

The Court granted summary judgment, declaratory 

judgment, and permanent injunctive relief to the JUA, holding 

that the sections of Act 44 related to the JUA were “plainly 

violative” of the Takings Clause. Id. at 540. There was a 

timely appeal. (C.A. Nos. 18-2297 & 18-2323.) 

2. Act 41 of 2018 and Pennsylvania 

Professional Liability Joint Underwriting 

Ass’n v. Wolf (JUA II), 381 F. Supp. 3d 324 

(M.D. Pa. 2018)

In 2018, the Commonwealth responded to the District 

Court’s decision by enacting Act 41. That enactment followed

a review of the JUA by the Insurance Commissioner that, 

according to a legislative finding, revealed “a need to 

modernize the [JUA] in order to produce needed economical 

of the basic insurance coverage required by” the statute. 40

P.S. § 1303.712(a). It is funded by annual assessments of its 

participants. Id. § 1303.712(i).

Case: 21-1155 Document: 58 Page: 17 Date Filed: 12/16/2024
18

and administrative efficiencies.” Act of June 22, 2018, P.L. 

273, No. 41, § 3 (“Act 41”). In Act 41, the Commonwealth

expressed its intention to place the JUA “within the [Insurance 

D]epartment [to] give the [C]ommissioner more oversight of 

expenditures and ensure better efficiencies” in its operation. 

Id. The Act declared that the JUA “shall continue as an 

instrumentality of the Commonwealth and shall operate under 

the control, direction[,] and oversight of the [Insurance] 

Department.” Id. (emphasis added). Of particular note, Act 41

mandated that the JUA transfer all of its assets to the 

Department within thirty days of the Act’s effective date.15 Id. 

The JUA sued the Governor, the Insurance 

Commissioner, and four state representatives in their official 

capacities, again alleging violations ofsubstantive due process, 

the Takings Clause, and the Contract Clause.16 It sought 

15 Act 41 also purported to make changes to the JUA’s 

operations, including restructuring its Board, causing its 

liabilities to be considered as liabilities against the 

Commonwealth, installing a new executive director paid by the 

Commonwealth, and requiring the new Board to submit a new 

plan of operations for approval. Act of June 22, 2018, P.L. 

273, No. 41, § 3. 

16 The JUA also named the General Assembly as a 

defendant, but counsel did not enter an appearance on its 

behalf, and it filed no answer. The District Court explained

that “[a]ll filings by the [state representatives] have been 

made solely under the names of the four individual elected 

leaders and cannot be fairly construed as having been filed

on behalf of the General Assembly itself.” JUA II, 381 F. 

Supp. 3d at 330 n.2. After the District Court entered its order 

Case: 21-1155 Document: 58 Page: 18 Date Filed: 12/16/2024
19

injunctive and declaratory relief. As in JUA I, the District 

Court denied the JUA’s TRO motion but granted its motion for 

a preliminary injunction. The parties then filed cross-motions 

for summary judgment. 

The District Court granted summary and declaratory 

judgment and permanent injunctive relief in favor of the JUA, 

holding that “the Commonwealth cannot take the [JUA’s] 

private property in the manner contemplated by Act 41.” JUA 

II, 381 F. Supp. 3d at 342-43. Before discussing Act 41, the 

District Court reiterated its earlier holding that the JUA and its 

assets are “overwhelmingly private in nature.” Id. at 333. It 

rejected the state representatives’ argument that, under 

Trustees of Dartmouth College v. Woodward, 17 U.S. (4 

Wheat.) 518 (1819), a lack of non-state interests in the JUA

means that the Commonwealth can “wield its power [over the 

JUA], unrestrained by the federal Constitution[.]” JUA II, 381 

F. Supp. 3d at 336. On the contrary, the Court said, “the state 

has never been alone interested in [the JUA’s] transactions.” 

Id. at 337 (internal quotation marks omitted). In the Court’s 

view,

the record establishes that the [JUA’s] members 

do have some interest in [it]. The [JUA] is 

organized as a nonprofit, and, by law, member 

companies do not share in profits as they did in 

[two cited out-of-circuit cases]. The [JUA’s]

granting summary judgment to the JUA and permanently 

enjoining portions of Act 41, the parties stipulated that the 

order applied to the General Assembly. 

Case: 21-1155 Document: 58 Page: 19 Date Filed: 12/16/2024
20

reserves and its surplus are its first line of 

financial defense in the event it suffers a loss. 

But thereafter, it is the [JUA’s] member 

insurance companies, not the Commonwealth, 

that would be held to account: under the [JUA’s] 

current plan of operations, members may be 

assessed to make up any loss until the [JUA] can 

borrow sufficient funds to satisfy its deficit, 

repay borrowed funds, and reimburse members 

for assessments. Although the degree of member 

interest is not as enduring or direct as the 

member interest in [the out-of-circuit cases], it is 

member interest nonetheless and belies 

defendants’ assertion that the state is “alone”

interested in the [JUA]. 

JUA II, 381 F. Supp. 3d at 339 n.7 (internal citations omitted). 

The Court also rejected the Governor’s and 

Commissioner’s argument that Act 41 was a valid response to 

the holding of JUA I. The Court declared that no authority 

supported the proposition that “the state can declare public 

what it created as – and a court has confirmed to be – a private 

entity.” Id. at 335. As in JUA I, the District Court focused 

only on the JUA’s Takings Clause claim, and it said that Act 

41 was merely an attempt to do indirectly what the District 

Court had already told the Commonwealth in JUA I it could 

not do directly.

17 Id. at 341. Again there was a timely appeal. 

(C.A. Nos. 19-1057 & 19-1058.)

17 The JUA had argued that issue preclusion applied to 

the suit, but the District Court held that the issuesin JUA I were

not identical to those in JUA II because the legislative act and 

Case: 21-1155 Document: 58 Page: 20 Date Filed: 12/16/2024
21

3. Act 15 of 2019 and Pennsylvania 

Professional Liability Joint Underwriting 

Ass’n v. Wolf (JUA III), 509 F. Supp. 3d 212 

(M.D. Pa. 2020)

The wheel turned again in 2019, with the passage of Act 

15, which, unlike its predecessors, did not mandate the transfer 

of the JUA’s surplus to the Commonwealth. Act of June 28, 

2019, P.L. 101, No. 15, § 7 (“Act 15”). Instead, the Act

requires the JUA to be funded by the Commonwealth and that 

it submit and testify to a budget estimate annually. Id. It also 

mandates that the JUA’s Board hold quarterly public meetings 

as required by the state’s Sunshine Act,

18 and that the JUA be 

considered as a “Commonwealth agency” for the purposes of 

the Commonwealth Attorneys Act19 and other state statutes. 

Id. Finally, Act 15 requires the JUA to share a list of its 

constitutional question had changed. JUA II, 381 F. Supp. 3d

at 334-35 (“[T]he dispositive inquiry [in JUA II] is ‘[w]hether 

the Commonwealth can now recapture the [JUA] through post 

hoc legislation – irrespective of private rights and interests 

accrued by the [JUA] over more than four decades’ – without 

constitutional consequence.” (third alteration in original)).

18 The Sunshine Act requires that “[o]fficial action and

deliberations by a quorum of the members of an agency shall 

take place at a meeting open to the public[.]” 65 Pa. C.S.A. 

§ 704.

19 The Commonwealth Attorneys Act requires the 

Pennsylvania Attorney General to represent all 

Commonwealth agencies “in any action brought by or against 

the Commonwealth or its agencies[.]” 71 P.S. § 732-204(c). 

Case: 21-1155 Document: 58 Page: 21 Date Filed: 12/16/2024
22

employees with the Commonwealth, conduct operations in 

Commonwealth-owned facilities, and meet the requirements of

the Department of Revenue for employees with access to tax 

information. Id.

Predictably, the JUA again sued the Governor and the 

General Assembly, this time seeking declaratory and 

injunctive relief for violations of substantive and procedural

due process, the Takings Clause, the Contract Clause, and the 

First Amendment. Unlike in JUA I and JUA II, the District 

Court denied the JUA’s preliminary injunction and TRO

motions because “Act 15 posed no threat of imminent and 

irreparable harm.” JUA III, 509 F. Supp. 3d at 221. The parties

then filed cross-motions for summary judgment.

In its summary judgment opinion, the District Court 

once more repeated its holding from JUA I that the JUA is a 

private entity with private property. Id. at 222. It described 

Act 15 as “test[ing] the outer bounds of [the JUA I and JUA II]

holdings, tasking [the Court] to consider what degree of 

authority, if any, the Commonwealth may assert over the 

[JUA].” Id. The answer largely went against the 

Commonwealth, again.

The District Court held that Act 15’sfunding of the JUA

through the Commonwealth budget, as well as the requirement 

that the JUA submit and testify to its planned expenses,

constituted a regulatory taking. Id. at 223-27 (“By prohibiting 

the [JUA] from spending its private funds as it might choose, 

Act 15 deprives the [JUA] of ... essential property rights.”).

The District Court also held that the categorization of the JUA 

as a Commonwealth agency for purposes of the 

Commonwealth Attorneys Act violated the JUA’s First 

Case: 21-1155 Document: 58 Page: 22 Date Filed: 12/16/2024
23

Amendment right to consult with and hire civil counsel of its 

choice. Id. at 228-31. The Court accordingly granted a 

permanent injunction against the implementation of those 

portions of the Act. Id. at 235.

The District Court did, however, rule for the Defendants 

on the provisions of Act 15 having to do with the JUA’s 

disclosures to the public and the Commonwealth.

20 Those 

provisions did not constitute a violation of substantive due 

process. Id. at 231-34. Clarifying its earlier decisions, the 

Court said: “In holding that the [JUA] is a private entity and its 

funds private property, we rejected defendants’ claim that the 

[JUA] is the state itself. We have never denied, however, that 

the [JUA] is a unique creature – a state-created private entity 

that furthers the General Assembly’s public-health objectives.”

Id. at 232. While reasserting that the JUA’s property and 

operations are private, the Court acknowledged that the 

“mission [of the JUA] is indisputably public[,]” so the 

Commonwealth’s oversight and support in the form of the 

remaining provisions of Act 15 survived rational-basis review.

Id. at 232-33. Both sides timely appealed the Court’s order. 

(C.A. Nos. 21-1099, 21-1112, & 21-1155.) 

20 In addition to upholding the disclosure provisions of 

Act 15, the District Court also ruled for the Defendants on the 

JUA’s Contract Clause claim, which it deemed to be moot. 

JUA III, 509 F. Supp. 3d at 227 n.6. Those rulings coincide 

with paragraph five of the District Court’s separate judgment 

order, in which it granted summary judgment in favor of the 

Defendants as to the JUA’s substantive due process (Count I) 

and Contract Clause (Count III) claims. We will affirm that 

portion of the District Court’s order.

Case: 21-1155 Document: 58 Page: 23 Date Filed: 12/16/2024
24

We consolidated the appeals from the three JUA cases 

and held oral argument. We then stayed the appeals and 

certified to the Pennsylvania Supreme Court the question of 

whether the JUA is, under Pennsylvania law, a public or 

private entity. That court declined to answer the question,

saying the issue is “principally one of federal law.” Pa. Pro. 

Liab. Joint Underwriting Ass’n v. Governor of the 

Commonwealth, 310 A.3d 74, 76 (Pa. 2024). We now decide 

the merits of the appeals.

II. DISCUSSION21

On appeal, the Defendants argue 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 argue, as they repeatedly have, that the 

JUA is a “creature of the state” and without such rights. In 

response, the JUA maintains that it is a private entity and that

its assets and operations are largely beyond the reach of the 

21 The District Court had jurisdiction under 28 U.S.C.

§ 1331. We have jurisdiction pursuant to 28 U.S.C. § 1291. 

We exercise plenary review over the District Court’s grant of 

summary judgment and apply the same standard as the District 

Court. Hayes v. N.J. Dep’t of Hum. Servs., 108 F.4th 219, 221 

(3d Cir. 2024). Summary judgment is appropriate if, when 

viewed in the light most favorable to the non-moving party, 

there is no genuine issue of material fact and “the moving party 

is entitled to a judgment as a matter of law.” Celotex Corp. v. 

Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56(c)). 

We may affirm on any ground supported by the record. 

Hughes v. Long, 242 F.3d 121, 122 n.1 (3d Cir. 2001).

Case: 21-1155 Document: 58 Page: 24 Date Filed: 12/16/2024
25

Commonwealth. It further says 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.” (C.A. 18-

2297 Answering Br. at 31 (emphasis added).) While the case 

presents complexities that the District Court addressed with 

great care, we conclude that the Commonwealth has the better

of the arguments.

A. Dartmouth College provides the analytical 

approach for determining whether the JUA is

a public or private entity. 

The crux of this protracted litigation is the status of the 

JUA: whether it is a public entity akin to a state agency or is 

instead a private entity with the ability to sue the 

Commonwealth for the violation of constitutional rights. To 

make that determination, we first must identify the proper 

analytical approach. 

We begin by looking back more than two centuries to a 

case all the parties rely on: Trustees of Dartmouth College v. 

Woodward, 17 U.S. (4 Wheat.) 518 (1819). There, the

Supreme Court considered whether Dartmouth College, a

privately founded institution incorporated by charter from the 

British government, could be converted to a public institution 

by an act of the New Hampshire legislature some fifty years 

after the College’s founding. Id. at 552-55, 626. When the 

state tried to take it over, the College, through its trustees, sued, 

alleging a violation of the Constitution’s Contract Clause. Id. 

at 626-27.

Case: 21-1155 Document: 58 Page: 25 Date Filed: 12/16/2024
26

In considering whether Dartmouth College was a 

creature of the state subject to public control, the Supreme 

Court inferred nothing from the fact that the King of England

granted a charter to incorporate the college. Id. at 638. Instead,

the Court postulated a series of conditions that would qualify 

the College as a public institution.

If the act of incorporation be a grant of political 

power, if it create a civil institution, to be 

employed in the administration of the 

government, or if the funds ... be public 

property, or if the state ... , as a government, be 

alone interested in its transactions, [then] the 

subject is one in which the legislature of the state 

may act according to its own judgment, 

unrestrained by any limitation of its power 

imposed by the [C]onstitution of the United 

States. 

Id. at 629-30. 

We take the cited conditions to be four guiding

questions in the identification of a public entity subject to the 

control of the legislature. The first two questions, about the act 

of incorporation, ask whether the entity was granted political 

power or was created to be employed in the administration of 

government. The third asks whether the funds of the entity are 

public property, and the fourth and final question examines 

whether only the state has an interest in the entity. In short, the 

ends and means of the institution, as of the time it was 

established, are strong indicators of whether it is public or 

private. 

Case: 21-1155 Document: 58 Page: 26 Date Filed: 12/16/2024
27

Because an individual benefactor founded Dartmouth

College as a private charitable corporation, endowed by private 

funds, the founder “could scarcely be considered as a public 

officer, exercising any portion of those duties which belong to 

the government[.]” Id. at 634. Although the purpose of the 

institution was education, “an object of national concern,” the 

state could not “have supposed[] that [the founder’s] private 

funds, or those given by others, were subject to legislative 

management,” nor were the professors considered public 

officers merely by being employed to educate the youth. Id. at 

634-35. Dartmouth College, at its creation and incorporation, 

was founded for private purposes – “[t]he particular interests 

of New Hampshire never entered the mind of the donors, never 

constituted a motive for their donation” – so, the Court 

concluded, the College was not created as a “civil institution, 

participating in the administration of government[.]” Id. at 

640-41. The only power bestowed by the act of incorporation 

was the trustees’ perpetual power to promote the purpose of the 

College. Id. at 636, 641. That power did not assume a political 

character merely because the government granted a charter for 

Dartmouth to operate. Id. at 636-38.

In examining whether only New Hampshire had an 

interest in Dartmouth College, the Court reasoned that while

the original founder, land donors, and “fluctuating” student 

population maintained no “vested interest” assertable in court, 

the private corporation itself, as an “assignee of [the] rights” of 

the donors, did. Id. at 641-42. It stood in the founders’ place

and “distribute[d] their bounty, as they would themselves have 

distributed it[.]” Id. at 641-42. The corporation also served as 

a trustee for the students by exercising, asserting, and 

protecting their interests. Id. at 643. The corporation, 

administered by its trustees, thus held the “whole legal 

Case: 21-1155 Document: 58 Page: 27 Date Filed: 12/16/2024
28

interest[,]” id. at 645, and those trustees were capable of 

guiding and governing the institution as needed, outside of the 

“correcting and improving hand of the legislature,” id. at 648; 

see id. at 653 (explaining that the trustees were acting as 

assignees of the donors and founders, but also in their own 

interests as potential professors or leaders of the college). 

Having considered the questions it posed for itself, the 

Supreme Court ruled in favor of the College. Because 

Dartmouth was founded as a private charity with private funds,

without being granted political power or exercising it, and New 

Hampshire was not alone interested in it, the Supreme Court 

held that the state’s attempt to convert it to a public institution 

implicated and violated the Contract Clause. Id. at 650, 654. 

One of our sister circuits has applied Dartmouth 

College to determine whether an entity like the JUA could 

assert constitutional rights against its creator. In Texas 

Catastrophe Property Insurance Ass’n v. Morales, 975 F.2d 

1178 (5th Cir. 1992), the Fifth Circuit was asked whether a 

state-created property insurance association had a right to 

retain counsel in civil cases and could assert that right against 

the state. The Texas legislature established the association to 

provide property insurance in designated regions, and all 

property insurers in the state were required to join it. Id. at 

1179. The association received no funds from the government, 

and it wrote its own policies and paid its own claims. Id. When 

the legislature amended the association’s organic statute to 

require the association to use the Texas Attorney General as 

legal counsel, the association sued, alleging a violation of its 

constitutional rights. Id. at 1180. 

Case: 21-1155 Document: 58 Page: 28 Date Filed: 12/16/2024
29

Relying on the guidance of Dartmouth College, the 

Fifth Circuit examined the “identity” of the association to 

determine if it could bring the claim. Id. at 1182. The Fifth 

Circuit emphasized that the association’s statutory scheme 

allowed its members to receive distributions from its profits 

and, if a deficit occurred, to be assessed. Id. (“When [the 

association] loses, the bank accounts of its members are 

depleted, not the public treasury.”). Because the member 

companies were “vitally interested” in protecting their money 

– and that protection related to their ability to choose the 

association’s counsel – “the State of Texas [was] not alone 

interested in the [association’s assets].” Id. at 1183 (citing Trs. 

of Dartmouth Coll., 17 U.S. (4 Wheat.) at 629-30)). The Fifth 

Circuit also concluded that the act creating the association was 

not a grant of political power, nor was the association 

employed in the administration of government. Id. The 

association thus was not “truly a part of the state” and could 

sue Texas for the alleged deprivation of a constitutional right. 

Id. 

In JUA I, the District Court likewise rejected the 

argument that the JUA was a creature of the state because, 

applying Dartmouth College, it determined that the 

relationship between the JUA and the Commonwealth was not 

“sufficiently analogous” to that of a state and its 

municipalities.22 324 F. Supp. 3d at 530. In JUA II, the District 

22 That “sufficiently analogous” language comes from

Pocono Mountain Charter School v. Pocono Mountain School 

District, 908 F. Supp. 2d 597 (M.D. Pa. 2012). JUA I, 324 F. 

Supp. 3d at 530-31. In Pocono Mountain, the district court

considered whether a charter school could sue the state under 

§ 1983 by asking whether the school was “sufficiently 

Case: 21-1155 Document: 58 Page: 29 Date Filed: 12/16/2024
30

Court again dismissed the idea that the JUA is a “governmental 

instrument” under Dartmouth College, saying it “does not 

neatly fit into any of the categories of public entities described” 

therein. 381 F. Supp. 3d at 337. The Court declared that the 

state has “never been ‘alone interested in [the JUA’s] 

transactions.’” Id. On appeal, all of the Defendants urge us to 

adopt Dartmouth College’s guiding questions to determine 

whether the JUA is a public institution. The JUA also cites

Dartmouth College but argues that it embodies a holistic 

analysis, correctly reflected in the District Court’s decisions.

Unlike the District Court, we do not read Dartmouth

College as prescribing categories into which an entity must 

entirely fall to be considered public. Whether labeled holistic 

or not, the analysis should indeed follow Dartmouth College, 

and that is best done by considering the four questions just 

discussed. Tailored to the case before us, they ask (1) whether 

the JUA’s organic act granted it political power, (2) whether 

the JUA was created to be employed in the administration of 

government, (3) whether the JUA’s funds are drawn from

public property, and, finally, (4) whether anyone but the 

Commonwealth has an interest in the JUA. 

analogous to a municipality.” 908 F. Supp. 2d at 606. The 

court considered the school’s relationship with the school

district and state, id. at 611, and held that the school could not 

file suit because it operated within the authorization of the 

school district for a limited purpose, id. at 612. In JUA I, the 

District Court noted that “no case has extended Pocono 

Mountain beyond its charter school context.” 324 F. Supp. 3d 

at 530.

Case: 21-1155 Document: 58 Page: 30 Date Filed: 12/16/2024
31

B. The JUA is a public entity without the ability 

to assert constitutional claims against the 

Commonwealth.

We take up Dartmouth College’s four guiding questions

in turn.

First, we ask whether the JUA’s organic act granted it

political power.23 Trs. of Dartmouth Coll., 17 U.S. (4 Wheat.) 

at 629. Although not a grant of political power in the 

traditional sense, since its inception, the JUA has held and 

exercised the coercive power of the state in its ability to require

all MPL insurers who choose to do business in the 

Commonwealth to take certain actions.

24 Insurers have to 

become members of the JUA whether they like it or not, and 

the organic act for the JUA required the members to share the 

initial costs of the organization’s operation among themselves. 

PHCSM Act, P.L. 390, No. 111, § 802 (repealed 2002). The 

JUA also exercises the Commonwealth’s power in requiring 

the member-companies to provide affordable MPL insurance 

to providers who would otherwise be unable to conveniently 

obtain it in the “ordinary insurance market.” Id. § 801; 40 P.S. 

§ 1303.732(a). The Commonwealth granted the JUA its 

power, which is vested in and exercised by the JUA’s Board of 

Directors, 40 P.S. § 1303.731(a), to carry out the public 

purposes of the original legislation and its successor statute, the 

23 The District Court did not consider this aspect of 

Dartmouth College in any of its JUA decisions.

24 Recall that “MPL” is an acronym for medical 

professional liability.

Case: 21-1155 Document: 58 Page: 31 Date Filed: 12/16/2024
32

MCARE Act, id. § 1303.102; PHCSM Act, § 102. The

exercise of such power on behalf of the Commonwealth for a 

public purpose suggests that the JUA is a public entity. 

Second, we consider whether the JUA was created as a 

civil institution to be employed in the administration of 

government. Trs. of Dartmouth Coll., 17 U.S. (4 Wheat.) at 

629. The District Court concluded that the JUA was not 

created or employed as such. JUA II, 381 F. Supp. 3d at 337. 

We disagree. While the JUA is not a state agency in the 

traditional sense, Pennsylvania established the entity in 1975

to ensure that health care providers could obtain MPL 

insurance at a reasonable cost and that victims of medical

negligence would promptly receive fair compensation. 

PHCSM Act, § 102. The General Assembly reiterated those

two goals in 2002 with the enactment of the MCARE Act, the 

purpose of which is to make medical care available in the 

Commonwealth through a “comprehensive and high-quality 

health care system.” 40 P.S. § 1303.102(1). In addition to 

affordable MPL insurance and fair compensation for victims 

of medical negligence, the health care system must include 

“[a]ccess to a full spectrum of hospital services and to highly 

trained physicians in all specialties ... across th[e]

Commonwealth.” Id. §§ 1303.102(2)-(4). Recognizing and 

furthering those goals are “essential to the public health, 

safety[,] and welfare of all the citizens” of the Commonwealth. 

Id. § 1303.102(6).

The JUA is integral to the Commonwealth’s 

administration of a highly regulated, safe, and accessible health 

care system: it ensures that health care providers in high-risk 

specialties or reentering practice can and will do business in 

the Commonwealth, where obtaining required insurance 

Case: 21-1155 Document: 58 Page: 32 Date Filed: 12/16/2024
33

coverage would otherwise be cost-prohibitive. Id.

§ 1303.732(a). The General Assembly thus employed the JUA 

to serve as an essential piece of its supervision of the 

Commonwealth’s insurance market and health care system, 

supporting the public good by serving as a safety net for both 

medical providers and the patients they serve. We are, of 

course, not suggesting that entities involved in the insurance or 

health care markets are, by that fact alone, necessarily public 

institutions, even when the government may have a hand in 

their formation. There can be gradations of government 

involvement, so a fact-specific determination is required. In 

this instance, we believe that the Commonwealth’s creation 

and use of the JUA for the stated purposes indicates that it can 

rightly be considered a feature of the Commonwealth’s 

government and hence as a public institution. 

Third, we ask whether the JUA’s funds are drawn from

public property. Trs. of Dartmouth Coll., 17 U.S. (4 Wheat.) 

at 629-30. In considering this aspect of Dartmouth College, 

the District Court concluded that the JUA has “never been 

funded by or endowed with ‘public property’[.]” JUA II, 381 

F. Supp. 3d at 337. And, true enough, it is undisputed that the 

JUA has not drawn on the public fisc. Id. at 328. Taking 

account of “the nature of the funds in dispute[,]” the District 

Court thus held that the JUA’s surplus is private property. JUA 

I, 324 F. Supp. 3d at 537-38. But an essential piece is missing 

from that reasoning: the JUA’s funds are not simply private 

money exchanged among private individuals and entities in a 

typical insurance market. The funds are the result of the 

Commonwealth’s acquisition of policyholders’ premium 

payments for a public purpose. Although not public in the 

traditional sense, the JUA’s funds exist only to support the 

goals of the Commonwealth as set forth in the JUA’s organic 

Case: 21-1155 Document: 58 Page: 33 Date Filed: 12/16/2024
34

act and, later, the MCARE Act – to make available a 

comprehensive and high-quality health system in the 

Commonwealth, one aspect of which is to ensure access to 

affordable MPL insurance. 40 P.S. §§ 1303.102(1), (3). To 

the extent the JUA’s surplus could be considered profits, the 

JUA must use the funds for its nonprofit purpose, which is to 

provide MPL insurance as dictated by the MCARE Act. 15 Pa. 

C.S.A. § 9114(d). As discussed infra, the JUA’s obviously

excessive surplus provides no profits or dividends to anyone,

and no private party risks damage to its bank account should 

that surplus be reduced to a reasonable level. The funds exist 

as the result of the Commonwealth’s enforced acquisition of 

premiums for a public purpose, which, again, indicates that the 

JUA is public in nature. That the premiums thus received are 

augmented by returns on those same funds once invested does 

not change that. 

Finally, fourth, we consider whether anyone but the 

Commonwealth has an interest in the JUA. Trs. of Dartmouth 

Coll., 17 U.S. (4 Wheat.) at 630. In JUA II, the District Court 

explained that the JUA’s members have an interest in the JUA

because they may be assessed if the JUA suffers a deficit. 381 

F. Supp. 3d at 339 n.7. That statement is the only support for 

the District Court’s finding that the state has “never been ‘alone 

interested in [the JUA’s] transactions.’” Id. at 337. The 

Governor and Insurance Commissioner have a persuasive 

riposte. They asked: “Suppose one sought to purchase [the]

JUA. To whom would they write the check?” (Exec. Def. C.A. 

18-2297 Opening Br. at 33.) And the answer, they said, is not 

the members, the Board, or the JUA itself. The JUA has no 

beneficiaries or donors. So the question stands: Were the JUA 

able to be sold, who besides the Commonwealth would be 

entitled to receive the profit from the sale?

Case: 21-1155 Document: 58 Page: 34 Date Filed: 12/16/2024
35

Both in its Answering Brief and at oral argument, the 

JUA resisted engaging with that hypothetical. It said that, as 

an unincorporated nonprofit association, the JUA “exists for 

the benefit of its purpose” and “it cannot be bought or sold in 

any traditional sense.” (C.A. 18-2297 Answering Br. at 57.) 

That, of course, avoids rather than answers the question. But 

the Defendants’ point remains even if we shift the hypothetical 

from selling the JUA to dissolving it by operation of law or at 

the request of its members, as allowed by its plan of operations. 

Its assets would then be “distributed in such a manner as the 

Board may determine subject to the approval of the 

Commissioner.” (C.A. No. 21-1099 J.A. at 180.) It is difficult 

to imagine where the assets, including the surplus, would go 

except to the Commonwealth, as the JUA has no private 

stakeholders, no property in trust, and no charitable purpose. 

Cf. 15 Pa. C.S.A. § 9135(1)-(5) (explaining the requirements 

for winding up a nonprofit association). Even if the Board 

directed that the property be distributed to the JUA’s members, 

it seems most unlikely that the Commissioner would approve 

that plan. But see JUA I, 324 F. Supp. 3d at 538 (finding “no 

merit” in this possibility because it rested on too many 

assumptions). At oral argument, the JUA said that the General 

Assembly theoretically could dissolve the JUA, and the surplus 

would somehow go to its nonprofit purpose, which it did not 

specify but conceded was to benefit the public. 

The JUA argues that the member assessments to which 

the District Court referred in JUA II are enough to create a nonstate interest in the JUA.25 See JUA II, 381 F. Supp. 3d at 339 

25 The JUA also makes a general argument that its 

members have a reputational interest in “minimizing public 

Case: 21-1155 Document: 58 Page: 35 Date Filed: 12/16/2024
36

n.7. According to the JUA’s prior plan of operations, in the 

case of a deficit, the Board could issue assessments to members 

in proportion to their participation in the insurance pool. But 

the JUA’s CEO testified that the JUA has never assessed its 

members, “never intend[s] to” assess its members, and has 

been told by the Insurance Department to remove the 

assessment language from its plan; she further stated frankly 

that she did not “believe that [the JUA has] the statutory power 

to assess the members.” (C.A. No. 18-2297 J.A. at 1318, 1470-

72.) In fact, as the JUA conceded at oral argument, the plan of 

operations as amended in 2018 excluded the memberassessment language.

26 

The Governor and Insurance Department argue that 

whether the JUA’s members have a true possibility of being

assessed – and thus perhaps have an interest in the JUA’s funds

– is a disputed fact that should be viewed in the light most 

favorable to them on summary judgment. The JUA responds 

that the prior plan said what it said, despite its own CEO’s 

criticism of the [MPL insurance] industry[,]” which, the JUA 

says, represents a pecuniary interest. (Answering Br. C.A. 18-

2297 at 55-56.) The JUA offers no evidentiary support for its 

assertion that its members would suffer monetary losses from 

public criticism if the JUA did not exist.

26 The JUA stated at oral argument, however, that, 

although the JUA complied with the Commissioner’s mandate 

to remove the language permitting the Board to assess its 

members, the 2018 plan still somehow gives the Board broad 

power to “levy assessments[.]” (Compare C.A. No. 18-2297 

J.A. at 233 with C.A. No. 21-1099 J.A. at 177.)

Case: 21-1155 Document: 58 Page: 36 Date Filed: 12/16/2024
37

testimony indicating that there is no reason to believe any

assessments will ever occur. Neither side has it right, and, in 

particular, the Defendants’ categorization of the assessments as 

a disputed fact is incorrect. Instead, as the JUA’s CEO 

indicated in her testimony regarding the legal authority of the 

JUA to issue assessments, the question is one of law – whether 

the JUA has statutory authority to assess its members. 

The statute does not include any language about

assessments. 40 P.S. § 1303.733. It merely says that, if the

JUA were to experience a deficit, it could be authorized to 

borrow funds – but not from whom. Id. § 1303.733(b). The 

JUA’s authority to assess costs from its members is at best 

ambiguous, and, given that the JUA has never sought to assess 

its members, and “never intend[s]” to do so, setting up possible 

assessments as evidence of a valid non-state interest vastly 

exaggerates the hypothetical assessments’ importance. (C.A. 

No. 18-2297 J.A. at 1470.) 

In the end, the JUA’s possible financial booms and

busts do not give its policyholders or members a legal interest 

in its assets. The JUA fails to identify any other legally 

protectable interest on behalf of anyone but the 

Commonwealth. As far as we can tell, the Commonwealth, 

which created the JUA as part of its broader legislative scheme 

to maintain a high-quality health care system, is the only one 

with an interest in the JUA. 

In sum, Pennsylvania established the JUA to serve an 

integral role in the administration of the Commonwealth’s

insurance market and, consequently, in the health care market 

too. In doing so, it imbued the JUA with the coercive power 

Case: 21-1155 Document: 58 Page: 37 Date Filed: 12/16/2024
38

of state government to compel private insurance companies to 

take specific actions. The JUA’s funds are the result of the 

Commonwealth’s enforced acquisition of funds to support 

those goals, and only the Commonwealth has a legally 

protectable interest in the JUA and its resources. We thus hold 

that, under Dartmouth College’s guidance, the JUA is a public 

institution and is without the ability to maintain the 

constitutional claims it has asserted against the 

Commonwealth.27

27 Pursuant to the principles of federalism, the 

Commonwealth can amend and repeal its JUA-related 

legislation as it sees fit, free from interference by federal 

courts. See Garcia v. San Antonio Metro. Transit Auth., 469

U.S. 528, 546 (1985) (“The genius of our government provides 

that ... the people – acting not through the courts but through 

their elected representatives – have the power to determine as 

conditions demand, what services and functions the public 

welfare requires.”) (quoting Helvering v. Gerhardt, 304 U.S. 

405, 427 (1938) (Black, J., concurring)). As the District Court 

observed, however, the Commonwealth’s freedom to 

experiment is not without limits. JUA II, 381 F. Supp. 3d at 

340-41. A party with standing may object to the 

constitutionality of the Commonwealth’s actions and may seek 

redress in federal court. Bond v. United States, 564 U.S. 211, 

222 (2011) (“[F]ederalism protects the liberty of the individual 

from arbitrary power. When government acts in excess of its 

lawful powers, that liberty is at stake.”); Hein v. Freedom From 

Religion Found., Inc., 551 U.S. 587, 598 (2007) (explaining 

that a federal court “must refrain from passing upon the 

constitutionality of an act” unless “the question is raised by a 

party whose interests entitle him to raise it”) (quoting Valley 

Case: 21-1155 Document: 58 Page: 38 Date Filed: 12/16/2024
39

C. The District Court relied on cases that are 

distinguishable. 

Finally, for completeness, we consider the District 

Court’s reliance on certain out-of-circuit precedents that the 

Defendants argue are distinguishable from the present case. 

We agree with that critique. 

1. Asociación, Arroyo-Melicio, and

Morales

First, the District Court discussed Asociación De 

Subscripción Conjunta Del Seguro De Responsabilidad 

Obligatorio v. Flores Galarza, 484 F.3d 1 (1st Cir. 2007), 

wherein the First Circuit concluded that Puerto Rico’s 

association for automobile liability insurance could bring a 

takings claim against the territory, because the association was 

“private in nature” and thus had standing to allege a 

constitutional violation. Id. at 9, 20. That conclusion relied on 

the First Circuit’s earlier decision in Arroyo-Melicio v. Puerto 

Rican American Insurance Co., 398 F.3d 56, 62 (1st Cir. 

2005), which the District Court categorized as “expound[ing] 

the nature of the association’s relationship with the 

government.” JUA I, 324 F. Supp. 3d at 533. [C.A. No. 18-

2297 J.A. at 31.] 

But the discussion in Arroyo-Melicio is just that – a 

discussion of the characteristics of an insurance arrangement 

within a specific statutory scheme, all for the purpose of 

considering federal antitrust claims. 398 F.3d at 60-62. The 

Forge Christian Coll. v. Ams. United for Separation of Church 

and State, Inc., 454 U.S. 464, 474 (1982)) (cleaned up).

Case: 21-1155 Document: 58 Page: 39 Date Filed: 12/16/2024
40

First Circuit engaged in no analysis of the association’s status 

as a public or private entity; it did not have to. The statute that 

created that association and its relevant rules stated that it was 

“a private association,” had the “general corporate powers of a 

private corporation,” 26 L.P.R.A. §§ 8055(a), (g), and was 

“for-profit,” Off. of Comm’r of Ins., P.R. Reg. No. 6254(2)(c) 

(2000). The plaintiffs in Arroyo-Melicio did not dispute the 

association’s private status. The First Circuit’s statement that 

the association “is not an agency of” Puerto Rico resulted 

merely from reading the statute and regulations creating it, not 

from any analysis of its characteristics. Arroyo-Melicio, 398 

F.3d at 60-62. The District Court’s reliance on Asociación and 

Arroyo-Melicio was thus misplaced.

Second, the District Court discussed Texas Catastrophe 

Property Insurance Ass’n v. Morales, 975 F.2d at 1183. JUA 

I, 324 F. Supp. 3d at 533. As discussed in Section II.A., supra, 

the Fifth Circuit applied Dartmouth College in that case to 

determine whether a state-created property insurance 

association could assert a constitutional claim against its 

creator. Morales, 975 F.2d at 1182. The analysis 

fundamentally focused on the fact that Texas was not alone 

interested in the association’s assets because the association’s 

member companies shared in its profits and losses. Id. at 1183 

(citing Dartmouth, 17 U.S. (4 Wheat.) at 629-30). The Fifth 

Circuit mentioned the other aspects of the association as 

background, id. at 1179-80, but, as in Arroyo-Melicio, the 

insurance scheme in Morales differed from the JUA in a 

particularly significant way: as established by the association’s 

organic statute, the member companies shared in the profits 

and losses of the association. Morales, 975 F.2d at 1182; see 

also Arroyo-Melicio, 398 F.3d at 62. The entities at issue in 

both cases are thus expressly subject to the interests of their

Case: 21-1155 Document: 58 Page: 40 Date Filed: 12/16/2024
41

members – differentiating them from a public institution under 

Dartmouth College. See supra Section II.A. Those cases 

therefore do not answer the “public-versus-private entity” 

question on the facts before us.

2. MMIA and MSLA

The District Court also discussed the treatment of an 

unincorporated insurance association in Medical Malpractice 

Insurance Ass’n v. Superintendent of Insurance of State of New 

York, 533 N.E.2d 1030 (N.Y. 1988) (“MMIA”). JUA I, 324 F. 

Supp. 3d at 533-34. There, the New York Court of Appeals 

considered whether a legislative scheme requiring an MPL 

insurance underwriting association to run at a deficit was a 

confiscation of property in violation of the Takings Clause. 

MMIA, 533 N.E.2d at 1036. Because those deficits were 

“expressly contemplated in the enabling legislation[,]” the 

court rejected the association’s claim that the deficit was 

confiscatory.

28 Id. at 1037. 

In JUA I, the District Court discussed MMIA, 

contrasting what it called the “exhaustive statutory framework 

dictating the composition of [the association’s] board and its 

plan of operations and authorizing the superintendent of 

insurance to unilaterally order amendments to the plan” at issue 

28 The members, who were required to “make up” a 

deficit incurred by the association, were not parties to the suit, 

so the court did not consider whether the statutory scheme was 

confiscatory as to them. Med. Malpractice Ins. Ass’n v. 

Superintendent of Ins. of State of N.Y. (MMIA), 72 N.Y.2d 753, 

767 (N.Y. 1988).

Case: 21-1155 Document: 58 Page: 41 Date Filed: 12/16/2024
42

there with the Pennsylvania legislature’s choice not to “tightly

circumscribe the [JUA’s] operations and composition of its 

board[.]” JUA I, 324 F. Supp. 3d at 534, 538. The District 

Court reiterated those differences in JUA II, stating, “[i]n stark 

contrast to MMIA, the [JUA] is subject to minimal supervision

by the Commissioner, in a manner not meaningfully different 

from private insurers.” 381 F. Supp. 3d at 340.

But the court in MMIA did not address the question 

before us. It assumed the insurance association could bring 

federal constitutional claims against its creator, then 

considered the characteristics of that association’s funds for the 

purposes of ruling on the substance of those constitutional 

claims. MMIA, 533 N.E.2d at 1036-37. Although the court 

identified the association as a “creature of statute,” id. at 1036, 

it did not engage with the threshold issue of whether that 

creature was public and had the ability to assert constitutional 

claims against the state, so MMIA is inapposite.

Finally, the District Court discussed Mississippi Surplus 

Lines Ass’n v. Mississippi, 261 F. App’x 781 (5th Cir. 2008)

(“MSLA”). In that case, upon the request of the state’s 

Insurance Commissioner, a group of private individuals 

formed a nonprofit association to assist the Commissioner with

regulating the surplus line insurance market. Id. at 783. The 

statute allowed the association to levy fees on premiums, 

subject to approval by the Commissioner, which the 

association then used for operating expenses. Id. at 784. When 

the association accumulated excess funds through those fees, 

the state amended its code to authorize the transfer of $2 

million to the state. Id. The Fifth Circuit, in determining 

whether the funds were private or public property, explained 

that “the [association] and its funds exist at the whim of the 

Case: 21-1155 Document: 58 Page: 42 Date Filed: 12/16/2024
43

legislature and are public in nature[,]” so the association had 

no right to the funds. Id. at 785, 788. 

Like the court in MMIA, the Fifth Circuit in MSLA did 

not wrestle with whether the association itself was public or 

private for the purpose of determining whether it could assert 

constitutional claims against the state. Although it 

acknowledged that “the private or public nature of the 

organization is a necessary step in an inquiry when an entity 

acting for a state initiates legal action against the state[,]” id. at 

785 (discussing Morales, 975 F.2d at 1182), it did not conduct 

that analysis nor determine whether the association could bring 

a claim against the state in the first place. Rather, the court 

considered whether the funds were public or private only for 

the purpose of ruling on the merits of the association’s 

constitutional claims. Id. at 787-88 (“Because [the association] 

did not have a property right in the $2 million in excess fees 

that the State appropriated, the legislature did not deprive them 

of a property right without due process of law.”). In short, the 

court in MSLA did not engage with the question central in each 

of the JUA cases: whether the entity in question is public or 

private for the purpose of determining whether it can bring a 

constitutional claim against its creator. 

In sum, given the facts we have here, the cases relied on 

by the District Court appear to give little guidance, so we 

decline to endorse the conclusions the District Court reached 

based on them. 

Case: 21-1155 Document: 58 Page: 43 Date Filed: 12/16/2024
44

III. CONCLUSION

For the foregoing reasons, we will reverse in part, affirm 

in part (as stated in footnote 20, supra), and remand for further 

proceedings consistent with this opinion.

Case: 21-1155 Document: 58 Page: 44 Date Filed: 12/16/2024