Title: Wisconsin Medical Society v. Michael L. Morgan
Citation: 2010 WI 94
Docket Number: 2009AP000728
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: July 20, 2010

2010 WI 94 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2009AP728 
COMPLETE TITLE: 
 
 
Wisconsin Medical Society, Inc. and David M. 
Hoffmann, M.D., 
          Plaintiffs-Appellants, 
     v. 
Michael L. Morgan, 
          Defendant-Respondent. 
 
 
 
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
OPINION FILED: 
July 20, 2010   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
April 15, 2010   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Dane   
 
JUDGE: 
Michael Nowakowski   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
ABRAHAMSON, C.J., dissents (opinion filed). 
BRADLEY, J., joins dissent.   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the plaintiffs-appellants there were briefs (in the 
court of appeals) and a brief in the supreme court by Cynthia L. 
Buchko, Thomas M. Pyper, and Whyte Hirschboeck Dudek, S.C., 
Madison, and oral argument by Thomas M. Pyper. 
 
For the defendant-respondent the cause was argued by 
Charlotte Gibson, assistant attorney general, and Christopher J. 
Blythe, assistant attorney general was on the brief (in the 
court of appeals) and a brief in the supreme court, with whom on 
the briefs was J.B. Van Hollen, attorney general. 
 
An amicus curiae brief was filed by Peter L. Gardon, 
Jessica Hutson Polakowski, and Reinhart Boerner Van Deuren S.C., 
Madison, 
on 
behalf 
of 
the 
Wisconsin 
Academy 
of 
Family 
Physicians, the American Academy of Family Physicians, the 
Wisconsin Chapter of the American College of Physicians, the 
Milwaukee District Association of Osteopathic Physicians and 
Surgeons, and the American Medical Association. 
 
 
 
2 
An amicus curiae brief was filed by Anne Berleman Kearney 
and Appellate Consulting Group, Milwaukee, on behalf of the 
Wisconsin Hospital Association. 
 
An amicus curiae brief was filed by William L. Shenkenberg, 
Michael Marx, Sean Lanphier, and Mallory & Zimmerman, S.C., 
Milwaukee, on behalf of the Medical College of Wisconsin. 
 
An amicus curiae brief was filed by Michael B. Van Sicklen, 
Bree Grossi Wilde, and Foley & Lardner LLP, Madison, on behalf 
of Dean Health Systems, Inc., Marshfield Clinic and Gunderson 
Lutheran Health System, Inc. 
 
An amicus curiae brief was filed by Lester A. Pines and 
Cullen, Weston, Pines & Bach LLP, Madison, on behalf of the 
Advocates for Medicaid Patients. 
 
An amicus curiae brief was filed by Lynn R. Laufenberg and 
the Laufenberg Law Group, S.C., Milwaukee and by Dana J. Weis 
and Habush, Habush & Rottier, S.C., Rhinelander, on behalf of 
the Wisconsin Association for Justice, and oral argument by Dana 
J. Weis. 
 
 
 
 
2010 WI 94
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2009AP728   
(L.C. No. 
2007CV4035) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Wisconsin Medical Society, Inc.  
and David M. Hoffmann, M.D., 
 
          Plaintiffs-Appellants, 
 
     v. 
 
Michael L. Morgan, 
 
          Defendant-Respondent. 
 
 
 
FILED 
 
JUL 20, 2010 
 
A. John Voelker 
Acting Clerk of 
Supreme Court 
 
 
 
 
 
APPEAL from an order of the Circuit Court for Dane County, 
Michael Nowakowski, Judge.  Reversed and cause remanded.   
 
¶1 
DAVID T. PROSSER, J.   This case is before the court 
on certification from the court of appeals pursuant to Wis. 
Stat. § (Rule) 809.61 (2007-08).1  As part of the 2007-2009 state 
budget, 2007 Wis. Act 20 (the Act), the legislature transferred 
$200 million from the Injured Patients and Families Compensation 
Fund (the Fund) to the Medical Assistance Trust Fund (MATF).  
                                                 
1 All subsequent references to the Wisconsin Statutes are to 
the 2007-08 version unless otherwise indicated. 
No.  2009AP728 
2 
 
2007 Wis. Act 20, § 9225.  To implement the Act, the Department 
of Administration, under the supervision and direction of 
Secretary Michael L. Morgan (Secretary Morgan), subsequently 
made two transfers of $71.5 million and $128.5 million from the 
Fund. 
¶2 
The Wisconsin Medical Society (the Medical Society) 
and Dr. David Hoffmann, M.D. (Dr. Hoffmann) brought this suit, 
claiming that Secretary Morgan took private property without 
just compensation.  The circuit court dismissed the suit on 
grounds that the Medical Society lacked a property interest in 
the Fund. 
¶3 
The Medical Society appealed, and the court of appeals 
certified the matter to this court.  We granted certification on 
the following two questions: 
(1) Do 
the 
plaintiffs 
have 
a 
protectable 
property interest in the Injured Patients and Families 
Compensation Fund? 
(2) Is a statute that retroactively repudiates a 
government’s contractual obligation constitutional? 
¶4 
We conclude that the health care providers have a 
constitutionally protected property interest in the Fund.  
Wisconsin Stat. § 655.27(6) defines the Fund as an irrevocable 
trust, and the structure and purpose of the Fund satisfy all the 
elements necessary to establish a formal trust.  Because the 
health care providers are specifically named as beneficiaries of 
the trust, they have equitable title to the assets of the Fund. 
¶5 
From their equitable title in the Fund, the health 
care providers have at least three corresponding rights.  First, 
No.  2009AP728 
3 
 
they have a right to the security and integrity of the entire 
Fund.  Second, they have a right to realize the Fund's 
investment earnings to moderate, perhaps even lower, their 
assessments.  Third, health care providers and the proper 
claimants have the right to have excess judgments paid to the 
proper claimants.  Any transfer of money from the Fund for an 
improper purpose infringes upon these three rights. 
¶6 
Because health care providers have protected property 
interests in the Fund, we conclude that § 9225 of 2007 Wis. Act 
20 is unconstitutional because it authorizes an unconstitutional 
taking of private property without just compensation. 
¶7 
Accordingly, we reverse the circuit court's order 
granting summary judgment and dismissing the Medical Society's 
suit.  We remand with directions that the circuit court issue 
(1) an order requiring Secretary Morgan to replace the money 
removed from the Fund, together with lost earnings and interest 
that has been charged to the Fund; and (2) a permanent 
injunction prohibiting Secretary Morgan from transferring money 
out of the Fund pursuant to § 9225 of 2007 Wis. Act 20. 
I. BACKGROUND AND PROCEDURAL HISTORY 
¶8 
A full appreciation of the issues in this case 
requires 
a 
detailed 
examination 
of 
the 
Fund 
itself.  
Accordingly, we begin this section by examining the history of 
the Fund and the current statutory structure.  We then examine 
2007 Wis. Act 20 and the transfer of money from the Fund to the 
MATF.  Finally, we set out the procedural history of this case. 
A. 
The Fund 
No.  2009AP728 
4 
 
¶9 
The Fund was established by the legislature in 1975 in 
response to the rising cost of professional liability insurance 
coverage for health care providers, which was leading to 
increased health care costs and decreased availability of health 
care services.  § 1, ch. 37, Laws of 1975.  The stated purpose 
of the Fund is "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 
claims 
are 
satisfied." 
 
Wis. 
Stat. 
§ 655.27(6). 
¶10 The Fund operates as part of a broad legislative 
scheme set out in Wis. Stat. ch. 655.  Chapter 655 "provide[s] 
the exclusive procedure for a person to pursue a malpractice 
claim against a health care provider."  Rouse v. Theda Clark 
Med. Ctr., Inc., 2007 WI 87, ¶35, 302 Wis. 2d 358, 735 N.W.2d 30 
(citing State ex rel. Strykowski v. Wilkie, 81 Wis. 2d 491, 499, 
261 
N.W.2d 434 
(1978)). 
 
The 
provisions 
of 
ch. 655 
are 
applicable to nearly all health care providers practicing in 
Wisconsin who are not state, county, or municipal employees, or 
federal employees.2 
                                                 
2 Chapter 655 applies to physicians and nurse anesthetists 
whose principal place of practice is Wisconsin and who practice 
in Wisconsin more than 240 hours a year.  Wis. Stat. 
§ 655.002(a).  Participation is also mandatory for certain 
physicians and nurse anesthetists living in Wisconsin but 
practicing 
in 
Michigan, 
partnerships, 
corporations, 
other 
organizations, 
cooperative 
sickness 
care 
associations, 
ambulatory surgery centers, hospitals, affiliates of hospitals, 
and 
nursing 
homes 
combined 
with 
hospitals. 
 
Wis. 
Stat. 
§ 655.002(b)-(j); see also Wis. Stat. § 655.003 (exception for 
government employees). 
No.  2009AP728 
5 
 
¶11 Under ch. 655, each health care provider is required 
to maintain health care liability insurance or qualify as a 
self-insurer.  Wis. Stat. § 655.23(3)(a).  As of July 1, 1997, 
each health care provider is required to maintain liability 
coverage of at least $1,000,000 for each claim or occurrence and 
$3,000,000 for all claims or occurrences in any one policy year.  
Wis. Stat. § 655.23(4)(b)2.a., b.  As long as a health care 
provider has an insurance policy in force and complies with the 
requirements of ch. 655, the liability of the health care 
provider and his or her insurer is limited to the required 
amount of liability insurance or the maximum limit of the health 
care 
provider's 
liability 
insurance 
policy, 
whichever 
is 
greater.  Wis. Stat. § 655.23(5).3 
¶12 Each health care provider who is subject to the 
provisions of ch. 655 also is required to participate in the 
Fund by paying an annual assessment.  Wis. Stat. § 655.27(3)(a).  
For health care providers complying with the requirements of 
ch. 655, the Fund pays out that portion of any medical 
                                                 
3 Wisconsin Stat. § 655.23(5) provides: 
While health care liability insurance, self-
insurance or a cash or surety bond under sub. (3)(d) 
remains in force, the health care provider, the health 
care provider's estate and those conducting the health 
care provider's business, including the health care 
provider's health care liability insurance carrier, 
are liable for no more than the limits expressed in 
sub. (4) or the maximum liability limit for which the 
health care provider is insured, whichever is higher, 
if the health care provider has met the requirements 
of this chapter. 
No.  2009AP728 
6 
 
malpractice claim in excess of the amount of insurance that the 
health care provider is required to maintain, or the maximum 
liability of the health care provider's insurance, whichever is 
greater.  Wis. Stat. § 655.27(1).  In other words, the Fund is 
liable for payments "after a health care provider's statutorily 
mandated liability coverage limits are exceeded."  Wis. Patients 
Comp. Fund v. Wis. Health Care Liability Ins. Plan, 200 
Wis. 2d 599, 613, 547 N.W.2d 578 (1996) (hereinafter WHCLIP).   
¶13 Wisconsin Stat. § 655.23(6) provides that a health 
care provider who fails to participate in the Fund is subject to 
the broad enforcement authority of the Commissioner of Insurance 
(the commissioner) under Wis. Stat. § 601.64.4  Furthermore, a 
health care provider who does not participate in the Fund may 
not exercise any of the rights or privileges of his health care 
license.  Wis. Stat. § 655.23(7).  The board that granted the 
health care provider his or her license may suspend or refuse to 
issue or renew the license if the health care provider does not 
participate in the Fund.  Id. 
¶14 When the Fund was initially created, the legislature 
specified that it "shall be held in trust for the benefit of 
insureds and other proper claimants," and that "[t]he fund may 
not be used for purposes other than those of this chapter."  
                                                 
4 Wisconsin Stat. § 601.64 gives the commissioner the 
authority to commence an action in circuit court (1) to enjoin a 
violation of the statute or a rule; and (2) for a forfeiture up 
to $5,000 for each day of the violation.  Wis. Stat. 
§ 601.64(1), (2).  It also subjects intentional violators to 
criminal penalties.  Wis. Stat. § 601.64(4). 
No.  2009AP728 
7 
 
§ 10, ch. 37, Laws of 1975.  In 2003 this language was expanded 
to specify: 
The fund is established 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 
claims are satisfied.  The fund, including any net 
worth of the fund, is held in irrevocable trust for 
the 
sole 
benefit 
of 
health 
care 
providers 
participating 
in the fund and proper claimants.  
Moneys in the fund may not be used for any other 
purpose of the state. 
Wis. Stat. § 655.27(6) (emphasis added). 
¶15 The Fund is managed by a board of governors (the 
board).  Wis. Stat. § 655.27(2).  The board also oversees the 
WHCLIP, a risk-sharing plan to insure health care providers 
unable to obtain private coverage.  Wis. Stat. § 619.04(3); 
WHCLIP, 200 Wis. 2d at 607-08.  The board consists of 13 members 
representing different industries and organizations.  Wis. Stat. 
§ 619.04(3).5 
¶16 Because the Fund is a trust held for the benefit of 
health care providers and claimants, the board "is endowed with 
the requisite authority to perform all of the functions of 
trustees under the common law of trusts."  WHCLIP, 200 
                                                 
5 The board includes 3 representatives of the insurance 
industry appointed by the commissioner, a person named by the 
State Bar of Wisconsin, a person named by the Wisconsin 
Association for Justice (formerly the Wisconsin Academy of Trial 
Lawyers), two persons named by the Wisconsin Medical Society, a 
person 
named 
by 
the 
Wisconsin 
Hospital 
Association, 
the 
commissioner or a designated representative, and four public 
members appointed by the governor for staggered 3-year terms.  
Wis. Stat. § 619.04(3). 
No.  2009AP728 
8 
 
Wis. 2d at 615.  Accordingly, it has the "power and duty" to 
take legal action "for the protection of the trust estate."  Id. 
(quoting Strykowski, 81 Wis. 2d at 518). 
¶17 The board also has statutory authority to grant 
approval of the annual fees that health care providers must pay 
into the Fund, which are set by the commissioner.  Wis. Stat. 
§ 655.27(3)(b).  Wisconsin Stat. § 655.27(3)(a) mandates that 
the fees be set based on six factors: 
1. 
Past 
and 
prospective 
loss 
and 
expense 
experience in different types of practice. 
2. 
The past and prospective loss and expense 
experience of the fund. 
2m. The loss and expense experience of the 
individual health care provider . . .  
3. 
Risk factors for persons who are semiretired 
or part-time professionals. 
4. 
For [partnerships, corporations, or other 
organizations or enterprises], risk factors and past 
and 
prospective 
loss 
and 
expense 
experience 
attributable to employees of that health care provider 
other than employees licensed as a physician or nurse 
anesthetist. 
5. 
The 
supplemental 
appropriation 
under 
§ 20.145(2)(a) for payment of claims. 
Wis. Stat. § 655.27(3)(a).6  The fees set for a given fiscal year 
may not exceed the estimated total amount of claims to be paid 
during that fiscal year, the fees paid in the previous fiscal 
year adjusted by inflation, or 200 percent of the total dollar 
                                                 
6 The sixth factor was added as part of 2007 Wis. Act 20 to 
account for a supplemental appropriation of $100 million 
included in the Act. 
No.  2009AP728 
9 
 
amount disbursed for claims during the calendar year proceeding 
the previous fiscal year, whichever is greatest.  Wis. Stat. 
§ 655.27(3)(br). 
¶18 When the Fund was established in 1975, it operated on 
a cash basis.  This meant that the health care providers were 
assessed based on the actual amount paid out for claims in a 
given year.  During the 1980s, the Fund switched to accrual 
accounting to improve the Fund's integrity.  Under accrual 
accounting, the Fund's annual net balance is based on its assets 
minus the estimated "loss liabilities."  Loss liabilities are 
the amounts expected to be paid in the future for incidents that 
occurred in a given year, even if the underlying claims have not 
yet been made.  See Legislative Audit Bureau, An Audit: Injured 
Patients and Families Compensation Fund 25, available at 
http://www.legis.state.wi.us/lab/reports/10-4full.pdf 
(last 
visited July 13, 2010) (hereinafter 2010 Audit).7  Using the 
accrual method helps ensure that the Fund maintains sufficient 
assets to pay any of these outstanding loss liabilities if the 
Fund were discontinued. 
¶19 Loss liabilities account for nearly all of the Fund's 
liabilities.  Estimating the loss liabilities in a given year is 
difficult for a number of reasons.  The 2010 Audit lists five 
reasons why estimating loss liabilities is challenging: 
                                                 
7 We take judicial notice of the 2010 Audit, which is an 
easily accessible report prepared by a state agency.  See 
Perkins v. State, 61 Wis. 2d 341, 346 (1973) ("[T]his court has 
taken judicial notice of state records that are available at the 
seat of government in Madison that are easily accessible."). 
No.  2009AP728 
10 
 
[1] claims 
that 
exceed 
the 
primary 
medical 
malpractice 
insurance 
thresholds 
established 
in 
statute typically are infrequent and involve severe 
cases; 
[2] a medical malpractice claim may be filed 
years after an incident; 
[3] there is no limit on the amount of economic 
losses the Fund may be required to pay; 
[4] legislation 
and 
court 
decisions 
can 
significantly affect the Fund's liabilities; and 
[5] the methodology and assumptions used by an 
actuary can significantly affect the result of an 
analysis. 
2010 Audit, supra, at 6.  Prior audits have determined that the 
Fund's loss liability calculation was "reasonable, although 
conservative."  After incorporating some changes, the actuary 
completing a recent audit opined that the Fund's "current 
analyses are correspondingly less conservative than in the 
past."  2010 Audit, supra, at 7. 
¶20 Based on the accrual accounting method, the Fund 
maintains 
sufficient 
assets, 
in 
the 
form 
of 
reserves, 
assessments, and investment income, to pay all outstanding 
liabilities if the Fund were discontinued.  The Fund calculates 
its equity——the difference between total assets and total 
outstanding liabilities——based on this amount, and discounts its 
total outstanding liability by the amount of its estimated 
future investment income earnings.  Investment of the Fund's 
reserves accounted for roughly 33 percent of the Fund's total 
revenue from its inception in 1975 to June of 2004.  The Fund 
maintains 
long-term 
investments; 
it 
may 
liquidate 
these 
No.  2009AP728 
11 
 
investments to obtain cash, but doing so would result in 
diminished future earnings.  
¶21 From 
its 
inception 
through 
March 
of 
2005 
(approximately 30 years), the Fund had paid approximately $586.3 
million in total claims.  By December 31, 2007, this number had 
increased to $666.1 million, and by December 31, 2009, it had 
increased to $770.8 million.  Although annual expenditures have 
historically been lower than projected expenditures, it is 
difficult to predict when claims for any specific incident will 
be paid, and expenditures have the potential to increase greatly 
in the future if the amount of losses from claims incurred in 
previous years are paid.  Depending on the length of litigation, 
some claims may take up to 20 years after the occurrence before 
they are paid.8  Annual claim payments have steadily increased 
over the last four years, with the 2008-09 fiscal year seeing 
the largest annual payment of claims since the Fund's inception.  
2010 Audit, supra, at 5.9 
¶22 The board uses actuarial information to establish the 
annual health care provider assessments for each year.  In 2005 
the board adopted a policy of approving fee assessments at 
                                                 
8 For example, between 1990-91 and March 2005, the Fund paid 
$29.5 million in claims occurring in the 1990-91 fiscal year, 
and as of March 2005, two of those claims were still 
outstanding.   
9 From 1997 through 2006, claim payments averaged $25.7 
million per year.  By contrast, the total claim payments were 
$50.5 million for the 2007-08 fiscal year and $65.7 million for 
the 2008-09 fiscal year.  2010 Audit, supra, at 12. 
No.  2009AP728 
12 
 
levels that would result in a zero accounting surplus/deficit 
for the Fund.  This policy, which requires the board to maintain 
the Fund's net balance as close to zero as possible, was still 
in effect as of May 2008, although the record does not reflect 
whether it is still in effect.  From the 1997-98 fiscal year 
through the 2005-06 fiscal year, assessments generally decreased 
each year.  In the 2005-06 fiscal year, the board approved an 
average assessment increase of 25 percent, which the 2010 Audit 
attributed to this court's decision that the $350,000 inflation-
adjusted limit on noneconomic damages was unconstitutional.  See 
Ferdon 
v. 
Wis. 
Patients 
Comp. 
Fund, 
2005 
WI 
125, 
284 
Wis. 2d 573, 701 N.W.2d 440.  After a new noneconomic damages 
limit was enacted,10 the board approved smaller assessment 
increases for the 2007-08 fiscal year, and assessments did not 
increase in the 2008-09 fiscal year. 
¶23 Since its inception, the Fund has generally taken in 
more income in the form of health care provider assessments and 
investment income than it has paid out in claims and other 
expenses.  As of June 30, 2007, the Fund held a total of $798.5 
million in assets, with a net asset balance of $94.4 million. 
B. 
The 2007 Transfer 
¶24 On October 26, 2007, the legislature enacted the Act, 
the 2007-2009 state budget.  The Act contained a provision 
transferring a total of $200 million from the Fund to the MATF.  
2007 Wis. Act 20, § 9225.  The $200 million was to be 
                                                 
10 2005 Wis. Act 183, § 6; Wis. Stat. § 893.55(4)(b). 
No.  2009AP728 
13 
 
transferred in two separate transfers: $71.5 million for fiscal 
year 2007-08 and $128.5 million for fiscal year 2008-09.  The 
Act 
specified 
that 
the 
transfer 
was 
being 
made 
"[n]otwithstanding section 655.27(6) of the statutes," which 
provides that the Fund is held in irrevocable trust and may not 
be used for any other state purpose.  The legislature then 
reduced general purpose revenue (GPR) funding for the MATF by 
$200 
million. 
 
The 
Act 
also 
included 
a 
supplemental 
appropriation of up to $100 million for paying claims if the 
Fund is unable to do so.  2007 Wis. Act 20, § 212p; Wis. Stat. 
§ 20.145(2)(a). 
¶25 Pursuant to the Act, the Department of Administration 
booked a transfer on the state accounting system of $71.5 
million from the Fund to the MATF on October 29, 2007.  On 
November 30, 2007, Secretary Morgan reported to the Chief Clerks 
of the Senate and Assembly that the Fund did not have $71.5 
million available in liquid assets.  He then temporarily 
reallocated $51.3 million from another state fund.  The Fund has 
since been charged interest to cover this shortfall.11  2010 
Audit, supra, at 17. 
¶26 In response to actuarial recommendations that at least 
modest fee increases were necessary, assessment rates for the 
2009-10 fiscal year were increased by an average of 9.9 percent.  
2010 Audit, supra, at 10. 
                                                 
11 The Secretary cites Wis. Stat. § 20.002(11)(c) for the 
authority to charge interest after temporarily reallocating 
money in one fund to another fund. 
No.  2009AP728 
14 
 
¶27 In 
July 
2008 
the 
remaining 
$128.5 
million 
was 
transferred from the Fund to the MATF.  As of June 30, 2009, the 
Fund had an outstanding loan in the amount of $76.8 million from 
the State Investment Fund to cover the negative balance it 
incurred due to the transfer.  At that time, it had incurred 
$2.5 million in interest. 
¶28 The Fund now has a total net asset deficit of $109 
million.  According to the 2010 Audit, the Fund had $645.1 
million in total assets as of June 30, 2009.  2010 Audit, supra, 
at 35.  At the same time, it had total loss liabilities——the 
amounts expected to be paid in the future for incidents that 
have already occurred——in the amount of $675.4 million.  Id.  
Factoring in overdrafts due to the State Investment Fund and 
other liabilities, as of June 30, 2009, the audit concluded that 
the Fund had a total net asset deficit of $109 million.  Id. 
C. 
Procedural History 
¶29 On October 29, 2007, the Medical Society filed a 
complaint in Dane County Circuit Court against the commissioner, 
Secretary Morgan, the state treasurer, and the board.  Dr. 
Hoffmann later joined the suit as a plaintiff.12  The Medical 
Society is the largest association of medical doctors in the 
state, with more than 11,000 members.  Dr. Hoffmann is a 
practicing physician and "health care provider" who is required 
to pay assessments into the Fund. 
                                                 
12 By the time the Medical Society and Dr. Hoffmann filed 
their amended summons and complaint, the commissioner, the state 
treasurer and the board were no longer parties to the lawsuit, 
and Secretary Morgan was the sole defendant. 
No.  2009AP728 
15 
 
¶30 The complaint alleged that the transfer would put the 
Fund in a serious deficit, prevent the Fund from realizing 
investment earnings on the transferred $200 million, and require 
the commissioner and the board to increase fee assessments to 
bring the Fund back to a zero accounting surplus/deficit.  The 
complaint stated a number of causes of action, but only two——
unconstitutional 
taking 
without 
just 
compensation 
and 
unconstitutional impairment of contract——were certified by the 
court of appeals.13  The Medical Society sought, among other 
relief, a declaration that § 9225 of the Act constitutes an 
unconstitutional taking in violation of Article I, Section 13 of 
the Wisconsin Constitution; a judgment directing Secretary 
Morgan to replace all funds removed from the Fund with lost 
earnings; a permanent injunction to prohibit Secretary Morgan 
from transferring monies out of the Fund; and recovery of all of 
the Medical Society's attorney fees from the Fund based on the 
common fund theory. 
¶31 The 
circuit 
court 
granted 
summary 
judgment 
for 
Secretary Morgan.  It dismissed the Medical Society's non-
takings claims on grounds that they were barred by sovereign 
immunity.  Although the takings claim was not barred by 
sovereign immunity, the circuit court dismissed it on grounds 
                                                 
13 The Medical Society also alleged that the transfer 
constituted 
an 
invalid 
tax, 
an 
unconstitutional 
tax 
classification, a violation of equal protection, a breach of 
fiduciary duty, and a violation of Wis. Stat. § 655.27. 
No.  2009AP728 
16 
 
that the plaintiffs had failed to demonstrate that health care 
providers had a property interest in the Fund. 
¶32 The circuit court concluded that the Fund did not 
create contractual obligations.  It noted the "very strong" 
presumption against construing a statute to create contractual 
obligations.  See Dunn v. Milwaukee County, 2005 WI App 27, ¶8, 
279 Wis. 2d 370, 693 N.W.2d 82.  The court also pointed to the 
fact that the 2003 bill revising Wis. Stat. § 655.27(6) had 
initially specified that health care providers had "contractual 
rights" in the Fund, but that this language was subsequently 
eliminated.  See 2003 A.B. 487. 
¶33 The circuit court also concluded that "the true nature 
of the Fund" demonstrated that the health care providers did not 
have a property interest in it.  The court said that the 
providers "lack the normal indicia of a property interest" in 
the Fund.  "They cannot sell it, pledge it as collateral, 
bequeath it, receive investment income from it, enjoy any 
appreciation in its value, or exercise any control over" the 
Fund.  Furthermore, they receive the immediate benefit of excess 
insurance coverage, without any right to a refund.  Only the 
injured claimants ever receive payments.  The court also relied 
on authority from other jurisdictions that have refused to find 
a property interest in funds that were funded by mandatory 
assessments 
in 
which 
the 
participants 
had 
no 
right 
to 
distribution.  See Miss. Surplus Lines Ass'n v. State of Miss., 
442 F.Supp. 2d 335, 337 (S.D. Miss. 2006); Fun 'N Sun RV v. 
Mich., 527 N.W.2d 468 (Mich. 1994).  The court noted that the 
No.  2009AP728 
17 
 
Fund was more analogous to any number of state government trust 
accounts than to a "strict, private irrevocable trust." 
¶34 The court also contrasted the Fund with the Wisconsin 
Retirement System (WRS), which prior cases had determined 
created vested property interests.  It cited Wisconsin Retired 
Teachers Ass'n v. Employe Trust Funds Board, 195 Wis. 2d 1001, 
1025, 537 N.W.2d 400 (Ct. App. 1995), aff'd, 207 Wis. 2d 1, 558 
N.W.2d 83 (1997), for the proposition that the WRS expressly 
provided 
for 
a 
"contractual 
right." 
 
The 
court 
also 
distinguished the WRS cases on grounds that employees with 
protectable property interests in the WRS have their own private 
accounts.  Based on these distinctions, the court reasoned that 
the Medical Society "completely ignore[s] that what the Fund 
provides them is insurance coverage for which they pay a 
mandatory fee."  This coverage, the court concluded, "under no 
reasonable view can be seen as compensation [for services 
rendered] any more [than] the office space they pay rent for, 
the clerical services they pay wages for, or the electricity 
they pay utility bills for." 
¶35 The Medical Society appealed, and the court of appeals 
certified the case to this court.  The court of appeals 
determined that whether health care providers have a protectable 
property interest presents an issue of first impression, along 
with the question of whether the statute unconstitutionally 
repudiates the government's contractual obligations.  It also 
noted the statewide importance of this case as discussed in the 
No.  2009AP728 
18 
 
four amicus curiae briefs filed in the court of appeals.14  We 
accepted certification. 
II. STANDARD OF REVIEW 
¶36 The constitutionality of a statute is a question of 
law that this court reviews de novo.  State v. Wood, 2010 WI 17, 
¶15, 
323 
Wis. 2d 321, 
780 
N.W.2d 63. 
 
Statutes 
enjoy 
a 
presumption of constitutionality.  State v. Quintana, 2008 WI 
33, ¶12, 308 Wis. 2d 615, 748 N.W.2d 447.  We indulge every 
presumption to sustain the law.  Jackson v. Benson, 218 
Wis. 2d 835, 853, 578 N.W.2d 602 (1998).  We resolve any doubt 
about a statute's constitutionality in favor of upholding the 
statute.  State ex rel. Hammermill Paper Co. v. La Plante, 58 
Wis. 2d 32, 46, 205 N.W.2d 784 (1973). 
¶37 Because 
of 
the 
strong 
presumption 
in 
favor 
of 
constitutionality, a party bringing a constitutional challenge 
to a statute bears a "heavy burden."  State v. Carpenter, 197 
Wis. 2d 252, 276, 541 N.W.2d 105 (1995).  It is not sufficient 
for a party to demonstrate "that the statute's constitutionality 
is doubtful or that the statute is probably unconstitutional."  
State v. Smith, 2010 WI 16, ¶8, 323 Wis. 2d 377, 780 N.W.2d 90.  
Instead, the presumption can be overcome only if the party 
                                                 
14 The court of appeals did not address sovereign immunity 
in its certification on grounds that sovereign immunity could be 
resolved under current precedent.  Secretary Morgan concedes, 
and we agree, that sovereign immunity does not bar a state law 
takings claim.  Because we decide this case solely on the ground 
that 2007 Wis. Act 20 constituted an unconstitutional taking 
without just compensation, we do not address whether the Medical 
Society's other claims are barred by sovereign immunity. 
No.  2009AP728 
19 
 
establishes "that the statute is unconstitutional beyond a 
reasonable doubt."  Id. (quoting State v. Cole, 2003 WI 112, 
¶11, 264 Wis. 2d 520, 665 N.W.2d 328).   
III. DISCUSSION 
¶38 Article I, Section 13 of the Wisconsin Constitution 
provides: "The property of no person shall be taken for public 
use without just compensation therefor."  An unconstitutional 
taking occurs when (1) a property interest exists; (2) the 
property interest has been taken; (3) the taking was for public 
use; and (4) the taking was without just compensation.  Wis. 
Retired 
Teachers 
Ass'n 
v. 
Employe 
Trust 
Funds 
Bd., 
207 
Wis. 2d 1, 18-24, 558 N.W.2d 83 (1997).  When determining 
whether a taking occurred under this provision, we generally 
apply the same standards that are used to determine whether a 
taking occurred under the Fifth Amendment to the United States 
Constitution.  See Zealy v. City of Waukesha, 201 Wis. 2d 365, 
374, 548 N.W.2d 528 (1996) (holding that "[t]his court has 
adopted a similar method of inquiry" for determining regulatory 
takings as the United States Supreme Court); see also Eternalist 
Found. v. City of Platteville, 225 Wis. 2d 759, 773, 593 
N.W.2d 84 (Ct. App. 1999). 
¶39 There is no dispute that Secretary Morgan "took" money 
from the Fund, did so for public use, and did not compensate the 
Fund for this taking.  The dispute in this case is limited to 
the threshold issue of whether the appellants have a protected 
property interest in the Fund. See Wis. Prof'l Police Ass'n v. 
Lightbourn, 2001 WI 59, ¶132, 243 Wis. 2d 512, 627 N.W.2d 807 
No.  2009AP728 
20 
 
(the "first step in analyzing an alleged taking is to determine 
whether a property interest exists").  Thus, if the health care 
providers have a property interest in the Fund, Secretary 
Morgan's actions to implement § 9225 of the Act constituted a 
taking without just compensation, in violation of Article I, 
Section 13 of the Wisconsin Constitution. 
¶40 Because we conclude that the health care providers 
have a property interest in the Fund, we are satisfied that the 
Medical Society and Dr. Hoffmann have met their burden of 
proving that § 9225 of 2007 Wis. Act 20 is unconstitutional 
beyond a reasonable doubt.  In reaching this conclusion, we 
begin by reviewing the basic requirements for determining 
whether a property interest is recognized under Wisconsin law 
and therefore entitled to constitutional protection.  We then 
apply these principles to determine whether the health care 
providers have a protected property interest in the Fund. 
A. 
Property Interests Under Wisconsin Law 
¶41 Although the Wisconsin Constitution protects property 
interests, it does not itself create property interests.  Ass'n 
of State Prosecutors v. Milwaukee County, 199 Wis. 2d 549, 558, 
544 N.W.2d 888 (1996) (citing Bd. of Regents v. Roth, 408 U.S. 
564, 577).  Rather, "[a] property interest is constitutionally 
protected if state law recognizes and protects that interest."  
Thorp v. Town of Lebanon, 2000 WI 60, ¶46, 235 Wis. 2d 610, 612 
N.W.2d 59 (internal quotation and citation omitted). 
¶42 Wisconsin law recognizes a variety of rights and 
interests in property.  See Penterman v. Wis. Elec. Power Co., 
No.  2009AP728 
21 
 
211 Wis. 2d 458, 480-81, 565 N.W.2d 521 (1997) ("[I]t is well 
settled that the rights of ownership and use of property have 
long been recognized by this state.").15   A party has a property 
interest if he or she has a "legitimate claim of entitlement" to 
the property, as opposed to an "abstract need or desire" or 
"unilateral expectation."  Taplick v. City of Madison Pers. Bd., 
97 Wis. 2d 162, 170, 293 N.W.2d 173 (1980) (quoting Bd. of 
Regents v. Roth, 408 U.S. 564, 577 (1972)); Fazio v. Dep't of 
Emp. Trust Funds, 2005 WI App 87, ¶11, 280 Wis. 2d 837, 696 
N.W.2d 563 (reasoning adopted in Fazio v. Dep't of Emp. Trust 
Funds, 2006 WI 7, 287 Wis. 2d 106, 708 N.W.2d 326). 
¶43 The 
parties 
disagree 
on 
the 
basic 
requirements 
necessary for a statutorily established trust fund to constitute 
a property interest protected by Article I, Section 13 of the 
Wisconsin Constitution.  Relying primarily on this court's 
decision in Lightbourn, the Medical Society points to three 
sources of property interests: (1) statutory language describing 
the purpose and nature of the Fund; (2) beneficiaries' interest 
in the Fund's integrity and security; and (3) contractual rights 
in the Fund.  Secretary Morgan, on the other hand, argues that 
health care providers have no property interest because they 
lack three rights: (1) right to free use of the Fund; (2) right 
                                                 
15 "The Fifth Amendment [to the United States Constitution] 
attaches a broad meaning to the word property, consistent with 
the expansive meaning that the term had among the American 
founding fathers, the authors of the Constitution and the Bill 
of Rights."  2 Nichols on Eminent Domain, § 5.01[2][c], at 5-15 
(3d ed. 2006). 
No.  2009AP728 
22 
 
to distribution from the Fund; and (3) contractual rights in the 
Fund.  In other words, with the exception of contract rights——
which both parties agree can be the source of a property 
interest——the parties disagree about the basic sources from 
which a property interest can arise in a statutorily established 
trust fund. 
¶44 Although this court has never addressed the nature of 
health care providers' property interests in the Fund, the court 
has addressed the existence of property interests in the WRS.  
These cases set out the basic framework for determining whether 
participants have property interests in statutorily established 
trust funds.  Over time, this court has set out a broad scope of 
participant property interests in trust funds that extends 
beyond narrow contractual rights.  
¶45 An early case explaining participant rights in the 
state teachers retirement system was State Teachers' Retirement 
Bd. v. Giessel, 12 Wis. 2d 5, 106 N.W.2d 301 (1960).  The court 
relied heavily on a contract analysis.  The court said that the 
system was basically "a joint contributory money-purchase plan," 
id. at 8, and that "the teachers have a contractual relationship 
with the state and a vested right" in the retirement system, id. 
at 9.  The court ruled that the legislature could not use 
retirement system funds to pay for a study of the retirement 
system. 
¶46 In Association of State Prosecutors, this court 
addressed the constitutionality of legislation that created a 
uniform statewide pension plan for prosecutors.  The legislation 
No.  2009AP728 
23 
 
required Milwaukee County to transfer to the state plan employer 
contributions that had been made to the county retirement plan 
on behalf of unvested Milwaukee County prosecutors who had later 
become part of the state plan.  Ass'n of State Prosecutors, 199 
Wis. 2d at 552.  The court began its analysis by addressing 
whether the participants had a property interest in the county 
retirement plan, inasmuch as Milwaukee County had a "defined 
benefit" plan as opposed to the "defined contribution" plan in 
Giessel.  Ass'n of State Prosecutors, 199 Wis. 2d at 559.16  The 
court acknowledged that while the retirement fund in Giessel was 
different from the retirement plan at issue, it adhered to the 
general proposition that "vested employees and retirees have 
property interests in their retirement system."  Id. at 559. 
¶47 Thus, the court rejected the distinction between 
"defined contribution" plans——in which the employee's benefit is 
based upon the amounts contributed——and "defined benefit" plans—
—in which the employee's benefit is based upon a formula 
factoring in average salary and years of service.  Id. at 560.  
The court explained why the distinction was immaterial: 
The structure of a pension plan merely delineates the 
method of financing the pension funds and determines 
the appropriate amount of employer contributions. Any 
pension plan's ability to meet its obligations can be 
jeopardized when funds are taken from it, since every 
                                                 
16 Although the court in Association of State Prosecutors v. 
Milwaukee County, 199 Wis. 2d 549, 544 N.W.2d 888 (1996), was 
deciding whether the transfer constituted a deprivation of 
property without due process, the threshold inquiry of whether 
the participants had a property interest in the plan is the same 
issue we decide in this case. 
No.  2009AP728 
24 
 
dime is arguably part of a management strategy 
dependent upon spreading the fund's monies as broadly 
as possible. 
Id. at 560 (emphasis added).   
¶48 The court then turned to whether the transfer of funds 
would take property without due process of law.  Id. at 561.  
The Association of State Prosecutors argued that because the 
transferred amount was small, the transfer did not diminish the 
benefits of any employees or retirees remaining in that 
Milwaukee County plan.  Id.  The court rejected this argument, 
reasoning that "[g]overnmental takings do not become exempt from 
due process requirements simply because they may be actuarially 
insignificant."  Id.  The Association further argued that a 
beneficiary's property interest would never be impaired because 
Milwaukee County would always be responsible for any shortfall.  
Id.  The court again rejected this argument, reasoning that 
"[w]hile the specific transfer [at issue] may not immediately 
threaten the benefits of [the beneficiaries], the precedent set 
by such a transfer certainly could."  Id. at 562 (emphasis 
added).  The court concluded that if the legislature could order 
such transfers, "the actuarial soundness of the plan could 
eventually suffer."  Id. 
¶49 In Retired Teachers Ass'n, the court addressed whether 
annuitants had a property interest in a WRS account that paid 
out surpluses to annuitants.  Retired Teachers Ass'n, 207 
Wis. 2d at 18.  Concluding that they did, the court began by 
noting that an annuitant's interest "finds its genesis both in 
[the statute establishing rights in the WRS] and in prior 
No.  2009AP728 
25 
 
decisions of this court."  Id. (citing Wis. Stat. § 40.19(1)).  
The statute read in part: "Rights exercised and benefits accrued 
to an employee under this chapter for service rendered shall be 
due as a contractual right and shall not be abrogated by any 
subsequent legislative act."  Wis. Stat. § 40.19(1) (1987-88).  
The court then rejected the argument that annuitants had only a 
"unilateral expectation" of receiving surpluses.  The property 
interest, the court concluded, was "the right of every annuitant 
to have surplus distributions made in a manner consistent with 
the [statute providing for distribution of surpluses.]"  Id. at 
19-20.  Retired Teachers Ass'n, in dealing with surpluses, 
appeared to go beyond "defined benefits" to capture benefits 
from the overall success of the system. 
¶50 The court's most comprehensive analysis of participant 
rights in the WRS came in Lightbourn, which the Medical Society 
uses to establish its framework for determining the existence of 
property interests in the Fund.  In Lightbourn, the court dealt 
with a constitutional challenge to legislation altering a number 
of 
different 
provisions 
in 
the 
WRS. 
 
Lightbourn, 
243 
Wis. 2d 512, ¶59.  Among other claims, the plaintiffs argued 
that a transfer from one of the state accounts and a credit for 
employers 
constituted 
unconstitutional 
takings 
of 
private 
property.  Id. 
¶51 Although the court ultimately rejected the takings 
claims, it closely examined the source of participants' property 
interests in the WRS.  Id., ¶¶99-131.  These interests arose, in 
part, from the participants' individual accounts, but "[b]eyond 
No.  2009AP728 
26 
 
this narrow individual interest, each participant [also] has a 
broad property interest in the WRS as a whole."  Id., ¶100.  
Acknowledging that participants have contractual and vested 
rights in the state retirement system, the court went on "to 
articulate a more complete statement of the property interests 
and rights enjoyed by participants."  Id., ¶107. 
¶52 The first source of a property interest the court 
identified was in Wis. Stat. § 40.19(1), which described 
participants' rights in the WRS.  Id., ¶108.  The court noted 
that the language of the statute provided contractual rights in 
certain circumstances.  Id., ¶111. 
¶53 The second source of a property interest was in Wis. 
Stat. § 40.01, "the nature and purpose of the public employee 
trust fund."  Id., ¶113.  In particular, the court said that the 
purpose of the Fund was "to aid public employees in protecting 
themselves 
and 
their 
beneficiaries 
against 
the 
financial 
hardships of old age."  Id., ¶114 (quoting Wis. Stat. § 40.01).  
The court also acknowledged the statute's declaration that the 
trust 
fund 
"is 
a 
public 
trust 
and 
shall 
be 
managed, 
administered, invested and otherwise dealt with" solely to 
fulfill benefit commitments at the lowest cost.  Id.  Similarly, 
the court cited language in the statute stating that the Fund 
"shall not be used for any other purpose."  Id. 
¶54 In addressing the trust aspect of the Fund, the court 
also acknowledged that the statutory language provided "specific 
safeguards to participants."  Id., ¶116.  One of these was that 
"trust fund money must be used for proper trust purposes."  Id.  
No.  2009AP728 
27 
 
As an example of a non-trust purpose, the court referred to the 
transfer in Association of State Prosecutors, in which the court 
held that "[t]he state cannot simply 'reach' into the County 
Plan to pay for obligations [the state] has incurred."  Id., 
¶118 (quoting Ass'n of State Prosecutors, 199 Wis. 2d 562-63). 
¶55 The court then held that "legislative action affecting 
the WRS must be consistent with the stated objectives of the 
trust."  Lightbourn, 243 Wis. 2d 512, ¶119.  Again relying on 
Association of State Prosecutors, the court said that the 
legislature retained the power to adjust or amend a retirement 
plan, but that participants could challenge legislative actions 
"that deviate from trust objectives or cause injury to the 
trust."  Lightbourn, 243 Wis. 2d 512, ¶119.  Significantly, the 
court also noted that the Fund's board "must deal with the [WRS] 
in the same faithful manner as trustees would administer any 
trust, that is, they must exercise diligence, prudence, and 
absolute fidelity in managing trust assets."  Id., ¶120 (citing 
Sensenbrenner 
v. 
Sensenbrenner, 
76 
Wis. 2d 625, 
635, 
252 
N.W.2d 47 (1977) (emphasis added)). 
¶56 The third source of property interests the court 
identified was "the integrity and security" of retirement funds.  
Id., ¶121.  We noted that this interest was articulated in 
Association of State Prosecutors and inherent in the statutes 
governing the WRS.  Id.  Accordingly, we held that the statutes 
gave participants "the right to protect their accounts from 
either abrogation or dissipation."  Id. 
No.  2009AP728 
28 
 
¶57 In this case, both the circuit court and Secretary 
Morgan cite the statute's failure to establish contract rights 
to support the proposition that the health care providers lack a 
property interest in the Fund.  This reasoning is too narrow.  
Article I, Section 13 protects a wide variety of property 
interests recognized by state law.  Contract rights are not the 
sine qua non for a property interest in a state fund.  In fact, 
we have specifically held that property interests arise from a 
much broader set of factors than contract rights.  See 
Lightbourn, 243 Wis. 2d 512, ¶107 (articulating "a more complete 
statement of the property interests and rights enjoyed by 
participants" than contract rights); see also Fazio, 280 
Wis. 2d 837, ¶14 (beneficiaries of WRS death benefits——as 
opposed to those directly contracting with the state——also 
obtain a property interest in their benefit once they meet the 
statutory requirements). 
¶58 Examining these cases demonstrates that the court has 
considered a number of different factors when analyzing property 
interests in statutorily established trust funds.  Giessel 
demonstrated that a contractual relationship is a source of 
property interests, and that principle remains sound.  Giessel, 
12 Wis. 2d at 9.  However, Association of State Prosecutors, 
Retired Teachers Ass'n, and Lightbourn recognize a broader scope 
of participant interests.  These interests derive directly from 
statutory language and from the nature and purpose of the trust 
created by statute.  In sum, they reflect the "longstanding view 
in Wisconsin law that trust funds are to be treated differently 
No.  2009AP728 
29 
 
than general revenue, and that the state has less power to 
regulate the use of trust funds."  Opinion of Wis. Att'y Gen. to 
The Honorable Michael G. Ellis, Chairperson, Senate Organization 
Committee, OAG 1-95, at 3 (Feb. 14, 1995). 
¶59 Our "more complete" statement of property interests in 
Lightbourn is consistent with the legal standards applied by 
other courts to determine whether participants have property 
interests in statutorily established trust funds.  They have 
held that vested property rights "may be created either by 
common law, by statute, or by contract."  Moran v. Okla. ex rel. 
Derryberry, 534 P.2d 1282, 1288 (Okla. 1975) (quoting Baker v. 
Tulsa Bldg. & Loan Ass'n, 66 P.2d 45, 46 (Okla. 1936)).  To have 
a vested right, a person must hold "title, legal or equitable, 
to the present or future enjoyment of property."  Fun 'N Sun RV, 
527 N.W.2d at 478 (quoting Minty v. Bd. of State Auditors, 58 
N.W.2d 106, 111 (Mich. 1953)); Pa. Med. Soc'y v. Dep't of Pub. 
Welfare, Nos. 584 M.D. 2008, 585 M.D. 2008, 2010 WL 1491269, *9 
(Pa. Commw. Apr. 15, 2010) (quoting Konidaris v. Portnoff Law 
Assocs., Ltd., 953 A.2d 1231, 1242 (2008)) (vested rights arise 
from "title, legal or equitable, to the present or future 
enforcement of a demand, or a legal exemption from a demand made 
by another").  Vested rights may be constitutionally protected 
even if they are "beneficial" rights——such as rights in a trust 
estate——rather than legal or possessory rights.  See Tuttle v. 
N.H. Med. Malpractice Joint Underwriting Ass'n, 992 A.2d 624, 
638 (N.H. 2010). 
No.  2009AP728 
30 
 
¶60 While Lightbourn did not purport to set out an 
exclusive set of factors, it provides the correct basic 
framework for determining whether a property interest exists.  
With the understanding that a property interest may arise from 
contract rights, specific statutory language setting out the 
nature and purpose of a trust fund and the security and 
integrity of an entire fund, as well as other factors, we now 
turn 
to 
whether 
the 
health 
care 
providers 
have 
a 
constitutionally protected property interest in the Fund. 
B. 
The Health Care Providers' Equitable Title in the Fund 
¶61 Based on the principles articulated in Lightbourn and 
other cases, we conclude that the health care providers have a 
constitutionally protected property interest in the Fund.  The 
health care providers' property interest is the equitable title 
to the Fund that they hold as named beneficiaries of the Fund.  
We reach this conclusion for two reasons.  First, the Fund is 
unambiguously a formal trust under Wisconsin law in both name 
and form.  Second, the beneficiaries of a trust have equitable 
title in a trust. 
1. 
Existence of a Formal Trust 
¶62 The legislature established a formal trust fund.  The 
Fund is more than a trust in name.  It has all three critical 
elements necessary to establish a trust, namely, (1) trustees 
who hold property and are subject to equitable duties to deal 
with the property for the benefit of others; (2) beneficiaries 
to whom the trustees owe these equitable duties; and (3) trust 
property that is held by the trustees for the beneficiaries.  
No.  2009AP728 
31 
 
See Sutherland v. Pierner, 249 Wis. 462, 467, 24 N.W.2d 883 
(1946) (describing these three elements); see also Artac v. 
DHFS, 2000 WI App 88, ¶15, 234 Wis. 2d 480, 491-92, 610 
N.W.2d 115. 
¶63 First, the Fund has trustees who hold property subject 
to equitable duties to deal with the property for the benefit of 
others.  Wisconsin Stat. § 655.27(2) states: "Management of the 
fund shall be vested with the board of governors."  Furthermore, 
the Fund "is held in irrevocable trust for the sole benefit of 
health care providers participating in the fund and proper 
claimants."  Wis. Stat. § 655.27(6).  Read together, these two 
provisions unambiguously establish that the board is the trustee 
of the Fund. 
¶64 The board's duty as trustee is recognized in our prior 
cases that have analogized the board to the trustee of a private 
trust.  In Strykowski, this court acknowledged the Fund's duty 
to defend the trust estate, as well as its duty to deal 
impartially with beneficiaries: both the health care providers 
and proper claimants.  Strykowski, 81 Wis. 2d at 518.  The court 
concluded that the Fund did not violate its duties to the 
claimants by defending the trust "where the trustee reasonably 
determines that the claim is adverse to the trust."  Id.  The 
court analogized the trust to circumstances in a Colorado case 
involving a public pension: "It is within the power, and is the 
duty of a trustee to institute action and proceedings for the 
protection of the trust estate, . . . and to take all legal 
steps . . . reasonably 
necessary 
with 
relation 
to 
those 
No.  2009AP728 
32 
 
objectives."  Id. (quoting Brisnehan v. Central Bank & Trust, 
299 P.2d 113 (Colo. 1956)). 
¶65 Wisconsin courts have described the board as a trustee 
in other situations.  For example, this court held that the 
board could bring an action against an insurer that refused to 
contribute to a settlement in a claim against its insured, 
reasoning that it has the power "to perform all of the functions 
of trustees under the common law of trusts."  WHCLIP, 200 
Wis. 2d at 
615 
(citing 
Strykowski, 
81 
Wis. 2d at 
518).  
Similarly, the court of appeals held that the Fund could sue to 
recover payments to an unqualified provider, on grounds that 
doing so was "reasonably necessary" to protect the trust.  Wis. 
Patients Comp. Fund v. St. Mary's Hospital, 209 Wis. 2d 17, 40-
41, 561 N.W.2d 797 (Ct. App. 1997) (quoting WHCLIP, 200 
Wis. 2d at 615). 
¶66 Because the Fund operates as a trust and the board is 
the trustee, the board's duties to the beneficiaries are 
analogous to those of a common-law trustee.  Common-law trustees 
have fiduciary duties to beneficiaries.  Sutherland, 249 Wis. at 
466.  Therefore, as the trustee of the Fund, the board has a 
fiduciary duty in managing the trust.  See Zastrow v. Journal 
Commc'ns, 2006 WI 72, ¶22, 291 Wis. 2d 426, 718 N.W.2d 51.  This 
means that the board has a duty of "undivided loyalty" to the 
beneficiaries of the Fund.  Id., ¶34 (quoting Hammes v. First 
Nat'l. Bank & Trust Co. of Racine, 79 Wis. 2d 355, 255 N.W.2d 
555 (1977)); see also Lightbourn, 243 Wis. 2d 512, ¶120 (listing 
duties of ETF board). 
No.  2009AP728 
33 
 
¶67 The Fund also satisfies the second element necessary 
to create a trust: the existence of beneficiaries to whom the 
trustee owes equitable duties.  This element is unambiguously 
established 
by 
statutory 
language. 
 
See 
Lightbourn, 
243 
Wis. 2d 512, ¶¶108, 113 (finding participant property interests 
in the language of the statute, including a statute that sets 
out the nature and purpose of the public employee trust fund).   
¶68 Wisconsin Stat. § 655.27(6) provides that "[t]he fund, 
including any net worth of the fund, is held in irrevocable 
trust 
for 
the 
sole 
benefit 
of 
health 
care 
providers 
participating in the fund and proper claimants."  Wis. Stat. 
§ 655.27(6) (emphasis added).  Although the word "irrevocable" 
was not added until 2003, § 655.27(6) has always described the 
Fund as a "trust" held for the benefit of the health care 
providers (or "insureds" under the earlier statute) and proper 
claimants. 
 
Therefore, 
from 
the 
beginning, 
the 
statute 
specifically named health care providers as beneficiaries of the 
Fund. 
¶69 The board's duty is not to manage the Fund for the 
Fund's benefit, but to manage the Fund for the "sole benefit" of 
the named beneficiaries.  Wis. Stat. § 655.27(6).  This key 
element is lacking in many state funds that set aside money for 
a specific purpose and are "trust funds" in name only.17  
                                                 
17 The primary analogy offered by Secretary Morgan is the 
transportation fund.  Wis. Stat. § 25.40.  However, the state 
manages a large number of trust funds, which are designated for 
specific purposes but do not identify specific beneficiaries.  
See Wis. Stat. § 25.17 (listing funds). 
No.  2009AP728 
34 
 
Chapter 655 does more than set aside money for a purpose.  It 
enumerates two specific and definite classes of beneficiaries: 
health care providers and proper claimants.  Id.18 
¶70 The 
existence 
of 
named 
beneficiaries 
is 
what 
transforms the Fund from money set aside for a purpose into a 
formal trust.  To illustrate, in Fun 'N Sun RV, cited by 
Secretary 
Morgan, 
the 
Michigan 
Supreme 
Court 
upheld 
the 
constitutionality of the state's sale of its accident fund to a 
private insurer.  Fun 'N Sun RV, 527 N.W.2d at 482.  In doing 
so, the court noted that earlier case law "did not expressly 
identify any beneficiary of the 'trust' to which [the statute] 
referred."  Id. at 479 (discussing Comm'r of Ins. v. Advisory 
Bd. of the Mich. State Accident Fund, 434 N.W.2d 433 (Mich. Ct. 
App. 1988)).  For this reason, the court conceived of the 
Michigan fund as a "trust" only "in an informal, descriptive 
sense, rather 
than 
as a declaration of a formal trust 
relationship."  Id.   
¶71 The description of the Michigan fund is in stark 
contrast to the way Wis. Stat. § 655.27(6) and previous cases 
describe the Fund: a formal trust with named beneficiaries.  
None of the other cases cited by Secretary Morgan involved a 
trust held for the benefit of expressly named beneficiaries and 
a board with fiduciary duties to those beneficiaries.  See Miss. 
                                                 
18 "The members of a definite class of persons can be the 
beneficiaries of a trust."  See Restatement (Third) of Trusts 
§ 45 (2003). "A class is not indefinite for this purpose merely 
because it consists of a changing or shifting group, the number 
of whose members may increase or decrease."  Id., cmt. a. 
No.  2009AP728 
35 
 
Surplus Lines Ass'n v. Miss., 442 F. Supp. 2d 335, 337 (S.D. 
Miss. 2006), aff'd 261 Fed. Appx. 781 (5th Cir. Jan. 15, 2008); 
Kelso & Irwin, P.A. v. State Ins. Fund, 997 P.2d 591, 596 (Idaho 
2000) (no provisions in statutory language provided property 
rights); D. Corso Excavating, Inc. v. Poulin, 747 A.2d 994, 
1000-01 (R.I. 2000). 
¶72 The third element of a formal trust is the existence 
of trust property.  Wisconsin Stat. § 655.27(6) specifies that 
"[t]he fund is established" and that "any net worth of the fund" 
is held in irrevocable trust."  As of June 30, 2007, just prior 
to the transfer, the Fund held roughly $798.5 million in total 
assets.  2010 Audit, supra, at 35.  There is no question that 
trust property exists. 
¶73 In sum, the legislature established the Fund as a 
formal trust.  It underscored the nature of that trust in Wis. 
Stat. § 655.27(6).  Beyond the legislature's express intent to 
establish a trust, the Fund meets the three requirements for a 
trust under Wisconsin law: (1) trustees with duties to manage 
the trust on behalf of beneficiaries; (2) beneficiaries to whom 
the trustees owe equitable duties; and (3) trust property.  The 
existence of these three elements is conclusively demonstrated 
by statutory language, prior case law, and the substance of the 
Fund's operation. 
2. 
Beneficiaries' Equitable Title in the Trust 
¶74 Because the Fund is a formal trust, and because the 
health care providers are named beneficiaries of the Fund, the 
health care providers have equitable title to the Fund. 
No.  2009AP728 
36 
 
¶75 The establishment of a trust creates two kinds of 
ownership: the trustees hold legal title to the trust and the 
beneficiaries hold equitable title, referred to as a "beneficial 
interest."  Wis. Stat. § 701.05(2) (beneficiary of a private 
trust has "equitable interest"); Sutherland, 249 Wis. at 466 
(beneficiaries of a trust have a "beneficial interest" in the 
trust 
property). 
 
The 
beneficiaries' 
equitable 
interest 
represents "the real ownership," while the trustee's legal title 
is "no more than the shadow, always following the equitable 
estate, which is the substance."  Nossaman & Wyatt, 1 Trust 
Administration & Taxation § 1.04 at 1-13 (1992) (quoting West 
Jersey Title & Guar. Co. v. Indus. Trust Co., 141 A.2d 782 (N.J. 
1958)). 
¶76 We recognize that the establishment of the Fund 
diverges from traditional trust principles in one significant 
way. 
 
Generally, 
the 
person 
establishing 
the 
trust 
(by 
expressing the intent to do so) and the person providing the 
money for the trust are the same person, referred to as the 
"settlor."  See George Gleason Bogert & Amy Morris Hess, The Law 
of Trusts and Trustees, § 43 at 453 (3d ed. 2007) (settlor must 
have property interest to create a trust).  In the case of the 
Fund, the legislature established the Fund, but the health care 
providers are the "settlors" insofar as they placed the money 
into the trust.  This fact tends to confirm the health care 
providers' property interest in the Fund. 
¶77 Health care providers and proper claimants have 
property interests in the Fund, but these interests have 
No.  2009AP728 
37 
 
different bases.  The health care providers are assessed 
mandatory fees.  These assessments are enforced by the threat of 
fines or deprivation of a provider's license to practice 
medicine in Wisconsin.  In sum, there is a link between the 
provider's assessment and the provider's license that goes well 
beyond a professional's normal licensing payment for regulation 
or service.  Wisconsin Stat. § 655.27(6) recognizes this paid-
for benefit as a property interest.  By contrast, claimants have 
a property interest in the assurance that proper claims, 
including full economic damages, from medical malpractice will 
be satisfied, inasmuch as claimants have been forced to give up 
rights under conventional tort law to seek redress under the 
procedures and limitations of ch. 655. 
¶78 The legislature could have chosen to establish the 
Fund with broad-based taxes and to hold the funds in trust for 
the health care providers.  In that event, the legislature would 
have been the "settlor" in the traditional sense of both 
establishing the trust and providing the money for the trust.  
Instead, the legislature established the mechanism for the Fund, 
compelled health care providers to pool their money in it, and 
created a board to manage the Fund as a trustee.  In doing so, 
the legislature did not establish the Fund out of public money 
for a specific purpose.  Rather, the legislature, by enacting 
Chapter 655, facilitated the pooling of private money in the 
No.  2009AP728 
38 
 
trust and recognized and protected the health care providers' 
property interests in the resulting "estate."19 
¶79 In sum, because the Fund is a formal trust, satisfying 
the necessary requirements for a trust under Wisconsin law, the 
health care providers have equitable title to the Fund.  The 
existence of this equitable title is reinforced by the fact that 
the Fund is created from mandatory assessments on the health 
care providers themselves.  Beneficial or equitable interests 
are constitutionally protected.  See Fun 'N Sun RV, 527 
N.W.2d at 478 (quoting 2 Cooley, Constitutional Limitations (8th 
ed.) at 749); Pa. Med. Soc'y, 2010 WL 1491269, at *9; Tuttle, 
992 A.2d at 638; 2 Nichols on Eminent Domain, § 5.02[2][a] at 5-
46 (3d ed. 2006).  Therefore, the health care providers' 
equitable title to the Fund is a constitutionally protected 
property interest. 
C. 
Rights Arising from the Health Care Providers' Equitable 
Title 
¶80 Having established that the Fund is a formal trust 
under Wisconsin law and that health care providers have 
                                                 
19 Recently, in holding that health care providers had 
vested rights in receiving abatements of their assessments into 
a patient's compensation fund that operates similarly to the 
Wisconsin Fund, the Commonwealth Court of Pennsylvania found it 
relevant that "doctors have to pay the assessment, or they 
cannot practice in the Commonwealth."  Pa. Med. Soc'y v. Dep't 
of Pub. Welfare, Nos. 584 M.D. 2008, 585 M.D. 2008, 2010 WL 
1491269, 
*9 (Pa. 
Commw. Apr. 15, 2010).  Although the 
Pennsylvania 
court 
specifically 
addressed 
the 
right 
to 
abatements of the assessments, their reasoning nonetheless 
supports our conclusion that health care providers obtain vested 
rights by paying mandatory assessments. 
No.  2009AP728 
39 
 
equitable title to the Fund as named beneficiaries of the Fund, 
we now turn to the health care providers' three rights that flow 
from that equitable title.  First, the health care providers 
have a property interest in the security and integrity of the 
Fund.  Second, the health care providers have a right to realize 
investment earnings in the form of lowered assessments.  Third, 
both health care providers and proper claimants have a right to 
the assurance that excess judgments will be paid by the Fund, so 
that additional litigation can be avoided and justice will be 
done. 
1. 
Interest in the Security and Integrity of the Fund 
¶81 The first right that flows from the health care 
providers' equitable title in the Fund is a right to the 
security and integrity of the Fund.  Because the health care 
providers' property interest in the Fund is protected under 
Wisconsin trust law, the health care providers have a collective 
property interest in the entire Fund, even though individual 
health care providers do not have individual accounts.  Any 
improper removal of money from the Fund infringes upon this 
right, and is likely to affect individual providers. 
¶82 The health care providers' right to the security and 
integrity of the entire Fund flows naturally from the nature of 
the board's fiduciary duty to the beneficiaries.  A fiduciary 
duty generally gives rise to a duty to manage the beneficiaries' 
assets "as a 
prudent investor would."  See Wis. Stat. 
§ 881.01(3)(a); Hatleberg v. Norwest Bank Wis., 2005 WI 109, 
¶20, 283 Wis. 2d 234, 700 N.W.2d 15 (trustee must guard the 
No.  2009AP728 
40 
 
trust assets vigilantly); Hegner v. Anna Van Rossum Estate, 117 
Wis. 2d 314, 321, 344 N.W.2d 160 (1984) (holding that executors 
of an estate have many of the same duties as trustees, including 
the obligation to invest accumulated estate funds). 
¶83 This principle applies to statutorily established 
trust funds as much as it applies to private trust funds.  See 
Attorney General ex rel. Blied v. Levitan, 195 Wis. 561, 219 
N.W. 97 (1928) (holding that because Annuity Board had a duty to 
invest retirement funds, the court would not "read into the law 
any limitations upon the methods which the board in the exercise 
of sound business judgment may employ to that end").  In 
Lightbourn, the court cited the ETF's duty to the WRS as part of 
the statutory "safeguards" that formed the basis of the 
participants' property interests.  Lightbourn, 243 Wis. 2d 512, 
¶120 (the board "must deal with the [WRS] in the same faithful 
manner as trustees would administer any trust").  Like the ETF 
board, the board here "must exercise diligence, prudence, and 
absolute fidelity in managing trust assets."  Id. 
¶84 The beneficiaries' property interest in the Fund 
naturally implies a right to the security and integrity of the 
Fund because such a right is the necessary corollary of the 
trustee's fiduciary duty; it is what triggers the trustee's 
fiduciary duty.  If the beneficiaries did not have rights in the 
security and integrity of the entire Fund, then the board would 
have no duty to manage the Fund on the beneficiaries' behalf.  
The board's duty as "trustees under the common law of trusts," 
WHCLIP, 200 Wis. 2d at 615, established in chapter 655 and our 
No.  2009AP728 
41 
 
case law, would be an illusion: it would be a duty to act for 
the sole benefit of beneficiaries whose interests depended upon 
legislative whim.  
¶85 Our conclusion on this point is supported by the New 
Hampshire Supreme Court's recent decision in Tuttle.  Tuttle 
involved a transfer of money in New Hampshire's Medical 
Malpractice Joint Underwriting Association (JUA) to the state's 
general fund.  Tuttle, 159 N.H. at 633.  The JUA has been funded 
by surcharges on medical malpractice insurance policies and, if 
the plan experiences an excess of funds, the board managing the 
plan is required to reduce future assessments or distribute the 
excess. Id. at 636.  Although the court held the transfer 
unconstitutional 
on 
impairment-of-contract 
grounds, 
its 
reasoning with regard to the assessments applies to the transfer 
from the Fund in this case: 
The policies entitle the policyholders to "participate 
in the earnings of the [JUA]" and the incorporated 
regulations mandate the board's application of excess 
funds in one or both of two specified ways: either 
against future assessments, or distribution to the 
policyholders. Under either option, the policyholders 
have a direct financial interest, and not a mere 
expectancy, 
in 
any 
excess 
surplus. 
Thus, 
the 
policyholders have a vested right not necessarily in 
the distribution of the funds, but in the treatment   
of the funds for their benefit. 
Id. at 638 (emphasis added).   
¶86 Like the policyholders discussed in Tuttle and the WRS 
participants discussed in Lightbourn, the health care providers 
here have a vested right in the treatment of the Fund's money 
No.  2009AP728 
42 
 
for their benefit.  This right is the essence of their right to 
the security and integrity of the Fund.20 
¶87 In sum, because the health care providers have 
equitable title in the Fund protected by the trustee's fiduciary 
duty, they have a right to the security and integrity of the 
entire Fund.   
2. 
Rights to the Realization of Investment Earnings 
¶88 The second right that flows from the health care 
providers' equitable title in the Fund is a right to realize the 
investment earnings of the Fund through decreased assessments.  
Any improper transfer from the Fund infringes upon this right. 
¶89 In assessing whether the beneficiaries' interests are 
significant enough to establish a vested property right, we 
again turn to basic trust principles.  We consider whether the 
health care providers have a vested interest in the realization 
of investment earnings, or whether they have a "mere expectancy" 
to that money.  See Tuttle, 159 N.H. at 627; Wis. Academy of 
Sciences, Arts & Letters v. First Wis. Nat'l Bank of Madison, 
142 Wis. 2d 750, 761 n.9, 419 N.W.2d 301 (Ct. App. 1987); 
                                                 
20 Because the health care providers collectively have an 
interest in the entire net worth of the Fund, it is irrelevant 
that they do not have private accounts from which to draw out of 
the Fund.  The circuit court distinguished the WRS cases on the 
grounds that "[e]very public employee who has been recognized as 
having a protectable property interest in the WRS has their own 
private account."  We have recognized, however, that while WRS 
participants have an interest in their individual accounts, 
"[b]eyond this narrow individual interest, each participant has 
a broad property interest in the WRS as a whole."  Wis. Prof'l 
Police Ass'n v. Lightbourn, 2001 WI 59, ¶100, 243 Wis. 2d 512, 
627 N.W.2d 807. 
No.  2009AP728 
43 
 
Restatement (Second) Trusts, § 86 (1959) ("An expectation or 
hope of receiving property in the future cannot be held in 
trust.").  Even if a party's interest is contingent——rather than 
vested——it may still constitute property so long as it is more 
than a mere expectancy.  Sutherland, 249 Wis. at 466; Wis. 
Academy of Sciences, Arts & Letters, 142 Wis. 2d at 761 n.9. 
¶90 The health care providers have a vested interest in 
the success of the Fund, rather than a "mere expectancy."  They 
have a direct interest in the performance of the Fund because 
that performance affects the amount of their assessments.  It is 
true that they cannot be guaranteed their rates will decrease in 
a given year.  Nonetheless, Wis. Stat. § 655.27(3)——which sets 
out the considerations on which annual assessments are to be 
based——establishes the health care providers' rights to have 
their rates determined based upon "[t]he past and prospective 
loss 
and 
expense 
experience of the fund."  Wis. Stat. 
§ 655.27(3)(a)(2). 
¶91 This right to enjoy increases in the Fund's net assets 
through the form of reduced assessments is analogous to the 
participants' interest discussed in Retired Teachers Ass'n.  In 
that case, the court rejected the argument that participants had 
only 
a 
"unilateral 
expectation" 
that 
they 
would 
receive 
distributions from the WRS surpluses, reasoning that they had a 
property interest in having the WRS surpluses distributed 
according to statute.  Retired Teachers Ass'n, 207 Wis. 2d 1 at 
19-20.  Like the participants in Retired Teachers Ass'n, the 
health care providers have a vested right to have their rates 
No.  2009AP728 
44 
 
set 
according 
to 
the 
factors 
outlined 
in 
Wis. 
Stat. 
§ 655.27(3)(a). 
¶92 This right is more than a "mere expectancy"; it is 
directly set out in the statute.  Although the Fund can, and 
based on the actuarial assessment in the record, presumably 
would raise rates to restore its solvency, the provision that 
fees be assessed based on "[t]he past and prospective loss and 
expense experience" provides the health care providers with a 
clear right to have their rates set according to standard, 
enumerated considerations.  See id.; see also Moran, 534 P.2d at 
1288 (employers participating in Oklahoma worker's compensation 
fund "had a vested legal right . . . to rely upon this trust 
being maintained and administered in accordance with" the 
applicable law).  The right to faithful administration of the 
law is infringed when the diversion of Fund money for other 
state purposes forces the board and commissioner to (1) allow 
the Fund to operate at a deficit, potentially requiring future 
assessment increases when the Fund cannot pay excess judgments; 
or (2) raise assessments to restore the Fund's solvency. 
¶93 Our conclusion on this point is again supported by the 
decisions of the New Hampshire Supreme Court and Commonwealth 
Court of Pennsylvania.  In Tuttle, the court referred to two 
possible 
uses 
of 
surpluses: 
apply 
them 
against 
future 
assessments or distribute them.  Tuttle, 992 A.2d at 638.  It 
reasoned that "[u]nder either option, the policyholders have a 
direct financial interest, and not a mere expectancy, in any 
excess surplus."  Id.  The same is true here.  The health care 
No.  2009AP728 
45 
 
providers have a vested right in the Fund's surplus because it 
will either be returned to them in the form of lower assessments 
or reinvested for the Fund's future security. 
¶94 Similarly, the Pennsylvania court determined that 
health care providers had equitable title, amounting to a vested 
right, in statutory abatements.  Pa. Med. Soc'y, 2010 WL 
1491269, at *9.  Although Wis. Stat. § 655.27(3) does not 
provide for mandatory abatements, it provides a right to have 
the assessments set according to the statutory factors.  In 
either case, the health care providers have vested rights in the 
management and use of their assessments for proper purposes. 
¶95 Secretary 
Morgan 
contends 
that 
the 
State 
could 
constitutionally remove all money from the Fund except for the 
amounts necessary to pay claimants that had already made claims. 
If this theory were correct, the State could deplete the Fund on 
an ongoing basis, requiring the board to continually raise 
assessments by the statutory maximum each year in an attempt to 
replenish the Fund to compensate proper claimants.  Surely this 
would 
violate 
the 
health 
care 
providers' 
rights 
as 
beneficiaries.  Yet, ongoing transfers would differ from the 
transfer here only in the gravity of the constitutional 
deprivation.  See Ass'n of State Prosecutors, 199 Wis. 2d at 561 
("[t]he gravity of a property deprivation is irrelevant to the 
question of whether" a constitutional violation occurred).  
Therefore, the health care providers have a property interest in 
the entire net worth of the Fund because any removal of money 
from the Fund infringes upon their right to have their 
No.  2009AP728 
46 
 
assessments set according to the factors in the statute.  See 
id. 
3. 
Right to the Payment of Excess Judgments 
¶96 The third right that flows from the health care 
providers' equitable title in the Fund is a right to have 
judgments in excess of their required insurance paid on their 
behalf.  By maintaining primary insurance and meeting the 
requirements of ch. 655, a health care provider's liability for 
malpractice is limited to the amount of his or her primary 
insurance.  Wis. Stat. § 655.23(5).  The Fund pays the excess.  
Wis. Stat. § 655.27(1).  Under this arrangement, the Fund's 
payment of excess judgments benefits the health care providers 
because the payments are, in essence, made on the health care 
providers' behalf.  They have a property interest in the payment 
of these excess judgments. 
¶97 We recognize that the liability limitation provision 
under § 655.27(5) is not contingent on the Fund's payment of the 
excess judgment, and the board itself, is immune from liability 
for any obligation of the Fund.  Wis. Stat. § 619.04(9).  
However, if the Fund were unable to pay excess judgments, proper 
claimants would be left without any recourse, except to 
challenge the constitutionality of the statutory scheme.  Proper 
claimants are beneficiaries of the Fund.  Therefore, even if we 
accepted the proposition that the removal of money from the Fund 
would not directly infringe upon the health care providers' 
right to enjoyment of and distribution from the Fund, that 
No.  2009AP728 
47 
 
acceptance would not address the infringement of the proper 
claimants' property interests. 
¶98 Secretary Morgan argues that there is no evidence the 
Fund cannot meet its obligations, and points to the $100 million 
supplemental appropriation contained in the Act.21  We are not 
persuaded.  First, a $100 million appropriation after a $200 
million transfer from the Fund is, at a minimum, a net taking of 
$100 million.  Second, the $100 million appropriation is 
illusory; no money has actually been set aside and the $100 
million pledge could be withdrawn by the legislature as easily 
as the $200 million was transferred from the Fund.  Third, even 
if we accept Secretary Morgan's factual assertion that the 
Fund's soundness was not jeopardized by this diversion of funds, 
that fact is irrelevant because of the health care providers' 
interest in the security and integrity of the Fund.  See Ass'n 
of State Prosecutors, 199 Wis. 2d at 560 ("Any pension plan's 
ability to meet its obligations can be jeopardized when funds 
are taken from it, since every dime is arguably part of a 
                                                 
21 Section 
212p 
of 
the 
Act 
created 
Wis. 
Stat. 
§ 20.145(2)(a), reading: 
20.145 (2) (a) Supplement for claims payable. A 
sum sufficient, not to exceed $100,000,000, for paying 
any portion of a claim for damages arising out of the 
rendering of health care services that the injured 
patients and families compensation fund under s. 
655.27 is required to pay under ch. 655 but that the 
injured patients and families compensation fund is 
unable to pay because of insufficient moneys. 
2007 Wis. Act 20, § 212p. 
No.  2009AP728 
48 
 
management strategy . . . ").  Furthermore, while the transfer 
may not immediately threaten the Fund's beneficiaries, "the 
precedent set by such a transfer certainly could."  Id. at 562.  
The transfer was a taking, regardless of the transfer's 
actuarial significance.  Id. at 561.22 
¶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. 
                                                 
22 Although the gravity of the actuarial impact on the Fund 
is irrelevant to whether a taking occurred, it bears noting that 
the Actuarial Assessment in the record and the March 2010 audit 
both suggest that the transfer significantly affected the Fund's 
soundness. 
No.  2009AP728 
49 
 
¶100 We emphasize again that the nature of the health care 
providers' interest must be understood in light of the statutory 
determination that the Fund is held in "irrevocable trust" for 
the "sole benefit" of the beneficiaries.  This declaration 
codifies a private property interest that a future legislature 
is not free to confiscate.   
¶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 
No.  2009AP728 
50 
 
their patients and families, and it pronounced that trust 
"irrevocable."  We take the legislature at its word. 
IV. CONCLUSION 
¶103 We conclude that the health care providers have a 
constitutionally protected property interest in the Fund.  
Wisconsin Stat. § 655.27(6) defines the Fund as an irrevocable 
trust, and the structure and purpose of the Fund satisfy all the 
elements necessary to establish a formal trust.  Because the 
health care providers are specifically named as beneficiaries of 
the trust, they have equitable title to the assets of the Fund. 
¶104 The health care providers' equitable title in the Fund 
provides them with at least three corresponding rights.  First, 
they have a right to the security and integrity of the Fund.  
Second, they have a right to realize the Fund's investment 
earnings to moderate, perhaps even lower, their assessments.  
Third, health care providers and proper claimants have rights to 
have excess judgments paid to the proper claimants.  Any 
transfer of money from the Fund for an improper purpose 
infringes upon these three rights. 
¶105 Because health care providers have protected property 
interest in the Fund, we conclude that 2007 Wis. Act 20, § 9225 
authorized 
an 
unconstitutional taking of private property 
without just compensation. 
¶106 Accordingly, we reverse the circuit court's order 
granting summary judgment in favor of Secretary Morgan and 
dismissing 
the 
Medical 
Society's 
suit. 
 
We 
remand 
with 
directions that the circuit court issue (1) an order requiring 
No.  2009AP728 
51 
 
Secretary Morgan to replace the money removed from the Fund, 
together with lost earnings and interest that has been charged 
to the Fund; and (2) a permanent injunction prohibiting 
Secretary Morgan from transferring money out of the Fund 
pursuant to 2007 Wis. Act 20.   
By the Court.—The order of the circuit court is reversed 
and the cause is remanded to the circuit court. 
 
 
No.  2009AP000728.ssa 
 
1 
 
¶107 SHIRLEY S. ABRAHAMSON, C.J. (dissenting).  "It's not 
fair," or "I don't like it," might be the first reactions to the 
legislature's removal of $200 million from the Fund, which is 
made up of assessments paid by health care providers and used to 
pay out claims of victims of medical malpractice.  I do not 
necessarily disagree with these sentiments, but they are not 
responsive to the question at hand. 
¶108 The counter-reaction to "it's not fair" and "I don't 
like it" is that those sentiments do not render the legislation 
"unconstitutional."  Well-settled principles of constitutional 
law, and of trust law, should not be distorted to accommodate a 
generalized sense of unfairness.   
¶109 The standards and burdens of constitutional challenges 
to legislative action are familiar and well established:  
Challengers to the constitutionality of a statute have a heavy 
burden.  As Justice Prosser aptly noted:  "Our form of 
government provides for one legislature, not two.  This court is 
not meant to function as a 'super legislature,' constantly 
second-guessing the policy choices made by the legislature and 
governor . . . ultimately, legislators make a judgment.  If the 
people who elected the legislators do not like the solution, the 
voters have a good remedy every two years: retire those who 
supported laws the voters disfavor."1  In our three-branch system 
                                                 
1 Ferdon ex rel. Petrucelli v. Wis. Patients Compensation 
Fund, 2005 WI 125, ¶204, 284 Wis. 2d 573, 701 N.W.2d 440 
(Prosser, J., dissenting) (internal quotation and citations 
omitted). 
No.  2009AP000728.ssa 
 
2 
 
of government, statutes are presumed constitutional.2  A party 
who attacks the constitutionality of a legislative enactment in 
the courts must prove beyond a reasonable doubt that the statute 
is unconstitutional.3  Our review of the acts of the other 
branches of government "is independent but deferential.  Our 
duty is to uphold a legislative act if at all possible."4   
¶110 In the present case, the legislature made a judgment.  
It may seem unfair, and neither the Medical Society nor members 
of this court may like or agree with that judgment.  But the 
remedy for disliking the legislature's judgment is not found in 
this court unless the challenger has met the high standards 
established for proving a statute unconstitutional.  Because the 
majority's analysis of the property interests at stake leaves 
great room for doubt and because the majority must strain 
principles of trust law to reach its result, I conclude that the 
Medical Society has not met the heavy burden of proving the 
unconstitutionality of the transfer of assets from the Fund 
beyond a reasonable doubt.   
¶111 The relevant threshold inquiry in the present case is 
whether either the health care providers or victims of medical 
                                                 
2 Ass'n of State Prosecutors v. Milwaukee County, 199 
Wis. 2d  549, 557, 544 N.W.2d 888 (1996) (citing State v. Hart, 
89 Wis. 2d 58, 277 N.W.2d 843 (1979)). 
3 Id. (citing In matter of E.B., 111 Wis. 2d 175, 180, 330 
N.W.2d 584 (1983).  A budget bill enjoys the same strong 
presumption of 
constitutionality as any other legislative 
enactment.  Wis. Retired Teachers Assn. v. Employee Trust Fund 
Bd., 207 Wis. 2d 1, 18, 558 N.W.2d 83 (1997). 
4 Lightbourn, 243 Wis. 2d at 561, ¶63. 
No.  2009AP000728.ssa 
 
3 
 
malpractice have a vested private property interest at stake in 
the Fund.5  In other words, because it is their burden, the 
health care providers must demonstrate beyond a reasonable doubt 
they have a property interest, an entitlement to the assets 
which the Legislature transferred out of the Fund.6   
¶112 I agree with the circuit court.  The Fund is a state-
managed pool of money mandatorily contributed by health care 
providers to enable them to acquire protection against personal 
liability for medical malpractice claims.  The Fund is a 
government trust account in the sense that the Fund's governing 
entity is required to manage the monies in a particular way, but 
future legislatures may change the applicable statutes.   
¶113 The health care providers do benefit from the Fund 
insofar as they receive excess insurance coverage from it, but 
the health care providers had no vested property interest in the 
$200 million which the legislature transferred.  Without having 
met their burden of establishing a vested property interest, the 
Medical Society cannot sustain its claim that the transfer of 
assets 
from 
the 
Fund 
was 
an 
unconstitutional 
taking.  
Accordingly I conclude, as did the circuit court, that the 
                                                 
5 Wis. Prof'l Police Ass'n, Inc. v. Lightbourn, 243 Wis.2d 
512 (2001) (citing Retired Teachers, 207 Wis.2d at 18); see 
Bowen v. Pub. Agencies Opposed to Social Sec., 477 U.S. 41, 55 
(1986)); majority op., ¶38-39. 
6 See majority op., ¶42 ("A party has a property interest if 
he or she has a 'legitimate claim of entitlement' . . . as 
opposed 
to 
an 
'abstract 
need 
or 
desire' 
or 
'unilateral 
expectation.'"). 
No.  2009AP000728.ssa 
 
4 
 
Medical 
Society's 
challenge 
to 
the 
transfer 
as 
an 
unconstitutional taking must fail.   
¶114 In contrast, the majority concludes that the Fund is a 
private trust.  According to the majority, the health care 
providers are the settlors and the beneficiaries of the Fund.  
The majority thus locates the health care providers' vested 
property 
interest 
in 
the 
assets 
of 
the 
Fund 
as 
trust 
beneficiaries.  In reaching this result, the majority makes key 
mis-steps in its analysis of trust law.  I disagree with this 
contrived analysis.  Because the majority must force the issue 
to arrive at its conclusion, it has not given honest effect to 
the constitutional standard.  "Wherever doubt exists as to a 
legislative enactment's constitutionality, it must be resolved 
in favor of constitutionality."7  Because the majority's analysis 
leaves serious doubts, the Medical Society has not met its 
burden, and I cannot join the majority's result. 
I 
¶115 The majority opinion determines that in establishing 
the Fund the legislature established a formal trust, complying 
with the requirements of creating a private trust.8  According to 
the majority, the health care providers are thus beneficiaries 
of a private trust and have a vested property interest in the 
assets of the Fund because they have equitable title to the 
Fund.   
                                                 
7 Lightbourn, 243 Wis. 2d at 561, ¶64 (quoting State ex rel. 
Hammermill Paper Co. v. La Plante, 58 Wis. 2d 32, 46, 205 
N.W.2d 784 (1973). 
8 Majority op., ¶¶61-62. 
No.  2009AP000728.ssa 
 
5 
 
¶116 I conclude, as did the circuit court, that the Fund is 
not a formal trust.  The Fund does have some characteristics of 
a trust,9 and the legislature uses the term "trust" in the 
statute.  However, the Fund lacks key elements of a formal trust 
and therefore cannot be considered a formal trust in which the 
health care providers hold equitable title to the Funds assets. 
¶117 Regarding the statutory language, the word "trust" in 
the statute does not create a legal relationship tantamount to a 
private trust for individuals.  The word "trust" governs how the 
funds are managed.  This is analogous to numerous other public 
trust funds the Wisconsin legislature has created in the 
statutes.  Indeed, chapter 25 of the statutes sets forth a long 
list of such trust funds.  These include such funds as the 
transportation 
fund 
(Wis. 
Stat. 
§ 25.40), 
the 
petroleum 
inspection fund (Wis. Stat. § 25.47), the conservation fund 
(Wis. Stat. § 25.29), and the agricultural chemical cleanup fund 
(Wis. Stat. § 25.468).  The legislature regularly transfers 
monies from such trust funds into unrelated trust funds or the 
general fund.  The use of the label "trust fund" creates no 
vested property interest on the part of persons, organizations 
or causes who may contribute to or benefit from those programs.  
¶118 Regarding the majority's designation of the Fund as a 
formal 
trust, 
the 
majority 
errs. 
 
The 
majority 
opinion 
characterizes 
health 
care 
providers 
as 
settlors 
and 
beneficiaries as those terms are used in private trust law.  
                                                 
9 See State ex rel. Strykowski v. Wilkie, 81 Wis. 2d 491, 
261 N.W.2d 434 (1978). 
No.  2009AP000728.ssa 
 
6 
 
Neither contention survives scrutiny against the black-letter 
rules of trust law. 
¶119 According to the majority, health care providers are 
the settlors of the Fund insofar as they are the ones who have 
transferred property to the Fund by the payment of assessments.10  
According to private trust law, a settlor must have an intention 
to create a trust relationship for a trust to be established.11  
The majority opinion discusses the legislature's intent in 
establishing the Fund, see majority op., ¶73.  But because it is 
the health care providers who place assets into the Fund and who 
the majority treats as the settlors, the health care providers' 
intention to create a trust relationship is critical.  The 
health care providers, however, did not intend to create a trust 
relationship.  The health care providers have never properly 
manifested an intention to create a trust or to enter a trust 
relationship.  The health care providers must pay assessments to 
gain the benefits of excess insurance coverage provided by the 
Fund 
and 
to 
avoid the repercussions of fines and "the 
deprivation of a provider's license to practice medicine in 
Wisconsin," which 
they might face if they did not pay 
assessments.  See majority op., ¶¶13, 77.   
¶120 Health care providers thus cannot be viewed as 
equivalent to the settlors of a private trust.  The majority 
                                                 
10 Majority op, ¶76. 
11 Restatement of Trusts (Third) § 13 ("A trust is created 
only if the settlor properly manifests an intention to create a 
trust relationship."). 
No.  2009AP000728.ssa 
 
7 
 
begins to admit that it has a problem in this regard.12  But 
rather than adhering to the proper standard for constitutional 
review, which calls for the court to "uphold a legislative act 
if at all possible,"13 the majority goes to great lengths to 
offer a creative application of formal trust principles to a 
situation where, in my opinion, it is at best a stretch to make 
them fit.  Because the majority must stretch the law in its 
attempt to locate a vested property interest, it is improperly 
reallocating the presumptions and burdens of proof in a 
constitutional challenge to legislative action. 
¶121 The majority faces a similar problem in its analysis 
of health care providers as beneficiaries of a trust.  Although 
health care providers benefit from the Fund14 insofar as they are 
entitled to excess insurance coverage from the Fund, they are 
not beneficiaries of the Fund in the private trust sense.   
¶122 The health care providers benefit from the Fund 
because they are buying liability insurance coverage.  They pay 
mandatory fees to the state in exchange for insurance coverage.  
Purchasers of insurance benefit from buying insurance, but they 
are not beneficiaries of an insurance trust and they do not have 
                                                 
12 Compare majority op., ¶61 ("the Fund is unambiguously a 
formal trust") (emphasis added) with ¶76 ("We recognize that the 
establishment of the fund diverges from traditional trust 
principles in one significant way.").  
13 Lightbourn, 243 Wis. 2d at 561, ¶64. 
14 Thus Wis. Stat. § 655.27 provides that the Fund is for 
"the sole benefit of health care providers and claimants." 
No.  2009AP000728.ssa 
 
8 
 
a vested property interest in the money they pay for insurance 
coverage.   
¶123 As I see it, the Fund is simply a mandatory state 
insurance scheme entrusted to the care of the Fund's governing 
entity and the insurance commissioner.  The statutory purpose of 
the fund is fulfilled by ensuring that excess malpractice 
coverage is provided and that proper claims are paid.  The 
majority's description of the Fund at ¶¶9-12 describes the Fund 
for what it is, a mandatory legislative system of providing 
excess insurance.  While studiously avoiding the use of the word 
"insurance," the majority acknowledges that the Fund is "part of 
a broad legislative scheme" that limits "the liability of the 
health care provider and his or her insurer" and under which the 
Fund "pays out that portion of any medical malpractice claim in 
excess" of the provider's other required coverage.15   
¶124 That the health care providers benefit from the Fund 
created to perform these functions says nothing more than that 
they benefit from the statutory mandatory insurance program.  
That the health care providers reap benefits does not make them 
beneficiaries with a vested property right in the assets of the 
Fund within the meaning of trust law.  The majority's argument 
that the health care providers have property rights from 
equitable title to the assets of the Fund fails.   
¶125 The circuit court was correct in holding that the true 
nature of the Fund was that of a government trust account, 
                                                 
15 The Legislative findings in § 1, ch. 37, Laws of 1975 
refer 
to 
"increased 
insurance 
costs" 
and 
"the 
cost 
and 
difficulty of obtaining insurance for health care providers." 
No.  2009AP000728.ssa 
 
9 
 
requiring the monies to be managed in a particular way but 
allowing future legislatures to change the statutes as they saw 
fit.  This is consistent with numerous other public trust 
accounts created by the legislature, see supra ¶14.16 
¶126 In summary, the health care providers are entitled to 
excess insurance coverage from the Fund, but this right cannot 
be transformed into a property interest in the Fund's assets and 
does not give rise to a constitutional takings claim. 
II 
¶127 The majority relies on Wisconsin Professional Police 
Association v. Lightbourn, 2001 WI 59, 243 Wis. 2d 512, 627 
N.W.2d 807, which according to the majority "provides the 
correct basic framework for determining whether a property 
interest exists."  Majority op., ¶60. I will therefore compare 
Lightbourn and the present case.  
¶128 In Lightbourn the court held that beneficiaries of the 
Wisconsin Retirement System had property rights.  In the present 
case the court holds that the health care providers are the 
beneficiaries and have property rights. 
¶129 The interests of the participants in the Wisconsin 
Retirement System are easily distinguished from the interests of 
health care providers in the assets of the Fund.   
                                                 
16 The majority attempts to get around the fact that this 
Fund is not a formal trust by pointing out characteristics that 
distinguish the Fund from other public trusts that are not 
formal 
trusts. 
 
Naturally 
each 
fund 
has 
different 
characteristics and different funding mechanisms.  The fact that 
the Fund is distinguishable from other public trust funds does 
not give rise to vested property rights for the health care 
providers.  
No.  2009AP000728.ssa 
 
10 
 
¶130 The genesis of the property rights of employees in the 
Retirement System is in the statute's reference to contractual 
rights.  Because the Fund is in form and function a state-
managed insurance fund, any rights in the assets of the Fund 
must be found through contract.  In fact, the cases the majority 
cites in which the court found property rights all found a 
contractual relationship between the party and the state.17 
¶131 The property right of public employees recognized in 
the Wisconsin Retirement System cases in substantial part arose 
from the contract rights granted to them.  Without those 
contract rights, no unconstitutional taking would have been 
recognized.   
¶132 In the present case, the Medical Society has no 
contractual property rights in the Fund.  In enacting Wis. Stat. 
§ 655.27(6), the legislature chose to delete any reference to 
contract rights before enacting the statute.18   
                                                 
17 Tuttle v. N.H. Med. Malpractice Joint Underwriting Ass'n, 
992 A.2d 624 (N.H. 2010) (holding a transfer unconstitutional on 
impairment-of-contract grounds); Fun 'N Sun RV v. Michigan,  527 
N.W.2d 468 (Mich. 1994) (upholding a provision that authorized 
the state to sell a state accident fund and retain the proceeds  
because participants had no specific contract or property right 
to the proceeds); State Teachers' Retirement Bd. v. Giessel, 12 
Wis. 2d 5, 106 N.W.2d 301 (1960) (holding that "the teachers 
have a contractual relationship with the state and a vested 
right" in the retirement system); Wisconsin Retired Teachers 
Ass'n v. Employee Trust Funds Board, 195 Wis. 2d 1001, 1025, 537 
N.W.2d 400 
(Ct. 
App. 
1995) 
(holding 
that 
the 
Wisconsin 
Retirement System expressly provided for a "contractual right"). 
18 As the circuit court summarized:   
[T]he legislative history suggests the legislature 
considered the idea and failed to expressly create a 
contract right when it amended § 655.27(6).  2003 Wis. 
Act 111 was originally introduced as 2003 Assembly 
No.  2009AP000728.ssa 
 
11 
 
¶133 Furthermore, the Wisconsin Retirement System can be 
distinguished from the Fund in that the participants in the 
Retirement System have their own private accounts.  Every public 
employee who has been recognized as having a protectable 
property interest in the Wisconsin Retirement System has his or 
her own private account and will receive a dollar distribution 
calculated on his or her account.  In contrast, health care 
providers do not have their own private accounts with the Fund, 
and they will not receive a dollar distribution from the Fund.   
¶134 Moreover, 
in Lightbourn, all participants had a 
property interest in the entirety of the Retirement System fund, 
beyond the individual accounts.  Because of their vested 
property rights in their own accounts, the participants in the 
Retirement 
System 
had 
an 
interest 
in 
ensuring 
that 
the 
retirement funds were used only for proper trust fund purposes 
and that the integrity and security of the trust funds were 
protected.      
¶135 The statute creating the Fund does not create 
contractual obligations.  Indeed, the majority does not base the 
health care providers' property rights to the assets of the Fund 
on a contractual relationship between the state and the health 
care providers. 
                                                                                                                                                             
Bill 487 with the language, "health care providers and 
claimants have contractual rights in all assets of the 
fund for these purposes."  When Assembly Amendment 1 
was 
passed 
and 
became, 
in 
part, 
the 
present 
§ 655.27(6), the reference to "contractual rights" had 
been deleted and replaced with the insertion of 
"irrevocable" to modify trust.   
No.  2009AP000728.ssa 
 
12 
 
¶136 In 
Lightbourn, 
despite 
the 
participants' 
vested 
property right in the Retirement System, the court nevertheless 
concluded that the legislative changes to funding the system did 
not constitute a taking.  The majority in Lightbourn allowed the 
State to direct monies from the System for non-retirement 
purposes.  The Lightbourn court declared that the participants 
in the Wisconsin Retirement System "do not have a legal right to 
veto legislative decisions about benefit funding without showing 
some tangible injury."  Lightbourn, 243 Wis. 2d 512, ¶179. 
¶137 In contrast, in the present case, although there is 
not a contractual source of right as in Lightbourn, the majority 
surprisingly concludes that the legislative changes to funding 
the compensation system did constitute a taking.  As I see it, 
the majority in the present case in effect adopts the position 
of the dissent in the Lightbourn case.  The majority decision in 
Lightbourn and the majority decision in the present case are not 
consistent 
regarding 
the 
constitutionality 
of 
legislative 
changes in funding.  
¶138 Unfortunately, 
an 
implication 
of 
the 
majority 
opinion's creating an "irrevocable" private trust in statutory 
form is that the legislature may be significantly limited in 
enacting future legislation.19  In contrast, in Lightbourn the 
                                                 
19 The drafting records note that the word "irrevocable" was 
added in 2003 and does not strip the legislature of its right to 
amend legislation in a future legislative session. 
No.  2009AP000728.ssa 
 
13 
 
court was very careful to give the legislature room to change 
the System in future years.20  
¶139 Finally, in Lightbourn the court held that the 
possibility of future increases in employee contributions as a 
result of the diversion of funds in that case was too 
speculative to render the statute unconstitutional.  Thus, the 
desire of the Medical Society members to protect themselves from 
increased assessments is too speculative here to hold the 
statute unconstitutional.  A desire for the lowest possible 
insurance assessments is not a property interest within the 
meaning of the Takings Clause.       
¶140 The 
majority 
erroneously 
locates 
vested 
property 
rights where none exist.  The Fund must be viewed as part of an 
overall legislative scheme governing medical malpractice and 
malpractice claims.  The legislature intended to adopt various 
provisions relating to medical malpractice to stabilize medical 
malpractice insurance rates, to provide an incentive to practice 
in Wisconsin, and to help insure quality medical care in 
Wisconsin. The legislature did not intend to give health care 
providers a vested property interest in the Fund.   
¶141 The majority has gone to great lengths in its novel 
and creative attempt to re-craft the law of trusts to locate a 
nonexistent vested property interest in this case.  In the end, 
                                                 
20 When a state is accused of impairing the obligations of 
its own contract, courts will scrutinize "the ability of the 
State to enter into an agreement that limits its power to act in 
the future."  Lightbourn, 243 Wis. 2d at 594, ¶149 (quoted 
source omitted). 
No.  2009AP000728.ssa 
 
14 
 
the effort fails, but the mere fact that such an attempt was 
necessary reveals that the majority has wandered far away from 
the proper allocation of the burden of proof and the standard of 
constitutional review in this case.  That $200 million was 
transferred out of the Fund does not sit easy, but neither does 
distorting the standard of constitutional review to reach the 
majority's result in the present case.  Even with the benefit of 
the majority opinion's considerable efforts, the Wisconsin 
Medical Society has not met its burden of showing beyond a 
reasonable doubt that the transfer of money out of the Fund was 
unconstitutional. 
¶142 For the reasons set forth, I dissent. 
¶143 I am authorized to state that Justice ANN WALSH 
BRADLEY joins this opinion. 
 
No.  2009AP000728.ssa 
 
 
 
1