Court Opinion

ID: 4967797
Source: CourtListenerOpinion
Date Created: 2021-09-24 16:25:16.429553+00
Date Added: 2024-06-11T08:16:19.824398
License: Public Domain

CONCURRING OPINION BY
Judge BROBSON.
Because I believe that the adjudication of the Pennsylvania Insurance Commissioner (Commissioner) in this matter is at odds with the governing statutory language, the Commissioner’s adjudication must be reversed with a majority opinion that provides a path forward if this Court’s decision becomes the final word on this matter. It is for this reason that I join the majority opinion. I write separately only to offer an alternative construction of the governing statutory language that would also support reversal, but would provide for a different method of calculating assessments than that laid out by the majority-
Section 712 of the Medical Care Availability and Reduction of Error (MCARE) Act (Act)1 establishes the MCARE Fund. To evaluate the General Assembly’s intent in one subsection of Section 712 requires the consideration of the entire section, if not the entire Act. See 1 Pa.C.S. § 1921(a); Snyder v. Com., Dep’t of Transp., 64 Pa. Cmwlth. 599, 441 A.2d 494, 496 (1982) *1122(“[S]ections of a statute must be construed with reference to the entire statute and not apart from their context.”).
In context, Section 712 of the Act provides that monies in the MCARE Fund “shall be used to pay claims against participating health care providers for losses or damages awarded in medical professional liability actions against them in excess of’ the statutorily-required basic professional liability insurance coverage. Section 712(a) of the Act. Section 712 also provides that those very same participating providers are to fund the MCARE Fund through annual assessments. Section 712(d) of the Act.2
The annual assessments are “based on the prevailing primary premium for each participating health care provider”3— meaning, the assessment is a multiplier that, when applied to a particular health care provider’s prevailing primary premium, yields the amount of that health care provider’s annual assessment. Health care providers pay this annual assessment in addition to their annual medical malpractice insurance premium.
In order to determine the appropriate multiplier, the Pennsylvania Insurance *1123Department (Department) must first determine the total amount of funds to be generated by the assessment. Again, in context, at issue is the maintenance and operation of the MCARE Fund. The MCARE Fund pays claims on a “pay-as-you-go” basis, meaning that the MCARE Fund does not build into its assessment scheme an actuarial assessment of incurred but not reported or reported but unresolved claims, as most private insurers do and are required to do by law. Instead, the Department assesses .the annual needs of the MCARE Fund based on the expenses of the MCARE Fund in the year immediately preceding.
This brings me to Section 712(d)(1) of the Act. It provides, in relevant part:
The assessment ... shall, in the aggregate, produce an amount sufficient to do all of the following:
(i) Reimburse the fund for the payment of reported claims which became final during the preceding claims period.
(ii) Pay expenses of the fund incurred during the preceding claims period.
(iii) Pay principal and interest on moneys transferred into the fund in accordance with section 713(c).[4]
(iv) Provide a reserve that shall be 10% of the sum of subparagraph (i), (ii), and (iii).
(Emphasis added.) Subparagraphs (i), (ii), and (iii) are clearly intended as reimbursement/payment devices. They are meant to replenish the MCARE Fund for claims and expenses actually paid in the prior year and to pay off loan obligations actually incurred in the prior year. Thus, the assessment must include “sufficient” monies to restore the MCARE Fund balance to where it would have been had none of these claims and expenses been paid and as if the loan/transfer of funds had not occurred. This is in keeping with the MCARE Fund’s “pay-as-you-go” system.
But subparagraph (iv) is different. That subparagraph speaks in terms of providing for a “reserve.” The General Assembly’s use of the term “reserve” is telling.5 The General Assembly’s use of the concept of a “reserve” could reasonably be interpreted as referring not to the assessment in isolation, but rather to an assumption or anticipation that current year expenses and liabilities for the MCARE Fund would be 10% higher than the prior year. Thus, the General Assembly may have wanted to ensure that there is an additional amount of money in the MCARE Fund — a reserve — “sufficient” to pay for this assumed or anticipated additional obligation.
To ensure that there is a “10% reserve,” the General Assembly may have intended that the Department look to the MCARE Fund balance at the end of the year immediately preceding, in order to determine the “amount sufficient” to “[p]rovide a reserve that shall be 10% of the sum of subparagraphs (i), (ii) and (iii).” By the chosen statutory language, the General Assembly may have intended that the MCARE Fund reserve in the current year be capped at 10% of the MCARE Fund’s *1124expenses and liabilities from the year immediately preceding. I reach this conclusion because of the General Assembly’s use of the phrase “shall be 10%” in reference to the reserve. If the General Assembly had intended the 10% reserve to be only a floor, it would have chosen different language — e.g. “shall be at least 10%.” Moreover, if there is a balance in the prior year, failure to account for that balance would produce an assessment that is excessive, in that it could “provide a reserve” in excess of 10%.
This alternative interpretation of Section 712(d)(1) of the Act furthers one of the expressly stated legislative goals of the Act — ie., creating a health care system that provides for accessible and affordable professional liability insurance.6 Requiring health care providers to fund a 10% reserve every assessment year, without regard to the monies already held in reserve by the MCARE Fund, does nothing to make professional liability insurance affordable in the Commonwealth.
Finally, Section 712(k) of the Act supports this alternative interpretation. This provision anticipates the future termination of the MCARE Fund. On that day, “[a]ny balance remaining in the fund upon such termination shall be returned by the department to the participating health care providers who participated in the fund in proportion to them assessments in the preceding calendar year.” (Emphasis added.) The Commissioner adopted an interpretation of Section 712(d)(1) that could create, and has created, a substantial reserve in the MCARE Fund over a period of many years. Under this interpretation, the inequity and absurdity of only refunding the balance in the MCARE Fund in the year of termination to those health care providers who participated in the MCARE Fund in the preceding year (and perhaps only in the preceding year, meaning it was the health care provider’s first year of practice in the Commonwealth) is obvious. See 1 Pa.C.S. § 1922(1) (noting that we must presume that General Assembly does not intend a result that is absurd or unreasonable).
The fact that the General Assembly chose to limit distribution of any balance in the MCARE Fund at termination to those who participated in the MCARE Fund in the preceding calendar year also supports a conclusion that the General Assembly intended and envisioned a direct correlation between the actual MCARE Fund balance at termination and those assessed in the prior year. This alternative interpretation of Section 712(d)(1) of the Act, requiring only an assessment of an amount sufficient to provide for a 10% reserve in the MCARE Fund and nothing more, is consistent with this scheme.
Judge COHN JUBELIRER joins in this concurring opinion.

. Section 712 of the Act, Act of March 20, 2002, P.L. 154, as amended, 40 P.S. § 1303.712.

. Section 712(a) and (d) of the Act provide:
(a) Establishment. — There is hereby established within the State Treasury a special fund to be known as the Medical Care Availability and Reduction of Error Fund. Money in the fund shall be used to pay claims against participating health care providers for losses or damages awarded in medical professional liability actions against them in excess of the basic insurance coverage required by section 711(d), liabilities transferred in accordance with subsection (b) and for the administration of the fund.
(d) Assessments.—
(1)For calendar year 2003 and for each year thereafter, the fund shall be funded by an assessment on each participating health care provider. Assessments shall be levied by the department on or after January 1 of each year. The assessment shall be based on the prevailing primary premium for each participating health care provider and shall, in the aggregate, produce an amount sufficient to do all of the following:
(i) Reimburse the fund for the payment of reported claims which became final during the preceding claims period.
(ii) Pay expenses of the fund incurred during the preceding claims period.
(iii) Pay principal and interest on moneys transferred into the fund in accordance with section 713(c).
(iv) Provide a reserve that shall be 10% of the sum of subparagraphs (i), (ii) and (iii).
(2) The department shall notify all basic insurance coverage insurers and self-insured participating health care providers of the assessment by November 1 for the succeeding calendar year.
(3) Any appeal of the assessment shall be filed with the department.
(Footnotes omitted.) Also relevant for purposes of analyzing the issue in this case is Section 712(k) of the Act, which provides:
(k) Termination. — Upon satisfaction of all liabilities of the fund, the fund shall terminate. Any balance remaining in the fund upon such termination shall be returned by the department to the participating health care providers who participated in the fund in proportion to their assessments in the preceding calendar year.

. "Prevailing primary premium” is the premium rate associated with a particular health care provider for an occurrence policy issued by the Pennsylvania Professional Liability Joint Underwriting Association (JUA). Section 702 of the Act, Act of March 20, 2002, P.L. 154, as amended, 40 P.S. § 1303.702. The JUA is a statutory insurance pool, made up of all insurers authorized to write medical malpractice insurance in the Commonwealth. The JUA serves as the insurer of last resort for health care providers who are unable to secure their liability insurance in the open market at prevailing rates. Section 732 of the Act, Act of March 20, 2002, P.L. 154, as amended, 40 P.S. § 1303.732.

. Section 713(c) of the Act authorizes the Governor to transfer money into the MCARE Fund if the MCARE Fund lacks sufficient monies to pay its liabilities. Section 713(c) of the Act, Act of March 20, 2002, P.L. 154, as amended, 40 P.S. § 1303.713(c). Such transfers are treated as loans, and must be paid back with interest. Id.

. In the insurance industry, a "reserve” is defined as “[slums of money an insurer is required to set aside as a fund for the liquidation of future unaccrued and contingent claims, and claims accrued, but contingent and indefinite as to amount.” Black’s Law Dictionary 1308-09 (6th ed. 1990).

. Section 102 of the Act, Act of March 20, 2002, P.L. 154, as amended, 40 P.S. § 102.