Court Opinion

ID: 8203295
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:49:10.372048+00
Date Added: 2024-06-11T08:47:13.565374
License: Public Domain

SHIRLEY S. ABRAHAMSON, C.J.
¶ 107. (dissenting). "It's not fair," or "I don't like it,” might be the first *520reactions 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 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 *521that 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 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 *522a 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 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 *523standard. "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.
¶ 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 *524long 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. 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. *525The 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 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.
*526¶ 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 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.
*527¶ 125. The circuit court was correct in holding that the true nature of the Fund was that of a government trust account, 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.
*528¶ 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.
¶ 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
*529¶ 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 Lightboum, 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.
¶ 136. In Lightboum, despite the participants' vested property right in the Retirement System, the *530court 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 court was very careful to give the legislature room to change the System in future years.20
*531¶ 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, 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 *532that 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.

 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).

 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)).

 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).

 Lightbourn, 243 Wis. 2d at 561, ¶ 63.

 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.

 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.'").

 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)).

 Majority op., ¶¶ 61-62.

 See State ex rel. Strykowski v. Wilkie, 81 Wis. 2d 491, 261 N.W.2d 434 (1978).

 Majority op, ¶ 76.

 Restatement of Trusts (Third) § 13 ("A trust is created only if the settlor properly manifests an intention to create a trust relationship.").

 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.").

 Lightbourn, 243 Wis. 2d at 561, ¶ 64.

 Thus Wis. Stat. § 655.27 provides that the Fund is for "the sole benefit of health care providers and claimants."

 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."

 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.

 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").

 As the circuit court summarized:
*529[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 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.

 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.

 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).