Pennsylvania state government is facing a $200 million lawsuit in federal court over its budget that relies heavily on one-time cash infusions.
In its lawsuit, the Pennsylvania Professional Liability Joint Underwriting Association says the state’s attempt to take most of its reserves is an unconstitutional nationalization of a non-profit organization.
The association was created by the state in 1975 as a medical malpractice insurer of last resort. It provides coverage to more than 600 companies, and says its reserves were generated from premiums.
Budget-related legislation signed by Gov. Tom Wolf last month would shut down the association Dec. 1 if it doesn’t hand over $200 million.
Government lawyers say it created the association and can dissolve it. They also say the association’s reserves are excessive and don’t belong there.