AdultBasic's funding suit will proceed

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Two days after issuing its opinion in the first case, a split Commonwealth Court ruled that a second class-action suit over the redirection of tobacco settlement funds away from the defunct adultBasic health insurance program may proceed against Gov. Tom Corbett, Budget Secretary Charles Zogby and the state Treasury Department.

In a 34-page opinion in Sears v. Corbett issued June 27, a 5-2 majority decided to sustain in part and overrule in part preliminary objections filed by Mr. Corbett, Mr. Zogby and the state Legislature, allowing the plaintiffs to proceed with their claim seeking to have the state Treasury Department return to allocating tobacco settlement money to adultBasic.

AdultBasic was a popular, low-cost health insurance program for working poor who were ineligible for other government plans such as Medicaid and Medicare. But the state let the program expire in 2011, claiming a lack of funds.

The court also allowed claims seeking declaratory and mandamus relief to go forward.

On June 29, the court issued a nearly identical ruling in a second class action, Weisblatt v. Corbett, though that suit does not name the Legislature as a defendant.

"Because the reasoning of Sears v. Corbett applies equally in this case, we incorporate that opinion by reference and reach the same conclusions in this case," Judge Patricia A. McCullough wrote for the majority.

Judge McCullough was joined by then-President Judge Bonnie Brigance Leadbetter and current President Judge Dan Pellegrini, as well as by Judges Mary Hannah Leavitt and P. Kevin Brobson in both cases.

Judge Robert Simpson, joined by Judge Bernard L. McGinley, filed a dissenting opinion in each case, saying he would have dismissed the suit in its entirety with prejudice.

In Sears, the plaintiffs filed suit after adultBasic, which was partly funded by the proceeds of a 1998 settlement between several tobacco companies and Pennsylvania, ceased operations last year after new legislation -- Act 46 of 2010 and Act 26 of 2011 -- redirected money away from the program and into the state's general fund, according to court papers.

Judge McCullough said the underlying facts and procedural history in Weisblatt closely resembled those in Sears.

The plaintiffs in both cases argue that the new legislation violated both the Tobacco Settlement Act and the Pennsylvania Constitution, and are seeking an order directing all future tobacco settlement funds to be deposited in accordance with the settlement act, and all redirected funds to be repaid to the Tobacco Settlement Fund.

The plaintiffs are also seeking to have the adultBasic program reinstated retroactively to March 1, 2011, and are asking for an injunction requiring the Treasury to keep in its accounts any tobacco settlement money until the case is closed, according to court papers.

The majority sustained the defendants' preliminary objections with regard to the plaintiffs' claims involving money that was redirected from the Health Endowment Account for Long-Term Hope, which was created by Tobacco Settlement Act, and which was designated to receive a portion of the settlement funds -- a portion separate from the money that was to be directed to adultBasic.

Judge McCullough said the law gives the governor discretion to use money from the health account "to meet the extraordinary or emergency health care needs of the citizens of this commonwealth," but does not require such use.

But Judge McCullough disagreed with the defendants' assertion that the redirection of the funds met that standard. "Indeed, if these monies had not been redirected, it appears that there would have been sufficient funding for adultBasic in 2011," she wrote.

Judge Simpson disagreed.

"By whatever name, they seek return of funds from the commonwealth's General Fund back to an account where it will be available for the adultBasic program," he said. "The plain language of [the law] does not enable them to do so."

The defendants also argued that a class action is neither fair nor efficient in this case since a win for any individual member of the class would amount to a win for all members.

Judge McCullough agreed with the plaintiffs that this challenge was premature because a court cannot make a class-action determination until the close of pleadings.

Counsel for the plaintiffs, David H. Weinstein of Weinstein Kitchenoff & Asher in Philadelphia, said he and his clients are "thrilled that the Commonwealth Court has allowed us to continue pursuing re-establishing the funding for 41,000 working but poor Pennsylvanians who are provided minimum health coverage under the Tobacco Settlement Fund."

A spokesperson for Mr. Corbett could not be reached.


Zack Needles: or 215-557-2493. To read more articles like this, visit


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