HARRISBURG -- A state court ruled today that Pennsylvania has mishandled a fund to help physicians pay malpractice premiums and ordered the state to transfer hundreds of millions of dollars out of its general fund to resolve a pair of lawsuits.

Commonwealth Court ruled 4-1 in favor of the state's hospitals and physicians, which had argued the state should not have been able to divert surplus money from a program known as MCare to help solve its budget problems.

At issue was how the state handled malpractice abatements from 2003 to 2007.

The MCare program is funded by an assessment on health care providers above and beyond their normal medical malpractice insurance. The fund is used to pay claims against medical providers for losses or damages that exceed their basic insurance coverage.

In 2003, the state agreed to help doctors deal with skyrocketing malpractice premiums by giving them abatements on their MCare payments.

In October, the state drained $808 million from two MCare accounts to help resolve a multibillion-dollar budget shortfall, one of the judges said. The court ruled that left the fund with less ability to meet its future obligations.

The plaintiffs in one or both of the lawsuits included the Hospital & Healthsystem Association of Pennsylvania, the Pennsylvania Medical Society, Geisinger Health System and specific hospitals and doctors.

Scot Chadwick, the Pennsylvania Medical Society's vice president for governmental affairs, said that although $808 million was diverted from the MCare-related accounts and was the total amount cited in a dissenting opinion, the lawsuits put into dispute a total of $566 million to $716 million.

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