Pennsylvania Professional Liability Joint Underwriting Association v. Josh Shapiro, Governor of Pennsylvania, et al.

The Pennsylvania Professional Liability Joint Underwriting Association (JUA) is a 26 U.S.C. § 501(c)(6) nonprofit that provides medical professional liability insurance. JUA is funded by private premiums and earned interest, is controlled by a majority-private board, and acts as a private insurance provider. For 42 years, Pennsylvania treated JUA as a private entity. Then Pennsylvania realized JUA had nearly $300 million in surplus funds. Pennsylvania passed a series of laws to confiscate JUA’s surplus funds and make it a governmental actor. The district court held that each law violated JUA’s constitutional rights. But the Third Circuit held that JUA has no constitutional rights against the Commonwealth because JUA already was a “public entity rather than a private one.” App.4a. The Third Circuit’s decision is contrary to this Court’s instruction that an entity is not governmental merely because it is created by the State and performs an important function. E.g., Trs. of Dartmouth Coll. v. Woodward, 17 U.S. (4 Wheat.) 518, 638-39 (1819). And it creates a circuit split about whether a state-created entity that is privately funded, privately controlled, and performs a private function is private or governmental. The First, Fifth, and Seventh Circuits have deemed such entities private. The Third Circuit, meanwhile, deemed JUA governmental. The question presented is whether a state-created entity that is privately funded, privately controlled, and performs a private function is a private entity that has constitutional rights against the State. (i)