The state’s largest association of health care providers filed a lawsuit Monday asking for an injunction against the new state budget’s $200 million transfer from a fund designed to compensate victims for malpractice beyond basic insurance.

In the complaint, the Wisconsin Medical Society, which represents more than 11,000 health care employees statewide, accused the state of levying “an unlawful tax on health care providers and injured patients and families,” and appropriating funds “without just compensation,” among other legal and constitutional issues.

The fund, the Wisconsin’s Injured Patients and Families Compensation Fund, was established in 1975 to ensure victims of medical malpractice would be compensated even if their claims went beyond the funds provided for by standard malpractice insurance, which is limited to $1 million per case or $3 million per year. All Wisconsin physicians not employed by the state must pay into the fund every year.

WMS’ senior vice president of government relations Mark Grapentine said the core of this lawsuit was the fact that none of the fund’s money came from taxpayers.

“Even the costs of administering the fund are paid by fees,” Grapentine said. “It’s not the government’s money.”

The transfer was one provision of the budget Democratic Gov. Jim Doyle signed into law last Friday. The new law will move the money into the Medical Assistance Trust Fund, which pays out to the state’s Medicaid program, BadgerCare Plus and other health care financing. The $200 million transfer amounts to more than a quarter of IPFCF.

Doyle spokesperson Carla Vigue said the end result would be to keep health care costs down for Wisconsin residents by covering the state’s children and helping those who don’t have health care buy in for a reduced rate.

“It’s basically going to get 98 percent of people in Wisconsin insured,” Vigue said.

According to Grapentine, the fund has helped to keep Wisconsin attractive to high-quality physicians from states with less stable malpractice environments. Wisconsin is one of eight states the American Medical Association lists as having a medical liability environment that’s not in crisis.

“The fund has been a tremendous asset to Wisconsin,” Grapentine said. “We’re always fighting the battle to attract, recruit and retain top physicians. Wisconsin is often not the first choice of new physicians out of medical school.”

Furthermore, Grapentine said the transfer endangers the very existence of the fund, which was projected to have a deficit of more than $440 million by 2008 if the governor’s original proposal of a $175 million transfer had gone through.

Vigue said the governor has no opinion about the lawsuit at the moment. However, she added the transfer was a legitimate exercise of the state’s power.

“The Legislature created this fund, and the Legislature can make changes to the fund,” Vigue said.

The governor has attempted similar transfers in past budget seasons, Grapentine said, but until this year was held back by Republican majorities on the Joint Finance Committee.

Some legislators are supporting a reverse of the transfer, including the new Senate Majority Leader, Russ Decker, D-Weston. Senator Roger Breske, D-Eland, is also working on a bill that would reinstate a $418 million hospital tax, which could bring in more than $700 million in federal funding to help fill in the hole in the IPFCF.

In the meantime, Grapentine said, the Wisconsin Medical Society will persist in its lawsuit.

“We’re in it for the long haul,” Grapentine said.

Decker was unavailable for comment as of press time.