and 18-2323 PENNSYLVANIA PROFESSIONAL LIABILITY JOINT UNDERWRITING ASSOCIATION v. Governor of the Commonwealth of Pennsylvania, the General Assembly of the…

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
Nos. 18-2297 and 18-2323
_____________
PENNSYLVANIA PROFESSIONAL LIABILITY JOINT
UNDERWRITING ASSOCIATION
v.
GOVERNOR OF THE COMMONWEALTH OF
PENNSYLVANIA,
THE GENERAL ASSEMBLY OF THE
COMMONWEALTH OF PENNSYLVANIA
(Intervenor in District Court)
Governor of the Commonwealth of Pennsylvania,
Appellant in 18-2297
The General Assembly of The Commonwealth of
Pennsylvania,
Appellant in 18-2323
_____________
Nos. 19-1057 and 19-1058
_____________

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PENNSYLVANIA PROFESSIONAL LIABILITY JOINT
UNDERWRITING ASSOCIATION
v.
GOVERNOR OF PENNSYLVANIA; THE GENERAL
ASSEMBLY OF THE COMMONWEALTH OF
PENNSYLVANIA; PRESIDENT PRO TEMPORE
PENNSYLVANIA SENATE; MINORITY LEADER
PENNSYLVANIA SENATE; SPEAKER PENNSYLVANIA
HOUSE OF REPRESENTATIVES; MINORITY LEADER
PENNSYLVANIA HOUSE OF REPRESENTATIVES;
INSURANCE COMMISSIONER PENNSYLVANIA
President Pro Tempore Pennsylvania Senate;
Minority Leader Pennsylvania Senate; Speaker Pennsylvania
House of Representatives, Minority Leader Pennsylvania
House of Representatives,
Appellants in 19-1057
Governor of Pennsylvania,
Insurance Commissioner Pennsylvania,
Appellants in 19-1058
_____________
Nos. 21-1099, 21-1112, and 21-1155
_____________
PENNSYLVANIA PROFESSIONAL LIABILITY JOINT
UNDERWRITING ASSOCIATION
v.

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GOVERNOR OF PENNSYLVANIA; GENERAL
ASSEMBLY OF THE COMMONWEALTH OF
PENNSYLVANIA
General Assembly of the Commonwealth of
Pennsylvania,
Appellant in 21-1099
Governor of Pennsylvania,
Appellant in 21-1112
Pennsylvania Professional Liability Joint Underwriting
Association,
Appellant in 21-1155
_______________
On Appeal from the United States District Court
For the Middle District of Pennsylvania
(D.C. Nos. 1-17-cv-2041, 1-18-cv-1308, and 1-19-cv-1121)
District Judge: Honorable Christopher C. Conner
_______________
Argued
November 9, 2022
Before: CHAGARES, Chief Judge, JORDAN, and
RESTREPO, Circuit Judges
(Filed: December 16, 2024)
_______________

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Nicole J. Boland
Pennsylvania State Police
Office of Chief Counsel
1800 Elmerton Avenue
Harrisburg, PA 17110
Sean A. Kirkpatrick
Keli M. Neary
Karen M. Romano
Office of Attorney General of Pennsylvania
Strawberry Square – 15 th Floor
Harrisburg, PA 17120
Counsel for Governor of Pennsylvania
Melissa Chapaska
Kevin J. McKoen
Dennis Whitaker
Hawke McKeon & Sniscak
100 North Tenth Street
P.O. Box 1778
Harrisburg, PA 17101
Counsel for Pennsylvania Professional Liability
Joint Underwriting Association
Karl S. Myers
Stevens & Lee
555 City Avenue
Suite 1170
Bala Cynwyd, PA 19004

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Michael D. O’Mara
Spencer R. Short
Jonathan F. Bloom
Stradley Ronon Stevens & Young
2005 Market Street – Suite 2600
Philadelphia, PA 19103
Counsel for General Assembly of the
Commonwealth of Pennsylvania,
Minority Leader Pennsylvania Senate,
Speaker Pennsylvania House of Representatives,
Minority Leader Pennsylvania House of
Representatives,
President Pro Tempore Pennsylvania Senate, and
Insurance Commissioner Pennsylvania
Karon Sarpolis
365 Rolling Hill Road
Elkins Park, PA 19027
Pro Se Amicus
_______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
Nearly fifty years ago, in response to a medical
malpractice insurance crisis in the state, the General Assembly
of the Commonwealth of Pennsylvania established the Joint
Underwriting Association (“JUA”). The JUA’s primary
function is to act as a professional liability insurer of last resort
for high-risk medical providers, who pay the JUA directly for
the policies it issues. The JUA has never received funding from

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the Commonwealth. Since its inception, it has amassed
through investments a surplus of about $300 million.
Every year from 2016 to 2019, the Commonwealth took
legislative action trying either to transfer the JUA’s surplus to
the Commonwealth’s General Fund or to assume control of the
JUA.1 The 2017, 2018, and 2019 statutes – Acts 44, 41, and
15, respectively – are the focus of the appeals before us now.
After each of those enactments, the JUA sued various
combinations of defendants, including the Commonwealth’s
Governor, General Assembly, Insurance Commissioner, and
four state representatives (together, the Defendants), asserting
multiple federal claims. According to the JUA, the Defendants
have violated the Takings Clause, the Contract Clause, the First
Amendment, and the JUA’s rights to procedural and
substantive due process.2 In response to the JUA’s challenges,
the Defendants asserted, among other things, that the JUA was
created by the Commonwealth and cannot assert constitutional
claims against its creator. The District Court disagreed and
1 The General Fund holds all money the Commonwealth
receives from the Commonwealth Department of Revenue or
“any other source” that is not required to be credited to another
state fund. 72 P.S. § 302.
2 Those clauses and amendments are found at the
following: Takings Clause, U.S. Const. amend. V; Contract
Clause, id. art. 1, § 10, cl. 1; First Amendment, id. amend. 1;
and due process, id. amend. XIV.

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entered an injunction, preventing the enforcement of most of
the legislative changes to the JUA.3
The primary issue before us in these appeals is whether
the JUA is indeed a creature of the Commonwealth beholden
only to the Commonwealth; in other words, whether it is a
public entity rather than a private one. We hold that it is,
because the Commonwealth delegated power to the JUA to
support a public purpose within the state insurance market, and
because only the Commonwealth has a legally protectable
interest in the JUA. As a public entity, the JUA lacks the
ability to maintain the constitutional claims it has asserted
against the Commonwealth, its creator. Accordingly, and for
the reasons explained herein, we will reverse in part, affirm in
part, and remand.
I. B ACKGROUND4
Because our analysis of the JUA’s public nature must
account for its role in the Commonwealth, we begin by
explaining the JUA’s history, operations, powers, and duties.
3 Portions of the acts unrelated to the JUA survived and
are not at issue in this appeal.
4 This appeal consolidates 3d Cir. Nos. 18-2297, 18-
2323, 19-1057, 19-1058, 21-1099, 21-1112, and 21-1155. The
joint appendix filed in the appeals from Pennsylvania
Professional Liability Joint Underwriting Ass’n v. Wolf (JUA
I), 324 F. Supp. 3d 519 (M.D. Pa. 2018), and Pennsylvania
Professional Liability Joint Underwriting Ass’n v. Wolf (JUA
II), 381 F. Supp. 3d 324 (M.D. Pa. 2018), is cited as “C.A. No.
18-2297 J.A.” The joint appendix filed in the appeals from

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A. History and Operation of the JUA
The Commonwealth General Assembly established the
JUA in 1975 in an effort to make medical professional liability
(“MPL”) insurance available at a reasonable cost.5 The JUA
is required to offer MPL insurance to health care providers and
entities that “cannot conveniently obtain [MPL] insurance
through ordinary methods at rates not in excess of those
applicable to [those] similarly situated[.]”6 40 P.S.
§ 1303.732(a). All insurers authorized to write liability
insurance in the Commonwealth must be members of the JUA.
Id. § 1303.731(a).
Pennsylvania Professional Liability Joint Underwriting Ass’n
v. Wolf (JUA III), 509 F. Supp. 3d 212 (M.D. Pa. 2020), is cited
as “C.A. No. 21-1099 J.A.”
5 The JUA was created by the Pennsylvania Health Care
Services Malpractice (“PHCSM”) Act. PHCSM Act, P.L. 390,
No. 111, § 802 (repealed 2002). The General Assembly
replaced that Act in 2002 with the Medical Care Availability
and Reduction of Error (“MCARE”) Act, 40 P.S. § 1303.101
et seq., which “established” the JUA as a “nonprofit joint
underwriting association,” id. § 1303.731(a).
6 According to the record, the JUA’s insureds generally
fall into four categories: (1) providers with a history of
malpractice occurrences; (2) providers practicing high-risk
specialties; (3) providers who have gaps in coverage; or (4)
providers reentering the medical profession after the loss or
suspension of their licenses or voluntary withdrawal from
practice.

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By statute, the JUA is supervised by the Insurance
Department of Pennsylvania (the “Department”) and owes four
duties to the Department: (1) to submit a plan of operations to
the Commissioner of the Department for approval; (2) to
submit rates and any rate modifications to the Department for
approval; (3) to offer MPL insurance to health care providers;
and (4) to annually file with the Commissioner updated rates
for all health care providers, which, in turn, the Commissioner
“shall review and may adjust” when calculating annual
assessments for the health care providers. Id. § 1303.731(b)
(incorporating id. § 1303.712(f)). The original legislation
insulated the Commonwealth from the JUA’s debts and
liabilities, but Act 41, enacted in 2018 and discussed in Section
I.B.2., infra, repealed that provision. Id. § 1303.731(c).
The “powers and duties” of the JUA are “vested in and
exercised by” its Board of Directors. Id. § 1303.731(a).
According to the JUA’s plan of operations, which is subject to
the Commissioner’s approval, id. § 1303.731(b), the Board has
no more than fourteen directors, consisting of the president of
the JUA, up to eight member-company representatives elected
by the JUA’s members, up to four representatives from health
care providers or the public nominated by the Board and
appointed by the Commissioner, and one agent or broker
elected by the JUA’s members, Pa. Pro. Liab. Joint
Underwriting Ass’n v. Wolf (JUA II), 381 F. Supp. 3d 324, 328
(M.D. Pa. 2018). The JUA has four employees, none of whom
are paid by the Commonwealth; nor do they receive any
benefits under the Commonwealth’s retirement system. Pa.
Pro. Liab. Joint Underwriting Ass’n v. Wolf (JUA III), 509 F.
Supp. 3d 212, 218 (M.D. Pa. 2020). The organization’s
operating plan states that it may be dissolved by “operation of
law” – like any nonprofit in the state, 15 Pa. C.S.A.

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§ 9134(a)(5) – or dissolved at the request of its members,
“subject to the approval of the Commissioner[,]” JUA III, 509
F. Supp. 3d at 218. At dissolution, the Board is tasked with
determining how the JUA’s assets are to be distributed, subject
to the Commissioner’s approval. Id.
The JUA issues insurance policies directly to its
policyholders, who pay premiums to the JUA.7 Those
premiums – and the income earned on investments made with
them – are now the JUA’s sole source of funding; neither its
members nor the Commonwealth contribute any money to its
operation. The JUA holds “contingency funds” in two separate
accounting categories: first, in reserves, which represent the
“best estimate” of the funds needed for claims “that have been
incurred but not yet paid,” and second, in surplus, which is the
“capital after all liabilities have been deducted from assets.”
(C.A. No. 18-2297 J.A. at 613, 2363.)
The JUA’s surplus funds underly the disputes here. In
December 2016, the JUA’s surplus was $268,124,490. By
March 2020, it had grown to $298,276,876. By at least one
metric, this was an exceptional stockpile. In the insurance
business, a risk-based capital (“RBC”) ratio is the measure of
the sufficiency of an insurer’s contingency funds to cover the
7 The policyholders – those who seek insurance from the
JUA in its role as a last-resort insurer – are different from the
members of the JUA, who join “by virtue of becoming licensed
carriers” of liability insurance in Pennsylvania. (C.A. No. 18-
2297 J.A. at 308.) The typical JUA policy is limited to one
year, with a limit of $500,000 per claim and aggregate limits of
$1.5 million for individuals and $2.5 million for hospitals.

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“full range of potential exposure from [its] claims.”8 (C.A. No.
18-2297 J.A. at 1162.) The Department expects insurers to
maintain an RBC ratio of at least 300% of its potential
exposure to claims by its policyholders. As of 2017, the JUA’s
RBC was 13,477%.
Because of that extraordinarily high ratio, the
Department sent the JUA a letter about “certain matters
involving a lack of regulatory compliance and deviation from
sound business practices[.]”9 (C.A. No. 18-2297 J.A. at 937.)
The Department asked the JUA to “determine an efficient
amount of surplus to hold in order to run its operation” and to
recommend in its plan of operations how it will divest itself of
the “excess capital[.]” (C.A. No. 18-2297 J.A. at 938.) In
response, the JUA said that the Board would develop and
undertake a plan of action to address the excess surplus when
so required, but it went on to state that it would be
“inappropriate to identify an efficient surplus operating range”
8 A company’s RBC ratio is calculated in accordance
with a formula that “may adjust for the covariance between”
the insurance company’s asset, credit, underwriting, and “[a]ll
business and other risks[.]” 40 P.S. § 221.4-B. The formula is
set by the National Association of Insurance Commissioners,
id. § 221.1-B, and a company’s RBC ratio is generally
confidential, id. § 221.11-B(a).
9 At that time, when the JUA held more than $268
million in surplus funds, an auditor recommended that the JUA
needed only about $21.5 million in reserves for “unpaid losses”
and “unpaid loss adjustment expenses.” (C.A. No. 18-2297
J.A. at 1162.)

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because of a “lack of legal authority” about how any excess
surplus should be handled. (C.A. No. 18-2297 J.A. at 988-89.)
The JUA has no policy requiring the distribution of dividends
to its policyholders; it has never paid any dividends to its
policyholders; nor can it, consistent with statute, pay dividends
or make distributions to its members.10 See 15 Pa. C.S.A.
§ 9114(d) (explaining that nonprofit associations can only use
their profits for their nonprofit purposes); id. § 9132(a) (“[A]
nonprofit association may not pay dividends or make
distributions to a member or manager.”).
Meanwhile, as we explain below, the legislature made
efforts to reach the JUA’s surplus capital.
10 In the event of a budget deficit, which has never
occurred, the Board must alert the Commissioner. 40 P.S.
§ 1303.733(a). If the Commissioner approves, the JUA is
authorized to borrow the funds needed to satisfy a deficit. Id.
§ 1303.733(b). An earlier version of the JUA’s plan of
operations, adopted in 2005, explained that the JUA could also
fund a deficit by assessing its members in proportion to each
member’s participation, which the JUA would have to refund
when it acquired the necessary funds through a loan or an
increase in premiums. The JUA, however, has never borrowed
money or assessed its members to fund its operations. Its CEO
testified that the Insurance Department advised it to remove the
assessment language from its plan of operations, and that the
JUA “never intend[s]” to assess its members. (C.A. No. 18-
2297 J.A. at 1318, 1470). In 2018, the JUA removed from its
plan of operations the specific language about its ability to
assess its members.

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B. The Commonwealth’s Legislation and the
JUA’s Lawsuits
The several cases consolidated in this appeal stem from
three pieces of legislation and the lawsuits that challenged
them.
1. Act 44 of 2017 and Pennsylvania
Professional Liability Joint Underwriting
Ass’n v. Wolf (JUA I), 324 F. Supp. 3d 519
(M.D. Pa. 2018)
In 2017, the legislature passed and the Governor signed
Act 44 to implement the annual budget for the Commonwealth.
Act of Oct. 30, 2017, P.L. 725, No. 44, § 1 (“Act 44”). Act 44
mandated that the JUA transfer $200 million into the
Commonwealth’s General Fund.11 Id. § 1.3. It required
payment by December 1, 2017, or the JUA would be abolished,
and its funds transferred to the Commissioner. Id. Act 44’s
legislative findings included that the JUA “has money in
excess of the amount reasonably required to fulfill its statutory
mandate[,]” that its funds do not belong to its members or
policyholders, and that it is an “instrumentality of the
Commonwealth[.]” Id.
11 Act 44 explicitly repealed Act 85, enacted in 2016,
which had also demanded that the JUA transfer $200 million
to the Commonwealth. JUA I, 324 F. Supp. 3d at 526. The
JUA commenced a lawsuit following Act 85’s enactment,
which has been held in abeyance pending the resolution of
these appeals. Id.

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A week after Act 44’s enactment, the JUA sued the
Governor in the U.S. District Court for the Middle District of
Pennsylvania, seeking declaratory and injunctive relief for
violations of the Constitution, specifically, substantive due
process, the Takings Clause, and the Contract Clause. The
JUA also moved for a temporary restraining order (“TRO”)
and preliminary injunction against enforcement of the JUA-
related section of Act 44. The District Court denied the JUA’s
request for a TRO and, upon motion by the General Assembly
of Pennsylvania, granted leave for the General Assembly to
intervene. After a hearing, the District Court granted the
motion for a preliminary injunction, declaring that “[t]he
uncompensable constitutional exigency imposed by Act 44 is
one of extraordinary proportion.” Pa. Pro. Liab. Joint
Underwriting Ass’n v. Wolf, No. 1-17-cv-2041, 2017 WL
5625722, at *11 (M.D. Pa. Nov. 22, 2017).
The parties filed cross-motions for summary judgment.
The Governor and General Assembly argued that the JUA
could not assert constitutional claims against the
Commonwealth because the JUA is nothing more than a
creature of the Commonwealth itself.12 JUA I, 324 F. Supp. 3d
12 The General Assembly argued that the JUA’s
relationship with the Commonwealth is “sufficiently
analogous” to that of a state with a municipality, so that it
functions as a political subdivision and cannot bring a claim
against its creator. JUA I, 324 F. Supp. 3d at 530. The District
Court, however, distinguished the JUA from entities that
generally fall under the political subdivision doctrine, stating
that the JUA “has no power … to tax, to issue bonds, or to
exercise eminent domain” and that its mission is “inherently
nongovernmental.” Id. at 531. The District Court also rejected

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at 529, 532. The JUA responded that it “is not and never has
been part of the state,” so Act 44 directed a taking of “private
property” by the Commonwealth with “no hope of ‘just
compensation[.]’” (M.D. Pa. 17-2041 D.I. 59 at 13-15.)
The District Court’s analysis “beg[an] and end[ed] with
the [JUA]’s Takings Clause claim.” JUA I, 324 F. Supp. 3d at
528. After rejecting the arguments that the JUA was a political
subdivision of the Commonwealth, or the Commonwealth
itself, the Court found guidance in out-of-circuit cases
involving “state-created insurer[s]-of-last-resort” suing their
creators.13 Id. at 532-35. The District Court said those cases
did not suggest that state creation of an entity was “alone
determinative” as to whether the entity was public or private;
rather, the courts “holistically examined” the entity’s
relationship with the state, using a “variety of factors[.]” Id. at
535.
Following suit, the Court conducted its own holistic
examination of the JUA’s relationship with the
Commonwealth. It considered the JUA’s function, the degree
the Governor’s argument that the JUA, like Amtrak (a
“government entity” for the purposes of 42 U.S.C. § 1983
liability), is a government actor. Id. The Court reasoned that
the Commonwealth had, at that time, disclaimed liability for
the JUA and the JUA was not subject to extensive government
control, so the comparison to Amtrak was not appropriate. Id.
at 531-32.
13 See infra Section II.C (discussing out-of-circuit
cases).

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of control reserved to the Commonwealth in contrast with the
degree of autonomy granted to the JUA, other aspects of the
JUA’s treatment by statute, and the nature of the funds in
dispute. Id. at 535-38. For three reasons, the Court held that
the JUA is a “private entity as a matter of law”: first, the JUA
is, “at its core, an insurance company” comprised of private
members, governed by a private board, and supported by
private employees; second, the JUA is subject to de minimis
Commonwealth supervision in that it is only required to seek
the Insurance Commissioner’s approval of its plan of
operations and any plan to borrow funds in case of a deficit;
and, third and finally, the JUA is exclusively funded by private
premiums, the payment of which has no public end-use. Id.
In so ruling, the District Court emphasized the
legislature’s choices in creating the JUA:
[I]n the same legislation that created the [JUA],
the General Assembly relinquished control
thereof. … The legislature had the option to
tightly circumscribe the [JUA’s] operations and
composition of its board, to establish the control
of the [JUA] as a special fund [14] … , or to retain
14 The District Court contrasted the Commonwealth’s
choice not to establish the JUA as a “special fund” with the
Commonwealth’s choice to create the MCARE Fund as part
of the MCARE Act (see supra n.5). JUA I, 324 F. Supp. 3d
at 524. The MCARE Fund is administered by the
Commonwealth Insurance Department and is used to “pay
claims against participating health care providers for losses
or damages awarded in [MPL] actions against them in excess

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meaningful control in any number of other ways.
That the General Assembly chose to achieve a
public health objective through a private
association has a perceptible benefit: it assures
availability of medical professional liability
coverage throughout the Commonwealth at no
public cost. By the same token, it also has a
consequence: the General Assembly cannot
claim carte blanche access to the [JUA’s] assets.
Id. at 538 (citations omitted).
The Court granted summary judgment, declaratory
judgment, and permanent injunctive relief to the JUA, holding
that the sections of Act 44 related to the JUA were “plainly
violative” of the Takings Clause. Id. at 540. There was a
timely appeal. (C.A. Nos. 18-2297 & 18-2323.)
2. Act 41 of 2018 and Pennsylvania
Professional Liability Joint Underwriting
Ass’n v. Wolf (JUA II), 381 F. Supp. 3d 324
(M.D. Pa. 2018)
In 2018, the Commonwealth responded to the District
Court’s decision by enacting Act 41. That enactment followed
a review of the JUA by the Insurance Commissioner that,
according to a legislative finding, revealed “a need to
modernize the [JUA] in order to produce needed economical
of the basic insurance coverage required by” the statute. 40
P.S. § 1303.712(a). It is funded by annual assessments of its
participants. Id. § 1303.712(i).

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and administrative efficiencies.” Act of June 22, 2018, P.L.
273, No. 41, § 3 (“Act 41”). In Act 41, the Commonwealth
expressed its intention to place the JUA “within the [Insurance
D]epartment [to] give the [C]ommissioner more oversight of
expenditures and ensure better efficiencies” in its operation.
Id. The Act declared that the JUA “shall continue as an
instrumentality of the Commonwealth and shall operate under
the control, direction[,] and oversight of the [Insurance]
Department.” Id. (emphasis added). Of particular note, Act 41
mandated that the JUA transfer all of its assets to the
Department within thirty days of the Act’s effective date.15 Id.
The JUA sued the Governor, the Insurance
Commissioner, and four state representatives in their official
capacities, again alleging violations of substantive due process,
the Takings Clause, and the Contract Clause.16 It sought
15 Act 41 also purported to make changes to the JUA’s
operations, including restructuring its Board, causing its
liabilities to be considered as liabilities against the
Commonwealth, installing a new executive director paid by the
Commonwealth, and requiring the new Board to submit a new
plan of operations for approval. Act of June 22, 2018, P.L.
273, No. 41, § 3.
16 The JUA also named the General Assembly as a
defendant, but counsel did not enter an appearance on its
behalf, and it filed no answer. The District Court explained
that “[a]ll filings by the [state representatives] have been
made solely under the names of the four individual elected
leaders and cannot be fairly construed as having been filed
on behalf of the General Assembly itself.” JUA II, 381 F.
Supp. 3d at 330 n.2. After the District Court entered its order

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injunctive and declaratory relief. As in JUA I, the District
Court denied the JUA’s TRO motion but granted its motion for
a preliminary injunction. The parties then filed cross-motions
for summary judgment.
The District Court granted summary and declaratory
judgment and permanent injunctive relief in favor of the JUA,
holding that “the Commonwealth cannot take the [JUA’s]
private property in the manner contemplated by Act 41.” JUA
II, 381 F. Supp. 3d at 342-43. Before discussing Act 41, the
District Court reiterated its earlier holding that the JUA and its
assets are “overwhelmingly private in nature.” Id. at 333. It
rejected the state representatives’ argument that, under
Trustees of Dartmouth College v. Woodward, 17 U.S. (4
Wheat.) 518 (1819), a lack of non-state interests in the JUA
means that the Commonwealth can “wield its power [over the
JUA], unrestrained by the federal Constitution[.]” JUA II, 381
F. Supp. 3d at 336. On the contrary, the Court said, “the state
has never been alone interested in [the JUA’s] transactions.”
Id. at 337 (internal quotation marks omitted). In the Court’s
view,
the record establishes that the [JUA’s] members
do have some interest in [it]. The [JUA] is
organized as a nonprofit, and, by law, member
companies do not share in profits as they did in
[two cited out-of-circuit cases]. The [JUA’s]
granting summary judgment to the JUA and permanently
enjoining portions of Act 41, the parties stipulated that the
order applied to the General Assembly.

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reserves and its surplus are its first line of
financial defense in the event it suffers a loss.
But thereafter, it is the [JUA’s] member
insurance companies, not the Commonwealth,
that would be held to account: under the [JUA’s]
current plan of operations, members may be
assessed to make up any loss until the [JUA] can
borrow sufficient funds to satisfy its deficit,
repay borrowed funds, and reimburse members
for assessments. Although the degree of member
interest is not as enduring or direct as the
member interest in [the out-of-circuit cases], it is
member interest nonetheless and belies
defendants’ assertion that the state is “alone”
interested in the [JUA].
JUA II, 381 F. Supp. 3d at 339 n.7 (internal citations omitted).
The Court also rejected the Governor’s and
Commissioner’s argument that Act 41 was a valid response to
the holding of JUA I. The Court declared that no authority
supported the proposition that “the state can declare public
what it created as – and a court has confirmed to be – a private
entity.” Id. at 335. As in JUA I, the District Court focused
only on the JUA’s Takings Clause claim, and it said that Act
41 was merely an attempt to do indirectly what the District
Court had already told the Commonwealth in JUA I it could
not do directly.17 Id. at 341. Again there was a timely appeal.
(C.A. Nos. 19-1057 & 19-1058.)
17 The JUA had argued that issue preclusion applied to
the suit, but the District Court held that the issues in JUA I were
not identical to those in JUA II because the legislative act and

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3. Act 15 of 2019 and Pennsylvania
Professional Liability Joint Underwriting
Ass’n v. Wolf (JUA III), 509 F. Supp. 3d 212
(M.D. Pa. 2020)
The wheel turned again in 2019, with the passage of Act
15, which, unlike its predecessors, did not mandate the transfer
of the JUA’s surplus to the Commonwealth. Act of June 28,
2019, P.L. 101, No. 15, § 7 (“Act 15”). Instead, the Act
requires the JUA to be funded by the Commonwealth and that
it submit and testify to a budget estimate annually. Id. It also
mandates that the JUA’s Board hold quarterly public meetings
as required by the state’s Sunshine Act,18 and that the JUA be
considered as a “Commonwealth agency” for the purposes of
the Commonwealth Attorneys Act19 and other state statutes.
Id. Finally, Act 15 requires the JUA to share a list of its
constitutional question had changed. JUA II, 381 F. Supp. 3d
at 334-35 (“[T]he dispositive inquiry [in JUA II] is ‘[w]hether
the Commonwealth can now recapture the [JUA] through post
hoc legislation – irrespective of private rights and interests
accrued by the [JUA] over more than four decades’ – without
constitutional consequence.” (third alteration in original)).
18 The Sunshine Act requires that “[o]fficial action and
deliberations by a quorum of the members of an agency shall
take place at a meeting open to the public[.]” 65 Pa. C.S.A.
§ 704.
19 The Commonwealth Attorneys Act requires the
Pennsylvania Attorney General to represent all
Commonwealth agencies “in any action brought by or against
the Commonwealth or its agencies[.]” 71 P.S. § 732-204(c).

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22
employees with the Commonwealth, conduct operations in
Commonwealth-owned facilities, and meet the requirements of
the Department of Revenue for employees with access to tax
information. Id.
Predictably, the JUA again sued the Governor and the
General Assembly, this time seeking declaratory and
injunctive relief for violations of substantive and procedural
due process, the Takings Clause, the Contract Clause, and the
First Amendment. Unlike in JUA I and JUA II, the District
Court denied the JUA’s preliminary injunction and TRO
motions because “Act 15 posed no threat of imminent and
irreparable harm.” JUA III, 509 F. Supp. 3d at 221. The parties
then filed cross-motions for summary judgment.
In its summary judgment opinion, the District Court
once more repeated its holding from JUA I that the JUA is a
private entity with private property. Id. at 222. It described
Act 15 as “test[ing] the outer bounds of [the JUA I and JUA II]
holdings, tasking [the Court] to consider what degree of
authority, if any, the Commonwealth may assert over the
[JUA].” Id. The answer largely went against the
Commonwealth, again.
The District Court held that Act 15’s funding of the JUA
through the Commonwealth budget, as well as the requirement
that the JUA submit and testify to its planned expenses,
constituted a regulatory taking. Id. at 223-27 (“By prohibiting
the [JUA] from spending its private funds as it might choose,
Act 15 deprives the [JUA] of … essential property rights.”).
The District Court also held that the categorization of the JUA
as a Commonwealth agency for purposes of the
Commonwealth Attorneys Act violated the JUA’s First

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23
Amendment right to consult with and hire civil counsel of its
choice. Id. at 228-31. The Court accordingly granted a
permanent injunction against the implementation of those
portions of the Act. Id. at 235.
The District Court did, however, rule for the Defendants
on the provisions of Act 15 having to do with the JUA’s
disclosures to the public and the Commonwealth.20 Those
provisions did not constitute a violation of substantive due
process. Id. at 231-34. Clarifying its earlier decisions, the
Court said: “In holding that the [JUA] is a private entity and its
funds private property, we rejected defendants’ claim that the
[JUA] is the state itself. We have never denied, however, that
the [JUA] is a unique creature – a state-created private entity
that furthers the General Assembly’s public-health objectives.”
Id. at 232. While reasserting that the JUA’s property and
operations are private, the Court acknowledged that the
“mission [of the JUA] is indisputably public[,]” so the
Commonwealth’s oversight and support in the form of the
remaining provisions of Act 15 survived rational-basis review.
Id. at 232-33. Both sides timely appealed the Court’s order.
(C.A. Nos. 21-1099, 21-1112, & 21-1155.)
20 In addition to upholding the disclosure provisions of
Act 15, the District Court also ruled for the Defendants on the
JUA’s Contract Clause claim, which it deemed to be moot.
JUA III, 509 F. Supp. 3d at 227 n.6. Those rulings coincide
with paragraph five of the District Court’s separate judgment
order, in which it granted summary judgment in favor of the
Defendants as to the JUA’s substantive due process (Count I)
and Contract Clause (Count III) claims. We will affirm that
portion of the District Court’s order.

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24
We consolidated the appeals from the three JUA cases
and held oral argument. We then stayed the appeals and
certified to the Pennsylvania Supreme Court the question of
whether the JUA is, under Pennsylvania law, a public or
private entity. That court declined to answer the question,
saying the issue is “principally one of federal law.” Pa. Pro.
Liab. Joint Underwriting Ass’n v. Governor of the
Commonwealth, 310 A.3d 74, 76 (Pa. 2024). We now decide
the merits of the appeals.
II. DISCUSSION21
On appeal, the Defendants argue that the District Court
erred in holding that the JUA is a private entity with
constitutional rights it can assert against its creator, the
Commonwealth. They argue, as they repeatedly have, that the
JUA is a “creature of the state” and without such rights. In
response, the JUA maintains that it is a private entity and that
its assets and operations are largely beyond the reach of the
21 The District Court had jurisdiction under 28 U.S.C.
§ 1331. We have jurisdiction pursuant to 28 U.S.C. § 1291.
We exercise plenary review over the District Court’s grant of
summary judgment and apply the same standard as the District
Court. Hayes v. N.J. Dep’t of Hum. Servs., 108 F.4th 219, 221
(3d Cir. 2024). Summary judgment is appropriate if, when
viewed in the light most favorable to the non-moving party,
there is no genuine issue of material fact and “the moving party
is entitled to a judgment as a matter of law.” Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56(c)).
We may affirm on any ground supported by the record.
Hughes v. Long, 242 F.3d 121, 122 n.1 (3d Cir. 2001).

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25
Commonwealth. It further says that the way the
Commonwealth created and has regulated the JUA over
decades has “created … conditions under which [it] acquired
the right to protection from uncompensated takings.” (C.A. 18-
2297 Answering Br. at 31 (emphasis added).) While the case
presents complexities that the District Court addressed with
great care, we conclude that the Commonwealth has the better
of the arguments.
A. Dartmouth College provides the analytical
approach for determining whether the JUA is
a public or private entity.
The crux of this protracted litigation is the status of the
JUA: whether it is a public entity akin to a state agency or is
instead a private entity with the ability to sue the
Commonwealth for the violation of constitutional rights. To
make that determination, we first must identify the proper
analytical approach.
We begin by looking back more than two centuries to a
case all the parties rely on: Trustees of Dartmouth College v.
Woodward, 17 U.S. (4 Wheat.) 518 (1819). There, the
Supreme Court considered whether Dartmouth College, a
privately founded institution incorporated by charter from the
British government, could be converted to a public institution
by an act of the New Hampshire legislature some fifty years
after the College’s founding. Id. at 552-55, 626. When the
state tried to take it over, the College, through its trustees, sued,
alleging a violation of the Constitution’s Contract Clause. Id.
at 626-27.

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26
In considering whether Dartmouth College was a
creature of the state subject to public control, the Supreme
Court inferred nothing from the fact that the King of England
granted a charter to incorporate the college. Id. at 638. Instead,
the Court postulated a series of conditions that would qualify
the College as a public institution.
If the act of incorporation be a grant of political
power, if it create a civil institution, to be
employed in the administration of the
government, or if the funds … be public
property, or if the state … , as a government, be
alone interested in its transactions, [then] the
subject is one in which the legislature of the state
may act according to its own judgment,
unrestrained by any limitation of its power
imposed by the [C]onstitution of the United
States.
Id. at 629-30.
We take the cited conditions to be four guiding
questions in the identification of a public entity subject to the
control of the legislature. The first two questions, about the act
of incorporation, ask whether the entity was granted political
power or was created to be employed in the administration of
government. The third asks whether the funds of the entity are
public property, and the fourth and final question examines
whether only the state has an interest in the entity. In short, the
ends and means of the institution, as of the time it was
established, are strong indicators of whether it is public or
private.

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27
Because an individual benefactor founded Dartmouth
College as a private charitable corporation, endowed by private
funds, the founder “could scarcely be considered as a public
officer, exercising any portion of those duties which belong to
the government[.]” Id. at 634. Although the purpose of the
institution was education, “an object of national concern,” the
state could not “have supposed[] that [the founder’s] private
funds, or those given by others, were subject to legislative
management,” nor were the professors considered public
officers merely by being employed to educate the youth. Id. at
634-35. Dartmouth College, at its creation and incorporation,
was founded for private purposes – “[t]he particular interests
of New Hampshire never entered the mind of the donors, never
constituted a motive for their donation” – so, the Court
concluded, the College was not created as a “civil institution,
participating in the administration of government[.]” Id. at
640-41. The only power bestowed by the act of incorporation
was the trustees’ perpetual power to promote the purpose of the
College. Id. at 636, 641. That power did not assume a political
character merely because the government granted a charter for
Dartmouth to operate. Id. at 636-38.
In examining whether only New Hampshire had an
interest in Dartmouth College, the Court reasoned that while
the original founder, land donors, and “fluctuating” student
population maintained no “vested interest” assertable in court,
the private corporation itself, as an “assignee of [the] rights” of
the donors, did. Id. at 641-42. It stood in the founders’ place
and “distribute[d] their bounty, as they would themselves have
distributed it[.]” Id. at 641-42. The corporation also served as
a trustee for the students by exercising, asserting, and
protecting their interests. Id. at 643. The corporation,
administered by its trustees, thus held the “whole legal

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28
interest[,]” id. at 645, and those trustees were capable of
guiding and governing the institution as needed, outside of the
“correcting and improving hand of the legislature,” id. at 648;
see id. at 653 (explaining that the trustees were acting as
assignees of the donors and founders, but also in their own
interests as potential professors or leaders of the college).
Having considered the questions it posed for itself, the
Supreme Court ruled in favor of the College. Because
Dartmouth was founded as a private charity with private funds,
without being granted political power or exercising it, and New
Hampshire was not alone interested in it, the Supreme Court
held that the state’s attempt to convert it to a public institution
implicated and violated the Contract Clause. Id. at 650, 654.
One of our sister circuits has applied Dartmouth
College to determine whether an entity like the JUA could
assert constitutional rights against its creator. In Texas
Catastrophe Property Insurance Ass’n v. Morales, 975 F.2d
1178 (5th Cir. 1992), the Fifth Circuit was asked whether a
state-created property insurance association had a right to
retain counsel in civil cases and could assert that right against
the state. The Texas legislature established the association to
provide property insurance in designated regions, and all
property insurers in the state were required to join it. Id. at
1179. The association received no funds from the government,
and it wrote its own policies and paid its own claims. Id. When
the legislature amended the association’s organic statute to
require the association to use the Texas Attorney General as
legal counsel, the association sued, alleging a violation of its
constitutional rights. Id. at 1180.

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29
Relying on the guidance of Dartmouth College, the
Fifth Circuit examined the “identity” of the association to
determine if it could bring the claim. Id. at 1182. The Fifth
Circuit emphasized that the association’s statutory scheme
allowed its members to receive distributions from its profits
and, if a deficit occurred, to be assessed. Id. (“When [the
association] loses, the bank accounts of its members are
depleted, not the public treasury.”). Because the member
companies were “vitally interested” in protecting their money
– and that protection related to their ability to choose the
association’s counsel – “the State of Texas [was] not alone
interested in the [association’s assets].” Id. at 1183 (citing Trs.
of Dartmouth Coll., 17 U.S. (4 Wheat.) at 629-30)). The Fifth
Circuit also concluded that the act creating the association was
not a grant of political power, nor was the association
employed in the administration of government. Id. The
association thus was not “truly a part of the state” and could
sue Texas for the alleged deprivation of a constitutional right.
Id.
In JUA I, the District Court likewise rejected the
argument that the JUA was a creature of the state because,
applying Dartmouth College, it determined that the
relationship between the JUA and the Commonwealth was not
“sufficiently analogous” to that of a state and its
municipalities.22 324 F. Supp. 3d at 530. In JUA II, the District
22 That “sufficiently analogous” language comes from
Pocono Mountain Charter School v. Pocono Mountain School
District, 908 F. Supp. 2d 597 (M.D. Pa. 2012). JUA I, 324 F.
Supp. 3d at 530-31. In Pocono Mountain, the district court
considered whether a charter school could sue the state under
§ 1983 by asking whether the school was “sufficiently

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30
Court again dismissed the idea that the JUA is a “governmental
instrument” under Dartmouth College, saying it “does not
neatly fit into any of the categories of public entities described”
therein. 381 F. Supp. 3d at 337. The Court declared that the
state has “never been ‘alone interested in [the JUA’s]
transactions.’” Id. On appeal, all of the Defendants urge us to
adopt Dartmouth College’s guiding questions to determine
whether the JUA is a public institution. The JUA also cites
Dartmouth College but argues that it embodies a holistic
analysis, correctly reflected in the District Court’s decisions.
Unlike the District Court, we do not read Dartmouth
College as prescribing categories into which an entity must
entirely fall to be considered public. Whether labeled holistic
or not, the analysis should indeed follow Dartmouth College,
and that is best done by considering the four questions just
discussed. Tailored to the case before us, they ask (1) whether
the JUA’s organic act granted it political power, (2) whether
the JUA was created to be employed in the administration of
government, (3) whether the JUA’s funds are drawn from
public property, and, finally, (4) whether anyone but the
Commonwealth has an interest in the JUA.
analogous to a municipality.” 908 F. Supp. 2d at 606. The
court considered the school’s relationship with the school
district and state, id. at 611, and held that the school could not
file suit because it operated within the authorization of the
school district for a limited purpose, id. at 612. In JUA I, the
District Court noted that “no case has extended Pocono
Mountain beyond its charter school context.” 324 F. Supp. 3d
at 530.

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31
B. The JUA is a public entity without the ability
to assert constitutional claims against the
Commonwealth.
We take up Dartmouth College’s four guiding questions
in turn.
First, we ask whether the JUA’s organic act granted it
political power.23 Trs. of Dartmouth Coll., 17 U.S. (4 Wheat.)
at 629. Although not a grant of political power in the
traditional sense, since its inception, the JUA has held and
exercised the coercive power of the state in its ability to require
all MPL insurers who choose to do business in the
Commonwealth to take certain actions.24 Insurers have to
become members of the JUA whether they like it or not, and
the organic act for the JUA required the members to share the
initial costs of the organization’s operation among themselves.
PHCSM Act, P.L. 390, No. 111, § 802 (repealed 2002). The
JUA also exercises the Commonwealth’s power in requiring
the member-companies to provide affordable MPL insurance
to providers who would otherwise be unable to conveniently
obtain it in the “ordinary insurance market.” Id. § 801; 40 P.S.
§ 1303.732(a). The Commonwealth granted the JUA its
power, which is vested in and exercised by the JUA’s Board of
Directors, 40 P.S. § 1303.731(a), to carry out the public
purposes of the original legislation and its successor statute, the
23 The District Court did not consider this aspect of
Dartmouth College in any of its JUA decisions.
24 Recall that “MPL” is an acronym for medical
professional liability.

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32
MCARE Act, id. § 1303.102; PHCSM Act, § 102. The
exercise of such power on behalf of the Commonwealth for a
public purpose suggests that the JUA is a public entity.
Second, we consider whether the JUA was created as a
civil institution to be employed in the administration of
government. Trs. of Dartmouth Coll., 17 U.S. (4 Wheat.) at
629. The District Court concluded that the JUA was not
created or employed as such. JUA II, 381 F. Supp. 3d at 337.
We disagree. While the JUA is not a state agency in the
traditional sense, Pennsylvania established the entity in 1975
to ensure that health care providers could obtain MPL
insurance at a reasonable cost and that victims of medical
negligence would promptly receive fair compensation.
PHCSM Act, § 102. The General Assembly reiterated those
two goals in 2002 with the enactment of the MCARE Act, the
purpose of which is to make medical care available in the
Commonwealth through a “comprehensive and high-quality
health care system.” 40 P.S. § 1303.102(1). In addition to
affordable MPL insurance and fair compensation for victims
of medical negligence, the health care system must include
“[a]ccess to a full spectrum of hospital services and to highly
trained physicians in all specialties … across th[e]
Commonwealth.” Id. §§ 1303.102(2)-(4). Recognizing and
furthering those goals are “essential to the public health,
safety[,] and welfare of all the citizens” of the Commonwealth.
Id. § 1303.102(6).
The JUA is integral to the Commonwealth’s
administration of a highly regulated, safe, and accessible health
care system: it ensures that health care providers in high-risk
specialties or reentering practice can and will do business in
the Commonwealth, where obtaining required insurance

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33
coverage would otherwise be cost-prohibitive. Id.
§ 1303.732(a). The General Assembly thus employed the JUA
to serve as an essential piece of its supervision of the
Commonwealth’s insurance market and health care system,
supporting the public good by serving as a safety net for both
medical providers and the patients they serve. We are, of
course, not suggesting that entities involved in the insurance or
health care markets are, by that fact alone, necessarily public
institutions, even when the government may have a hand in
their formation. There can be gradations of government
involvement, so a fact-specific determination is required. In
this instance, we believe that the Commonwealth’s creation
and use of the JUA for the stated purposes indicates that it can
rightly be considered a feature of the Commonwealth’s
government and hence as a public institution.
Third, we ask whether the JUA’s funds are drawn from
public property. Trs. of Dartmouth Coll., 17 U.S. (4 Wheat.)
at 629-30. In considering this aspect of Dartmouth College,
the District Court concluded that the JUA has “never been
funded by or endowed with ‘public property’[.]” JUA II, 381
F. Supp. 3d at 337. And, true enough, it is undisputed that the
JUA has not drawn on the public fisc. Id. at 328. Taking
account of “the nature of the funds in dispute[,]” the District
Court thus held that the JUA’s surplus is private property. JUA
I, 324 F. Supp. 3d at 537-38. But an essential piece is missing
from that reasoning: the JUA’s funds are not simply private
money exchanged among private individuals and entities in a
typical insurance market. The funds are the result of the
Commonwealth’s acquisition of policyholders’ premium
payments for a public purpose. Although not public in the
traditional sense, the JUA’s funds exist only to support the
goals of the Commonwealth as set forth in the JUA’s organic

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34
act and, later, the MCARE Act – to make available a
comprehensive and high-quality health system in the
Commonwealth, one aspect of which is to ensure access to
affordable MPL insurance. 40 P.S. §§ 1303.102(1), (3). To
the extent the JUA’s surplus could be considered profits, the
JUA must use the funds for its nonprofit purpose, which is to
provide MPL insurance as dictated by the MCARE Act. 15 Pa.
C.S.A. § 9114(d). As discussed infra, the JUA’s obviously
excessive surplus provides no profits or dividends to anyone,
and no private party risks damage to its bank account should
that surplus be reduced to a reasonable level. The funds exist
as the result of the Commonwealth’s enforced acquisition of
premiums for a public purpose, which, again, indicates that the
JUA is public in nature. That the premiums thus received are
augmented by returns on those same funds once invested does
not change that.
Finally, fourth, we consider whether anyone but the
Commonwealth has an interest in the JUA. Trs. of Dartmouth
Coll., 17 U.S. (4 Wheat.) at 630. In JUA II, the District Court
explained that the JUA’s members have an interest in the JUA
because they may be assessed if the JUA suffers a deficit. 381
F. Supp. 3d at 339 n.7. That statement is the only support for
the District Court’s finding that the state has “never been ‘alone
interested in [the JUA’s] transactions.’” Id. at 337. The
Governor and Insurance Commissioner have a persuasive
riposte. They asked: “Suppose one sought to purchase [the]
JUA. To whom would they write the check?” (Exec. Def. C.A.
18-2297 Opening Br. at 33.) And the answer, they said, is not
the members, the Board, or the JUA itself. The JUA has no
beneficiaries or donors. So the question stands: Were the JUA
able to be sold, who besides the Commonwealth would be
entitled to receive the profit from the sale?

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35
Both in its Answering Brief and at oral argument, the
JUA resisted engaging with that hypothetical. It said that, as
an unincorporated nonprofit association, the JUA “exists for
the benefit of its purpose” and “it cannot be bought or sold in
any traditional sense.” (C.A. 18-2297 Answering Br. at 57.)
That, of course, avoids rather than answers the question. But
the Defendants’ point remains even if we shift the hypothetical
from selling the JUA to dissolving it by operation of law or at
the request of its members, as allowed by its plan of operations.
Its assets would then be “distributed in such a manner as the
Board may determine subject to the approval of the
Commissioner.” (C.A. No. 21-1099 J.A. at 180.) It is difficult
to imagine where the assets, including the surplus, would go
except to the Commonwealth, as the JUA has no private
stakeholders, no property in trust, and no charitable purpose.
Cf. 15 Pa. C.S.A. § 9135(1)-(5) (explaining the requirements
for winding up a nonprofit association). Even if the Board
directed that the property be distributed to the JUA’s members,
it seems most unlikely that the Commissioner would approve
that plan. But see JUA I, 324 F. Supp. 3d at 538 (finding “no
merit” in this possibility because it rested on too many
assumptions). At oral argument, the JUA said that the General
Assembly theoretically could dissolve the JUA, and the surplus
would somehow go to its nonprofit purpose, which it did not
specify but conceded was to benefit the public.
The JUA argues that the member assessments to which
the District Court referred in JUA II are enough to create a non-
state interest in the JUA.25 See JUA II, 381 F. Supp. 3d at 339
25 The JUA also makes a general argument that its
members have a reputational interest in “minimizing public

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36
n.7. According to the JUA’s prior plan of operations, in the
case of a deficit, the Board could issue assessments to members
in proportion to their participation in the insurance pool. But
the JUA’s CEO testified that the JUA has never assessed its
members, “never intend[s] to” assess its members, and has
been told by the Insurance Department to remove the
assessment language from its plan; she further stated frankly
that she did not “believe that [the JUA has] the statutory power
to assess the members.” (C.A. No. 18-2297 J.A. at 1318, 1470-
72.) In fact, as the JUA conceded at oral argument, the plan of
operations as amended in 2018 excluded the member-
assessment language.26
The Governor and Insurance Department argue that
whether the JUA’s members have a true possibility of being
assessed – and thus perhaps have an interest in the JUA’s funds
– is a disputed fact that should be viewed in the light most
favorable to them on summary judgment. The JUA responds
that the prior plan said what it said, despite its own CEO’s
criticism of the [MPL insurance] industry[,]” which, the JUA
says, represents a pecuniary interest. (Answering Br. C.A. 18-
2297 at 55-56.) The JUA offers no evidentiary support for its
assertion that its members would suffer monetary losses from
public criticism if the JUA did not exist.
26 The JUA stated at oral argument, however, that,
although the JUA complied with the Commissioner’s mandate
to remove the language permitting the Board to assess its
members, the 2018 plan still somehow gives the Board broad
power to “levy assessments[.]” (Compare C.A. No. 18-2297
J.A. at 233 with C.A. No. 21-1099 J.A. at 177.)

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37
testimony indicating that there is no reason to believe any
assessments will ever occur. Neither side has it right, and, in
particular, the Defendants’ categorization of the assessments as
a disputed fact is incorrect. Instead, as the JUA’s CEO
indicated in her testimony regarding the legal authority of the
JUA to issue assessments, the question is one of law – whether
the JUA has statutory authority to assess its members.
The statute does not include any language about
assessments. 40 P.S. § 1303.733. It merely says that, if the
JUA were to experience a deficit, it could be authorized to
borrow funds – but not from whom. Id. § 1303.733(b). The
JUA’s authority to assess costs from its members is at best
ambiguous, and, given that the JUA has never sought to assess
its members, and “never intend[s]” to do so, setting up possible
assessments as evidence of a valid non-state interest vastly
exaggerates the hypothetical assessments’ importance. (C.A.
No. 18-2297 J.A. at 1470.)
In the end, the JUA’s possible financial booms and
busts do not give its policyholders or members a legal interest
in its assets. The JUA fails to identify any other legally
protectable interest on behalf of anyone but the
Commonwealth. As far as we can tell, the Commonwealth,
which created the JUA as part of its broader legislative scheme
to maintain a high-quality health care system, is the only one
with an interest in the JUA.
In sum, Pennsylvania established the JUA to serve an
integral role in the administration of the Commonwealth’s
insurance market and, consequently, in the health care market
too. In doing so, it imbued the JUA with the coercive power

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38
of state government to compel private insurance companies to
take specific actions. The JUA’s funds are the result of the
Commonwealth’s enforced acquisition of funds to support
those goals, and only the Commonwealth has a legally
protectable interest in the JUA and its resources. We thus hold
that, under Dartmouth College’s guidance, the JUA is a public
institution and is without the ability to maintain the
constitutional claims it has asserted against the
Commonwealth.27
27 Pursuant to the principles of federalism, the
Commonwealth can amend and repeal its JUA-related
legislation as it sees fit, free from interference by federal
courts. See Garcia v. San Antonio Metro. Transit Auth., 469
U.S. 528, 546 (1985) (“The genius of our government provides
that … the people – acting not through the courts but through
their elected representatives – have the power to determine as
conditions demand, what services and functions the public
welfare requires.”) (quoting Helvering v. Gerhardt, 304 U.S.
405, 427 (1938) (Black, J., concurring)). As the District Court
observed, however, the Commonwealth’s freedom to
experiment is not without limits. JUA II, 381 F. Supp. 3d at
340-41. A party with standing may object to the
constitutionality of the Commonwealth’s actions and may seek
redress in federal court. Bond v. United States, 564 U.S. 211,
222 (2011) (“[F]ederalism protects the liberty of the individual
from arbitrary power. When government acts in excess of its
lawful powers, that liberty is at stake.”); Hein v. Freedom From
Religion Found., Inc., 551 U.S. 587, 598 (2007) (explaining
that a federal court “must refrain from passing upon the
constitutionality of an act” unless “the question is raised by a
party whose interests entitle him to raise it”) (quoting Valley

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39
C. The District Court relied on cases that are
distinguishable.
Finally, for completeness, we consider the District
Court’s reliance on certain out-of-circuit precedents that the
Defendants argue are distinguishable from the present case.
We agree with that critique.
1. Asociación, Arroyo-Melicio, and
Morales
First, the District Court discussed Asociación De
Subscripción Conjunta Del Seguro De Responsabilidad
Obligatorio v. Flores Galarza, 484 F.3d 1 (1st Cir. 2007),
wherein the First Circuit concluded that Puerto Rico’s
association for automobile liability insurance could bring a
takings claim against the territory, because the association was
“private in nature” and thus had standing to allege a
constitutional violation. Id. at 9, 20. That conclusion relied on
the First Circuit’s earlier decision in Arroyo-Melicio v. Puerto
Rican American Insurance Co., 398 F.3d 56, 62 (1st Cir.
2005), which the District Court categorized as “expound[ing]
the nature of the association’s relationship with the
government.” JUA I, 324 F. Supp. 3d at 533. [C.A. No. 18-
2297 J.A. at 31.]
But the discussion in Arroyo-Melicio is just that – a
discussion of the characteristics of an insurance arrangement
within a specific statutory scheme, all for the purpose of
considering federal antitrust claims. 398 F.3d at 60-62. The
Forge Christian Coll. v. Ams. United for Separation of Church
and State, Inc., 454 U.S. 464, 474 (1982)) (cleaned up).

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First Circuit engaged in no analysis of the association’s status
as a public or private entity; it did not have to. The statute that
created that association and its relevant rules stated that it was
“a private association,” had the “general corporate powers of a
private corporation,” 26 L.P.R.A. §§ 8055(a), (g), and was
“for-profit,” Off. of Comm’r of Ins., P.R. Reg. No. 6254(2)(c)
(2000). The plaintiffs in Arroyo-Melicio did not dispute the
association’s private status. The First Circuit’s statement that
the association “is not an agency of” Puerto Rico resulted
merely from reading the statute and regulations creating it, not
from any analysis of its characteristics. Arroyo-Melicio, 398
F.3d at 60-62. The District Court’s reliance on Asociación and
Arroyo-Melicio was thus misplaced.
Second, the District Court discussed Texas Catastrophe
Property Insurance Ass’n v. Morales, 975 F.2d at 1183. JUA
I, 324 F. Supp. 3d at 533. As discussed in Section II.A., supra,
the Fifth Circuit applied Dartmouth College in that case to
determine whether a state-created property insurance
association could assert a constitutional claim against its
creator. Morales, 975 F.2d at 1182. The analysis
fundamentally focused on the fact that Texas was not alone
interested in the association’s assets because the association’s
member companies shared in its profits and losses. Id. at 1183
(citing Dartmouth, 17 U.S. (4 Wheat.) at 629-30). The Fifth
Circuit mentioned the other aspects of the association as
background, id. at 1179-80, but, as in Arroyo-Melicio, the
insurance scheme in Morales differed from the JUA in a
particularly significant way: as established by the association’s
organic statute, the member companies shared in the profits
and losses of the association. Morales, 975 F.2d at 1182; see
also Arroyo-Melicio, 398 F.3d at 62. The entities at issue in
both cases are thus expressly subject to the interests of their

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members – differentiating them from a public institution under
Dartmouth College. See supra Section II.A. Those cases
therefore do not answer the “public-versus-private entity”
question on the facts before us.
2. MMIA and MSLA
The District Court also discussed the treatment of an
unincorporated insurance association in Medical Malpractice
Insurance Ass’n v. Superintendent of Insurance of State of New
York, 533 N.E.2d 1030 (N.Y. 1988) (“MMIA”). JUA I, 324 F.
Supp. 3d at 533-34. There, the New York Court of Appeals
considered whether a legislative scheme requiring an MPL
insurance underwriting association to run at a deficit was a
confiscation of property in violation of the Takings Clause.
MMIA, 533 N.E.2d at 1036. Because those deficits were
“expressly contemplated in the enabling legislation[,]” the
court rejected the association’s claim that the deficit was
confiscatory.28 Id. at 1037.
In JUA I, the District Court discussed MMIA,
contrasting what it called the “exhaustive statutory framework
dictating the composition of [the association’s] board and its
plan of operations and authorizing the superintendent of
insurance to unilaterally order amendments to the plan” at issue
28 The members, who were required to “make up” a
deficit incurred by the association, were not parties to the suit,
so the court did not consider whether the statutory scheme was
confiscatory as to them. Med. Malpractice Ins. Ass’n v.
Superintendent of Ins. of State of N.Y. (MMIA), 72 N.Y.2d 753,
767 (N.Y. 1988).

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there with the Pennsylvania legislature’s choice not to “tightly
circumscribe the [JUA’s] operations and composition of its
board[.]” JUA I, 324 F. Supp. 3d at 534, 538. The District
Court reiterated those differences in JUA II, stating, “[i]n stark
contrast to MMIA, the [JUA] is subject to minimal supervision
by the Commissioner, in a manner not meaningfully different
from private insurers.” 381 F. Supp. 3d at 340.
But the court in MMIA did not address the question
before us. It assumed the insurance association could bring
federal constitutional claims against its creator, then
considered the characteristics of that association’s funds for the
purposes of ruling on the substance of those constitutional
claims. MMIA, 533 N.E.2d at 1036-37. Although the court
identified the association as a “creature of statute,” id. at 1036,
it did not engage with the threshold issue of whether that
creature was public and had the ability to assert constitutional
claims against the state, so MMIA is inapposite.
Finally, the District Court discussed Mississippi Surplus
Lines Ass’n v. Mississippi, 261 F. App’x 781 (5th Cir. 2008)
(“MSLA”). In that case, upon the request of the state’s
Insurance Commissioner, a group of private individuals
formed a nonprofit association to assist the Commissioner with
regulating the surplus line insurance market. Id. at 783. The
statute allowed the association to levy fees on premiums,
subject to approval by the Commissioner, which the
association then used for operating expenses. Id. at 784. When
the association accumulated excess funds through those fees,
the state amended its code to authorize the transfer of $2
million to the state. Id. The Fifth Circuit, in determining
whether the funds were private or public property, explained
that “the [association] and its funds exist at the whim of the

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legislature and are public in nature[,]” so the association had
no right to the funds. Id. at 785, 788.
Like the court in MMIA, the Fifth Circuit in MSLA did
not wrestle with whether the association itself was public or
private for the purpose of determining whether it could assert
constitutional claims against the state. Although it
acknowledged that “the private or public nature of the
organization is a necessary step in an inquiry when an entity
acting for a state initiates legal action against the state[,]” id. at
785 (discussing Morales, 975 F.2d at 1182), it did not conduct
that analysis nor determine whether the association could bring
a claim against the state in the first place. Rather, the court
considered whether the funds were public or private only for
the purpose of ruling on the merits of the association’s
constitutional claims. Id. at 787-88 (“Because [the association]
did not have a property right in the $2 million in excess fees
that the State appropriated, the legislature did not deprive them
of a property right without due process of law.”). In short, the
court in MSLA did not engage with the question central in each
of the JUA cases: whether the entity in question is public or
private for the purpose of determining whether it can bring a
constitutional claim against its creator.
In sum, given the facts we have here, the cases relied on
by the District Court appear to give little guidance, so we
decline to endorse the conclusions the District Court reached
based on them.

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III. C ONCLUSION
For the foregoing reasons, we will reverse in part, affirm
in part (as stated in footnote 20, supra), and remand for further
proceedings consistent with this opinion.

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