Last month, a federal appeals court reversed lower court decisions blocking the Pennsylvania state government from siphoning cash from a state-chartered medical malpractice insurer of last resort.

The 3rd U.S. Circuit Court of Appeals ruled against the Pennsylvania Professional Liability Joint Underwriting Association, saying state government created the insurer, imbued it with its power and held the only interest in it.

The state, the court said, can amend or repeal the law that created the nonprofit association “as it sees fit, free from interference by federal courts.”

The decision came seven years after the association first sued the state in federal court, asking a judge to block Pennsylvania’s threat to shut it down if it didn’t hand over at least $200 million from its reserves.

The association, created by the state in 1975 amid a medical malpractice crisis, provides coverage to hundreds of healthcare providers, and reported a $342 million surplus last Dec. 31.

It can ask the appeals court for a rehearing or appeal to the U.S. Supreme Court.

For three years, from 2017 to 2019, the Legislature and then-Gov. Tom Wolf sought the association’s cash to help plug a deficit in the state government’s operating budget.

The association sued, winning repeatedly in federal court. U.S. District Judge Christopher Conner ruled that the association was a private entity and that it was unconstitutional to take its surplus without fair compensation.

But in last month’s decision, Judge Kent A. Jordan of the 3rd Circuit wrote that the state created the association as part of a broader effort to maintain a healthcare system. The association’s cash is the result of those goals and its policyholders and members don’t have a legal interest in its assets, Jordan wrote.

“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,” he wrote.

The association has said in court papers that its reserves were generated from policyholder premiums and that taxpayer money never funded any of its operations.