Industry associations representing both groups said the state owes doctors and other health care providers anywhere from $446 million to $616 million in reimbursements for bills paid into the fund known as MCare.
The lawsuits were filed in Commonwealth Court by the Hospital & Healthsystem Association of Pennsylvania and the Pennsylvania Medical Society.
The MCare subsidy lapsed earlier this year amid a stalemate between Democratic Gov. Ed Rendell and Republican lawmakers over expanding a state health insurance program for uninsured adults. Rendell proposed using a $500 million MCare surplus to help finance the expansion.
State cigarette tax revenue and surcharges paid by motorists cited for moving violations underwrite the subsidy, but the lawsuits claim that the state has not transferred all of the cigarette tax revenue into the insurance fund, leaving it without enough money to pay future liabilities.
"It should be used to offset the MCare surcharge for all physicians and hospitals," said Carolyn Scanlan, president and chief executive officer of the hospital association.
Without the money, many Philadelphia doctors say hospitals are hurting.
Dr. Arnold Cohen, the chair of the OB-Gyn department at Einstein Medical Center, says for his unit alone, "For me at Einstein, it's about $450,000 in extra medical liability insurance costs, and it's taking away from a lot of progreams and seeing a lot of patients, and taking care of things that need to be done."
The Medical Society says Pennsylvania lost 16-percent of its cardiologists, 13-percent of its orthopedic specialists, and 11 per cent of its ob-gyn specialists between 2004 and 2006.
In Philadelphia, 11 per cent of the primary care doctors directly involved in patient care vanished.
In Chester County, Brandywine Hospital will stop delivering babies by December 18, because the hospital can't find replacement for 2 obstetricians who left.
MCare began in 2003 when premiums surged by double-digit percentages annually, although they have stabilized in recent years. The program pays medical malpractice awards and settlements above $500,000 and subsidizes the premiums that providers pay for coverage.
Doctors have argued that the subsidy is vital to retaining the state's complement of physicians, particularly those in high-risk specialties such as obstetrics and gynecology who pay higher malpractice premiums. Doctors who accept the subsidy must continue to practice in Pennsylvania for at least one year.
Rendell spokesman Chuck Ardo disputed the lawsuits' claims. Although state law dedicates the cigarette tax revenue to health care spending, it does not require the money to be spent exclusively on the malpractice insurance subsidy, he said.
"We believe that they are misinterpreting the legislation," Ardo said.
The administration has said the MCare fund surplus reflects a continuing decline in the amount of malpractice claims.
The organizations also expressed concern that the state could use the unspent money for other purposes. Both lawsuits cited comments made on the House floor Nov. 19 by then-Majority Leader Bill DeWeese, D-Greene, who said some of it could be used to fill "a $500 million hole in next year's budget."
"If the (malpractice insurance money) is diverted, this has great potential to be yet another setback for Pennsylvania's physician recruitment efforts," Dr. Daniel Glunk, president of the medical society, said in a statement.
DeWeese spokesman Tom Andrews declined to respond to that specific claim Thursday, but said, "I find it ironic that groups who advocate against frivolous lawsuits appear to have filed their own."