The Attorney General of Texas
December 31. 198'2
MARK WHITE
Attorney General
Robert Bernstein, M.D., F.A.C.P. Opinion No. MW-590
Supreme Court Building
Commissioner of Health
P. 0. BOX 12546
Austin. TX. 76711. 2548
Texas Department of Health Re: Whether fees collected
5121475-2501 1100 West 49th Street for physicians' services at
Telex 9101874-1367 Austin, Texas 78756 certain state hospitals must
Telecopier 5121475-0266 be placed in the state
treasury
1607 Main St.. Suite 1400
Dallas, TX. 75201-4709
Dear Dr. Bernstein:
214,742.8944
You have asked this question:
4824 Alberta Ave., Suite 160
El Paso, TX. 79905.2793
Are fees and charges collected for physicians'
9151533-3484 services pursuant to article 3201a-3, section 6A,
exempt from article 4393c?
1220 Dallas Ave.. Suite 202
Article 3201a-3, V.T.C.S., provides in part:
Houston. TX. 770026986
7131650-0666
Section 1. In addition to the treatment of
tuberculosis, the Harlingen State Chest Hospital
806 Broadway. Suite 312 and the San Antonio State Chest Hospital may
Lubbock, TX. 79401.3479
create a pilot program to treat persons afflicted
806/747-5238
with other chronic diseases of the respiratory
system regardless of the diagnosis.
4309 N. Tenth. Suite B
McAllen, TX. 78501-1665 .. . .
5121682.4547
sec. 6A. Fees and charges collected by each
200 Main Plaza, Suite 400 hospital for physicians' services shall be
San Antonio, TX. 78205-2797 retained locally and shall be used only for the
5121225-4191 purpose of recruiting, retaining, and
supplementing the salaries of the hospital's
An Equal Opportunity/ medical staff. Distribution of fees and charges
Affirmative Action Employer for physicians' services shall be subject to rules
and regulations adopted by the medical staff, not
inconsistent with the laws of this state
regulating the practice of medicine.
Article 4393c, V.T.C.S., the State Funds Reform Act of 1981,
provides in part:
. 2191
,.
Dr. Robert Bernstein - Page 2 @I%'-590)
Sec. 4. All fees. fines, penalties, taxes,
charges, gifts, grants, donations, and other funds
collected or received by a state agency as
authorized or required by law shall be deposited
in the state treasury, credited to a special fund
or funds, and subject to appropriation only for
the purposes for which they are otherwise
authorized to be expended or disbursed. Deposit
shall be made within seven days after the date of
receipt.
Section 3 lists various exceptions to this requirement. You contend
that one of these exceptions is applicable in this instance. It
provides:
(b) This Act does not apply to:
....
(2) funds held in trust or escrow for the
benefit of any person or entity other
than a state agency.
By way of explanation, you stated in your memorandum brief that:
As provided by Section 6~. the hospitals'
collections for physicians' services were locally
retained and were under the exclusive control of
the physicians comprising the medical staff of the
hospital. The physicians, by agreement, have
created an express trust to control disbursement
of the funds.... The hospitals are reimbursed for
the fund for collection costs incurred on behalf
of the physicians.... The first requirement [of
section 3(b)(Z)] that the funds be held in trust
is met since all fees and charges collected for
physicians' services are placed in the Medical
Trust Fund.... The second requirement is also met
in that the funds benefit a person or entity other
than a state agency. These funds benefit the
physicians who are members of the plan and in no
way benefit a 'state agency.' (Emphasis added).
Before considering your argument that fees and charges collected
under section 6A of article 3201a-3 are exempt from article 4393c
under section 3(b)(2) thereof, we must address two preliminary
questions. The first is whether the Harlingen and San Antonio State
Chest Hospitals are "state agencies" within the meaning of article
4393c. We conclude that they are. Section 2 of this statute defines
"state agency" broadly, as including:
p. 2192
Dr. Robert Bernstein - Page 3 (M=w-590)
=*y department, commission, board, office,
institution, or other agency that is in the
executive branch of state government, has
authority that is not limited to a geographical
portion of the state, and was created by the
constitution or a statute of this state, but does
not include [certain departments and institu-
tions].
In our opinion, these two state hospitals are "institutions" which
satisfy each of the conditions for being a "state agency" set forth in
section 2.
The second question concerns the relationship between article
4393~ and section 6A of article 3201a-3. Although the former statute,
which was enacted in 1981, generally requires state agencies to
deposit in the state treasury any fees or other funds that they
collect or receive, the latter, which was added to article 3201a-3 in
1975, provides that fees and charges collected pursuant to that
statute "shall be retained locally." The question is whether section
6A constitutes an exception to article 4393~.
Although our courts have held that repeals of statutes by
implication are not favored, Hines Y. State, 515 S.W.2d 670 (Tex.
Grim. App. 1974), and that the enactment of a general law does not
ordinarily impliedly repeal a special law, Flowers v. Pecos River R.
Company. 156 S.W.2d 260 (Tex. 1941). they have also held that:
Where a later enactment is intended to embrace all
the law upon the subject with which it deals, it
repeals all former laws relating to the same
subject. Gordon v. Lake, 163 Tex. 392, 356 S.W.2d
138 (1962). Under this rule, a statute that
covers the subject matter of a former law and is
evidently intended as a substitute for it,
although containing no express words to that
effect, operates as a repeal of the former law to
the extent that its provisions are revised and its
field freshly covered. See Motor Inv. Co. v.
Hamlin, 142 Tex. 486, 179 S.W.2d 278 (1944).
McInnis v. State, 603 S.W.2d 179, 183 (Tex. 1980). We believe that
this rule is applicable here. In our view, although article 4393
contains no express words of repeal, its comprehensiveness and detail,
i.e., its application to "all fees... collected or received by a state
agency" (emphasis added),oupled with the fact that it lists only
certain specific exceptions, compel the conclusion that its purpose
was to "embrace all the law on the subject with which it deals." See
also Bill Analysis of House Bill No. 1623, prepared for House
Committee on Ways and Means (which indicates that the purpose of the
p. 2193
. -
Dr. Robert Bernstein - Page 4 (MW-590)
law was to harmonize conflicting prior laws relating to deposits of
money in treasury by state agencies). This means that the "shall be
retained locally" language in section 6A of article 3201a-3 is no
longer operative. Thus, if the fees and charges to which section 6A
refers are not within one of the exceptions to article 4393c. they
must be deposited in the state treasury.
As we have noted, the only exception to article 4393c that you
have raised -- and the only one that we believe could be applicable
here -- is the section 3(b)(2) exception. Your argument that this
section applies raises some interesting questions. For example, it is
not entirely clear whether the physicians of these two state hospitals
properly assumed "exclusive control" of these fees and charges and had
the legal authority to create the express trust to which you refer in
your letter. We need not address this question, however, because we
conclude that even if this express trust was validly created, the
section 3(b)(2) exception is still inapplicable in this instance.
As you recognize, funds held in trust or escrow must, in order to
be exempt from article 4393c, be held "for the benefit of any person
or entity other than a state agency." We have already determined that
the San Antonio and Harlingen State Chest Hospitals are "state
agencies" within the meaning of article 4393~. Thus, to be exempt,
these fees and charges must be held in trust for the benefit of some
person or entity other than these two hospitals. Under section 6A,
these funds may be used "only for the purpose of recruiting,
retaining, and supplementing the salaries of the hospital's medical
staff." In our opinion, the use of these funds for the designated
purposes will directly benefit these hospitals. Said use will
facilitate the hospitals' ability to attract qualified physicians to
serve on their medical staffs and to retain those who presently serve
thereon. To the extent these funds provide qualified physicians with
an additional incentive to both join and remain on these hospitals'
medical staffs, they certainly "benefit" these hospitals.
You argue that "[the phrase] 'fees and charges for physicians'
services' cannot be construed ss benefitting a 'state agency' without
running afoul of the Medical Practices Act," article 4495b, V.T.C.S.
Specifically, you contend that section 3.07(f) of this act provides
that it is unlawful for a person to engage in certain acts, including:
(12) permitting or allowing another to use his
license or certificate to practice medicine in
this state for the purpose of diagnosing,
treating, or offering to treat sick, injured, or
afflicted human beings
and that:
p. 2194
.
Dr. Robert Bernstein - Page 5 (MW-590)
collection and use bye the hospital of fees for
physicians' services is considered to be
permitting the hospital to use the physicians'
licenses to practice medicine in violation of the
Medical Practices Act. See Rock&t v. Board of
Medical Examiners, 287 S.W.2d 190 (Tex. Civ. App.
- San Antonio 1956, writ ref'd n.r.e.).
The Rockett court held, inter alla, that the predecessor of the
aforementioned subsection (12). see article 4505, V.T.C.S., was
violated where a clinic in which nolicensed medical doctor owned an
interest collected fees for the services of a physician whom the
clinic employed.
We cannot accept your argument. We do not agree that our
conclusion that the state hospitals in question "benefit" from the use
of these fees and charges necessarily means that such benefit is
illegal. Even if we assume that the rationale of the Rockett case
would prevent state hospitals from benefitting from the professional
services of the physicians whom they employ -- a question which we do
not decide -- the fact remains that the power to regulate the practice
of medicine in this state rests with the legislature. Just as the
legislature is free to impose restrictions upon the practice of
medicine, it is free to create exceptions to those restrictions. To
the extent that section 6A of article 3201a-3 permits the two state
chest hospitals in question to benefit from the services of the
physicians on their medical staffs, we believe that it constitutes
just such an exception.
For these reasons, we conclude that, under the facts that you
have presented, the fees and charges to which section 6A of article
3201s refers are not within the section 3(b)(2) exception to article
4393c. We therefore answer your question in the negative.
SUMMARY
Fees and charges collected pursuant to article
3201a-3, section 6A, V.T.C.S., are not exempt from
article 4393c, section 4, V.T.C.S., under section
3(b)(2) thereof, and therefore must be deposited
in the state treasury.
&a
MARK WHITE
Attorney General of Texas
p. 2195
, .
Dr. Robert Bernstein - Page 6 (MW-590)
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Jon Bible
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Bill Campbell
Rick Gilpin
Jim Moellinger
p. 2196