 .




                      The Attorney              General of Texas
                                        March    24,   1970

JOHN L. HILL
Attorney General

                   Honorable Max C. Butler, M.D.                 Opinion No. H-1143
                   President, Board of Medical Examiners
                   Suite 900, Southwest Tower Building           Re:      Construction   of article
                   211 East Seventh Street                       4447s, V.T.C.S., (Acts 1975, 65th
                   Austin, Texas 78701                           Leg., ch. 621, at 1528), which
                                                                 relates to disclosure of certain
                                                                 agreements     for the payment of
                                                                 laboratory test.

                   Dear Dr. Butler:

                          You have asked a number of questions regarding the construction of
                   article 4447s, V.T.C.S., enacted by the 65th Legislature.    That statute
                   provides:

                                 Section 1. No person licensed in this state to
                              practice    medicine,   dentistry,  podiatry,  veterinary
                              medicine, or chiropractic shall agree with any clinical,
                              bioanalytical, or hospital laboratory, wherever located,
                              to make payments to such laboratory for individual
                              tests, combination of tests, or test series for patients
                              unless such person discloses on the hill or statement to
                              the patient or third party payors the name and address
                              of such laboratory and the net amount or amounts paid
                              to or to be paid to such laboratory for individcsl tests,
                              combination of tests, or test series.
                                 Sec. 2.      The board or agency responsible         for
                              licensing and regulation of persons practicing medicine,
                              dentistry,    podiatry, veterinary  medicine, and chiro-
                              practic, in addition to other authority granted, may
                              deny an application for license or authority to practice
                              for violation of Section 1 of this Act.

                   You first ask whether the act applies to a professional     association   or other
                   organization of physicians.




                                                 P.    4646
Honorable Max C. Butler, M.D.     -   Page 2      (H-1143)



       An organization cannot be ‘licensed in this state to practice medicine.” See
Rockett v. Texas State Board of Medical Examiners, 287 S.W.2d 190 (Tex. Civ. AK
- San Antonio 1956, writ ref’d n.r.e.1. The individual physicians who make up the
organization,    however, are subject to the provisions of the statute        if that
association “agreeis] with any . . . laboratory . . . to make payments to such
laboratory    for . . . tests . . . for patients. I’ Article 1528f, the Professional
 Association Act, specifically   provides in section 6 that a licensed individual
employed by a. professional association “shall remain subject to reprimand or
discipline for his conduct.” It would appear, therefore, that, while a professional
association or other organization of physicians need not comply with article 4447s,
the professional members of that organization are subject to its terms.

        Your next question is whether article 4447s is applicable to a laboratory
owned .by the physician who requests the analysis or to one which is cooperative in
nature and is owned by a group of physicians.         The statute makes clear that it
applies to an agreement “with %.      . . laboratory, wherever located. . . ” (emphasis
added). So long as the laboratory is organized as a separate entity we believe that
it falls within the meaning of article 4447s.

       You also ask whether the required disclosure could be accomplished by a
statement indicating a percentage of the total amount paid for laboratory services.
The statute requires that the patient’s bill disclose the “net amount or amounts . . .
paid to such laboratory..      . .I’ In Alidor v. Mobile County Comm’n, 284 So.2d 257
(Ala. 19731, a tax assessor, required by statute to certify “the amount of ad valorem
tax,” attempted to comply by expressing the amount in terms of a percentage of
assessed value. Although the court found no reversible error, “since only a simple
arithmetical    procedure was necessary to get the correct amount,” it acknowledged
that certification   of a dollar amount would have been more appropriate.     5 at 260.
See
-    In re McDonnell’  s Will,  256  N.Y.S.2d 149, 151(N.Y. Surrogate Ct. 1965).

       In our opinion, the use of a percentage rather than a dollar amount will not
constitute a defense to a proceeding under article 4447s. The bill analysis states
that

            [t] here is some concern that the amount billed to the patient or
            insurance company may not actually reflect the cost of the
            laboratory test.

It is clear that the purpose of article 4447s is to protect the patient from unfair
laboratory charges. It is well established that, in interpreting a statute,

            it is permissible to consider the evil sought to be remedied   and
            the causes which induced its enactment




                                      p.   4647
Honorable Max C. Butler, M.D.     -    Page 3     (H-1143)



State v. Bothe, 231 S.W.2d 453, 456 (Tex. Civ. App. - San Antonio 1950, no writ).
See also Grass0 v. Cannon Ball Motor Freight Lines, 81 S.W.2d 482, 486 (Tex. 1935).
We believe therefore that article 4447s requires disclosure of a net dollar amount
rather than a percentage of the total amount paid for laboratory services.

       You also i.nquire as to whether the Board of Medical Examiners has any
enforcement authority for violation of article 4447s aside from that granted in the
statute itself. Section 2 permits the Board to “deny an application for license. . .
for violation of Section 1.. . .‘I But it also makes clear that such authority is “in
addition to other authority granted. II Article 4506, V.T.C.S., grants to the Board

           the right to cancel, revoke or suspend the license      of any
           practitioner of medicine upon proof of the violation    of the
           law in any respect with regard thereto . . . .

Thus, we believe that the Board is authorized to cancel, revoke or suspend the
license of any physician who is found to have violated article 4447s.

        Your last question is whether the required disclosure may be accomplished
“by the posting of a schedule of laboratory          tests and costs therefor    or by
notificatton to the ~patient on a bill or statement that such information is available
on request.” In our opinion, article 4447s clearly requires that the ‘net amount” be
disclosed “on the bill or statement.”    Accordingly, we answer your final question in
the negative.

                                      SUMMARY

           Although a professional association or other organization of
           physicians need not comply with article 4447s, the profes-
           sional members of that organization are subject to its terms.
            Article 4447s applies to agreements with any laboratory
           organized as a separate       entity.    The statute   requires
           disclosure of a net dollar amount rather than a percentage
           of the total amount paid for laboratory services. Disclosure
           is not accomplished by the posting of a schedule of costs or
           notification  to the patient that such information is available
           on request, but must be made known to the patient on the
           bill or statement.      The Board of Medical Examiners, in
           addition to its authority to deny an application for license
           for violation of article 4447s, is also empowered by article
           4506 to cancel, revoke or suspend the license of any
           physician who is found to have violated that statute.




                                         p.     4648
 Honorable Max C. Butler, M.D.   -   Page 4      (H-1143)




                                          JOHN L. HILL
                                          Attorney General of Texas
 APPROVED:




Opinion Committee

jst




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