                                         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:




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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:




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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



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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
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    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




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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




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