Holy Cross Hospital of Silver Spring, Inc. v. Health Services Cost Review Commission

Smith, J., delivered the opinion of the Court. We are here involved as a matter of statutory construction with the question of whether fees charged by physicians in certain medical specialities to hospital patients, which fees are placed on hospital accounts and billed by the hospitals in such amounts to the patients, constitute a part of “the total costs of the hospital” so as to be considered as “reasonably related to the total services offered by the hospital” and thus whether the Maryland Health Services Cost Review Commission (the Commission) is empowered to review and set charges by these physicians in the specialities of cardiology, pathology, and radiology. The Commission was created by Chapter 627 of the Acts of 1971. Certain revisions have been made since that date.

See Maryland Code (1957, 1971 Repl. Vol., 1978 Cum. Supp.) Art. ⁶⁸⁰ 43, §§ 568H-568Z. Matters involving the Commission were before us previously in Health Serv.

Cost v. Franklin Sq., 280 Md. 233 , 372 A. 2d 1051 (1977), and Blue Cross v. Franklin Sq. Hosp., 277 Md. 93 , 352 A. 2d 798 (1976). Neither case involved the issue presented here. The Commission held public hearings relative to Holy Cross Hospital of Silver Spring, Incorporated (the Hospital), one of the appellants.

On December 1, 1976, it issued a proposed opinion and order which stated in pertinent part: “Section 568M(2), Article 43 of the Annotated Code of Maryland indicates that the Commission has the authority to ‘hold public hearings, conduct investigations, and require the filing of information relating to any matter affecting the cost of services in all institutions subject to provisions of this sub-title____’[ 1 ] It is clear that the provision of radiology and pathology is a service of Holy Cross Hospital. Based on this observation it is the Commission’s belief that the legislative intent of the Commission’s Enabling Act was that the Commission concern itself with all costs associated with the services rendered to patients in the hospital. [ 2 ] The Commission, therefore, finds that the salaries of the radiologists, pathologists and cardiologists are subject to their review as a part of their legislative charge to assure the public that total costs are reasonably related to total services provided.” ⁶⁸¹ The Commission’s final opinion and order, reaffirming its proposed opinion and order, was filed on February 2, 1977. It established new rates effective March 1, 1977, which included that which might be charged for radiology, pathology, and cardiology. That opinion stated in pertinent part: “The Hospital argued that the Commission was wrong in referring to the present compensation of the hospital based physicians as a salary.

Since a salary refers to a fixed payment and the physician’s compensation varies with the number and variety of tests performed, the Commission did indeed err in its choice of word. Further, the Commission’s proposed Order also based the aggregate charges to the public for those services upon the relative value units of service provided. We, therefore, modify the proposed Opinion to read ‘compensation’ rather than ‘salary’ and otherwise confirm that as our Opinion supplemented by this document.” The Hospital sought judicial review in the Circuit Court for Montgomery County pursuant to Code (1957, 1978 Repl. Vol.) Art. 41, § 255, a part of the Administrative Procedure Act.

Drs. Robert E. McCullough and Edward D. Soma (the doctors or the physicians), who appear as appellants here, were each granted leave to intervene in the circuit court. Their specialities are pathology and radiology, respectively. The circuit court reversed the order of the Commission and remanded the matter to it for further proceedings.

However, the Hospital and the physicians appealed to the Court of Special Appeals since on the issue here under consideration the opinion and order were adverse to them. We granted the writ of certiorari prior to consideration of the case by that court. The doctors are members of the medical staff of the Hospital, just as numerous other physicians are members of such staff being assigned to the appropriate clinical department such as general medicine, surgery and the like, according to their respective specialities. For a number of ⁶⁸² years physicians in their categories conducted their own billing and collection operations, completely independent of the Hospital.

This procedure was changed in 1972. At the times pertinent to this proceeding each of the physicians had a contract with the Hospital by which it was to supply him with suitable space and certain equipment and supplies. Each of them was to act as the director of his respective department in the Hospital and to provide services to patients within those specialities. The Hospital director testified that the prior separate billing system resulted in numerous complaints from patients who, after paying the Hospital’s bill, were chagrined to receive yet another bill from a physician who had performed a special service.

As a result, the system was changed so that the Hospital billed for those specialities, 3 Each month the Hospital remits to the respective physicians an amount equal to the gross billings on their behalf for the previous month, less 15% “retained] to compensate it for bad debts and as reimbursement for the cost of administering” the contracts with the physicians. Each of the physicians is obligated to provide services without charge to any individual' “determine[d] to be medically indigent, non-pay or part-pay The Commission’s powers relative to the controversy here before us are found, in § 568U which provides in pertinent part: “(a) From and after July 1,1974, the Commission shall have the power to initiate such reviews or investigations as may be necessary to assure all purchasers of health care hospital services that the total costs of the hospital are reasonably related to the total services offered by the hospital, [and] that the hospital’s aggregate rates are reasonably related to the hospital’s aggregate costs____ “(b) In order to properly discharge these obligations, the Commission shall have full power to ⁶⁸³ review and approve the reasonableness of rates established or requested by any hospital subject to the provisions of this subtitle. No hospital shall charge for services at a rate other than those established in accordance with the procedures established hereunder.” A number of contentions are made to us by the Hospital and the physicians as to why the Commission may not do that which it here seeks to do. We shall focus, however, only on the question of whether the charges by these specialists are a part of “the total costs of the hospital,” since if they are not there is no need to consider the other objections.

The bases for review of a proceeding such as this are set forth in Code (1957, 1978 Repl. Vol.) Art. 41, § 255 (f) and were discussed for the Court by Judge Horney in Bernstein v. Real Estate Comm., 221 Md. 221, 230-31 , 156 A. 2d 657 (1959), appeal dismissed, 363 U. S. 419 (1960). As was pointed out in that case, courts are not permitted to substitute their judgment for the expertise of those persons who constitute the administrative agency from which the appeal was taken. See also Chief Judge Murphy’s opinion for the Court in Zeitschel v. Board of Education, 274 Md. 69, 82 , 332 A. 2d 906 (1975).

As Judge Singley observed for the Court in Oxon Hill Rec. Club v. Water Res. Adm., 281 Md. 110, 113 , 375 A. 2d 567 (1977), our review of the action of an administrative agency “is almost always limited to whether there was illegality, arbitrariness or unreasonableness in the action which was taken [citing cases].” It is elementary that since an administrative agency, such as the Commission, is a creature of statute, it has no inherent powers and its authority thus does not reach beyond the warrant provided it by statute. Gutwein v. Easton Publishing Co., 272 Md. 563, 575-77 , 325 A. 2d 740 (1974), holding that the statute creating the Maryland Human Relations Commission did not grant the Commission power to make monetary awards for compensatory or other damages; Albert v. Pub.

Serv. Comm., 209 Md. 27, 34 , 120 A. 2d 346 (1956), and Utilities Co. v. Public Service Co., 154 Md. 445, 453 , 140 A. 840 (1928). ⁶⁸⁴ The rules for statutory construction were set forth by Judge Levine for the Court in Mazor v. State, Dep’t of Correction, 279 Md. 355 , 369 A. 2d 82 (1977): “As we have so often said, the cardinal rule of construction of a statute is to ascertain and carry out the real intention of the Legislature. State v. Fabritz, 276 Md. 416, 421 , 348 A. 2d 275 (1975); Fairchild v. Maritime Air Serv., 274 Md. 181, 185 , 333 A. 2d 313 (1975); Purifoy v. Merc.-Safe Dep. & Trust, 273 Md. 58, 65 , 327 A. 2d 483 (1974). The primary source from which we glean this intention is the language of the statute itself.

State v. Fabritz, 276 Md. at 421 . And in construing a statute we accord the words their ordinary and natural signification. Bright v. Unsat. C. & J. Fund Bd., 275 Md. 165, 169 , 338 A. 2d 248 (1975); Md.-Nat'l Cap.

P. & P. v. Rockville, 272 Md. 550, 556 , 325 A. 2d 748 (1974); Grosvenor v. Supervisor of Assess., 271 Md. 232, 237-38 , 315 A. 2d 758 (1974). If reasonably possible, a statute is to be read so that no word, phrase, clause or sentence is rendered surplusage or meaningless. Prince George’s Co. v. White, 275 Md. 314, 319 , 340 A. 2d 236 (1975). Similarly, wherever possible an interpretation should be given to statutory language which will not lead to absurd consequences.

Fairchild v. Maritime Air Serv., 274 Md. at 186. Moreover, if the statute is part of a general statutory scheme or system, the sections must be read together to ascertain the true intention of the Legislature. Blumenthal v. Clerk of Cir. Ct., 278 Md. 398, 403 , 365 A. 2d 279 (1976); Thomas v. State, 277 Md. 314, 317 , 353 A. 2d 256 (1976); County Council v. Supervisor, 274 Md. 116, 120 , 332 A. 2d 897 (1975).” Id. at 360-61. For statements to the same effect see the opinion by Judge Cole for the Court in Gietka v. County Executive, 283 Md. 24, 27 , 387 A. 2d 291 (1978); Schweitzer v. Brewer, 280 Md. 430, 438 , 374 A. 2d 347 (1977), where Judge Orth listed a host of cases on this subject for the Court, and Thomas v. Police ⁶⁸⁵ Commissioner, 211 Md. 357 , 127 A. 2d 625 (1956), where Judge Hammond made a succinct statement for the Court relative to the principles of statutory construction.

In Harden v. Mass Transit Adm., 277 Md. 399, 406 , 354 A. 2d 817 (1976), citing Patapsco Trailer v. Eastern Freightways, 271 Md. 558, 563-64 , 318 A. 2d 817 (1974), and Giant of Maryland v. State’s Attorney, 267 Md. 501, 512 , 298 A. 2d 427 , appeal dismissed, 412 U. S. 915 (1973), we stated, “A court may not insert or omit words to make a statute express an intention not evidenced in its original form.” See also Amalgamated Ins. v. Helms, 239 Md. 529, 534 , 212 A. 2d 311 (1965), where Chief Judge Prescott said for the Court, “[C]onstruing a statute liberally and adding to it, by judicial fiat, a provision which the Legislature did not see fit to include are not one and the same thing.” In the matter of statutory construction it is well understood that the view taken of a