Potomac Valley Orthopaedic Associates v. Maryland State Board of Physicians

MURPHY, J. This case presents an issue of statutory interpretation that arises out of a “DECLARATORY RULING” requested pursuant to Section 10-304(a) of the State Government Article (SG), and issued on December 20, 2006 by the Maryland State Board of Physicians (the Board) pursuant to SG § 10-305(a). After that ruling was affirmed by the Circuit Court for Montgomery County pursuant to SG § 10-305(c), the Appellants—twelve medical practices that specialize in the fields of ⁶²⁵ orthopedics, urology, radiation oncology and emergency medicine—noted an appeal to the Court of Special Appeals pursuant to SG § 10—223(b)(1), and presented that Court with the question of “[w]hether the Maryland Patient Referral Law [ (Subtitle 3 of Title 1 of the Health Occupations Article) ] prohibits an orthopaedic surgeon from furnishing patients with MRI or CT diagnostic services within his or her office or group, even when the orthopaedist complies with the ‘group practice’ exemption in Health Occ. § l-302(d)(2) or the ‘direct supervision’ exemption in Health Occ. § l-302(d)(3)?” Before the Appellees filed their briefs in the Court of Special Appeals, 1 this Court issued a writ of certiorari on its own initiative. 404 Md. 659 , 948 A.2d 70 (2008). Although the Appellees agree that this case presents but one question, they argue that the question should be rephrased. According to Mark Bohlman, M.D.

(who is participating as an Appellee “Individually and as President on behalf of The Maryland Radiological Society, Inc.”), the proper question is: Whether or not the Board Erred in Ruling that a Referral by an Orthopaedic Physician for an MRI to be Performed on or by an MRI Machine Owned or Leased by the Orthopaedic Practice is an Illegal Self-Referral within the Meaning of the Maryland Self referral Law and was not Exempt under the Exemptions set out in § l-302(d)(2), (3) or (4) of the Health Occupations Article of the Maryland Annotated Code[?] According to the Board, the proper question is: Do the three exceptions in HO § 1—302(d)(2), (3) and (4) to the general statutory prohibition against physician self-referrals apply to a physician’s referral of a patient for MRI imaging on a machine in which that physician’s practice has a beneficial financial interest? ⁶²⁶ For the reasons that follow, we hold that the Board’s Declaratory Ruling was correct, and therefore affirm the judgment of the Circuit Court. Background The Board’s Declaratory Ruling included the following findings and conclusions: INTRODUCTION This Declaratory Ruling arises out of two formal petitions, separately filed by CareFirst BlueCross BlueShield and The Injured Workers’ Insurance Fund. These petitions ask the Board for a ruling on the propriety under the Maryland Self Referral Law of referrals made by physicians for MRI scans when that physician has a financial interest in the performance of that scan. BACKGROUND [T]he cases reviewed by the Board ... indicate that a common factual scenario exists among some Maryland orthopaedic practice groups with respect to referrals for MRI services.

The common factual scenario is set out below. Additionally, the Board has found several relevant variations to the general fact pattern that occur frequently in Maryland. The Board will rule on those as well. General Fact Pattern A patient is seen by an orthopaedic physician who has a beneficial financial interest in the orthopaedic practice.

The patient may have been referred to the orthopedist by another physician, or the patient may have come directly to the orthopaedic physician. The orthopaedic physician makes a referral for an MRI scan. The patient receives the MRI a few days or weeks later on an MRI machine that is owned and operated by, or leased by, the orthopaedic physician’s practice. The MRI image may be read in-house or may be sent to an off-site radiologist to read. ⁶²⁷ An off-site radiologist may state his or her findings in a radiology report and forward the report back to the orthopaedic physician.

The referring orthopaedic physician’s practice submits a bill for the MRI as the provider of the MRI scan (though not necessarily as the provider of the interpretation of the scan). Additionally, the Board found the following variations to this fact pattern. The following are modified fact patterns which may also occur in significant numbers in this State. VARIATION 1 Same as the general fact pattern, but the orthopaedic physician obtains a signed Maryland Uniform Consultation Referral Form from the patient’s primary care physician after the orthopedic physician determined that the MRI was necessary, but before the MRI was actually conducted.

The primary care physician does not, between the time that the orthopaedic physician determines that the MRI is necessary and the time that the MRI was accomplished, see the patient for the purpose of determining if the MRI is necessary, nor does he or she exercise independent medical judgment as to whether the MRI is appropriate or necessary. VARIATION 2 Same as the general fact pattern, but the orthopaedic physician names the primary care physician as the “referring physician” in the Health Insurance Claim Form. The primary care physician does not, between the time that the orthopaedic physician determines that the MRI is necessary and the time that the MRI was accomplished, see the patient for the purpose of determining if the MRI is necessary, nor does he or she exercise independent medical judgment as to whether the MRI is appropriate or necessary. ⁶²⁸ VARIATION 3 Same as the general fact pattern, but a physician who is an employee of the medical practice that provides the MRI scan evaluates the patient and orders the MRI to be done by that practice. The physician-employee does not have any beneficial interest in the medical practice.

ANALYSIS . The Purpose of the Self-Referral Law The Maryland Self-Referral Law was enacted during the 1993 legislative session as House Bill 1280 (HB 1280). The Legislative history shows that HB 1280 was part of a statutory scheme designed to address two problems plaguing health care in Maryland: “access to health insurance and escalating health care costs.” There seems to be little question that the legislature intended by this bill to substantially restrict the practice of self-referring, especially self-referrals of MRI scans, CAT scans and radiation therapy services. The Self-Referral Law thus created a broad and pervasive prohibition against self-referrals not only by physicians (as did the federal law) but also all by all other health care providers.

In addition, and again unlike the federal law, the Maryland prohibition covered every type of health care service. The Maryland-Self Referral Law first flatly bans any self-referral and any arrangement or scheme which has a principal purpose of accomplishing self-referrals: (a) Prohibited referrals.—Except as provided in subsection (d) of this section, a health care practitioner may not refer a patient, or direct an employee of or a person under contract with the health care practitioner, to refer a patient to a health care entity: ⁶²⁹ (1) [I]n which the health care practitioner or the practitioner in combination with the practitioner’s immediate family owns a beneficial interest. (2) In which the practitioner’s immediate family owns a beneficial interest of 3 percent or greater; or (3) With which the health care practitioner, the practitioner’s immediate family, or the practitioner in combination with the practitioner’s immediate family has a compensation arrangement.... (b) Payment prohibited.—A health care entity or a referring health care practitioner may not present or cause to be presented to any individual, third party payor, or other person a claim, bill or other demand for payment for health care services provided as a result of a referral prohibited by this subtitle.

(c) Applicability of svbsection(a).-—Subsection (a) of this section applies to any arrangement or scheme, including a cross-referral arrangement, which the health care practitioner knows or should know has a principal purpose of assuring indirect referrals that would have [been] in violation of subsection (a) of this section if made indirectly. Md. Health Occ.Code Ann. § 1-302 (cited hereafter by section “§” only.) Because the general rule is so broad and sweeping, numerous exceptions had to be made to accommodate situations in which there is no significant threat of overutilization. Each of the three exceptions at issue in this case generally permits referrals where there is little incentive for a physician to self-refer for financial gain. This Declaratory Ruling will deal with the three exceptions contained in § l-302(d)(2), (d)(3) and (d)(4), as they apply to the fact patterns developed in this case.

In interpreting these exceptions, the Board has complied with the following statutory construction rules. The statute should be interpreted “with reference to the purpose to be accomplished.” State v. Fabritz, 276 Md. 416, 421 [, ⁶³⁰ 348 A.2d 275, 278 ] (1975). The statute must be considered “in its entirety, in the context of the purpose underlying its enactment.” Id. The interpretation must seek to harmonize the statute as a whole.

In re Steven [Stephen ] K, 289 Md. 294, 298 [, 424 A.2d 153, 155 ] (1975[1981]). Language of an individual part of a statute must be interpreted “in relation to all its provisions,” and the interpretation must “harmonize individual selections as parts of a whole.” Burghout [Barghout ] v. Mayor and City Council of Baltimore, 325 Md. 311, 317 [, 600 A.2d 841, 844 ] (1992). The statute must be interpreted “as a whole[ ] so that no word, clause[, sentence,] or phrase is rendered surplusage, superfluous, meaningless or nugatory.” Lawson v. State, 389 Md. 570, 583 [, 886 A.2d 876, 883 ] (2005). Although, as the parties argue, the statute is “extraordinarily complex,” this does not in the Board’s opinion relieve the Board of its responsibility to interpret it.

The statute should be interpreted consistently with its overall purpose, taking into account all parts of the statute and without rendering any particular part of the statute meaningless or superfluous. * * * 1. Exception § l-302(d)(2) (d) The provisions of this section do not apply to: (2) A health care practitioner who refers a patient to another health care practitioner in the same group practice as the referring health care practitioner. § l-301(d)(2). The Board finds that the exception contained in (d)(2) was intended to create an exception for referrals that transfer a patient, permanently or temporarily, from one health care practitioner in a group practice to another. If this exception did not exist, the Self Referral Law would prohibit a physician from referring a patient to another member of the group practice in any situation, ⁶³¹ even when a physician is simply going out of town and refers a patient temporarily to his or her partner.... ____The Board concludes that exception (d)(2) simply allows the transfer of the professional responsibility for the patient’s continued care, including professional decision-making about the course of that care, to another physician within the same group practice.

Exception (d)(2) thus does not exempt referrals for specific “services or tests” already chosen by the referring physician. Some of the parties have argued that, because the term “referral” is defined broadly in § 1-301(1), the term “refers a patient” in (d)(2) must also be defined that broadly. The Board disagrees.... Since the words “services or tests” are not used in (d)(2), the Board concludes that (d)(2) was not intended to apply to services or tests that the referring physician has already determined are necessary. ....

The only way to read (d)(2) and (d)(4)(i)(2) together so that they both have meaning is to read (d)(2) to apply to the referral to a physician in the same group practice of a patient, but not for “services” or “tests” already determined necessary by the referring physician. This interpretation thus harmonizes these exceptions and at the same time is in accordance with the overall purpose of the Self referral Law to prevent self-referrals in situations where the opportunity for financial gain from referrals brings about a risk of overutilization.” .... A referral for MRI scan is a referral for a service or test, not a referral of a “patient” within the meaning of (d)(2). MRI scans are thus not covered at all by exception (d)(2), because that exception deals with referrals of a patient and not with referrals for “services or tests.” The referrals for MRI scans made by the physicians in ⁶³² this case, to the extent that they result in an MRI scan in which the referring physician has a beneficial interest, are not exempted from the Maryland Self Referral Law by exception (d)(2). 2.

Exception § l-302(d)(3) (d) The provisions of this section do not apply to: (3) A health care practitioner with a beneficial interest in a health care entity who refers a patient to that health care entity for health care services or tests, if the services or tests are personally performed by or under the direct supervision of the referring health care practitioner. § l-302(d)(3). The Board finds that the exception contained in § 1-302(d)(3) was intended to create an exemption for referrals of a patient for services or tests to a health care entity that is outside of the referring physician’s practice, even if the referring physician holds a beneficial interest in the outside entity, so long as the physician is personally present within the treatment area when the service is performed and either personally providing the service or directly supervising that service. Exception (d)(3) appears to parallel the AMA policy that the legislature intended to implement. First, the AMA policy applies only where the physician has an investment interest; likewise (d)(3) only applies where the physician has a beneficial interest.

Second, the AMA policy requires the physician to “directly render services” at the outside entity; likewise, (d)(3) requires the physician to personally perform or directly supervise the service or test while present at the entity.” Exception (d)(3) was intended to parallel the AMA policy; it therefore creates an exception that permits a physician in certain circumstances to refer patients to an outside entity in which he or she holds a beneficial interest. Exception (d)(3) does not, however, ⁶³³ permit a physician to refer to his or her own in-office practice. MRIs are “service or tests.” Exception (d)(3), however, applies only to referrals for services or tests to outside entities and not to in-office referrals within the group practice of the referring practitioner. Exception (d)(3) thus does not apply to in-office referrals by physicians for MRI scans to be provided by their own practices. 3.

Exception (d)(4) (d) The provisions of this section do not apply to: (4) A health care practitioner who refers in-office ancillary services or tests that are: (i) Personally furnished by: (1) The referring health care practitioner; (2) A health care practitioner in the same group practice as the referring health care practitioner; or (3) An individual who is employed and personally supervised by the qualified referring health care practitioner or a health care practitioner in the same group practice as the referring health care practitioner; (ii) Provided in the same building where the referring health care practitioner or a health care practitioner in the same group practice as the referring health care practitioner furnishes services; and (iii) Billed by: (1) The health care practitioner performing or supervising the services; or (2) A group practice of which the health care practitioner performing or supervising the services is a member. § l-302(d)(4). (1) “In-office ancillary services” means those basic health care services and tests routinely performed in the office of one or more health care practitioners. (2) Except for a ⁶³⁴ radiologist group practice or an office consisting solely of one or more radiologists, “in-office ancillary services does not include: (i) Magnetic resonance imaging services; (ii) Radiation therapy services; or (iii) Computer tomography scan services. H.O. § l-301(k) Significantly for this case, exception (d)(4) by definition does not include MRI, CAT scan, or radiation therapy services.

Thus, no detailed analysis of (d)(4) is needed except possibly to shed light on the meaning of all three of the exceptions when read together. The first and most obvious consideration is that the legislature’s clear language excluding self-referred MRIs from being exempted under (d)(4) makes it highly improbable that the legislature simultaneously intended to permit the same self-referred MRIs under (d)(2) or (d)(3). In this statutory context, an overly broad reading of (d)(2) or (d)(3) so as to make them overrule (d)(4) would make no common sense. The second consideration is that (d)(4) appears to round out the legislature’s scheme of three discrete but meaningful exceptions.

Unlike (d)(2), which does not deal with “services or tests” at all, and (d)(3), which deals with “services or tests” referred to outside entities, the exception in (d)(4) was intended to create an exception for referrals for “services or tests” within the referring practitioner’s practice. The Board finds