# The Attorney General of Texas

December 31. 198'2 MARK WHITE Attorney General

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An Equal Opportunity/ Affirmative Action Employer Robert Bernstein,M.D., F.A.C.P. Commissionerof Health OpinionNo. MW-590
TexasDepartmentof Health 1100West 49th Street Austin,Texas 78756 Re: Whether fees collected for physicians' services at certain state hospitals must be placed in the state treasury
Dear Dr. Bernstein:
You have asked this question:

Are fees and charges collected for physicians' services pursuant to article 3201a-3, section 6A, exempt fromarticle 4393c? Article 3201a-3,V.T.C.S.,provides inpart:

Section 1. In addition to the treatment of tuberculosis, the Harlingen State Chest Hospital and the San Antonio State Chest Hospital may create a pilot program to treatpersons afflicted with other chronic diseases of the respiratory systemregardlessof the diagnosis.

.. . .
sec. 6A. Fees and charges collected by each hospital for physicians' services shall be retained locally and shall be used only for the purpose of recruiting, retaining, and supplementing the salaries of the hospital's medical staff. Distribution of fees and charges forphysicians'servicesshallbe subject to rules and regulationsadopted by the medical staff, not inconsistent with the laws of this state regulatingthepracticeof medicine. Article 4393c, V.T.C.S., the State Funds Reform Act of 1981, provides in part:

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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 shallbe made within seven days after the date of receipt. Section 3 listsvarious exceptions to this requirement. You contend that one of these exceptions is applicable provides: (b) ThisAct doesnot apply to:

.... in this instance. It

(2) funds held in trust or escrow for the benefit of any person or entity other than a stateagency. Byway of explanation,you stated in yourmemorandumbrief that:

As provided by Section 6~. the hospitals' collections for physicians' serviceswere locally retained and were under the exclusive control of thephysicians comprisingthemedical staff of the hospital. The physicians, by agreement, have created an express trust to control disbursement of the funds.... The hospitalsare reimbursedfor 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 requirementis alsomet in that the fundsbenefit a person or entity other than a state agency. These funds benefit the physicianswho are members of the plan and in no way benefit a 'stateagency.' (Emphasisadded). Before consideringyour 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 statutedefines "state agency"broadly, as including:

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=*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 constitutionor a statute of this state,but does not include [certain departments and institutions].
In our opinion, these two state hospitals are "institutions"which satisfyeach of the conditionsforbeing a "stateagency" set forth in section 2. The second question concerns the relationship between article 4393~ and section6A 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 "shallbe retained locally." The question iswhether section 6A constitutesan exceptionto 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).theyhave alsoheld that:

Where a laterenactment is intendedto embraceall the law upon the subjectwith which it deals, it repeals all former laws relating to the same subject. Gordonv. Lake, 163Tex. 392, 356 S.W.2d 138 (1962). Under this rule, a statute that covers the subjectmatter 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 itsprovisionsare revisedand its field freshly covered. See Motor Inv. Co. v. Hamlin, 142Tex. 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 containsno expresswords of repeal, its comprehensivenessand detail, i.e., its applicationto "all fees...collectedor receivedby a state agency" (emphasis added), oupled with the fact that it lists only certain specific exceptions, compel the conclusion that its purpose was to "embraceall the law on the subjectwith 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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law was to harmonize conflicting prior laws relating to deposits of money in treasuryby 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 sectionapplies raises some interestingquestions. For example, it is not entirely clearwhether thephysiciansof these two statehospitals properly assumed "exclusivecontrol"of these fees and chargesand had the legal authority to create the express trust towhich 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 inapplicablein this instance.
As you recognize,fundsheld in trustor escrowmust, 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 determinedthat the San Antonio and Harlingen State Chest Hospitals are "state agencies" within the meaning of article 4393~. Thus, to be exempt, these fees and chargesmust 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 theirmedical staffs and to retain thosewho presently serve thereon. To the extent these funds provide qualifiedphysicianswith an additional incentive to both join and remain on these hospitals' medical staffs, they certainly "benefit"thesehospitals.
You argue that "[the phrase] 'fees and charges for physicians' services'cannotbe construed ss benefitting a 'stateagency'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 certainacts, 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 afflictedhumanbeings and that: . -

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collection and use byethe 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.

- SanAntonio 1956,writ ref'dn.r.e.). The Rockett court held, inter alla, that the predecessor of the aforementioned subsection (12). see article 4505, V.T.C.S., was violatedwhere a clinic in which nolicensed medical doctor owned an interest collected fees for the services of a physician whom the clinicemployed.
We cannot accept your argument. We do not agree that our conclusionthat the statehospitals in question "benefit"from theuse 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 servicesof the physicianswhom they employ -- a questionwhich we do not decide -- the fact remains that thepower to regulate thepractice 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 suchan 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 thereforeansweryour question in thenegative.
SUMMARY
Fees and charges collectedpursuant 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 AttorneyGeneralof Texas

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JOHNW. FAINTER,JR. FirstAssistantAttorneyGeneral
RICHARD E. GRAY III ExecutiveAssistantAttorneyGeneral Preparedby Jon Bible AssistantAttorneyGeneral
APPROVED: OPINION COMMITTEE
SusanL. Garrison,Chairman Jon Bible Bill Campbell Rick Gilpin JimMoellinger

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