The Attorney General of Texas 

December 31. 198'2 

MARK WHITE 

Attorney General 

Supreme Court Building 

P. 0. BOX 12546 

Austin. TX. 76711. 2548 

5121475-2501 

Telex 9101874-1367 

Telecopier 5121475-0266 

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Dallas, TX. 75201-4709 

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El Paso, TX. 79905.2793 

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Houston. TX. 770026986 

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806 Broadway. Suite 312 

Lubbock, TX. 79401.3479 

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McAllen, TX. 78501-1665 

5121682.4547 

200 Main Plaza, Suite 400 

San Antonio, TX. 78205-2797 

5121225-4191 

An Equal Opportunity/ 

Affirmative Action Employer 

Robert Bernstein, M.D., F.A.C.P. 

Commissioner of Health 

Opinion No. MW-590 

Texas Department of Health 

1100 West 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 from article 4393c? 

Article 3201a-3, V.T.C.S., provides in part: 

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 treat persons afflicted 

with other chronic diseases of the respiratory 

system regardless of 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 

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: 

. 2191 
,. 

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 

provides: 

(b) This Act does not apply to: 

. . . . 

in this instance. It 

(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: 

p. 2192 
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 institutions]. 

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 

p. 2193 
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 
. 

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 

p. 2195 
, . 

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 

p. 2196