Court Opinion

ID: 9577552
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:36:00.019224+00
Date Added: 2024-06-11T13:20:48.669432
License: Public Domain

*588Wright, J.
(dissenting)—The question presented herein is whether or not it constitutes an impairment of contract for the legislature to enact a statute (RCW 48.44.025) relative to vision care. The statute in question provides that if vision care service is performed by‘a licensed optometrist (licensed under RCW 18.53) who is not a health care service contractor or a participant, then, in that event, the subscriber is entitled to reimbursement in an amount equal to the fee that would be paid to a participant (ophthalmologist) .
The health care service contract is a 3-party arrangement with two separate contracts. One contract is between the health care service contractor and a physician who is denominated the “participant”. The other contract is between the corporation and the individual who is to receive care and who pays, denominated the “subscriber”.
The health care service contractor may be a corporation, cooperative group or association or a physician or group of physicians, group of hospitals, pharmacist or group of pharmacists licensed in the state of Washington. If it be a corporation or association, it must be composed of, or closely associated with, physicians, or composed of, or closely associated with pharmacists. The health care service contractor is defined in RCW 48.44.010(3) as one “who or which not otherwise being engaged in the insurance business, accepts prepayment for health care services . . .”
There are many indications in the statute that the legislature regarded health care service contracts to be a form of insurance. The administration is vested in the insurance commissioner. The statute is included in RCW Title 48, which title relates to insurance. The act contains the above quoted words “not otherwise being engaged in the insurance business, . . .”
The agents who sell health care service contracts are licensed under the provisions applicable to insurance agents (RCW 48.17) and agents licensed to sell disability insurance do riot need an additional license (RCW 48.44.015 (3)). In addition to those mentioned, there are many indications *589that health care service contracts were regarded by the legislature as a form of insurance or closely related thereto. The same conclusion has been reached by this court in McCarty v. King County Medical Serv. Corp., 26 Wn.2d 660, 175 P.2d 653 (1946).
It is recognized that the insurance business is related to the public welfare (RCW 48.01.030). Insurance is subject to regulation under the state’s police power. Kueckelhan v. Federal Old Line Ins. Co., 69 Wn.2d 392, 418 P.2d 443 (1966); Continental Ins. Co. v. Fishback, 154 Wash. 269, 282 P. 44 (1929); Northwestern Nat’l Ins. Co. v. Fishback, 130 Wash. 490, 228 P. 516, 36 A.L.R. 1507 (1924); German Alliance Ins. Co. v. Lewis, 233 U.S. 389, 58 L. Ed. 1011, 34 S. Ct. 612 (1914).
A statute enacted under the authority of the police power may impair the obligation of contract. Raymond Lumber Co. v. Raymond Light & Water Co., 92 Wash. 330, 159 P. 133 (1916); Seattle v. Hurst, 50 Wash. 424, 97 P. 454 (1908).
The legislature has broad powers to enact legislation for the public good. The presumption of the validity of a duly enacted statute attaches to such legislation. We said in Shea v. Olson, 185 Wash. 143, 151, 53 P.2d 615, 111 A.L.R. 998 (1936):
It is a well-settled principle of law, followed by all courts, that the presumption is in favor of the constitutionality of a statute. 6 R. C. L. 97, § 98. As expressed in our decisions, the rule in this state is that the court will not declare a law unconstitutional unless its invalidity is so apparent as to leave no reasonable doubt on the subject. [Citing cases.]
Legislation enacted under the police power must bear some relation to the evil sought to be remedied- or to promote some interest of the state. As pointed out by Hunter, J., the legislature may well deem the public interest requires the preservation of a freedom of choice as between different classes of practitioners licensed by the state to give vision care. It is the subscriber who pays for care, who receives the service, and who provides the funds to make *590the entire operation workable. There also may well be other reasons which impelled the legislature to so act. As was said in Shea v. Olson, supra at 154:
A large discretion is therefore vested in the legislature to determine what the public interest demands and what measures are necessary to secure and protect the same. State v. Somerville, 67 Wash. 638, 641, 122 Pac. 324.
In Campbell v. State, 12 Wn.2d 459, 122 P.2d 458 (1942) we said at page 466:
This court has several times recognized the rule that, in passing upon the constitutionality of a statute enacted pursuant to the police power, it is not necessary that the court find the existence of a state of facts which would justify the particular statute in question, it being sufficient if it be deemed within the bounds of reasonable possibility that such a state of facts may exist. [Citing cases.]
The existence of facts sufficient to justify the legislation here in question may reasonably be presumed.
If we say the provisions herein complained of do not bear any reasonable relation to the evils sought to be corrected, we are substituting our judgment for the wisdom of the legislature as to what is good for the welfare of the state and its citizens. That we cannot do.
In a somewhat converse situation we said in Williamson v. Grant County Pub. Hosp. Dist. 1, 65 Wn.2d 245, 250, 396 P.2d 879 (1964):
[T]hat the legislature has recognized and established distinctions between the branches of the healing arts which it considers necessary for the public good. Courts will not question the legislative wisdom of these distinctions so long as there is any reasonable basis for them. Ellestad v. Swayze, 15 Wn. (2d) 281, 291, 130 P. (2d) 349 (1942), and cases cited.
Without more, the judgment should be reversed upon the ground this is a matter within the police power of the state, and, heneo, the statute is valid. There is, however, another reason for reversal. There is no impairment of contract.
We have here three parties who enter into two contracts. Only the “health care service contractor”, usually referred *591to as the “corporation” or the “bureau” is a party to both contracts. One contract is between the bureau and the subscriber. The other contract is between the bureau and the physician. Less commonly, the second contract may be between the bureau and a pharmacist or a hospital.
Only the contract between the subscriber and the bureau is affected by the statute in question. The subscriber) is granted additional rights against the bureau. No bureau or other health care service contractor is a plaintiff herein, nor making any complaint against the statute.
On the other hand, the contract which the majority says is impaired is the contract between the bureau and the participant (physician). That contract is in nowise affected by the statute. The plaintiffs are all participants.
Even assuming the contract between the bureau and the subscriber is altered by the statute, that matter cannot be raised by the plaintiffs herein. No person may question the constitutionality of a statute as to matters which do not affect him. State ex rel. Hansen v. Salter, 190 Wash. 703, 70 P.2d 1056 (1937); Port of Tacoma v. Taxpayers, 53 Wn.2d 734, 336 P.2d 872 (1959); National Bank of Commerce v. Green, 1 Wn. App. 713, 463 P.2d 187 (1969).
Plaintiffs herein are all ophthalmologists, participants. Unless they, or one or more of them, has suffered an impairment of contract they cannot maintain the action. Since plaintiffs did not allege any violation of article 1, section 10 of the federal constitution, we are concerned only with a claimed violation of article 1, section 23 of the state constitution.
While there are several contracts involved between physicians and the various bureaus, they generally follow the same pattern. A typical example is the contract between the King County Medical Service Corporation and an individual physician (exhibit 10). A copy of said contract is reproduced herein. It will be noted that there are several provisions in the contract that lack the character of a binding obligation.
*592The preamble states the physician will render services “upon a basis of receiving such fees as the patient is able to pay for the services rendered”. In subdivision 4 the physician agrees to abide by the rules and regulations which have been or may he in the future “laid down by the company and/or its medical director”. In subdivision 5 the physician agrees to accept in full payment for services such fees as are fixed by the medical director. In subdivision 6 the company agrees to pay to the physician such fee as “shall be fixed by the medical director”. Subdivision 7 provides: “This agreement may be cancelled by either party at any time without cause”.
The law is stated in 17 Am. Jur. 2d Contracts § 79 (1964) as follows:
Clearly, a reservation to either party to a contract, of an unlimited right to determine the nature and extent of his performance, renders his obligation too indefinite for legal enforcement. This rule applies, for instance, to the reservation of an unlimited right to determine the nature and extent of the compensation under a contract.
In 17 Am. Jur. 2d Contracts § 83 (1964) it is said:
As a general rule, a reservation to a party of an unlimited right to determine the nature and extent of the compensation he will make renders his promise too indefinite to be enforceable. This rule applies to agreements which are wholly executory.
(Italics mine.) The contract involved herein was wholly executory.
The rule is well established that a contract is not within the protection of the constitutional provision against the impairment of the obligation of a contract unless it is a valid, legally enforceable, complete agreement.
The language of the state constitutional provision is contained in article 1, section 23, which reads in full:
No bill of attainder, ex post facto law, or law impairing the obligations of contracts shall ever be passed.
By way of comparison, the federal constitution, article 1, section 10, is practically identical. We are not here con*593cerned with the provision of the federal constitution except that cases construing that provision are useful as authority.
In Ochiltree v. The R.R. Co., 88 U.S. (21 Wall.) 249, 252, 22 L. Ed. 546 (1874), it was said:
the obligation of a contract within the meaning of the Constitution is a valid subsisting obligation, not a contingent or speculative one.
It is said in 16A C.J.S. Constitutional Law § 352 (1956):
The obligation of a contract is the law which binds the parties to perform their agreement.
In the instant case, there being no valid, binding obligation, there can be no impairment of the obligation.
Neither party to the contract between the subscriber and the bureau is complaining herein. By the terms of the statute, the subscriber is given an additional choice in the selection of a practitioner to prescribe eyeglasses for him. We are not called upon to decide if there is any impairment, thereby, of the contract between the subscriber and the bureau.
As hereinbefore mentioned, a party not adversely affected by a statute cannot question its constitutionality. Kitsap County v. Bremerton, 46 Wn.2d 362, 281 P.2d 841 (1955); National Bank of Commerce v. Green, 1 Wn. App. 713, 463 P.2d 187 (1969).
The statute in nowise affects the only contract to which plaintiffs are parties. True, plaintiffs fear competition. In that connection, however, there is nothing in the contract guaranteeing to plaintiffs any particular number of patients. The contract does not specify how many ophthalmologists may be participants, nor how many subscribers there shall be. Any possible diminution of plaintiffs’ income from the operation of the statute is highly speculative and conjectural. It takes more than a vague fear of competition (against which plaintiffs have no contractual protection) to justify a claim of impairment of the obligation of a contract. This is the more true when there is no obligation.
Tremper v. Northwestern Mut. Life Ins. Co., 11 Wn.2d *594461, 119 P.2d 707 (1941) is an example of the type of matter that is an impairment of contract. There the statute in question sought to change the interest to be charged on a policy loan from 6 percent simple interest to 6 percent compound interest. Such was held to be an impairment of contract. That was a direct change in the terms of the contract, and is readily distinguishable from the case at bench.
It must be remembered the statute in question was regularly enacted by the legislature of the state. “One who challenges the constitutionality of a statute carries the burden of proving its invalidity. State v. Primeau, 70 Wn.2d 109, 422 P.2d 302 (1966).” Seattle v. Jones, 79 Wn.2d 626, 628, 488 P.2d 750 (1971). The plaintiffs herein have not met that burden and the statute should be declared to be constitutional.
Finally, it must be recognized that in no event can any contract made after the enactment of the statute be said to be impaired. As we said in Minish v. Hanson, 64 Wn.2d 113, 115, 390 P.2d 704 (1964):
The plaintiffs recognize the well-settled rule that the obligation of a contract cannot properly be said to be impaired by a statute in force when the contract was made, for in such cases it is presumed that it was made in contemplation of the existing law. Numerous cases so holding are cited in 12 Am. Jur., Constitutional Law § 387, pp. 15,16.
The above citation is presently to be found in 16 Am. Jur. 2d Constitutional Law § 440, at 787, 788, together with more recent cases.
The judgment appealed from should be reversed.
Finley, J., concurs with Wright, J.
Petition for rehearing denied January 16, 1973.
Appendix A
Agreement between King County Medical Service Corporation and Physician
This Agreement, made and entered into this day of *595................................, A.D., 19........, between King County Medical Service Corporation as first party, hereinafter referred to as “the Company,” and ........................................, a physician duly and regularly licensed to practice his profession in the State of Washington and residing in King County, Washington, as second party, and hereinafter referred to as “the physician” or “this physician,” Witnesseth:
That Whereas, the company was organized for the purpose of securing the benefits of medical and surgical care, nursing and hospitalization to many individuals whose financial condition has made it impossible for them to receive such services in the past, and
Whereas, the physician is willing to assist in the execution of said proposal upon a basis of receiving such fees as the patient is able to pay for the services rendered, now, therefore, in order to fix the rights and liabilities of the parties hereto during the continuance of such an arrangement, It Is Agreed between the parties hereto as follows:
1. The physician hereby constitutes and appoints the company his agent to offer his services to those who shall make the company the periodical payments which it prescribes and which persons are hereinafter referred to as “patient”; all upon the terms and conditions hereinafter set forth. The physician agrees that this instrument shall constitute an irrevocable offer by the physician to the patient for the performance of the services hereinafter described, either personally or through some other physician who is a member of the King County Medical Service Bureau.
2. The company shall enter into similar contracts with other physicians whose qualifications entitle them to apply for membership in the King County Medical Service Bureau. The company shall also receive the periodical payments which it may from time to time prescribe to be paid by groups and/or individuals in and in the vicinity of King County, Washington, as payment for the services of such physicians, all upon such terms and under such regulations as the company may prescribe.
3. The physician agrees that he will, to the extent to which his services shall have been promised by the company to the patient and subject to the terms and conditions set forth in this agreement, treat all persons who make, or on whose behalf shall have been made, the periodic payments for services required by the company. The physician will perform said services whether requested so to do by the patient or by the medical director of the company who is hereinafter referred to as “the medical director.”
4. The physician agrees that he will abide by all of the rules and regulations governing the furnishing of such services and/or touching upon his relationship with the patient, and/or with the company which have been laid down, or shall hereinafter be established by the company and/or its medical director.
5. The physician agrees that he will accept in full for his services performed hereunder the fees fixed by the medical director without any charge to the patient.
*5966. The company agrees that as soon after the completion of his services for such patient as is reasonably practicable and upon compliance by the physician with all the requirements of the medical director, the company will pay the physician such reasonable compensation as shall be fixed by the medical director. The company agrees that in furtherance of the charitable purpose of its organization it will not permit any individual, firm or corporation to receive from it any sums which it collects except as a reasonable payment for services performed for, or property delivered to, the company; provided, however, that the company may, in its discretion, in the furtherance of .the charitable purpose of its organization, grant such free services to the deserving poor as the company in its judgment may determine. The company agrees that it will never distribute any funds received by it as dividends or profit to any officer or member of the corporation whatsoever.
7. This agreement may be cancelled by either party at any time without cause.
8. It is agreed that the prudent and successful management of the charitable activity in which the parties hereto are engaged requires that a certain reserve must be created by the company whereby the continuity of its operation and service may be assured to said patients. To that end the company is hereby authorized to create such reserve as, in the opinion of its board of directors, is reasonably necessary to insure patients that the service contracted for will be carried on in the contingency of an epidemic. The physician shall be subject to equal obligations and entitled to equal rights and benefits with all other physicians who have similar contracts with said company; but he shall have no interest whatsoever in or to the said reserve balance of the company.
9. The medical director of the company shall determine who are entitled, and the services to which, and the time for which they are entitled, to the services of the physician as provided in this agreement.
10. If emergency treatment shall be given the patient by a physician who is not a member of the King County Medical Service Bureau, and if such non-member physician shall consent, then and in that event this physician agrees that the medical director shall fix a total fee for the entire service to the patient, including such emergency treatment and shall divide the same equitably between such non-member physician and this physician and no charge shall be made against the patient by the non-member physician nor by this physician for any of such treatment.
In Witness Whereof, the parties have caused these presents to be executed in duplicate original the day and year first above written.
King County Medical Service Corporation
By...............................................................................................................................-
Its ........................................................................................ The Company
The Physician