Indenbaum v. Michigan Bd. of Medicine

• Decision Date: 08 September 1995
• Docket Number: Docket No. 164159
• Parties: , 64 USLW 2367 Samuel INDENBAUM, M.D., and Felix J. Liddell, M.D., Petitioners-Appellees, v. MICHIGAN BOARD OF MEDICINE, and Michigan Department of Licensing and Regulation, Respondents-Appellants (After Remand).
• Court: Court of Appeal of Michigan — District of US

Page 574

539 N.W.2d 574

213 Mich.App. 263, 64 USLW 2367

Samuel INDENBAUM, M.D., and Felix J. Liddell, M.D., Petitioners-Appellees, v. MICHIGAN BOARD OF MEDICINE, and Michigan Department of

Licensing and Regulation, Respondents-Appellants

(After Remand).

Docket No. 164159.

Court of Appeals of Michigan.

Submitted April 11, 1995, at Detroit.

Decided Sept. 8, 1995, at 9:00 a.m.

Released for Publication Nov. 17, 1995.

Barris, Sott, Denn & Driker by Eugene Driker, Daniel M. Share, and David L. Rogers, Detroit, for petitioners.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Howard C. Marderosian, Assistant Attorney General, for respondents.

Before CONNOR, P.J., and SMOLENSKI and NYKAMP, ^* JJ.

SMOLENSKI, Judge.

Respondents Michigan Board of Medicine (the board) and Michigan Department of Licensing and Regulation appeal as of right a circuit court order reversing a declaratory ruling issued by the board. For the reasons that follow, we reverse the circuit court's order and reinstate the board's declaratory ruling.

Section 16221 of the Public Health Code (PHC), M.C.L. § 333.1101 et seq.; M.S.A. § 14.15(1101) et seq., provides that a licensed health care professional shall be disciplined for the following:

(d) Unethical business practices, consisting of any of the following:

* * * * * *

(ii) Dividing fees for referral of patients or accepting kickbacks on medical or surgical services, appliances, or medications purchased by or in behalf of patients.

* * * * * *

(e) Unprofessional conduct, consisting of any of the following:

* * * * * *

(iv) Directing or requiring an individual to purchase or secure a drug, device, treatment, procedure, or service from another person, place, facility, or business in which the licensee has a financial interest. [M.C.L. § 333.16221(d)(ii) and (e)(iv); M.S.A. § 14.15(16221)(d)(ii) and (e)(iv). Emphasis supplied.]

In November 1988, petitioners, who are physicians, requested from the board a declaratory ruling pursuant to § 63, M.C.L. § 24.263; M.S.A. § 3.560(163), of the Administrative Procedures Act (APA), M.C.L. § 24.201 et seq.; M.S.A. § 3.560(101) et seq., concerning the applicability of § 16221(e)(iv) of the PHC to the following facts:

The Physicians are licensed to practice medicine under the Michigan Public Health Code, and each practices in a private medical office. Each owns a limited partnership interest in a free-standing health care facility to which he refers patients or patient specimens.

There is nothing in the facility's limited partnership agreement (or in any other agreement) requiring that the Physicians refer patients or patient specimens there. In fact, the facility's partnership agreement expressly prohibits physician-partners from "directing or requiring" patients to use the facility. Some of the facility's physician-partners use competing facilities in addition to using this one. Each physician receives a distribution of the facility's business profits based solely on his proportionate ownership interest in the facility, without regard for his referrals. The amount of a physician-partner's ownership shares does not depend on referrals, and physician-owners receive no payments in exchange for referrals.

Each of the Physicians has posted signs in this office, readily visible to patients needing the facility's services, containing this language:

"IMPORTANT INFORMATION

In connection with the treatment of our patients it may be necessary to refer them or submit patient specimens to a [type of facility]. Where appropriate our office uses [name of facility], which is owned in part by members of this office.

In addition to this [facility], there are other qualified [facilities] capable of providing the required service, including those at hospitals to which members of this office admit patients. If you wish, we will refer you to another qualified [facility].

WE NEITHER DIRECT NOR REQUIRE YOU TO USE [name of facility]."

Each Physician refers to the facility patients (or specimens of patients) who choose to use it, and patients who have not chosen another facility. However, it is the policy of each Physician's office to accommodate without discouragement any patient who asks to use another qualified facility.

The question for which we seek a declaratory ruling is this: When a Physician refers a patient or specimen to a facility in which he is a limited partner under the circumstances set forth above, is the Physician "directing or requiring" in violation of Section 16221(1)(e)(iv)? ¹

After hearing arguments by petitioners and the Attorney General, the board ruled that petitioners had violated § 16221(e)(iv) of the PHC:

At the May 17, 1989, meeting of the Michigan Board of Medicine, the Board ruled that when a physician refers a patient or specimen to a facility in which he is a limited partner under the circumstances set forth by Doctors Indenbaum and Liddell, the physician is "directing or requiring" in violation of Section 16221(1)(e)(iv) ²....

Please be advised that this declaratory ruling is based solely upon the factual circumstances described above; nor is this ruling to be construed as expressing an opinion as to the possible application of any other law or regulation to the factual circumstances described.

Petitioners appealed to the circuit court. The court reversed the board's ruling on the ground that it had deprived petitioners of adequate notice by failing to promulgate rules delineating the prohibited conduct. Respondents appealed to this Court. This Court reversed the circuit court's order on the ground that the circuit court had erred in deciding an issue not properly before it, i.e., the absence of promulgated rules, and remanded for the purpose of placing on the record the court's reasons for its decision pursuant to § 106 of the APA, M.C.L. § 24.306; M.S.A. § 3.560(206) (scope of review). Indenbaum v. Michigan Bd. of Medicine, unpublished opinion per curiam of the Court of Appeals, decided August 6, 1992 (Docket No. 129223).

On remand, and pursuant to § 106(2) of the APA, the trial court again reversed the board's ruling that petitioners had violated § 16221 of the PHC. See M.C.L. § 24.306(2); M.S.A. § 3.560(206)(2). The trial court noted that "direct or require" is not defined in the PHC. The court stated that in looking to case law for the common legal usage of "direct or require," pursuant to established rules of statutory construction, "it is obvious that the two elements are frequently used together to express an element of authority or compulsion that is not present in the term refer." The trial court determined that the board erroneously had expanded the definition of "direct or require" to be synonymous with "refer." The trial court stated that consequently § 16221(e)(iv) of the PHC now prohibited not only unprofessional conduct, but also erroneously limited a physician's ability to perform his professional duty, which the trial court defined as the ability of a physician to refer a fully informed patient to a facility that the physician believes is best for the patient's needs. The trial court concluded that the board's interpretation of "direct or require" was an abuse of discretion and affected by a substantial and material error of law. See M.C.L. § 24.306(1)(e) and (f); M.S.A. § 3.560(206)(1)(e) and (f). The trial court also determined that the board's interpretation of "require or direct" failed to provide petitioners with notice of the prohibited conduct, and thus rendered those terms unconstitutionally vague. See M.C.L. § 24.306(1)(a); M.S.A. § 3.560(206)(1)(a). On appeal, after remand, the board argues that the circuit court's reversal of its declaratory ruling was erroneous.

This Court reviews the board's declaratory ruling to determine whether it was authorized by law and supported by competent, material, and substantial evidence. Const. 1963, art. 6, § 28; M.C.L. § 24.306; M.S.A. § 3.560(206); Ludington Service Corp. v. Acting Comm'r of Ins., 444 Mich. 481, 490, 511 N.W.2d 661 (1994), amended 444 Mich. 1240, 518 N.W.2d 478 (1994). In this case, neither party contends that the board's decision was not supported by competent, material, and substantial evidence. Rather, the issue in this case is the interpretation of "directing or requiring" as used in § 16221(e)(iv) of the PHC, and its application to the undisputed facts. This Court gives some deference to an agency's interpretation of a statute. Ludington, supra, at 505, 511 N.W.2d 661. However, the agency's interpretation is not binding on this Court and cannot be used to overcome a statute's plain meaning. Id.

The board argues that its declaratory ruling was not an abuse of discretion or affected by an error of law because petitioners were "directing or requiring" in violation of the plain language of § 16221(e)(iv) of the PHC by sending or referring their patients or patients' specimens to a facility in which they held a financial interest under the circumstances of this case. Petitioners respond that the circuit court's reversal of the board's declaratory ruling was not erroneous because the plain language of § 16221(e)(iv) means that the Legislature did not intend to prohibit all referrals, but, rather, intended to prohibit only those referrals that are mandatory or compulsory in the nature of a command or order.

The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. Farrington v. Total Petroleum, Inc., 442 Mich. 201, 212, 501 N.W.2d 76 (1993). The first criterion in determining intent is the specific language of the statute. House Speaker v. State Administrative Bd., 441 Mich. 547, 567, 495 N.W.2d 539 (1993). The Legislature is presumed to have intended the meaning it plainly expressed. Frasier v. Model Coverall Service, Inc., 182 Mich.App. 741, 744, 453 N.W.2d 301 (1990). Courts may not speculate regarding the probable intent of the Legislature...