Health Services Cost Review Commission v. Holy Cross Hospital of Silver Spring, Inc.

• Decision Date: 23 April 1981
• Docket Number: No. 43,43
• Citation: Health Services Cost Review Commission v. Holy Cross Hospital of Silver Spring, Inc., 431 A.2d 641, 290 Md. 508 (Md. 1981)
• Parties: HEALTH SERVICES COST REVIEW COMMISSION v. HOLY CROSS HOSPITAL OF SILVER SPRING, INCORPORATED et al.
• Court: Maryland Court of Appeals

Page 508

290 Md. 508

431 A.2d 641

HEALTH SERVICES COST REVIEW COMMISSION v.HOLY CROSS HOSPITAL OF SILVER SPRING, INCORPORATED et al.

No. 43.

Court of Appeals of Maryland.

April 23, 1981.

On Reconsideration June 29, 1981.

Jay E. Levy, Asst. Atty. Gen., Baltimore (George A. Nilson, Deputy Atty. Gen., and Stanley Lustman, Asst. Atty. Gen., Baltimore, on the brief), for appellant.

Richard C. Shadyac, Fairfax, Va.(Metzger, Shadyac & Schwarz, Fairfax, Va., on the brief), and C. Michael Loftus, Washington, D. C. (Slover & Loftus, Washington, D. C., on the brief), for appellees.

Melvin J. Sykes, M. Peter Moser and Frank, Bernstein, Conaway & Goldman, Baltimore, on amici curiae brief of Maryland Radiological Society, Inc. and Michael L. Sherman, M. D.

John F. King, M. Bradley Hallwig and Anderson, Coe & King, Baltimore, on amicus curiae brief of Medical and Chirurgical Faculty of Maryland.

George T. Tyler, Baltimore, on amicus curiae brief of The Maryland Society of Pathologists, Inc.

Alfred L. Scanlan and Shea & Gardner, Washington, D. C., and William S. Moore, Bethesda, on amicus curiae brief of Groover, Christie and Merritt, P. C.

Argued before MURPHY, C. J., SMITH, DIGGES, ELDRIDGE, COLE and DAVIDSON, JJ., and JAMES C. MORTON, Jr., Specially Assigned Judge.

SMITH, Judge.

In this case, which probably will become known as "Holy Cross III,"we shall hold that a trial judge was right for the wrong reason in his determination of an appeal from the Health Services Cost Review Commission(the Commission).We conclude that since the Commission failed to establish that the term "total costs of the hospital" at the time of the enactment of the statute creating the Commission in 1971 was "a term 'of art' in the health care field having a well understood meaning different from its common signification which would include the fees of the physicians here,"the statute provides no authority to the Commission to regulate the professional fees here under consideration.

For a clear understanding of the issue currently before the Courtwe first refer to Holy Cross Hosp. v. Health Services283 Md. 677, 393 A.2d 181(1978), "Holy Cross I."¹We opened that opinion by saying:

We are here involved as a matter of statutory construction with the question of whether fees charged by physicians in certain medical specialties to hospital patients, which fees are placed on hospital accounts and billed by the hospitals in such amounts to the patients, constitute a part of "the total costs of the hospital" so as to be considered as "reasonably related to the total services offered by the hospital" and thus whether the Maryland Health Services Cost Review Commission(the Commission) is empowered to review and set charges by these physicians in the specialties of cardiology, pathology, and radiology.

The Commission was created by Chapter 627 of the Acts of 1971.Certain revisions have been made since that date.SeeMaryland Code(1957, 1971 Repl.Vol., 1978 Cum.Supp.) Art. 43, §§ 568H-568Z.(Id. at 679-80, 393 A.2d 181.)

After public hearings relative to Holy Cross, the Commission on December 1, 1976, issued a proposed opinion and order in which it found "that the salaries of the radiologists, pathologists and cardiologists (were) subject to (its) review as a part of (the Commission's) legislative charge to assure the public that total costs are reasonably related to total services provided."This was subsequently modified "to read 'compensation' rather than 'salary' ...."Holy Cross sought judicial review in the Circuit Court for Montgomery County.Certain physicians were permitted to intervene.Three issues were addressed by that court, (1) whether the Commission had jurisdiction to determine the rate charged by pathologists, radiologists, and cardiologists for their services rendered to patients of Holy Cross, (2) whether the Commission's restructuring of the rate schedules was so arbitrary and capricious as to deny the hospital and physicians due process of law, and (3) whether the Commission's action in excluding patient telephone charges from the basic room rate was arbitrary and capricious.The trial judge found for the Commission on the first and third issues but against it on the second issue.Hence, he reversed the order of the Commission and remanded the case to it for further proceedings.Since the circuit court's determination on the first issue was adverse to them, Holy Cross and the physicians appealed to the Court of Special Appeals.We granted the writ of certiorari prior to consideration of the case by that court.

In Holy Cross I we pointed out that a number of contentions were made to us by the hospital and the physicians as to why the Commission might not do that which it sought to do.We focused, however, "only on the question of whether the charges by these specialists are a part of 'the total costs of the hospital,' since if they(were) not there (was) no need to consider the other objections."Id.283 Md. at 683, 393 A.2d 181.We examined the statute in question and reviewed our cases relative to statutory construction.We then pointed out that "for the Commission to have the power it seeks it must be determined that the charges of these physicians constitute a part of 'the total costs of the hospital ....' "Id.283 Md. at 688, 393 A.2d 181.After examination of the definitions of the noun "cost" and the preposition "of" appearing in Webster's New International Dictionary of the English Language (2d ed. unabr. 1959)we concluded that " 'total costs of the hospital' means the Hospital's expenditures or outlays of money in connection with the operation of the Hospital."Id. at 689, 393 A.2d 181.We then determined:

(O)n the record before uswe are unable to agree with the conclusion of the trial judge or the conclusion of the Commission that the fees charged by these pathologists, radiologists, and cardiologists are a part of the "costs of the hospital," the term being used here in the sense of costs of operation of a hospital.On the other hand, we do not rule out the possibility that at the time of the enactment of this statute the words "total costs of the hospital" might have been a term "of art" in the health care field having a well understood meaning different from its common signification which would include the fees of the physicians here.Therefore, we think that the cause of justice would be best served by a remand of this case to the Circuit Court for Montgomery County under Maryland Rule 871 without affirmance or reversal for further proceedings in which the Commission would be afforded an opportunity to present evidence of such an understanding of the meaning of the term within the field of health care at the time this statute was enacted, if such testimony in fact is available.In order that there may be no misunderstanding, we point out that if the services here under consideration were not understood in the health care field as embraced within "total costs of the hospital" at the time of the enactment of this statute, the Commission has exceeded the power vested in it by the General Assembly.(Id. at 689-90, 393 A.2d 181.)

On the remand the trial judge heard about nine days of testimony and considered numerous exhibits.He issued a comprehensive opinion in which he concluded in part:

2.The words "total costs of the hospital" as contained in the statute enacted in 1971(Art. 43, § 568 U(a),Ann.Code of Md.1957 Ed., 1980 Replacement Volume) constitute a term of art which at that time had a well understood meaning within the field of health care different from its common significance, and as such, included the professional fees of hospital based radiologists and pathologists.

He went on, however, to direct the Commission:

(T)o exclude from their cost review determination with respect to Holy Cross Hospital, the professional fees of those radiologists, pathologists and electrocardiologist which are billed to the patients directly by the physicians in question ... and are not carried as allowable costs on reports or the audited financial statement of the hospital for purposes of reimbursement by third-party payors, or for hospital accounting purposes ....

The Commission appealed to the Court of Special Appeals.Prior to hearing in that court the Commission petitioned us for the writ of certiorari.Notwithstanding the provision of Maryland Rule 811 a 3 (d) that a petition for that writ shall contain "(t)he questions presented for review," the Commission framed no question in its petition.It did "contend( ) that since the Circuit Court concluded that 'total costs of the hospital' was a term of art in the health care field at the time the Commission's statute was enacted which term included the fees of hospital-based radiologists and pathologists, it was error to conclude further that the direct billing of such fees would escape Commission jurisdiction."It further "contend(ed) that based on the finding of the Circuit Court, the Commission does have the jurisdiction to regulate the fees charged by hospital-based radiologists, pathologists and electrocardiologists to hospital patients, no matter how billed."The answer to the petition stated that if we determined to issue the writ "the Physician Respondents w(ould) demonstrate that the Circuit Court did not err, as suggested by the Commission, in finding that the fees of the Physician Respondents were not subject to the Commission's jurisdiction, but rather in finding that the words 'total costs of the hospital' as contained in the Commission's enabling statute was a term of art having a well understood meaning."

In this Court the Commission claims that "(h)aving determined that 'total costs of the hospital' are subject to Commission jurisdiction, including the professional fees of hospital-based radiologists and pathologists, the lower court erred by concluding that these physicians could escape Commission jurisdiction by...