Judges: DANIEL E. LUNGREN, Attorney General
Filed Date: 8/18/1998
Status: Precedential
Modified Date: 7/5/2016
DANIEL E. LUNGREN Attorney General GREGORY L. GONOT Deputy Attorney General
THE HONORABLE BILL MORROW, MEMBER OF THE CALIFORNIA STATE ASSEMBLY, has requested an opinion on the following question:
If a physician pays a portion of the expenses of a clinical laboratory that is located in the office of another physician and orders laboratory tests from the laboratory but is not physically present when the tests are performed, may the physician charge a patient a fee for the tests in addition to the fee charged by the laboratory?
"(a) It is unlawful for any person licensed under this division or under any initiative act referred to in this division, or any clinical laboratory, or any health facility when billing for a clinical laboratory of the facility, to charge, bill, or otherwise solicit payment from any patient, client, or customer for any clinical laboratory service not actually rendered by the person or clinical laboratory or under his, her or its direct supervision unless the patient, client, or customer is apprised at the first time of the charge, billing, or solicitation of the name, address, and charges of the clinical laboratory performing the service. . . .
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"(c) It is also unlawful for any person licensed under this division or under any initiative act referred to in this division to charge additional charges for any clinical laboratory service that is not actually rendered by the licensee to the patient and itemized in the charge, bill, or other solicitation of payment. This section shall not be construed to prohibit any of the following:
"(1) Any itemized charge for any service actually rendered to the patient by the licensee.
"(2) Any summary charge for services actually rendered to a patient by a health facility, as defined in Section
1250 of the Health and Safety Code, or by a person licensed under this division or under any initiative act referred to in this division if the standardized billing form used by the facility or person requires a summary entry for all clinical laboratory charges.". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"(e) A violation of this section is a public offense and is punishable upon a first conviction by imprisonment in the county jail for not more than one year, or by imprisonment in the state prison, or by a fine not exceeding ten thousand dollars ($10,000), or by both that imprisonment and fine. A second or subsequent conviction is punishable by imprisonment in the state prison.
"(f)(1) Notwithstanding subdivision (e), a violation of this section by a physician and surgeon for a first offense shall be subject to the exclusive remedy of reprimand by the Medical Board of California if the transaction that is the subject of the violation involves a charge for a clinical laboratory service that is less than the charge would have been if the clinical laboratory service providing the service billed a patient, client, or customer directly for the clinical laboratory service, and if that clinical laboratory charge is less than the charge listed in the clinical laboratory's schedule of fees pursuant to subdivision (b).
"(2) Nothing in this subdivision shall be construed to permit a physician and surgeon to charge more than he or she was charged for the laboratory service by the clinical laboratory providing the service unless the additional charge is for service actually rendered by the physician and surgeon to the patient."2
We are asked to determine whether, under the terms of subdivision (c) of section
In interpreting the language of section
Under the terms of section
The language of subdivision (c) of section
"The Legislature finds and declares that health care costs in California are increasing at a rate which makes it difficult for many California citizens and employers to continue to afford health care coverage. It is the intent of the Legislature, in adopting this act, to address one aspect of the health cost escalation spiral in a way that will reduce the cost of health care to California residents. The Legislature intends to eliminate the ability of a health provider to increase the price of a clinical laboratory test when the health provider performs no actual service. The Legislature does not intend to prohibit a reasonable drawing and processing fee for laboratory specimens prepared in the office of a physician and surgeon." (Stats. 1992, ch. 85, § 1.)
The purpose of the 1992 legislation was also described in the report of the Senate Committee on Business and Professions, dated January 27, 1992, as follows:
"1. This bill was heard on 4/22/91 by the Business and Professions Committee, and was put over so that the bill's opponent, the California Medical Association, could offer alternative amendments to the bill's provisions that would be satisfactory to the Committee in assuring that charges are only made for services actually provided by a physician.
"2. This bill is sponsored by the California Clinical Laboratory Association in order to eliminate the mark-up of clinical lab services by physicians who pass them on to the patient. The sponsor claims that this `mark up' practice results in additional costs to the patient or 3rd-party payer insurance company) which may be substantially higher than justified by any added value actually provided by the physician's interpretation of the test results. This bill's legislative intent states that the bill's provisions are not intended to prohibit a reasonable `drawing and processing fee' for lab specimens prepared in the physician's office.
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"5. The publication Current Opinions of the Council on Ethical and Judicial Affairs of the American Medical Association (1989) contains principles or rules relating to medical ethics. In this publication at Section 8.08, ethical standards of practice relating to laboratory services and billing are stated, in part, as . . . `A physician should not charge a mark-up, commission, or profit on services rendered by others. A physician should not charge for services that are not provided. A mark-up is an excessive charge that exploits patients if it is nothing more than a tacked on amount for a service already provided and accounted for by the laboratory. A physician may make an acquisition charge or processing charge. The patient should be notified of any such charge in advance.'
"6. Supporters of this bill from the clinical laboratory industry claim that the majority of the patients are receiving bills from doctors who mark up fees for laboratory tests. An example of marking up tests occurs when a physician orders a `panel' of six to twenty-six tests. The physician then marks up the laboratory fees in progression by breaking down the panel and assigning a marked-up charge for each component. (i.e. Clinical Lab charges a physician $30 for a six panel test. The physician then adds $3 for each panel (6 x $3 = $18) and bills the patient for the lab charge plus the mark-up = $48)."
It is thus apparent that the enactment of what is now subdivision (c) of section
In the described circumstances, the physician is not performing the laboratory tests for the patient. Rather, the tests are performed in a separate office by a technologist. The physician's services are limited to reading and interpreting the results of the tests. The testing itself is not a "service actually rendered to the patient by the [physician]" for which the physician may charge independently and in addition to the clinical laboratory's fee for the tests. The fact that the physician is responsible for a portion of the laboratory's expenses does not alter the statutory requirements. Allocation of expenses and income is a separate matter to be dealt with between the physician and the laboratory, not between the physician and the patient.
Finally, we note that under the terms of subdivision (a) of section
We conclude that if a physician pays a portion of the expenses of a clinical laboratory that is located in the office of another physician and orders laboratory tests from the laboratory but is not physically present when the services are performed, the physician may not charge a patient a fee for the tests in addition to the fee charged by the laboratory.