Sunday, 1 January 2017

Government of Karnataka, to regulate/prescribe the rates chargeable by private medical establishments (and professionals) for services and procedures performed by them

Government of Karnataka, to regulate/prescribe the rates chargeable by private medical establishments (and professionals) for services and procedures performed by them

Dr K K Aggarwal, National President IMA

The Government of Karnataka is planning to introduce a Bill (January 2017?) for price control in the private healthcare sector. Prices will be fixed for all medical procedures including that for the patientsin the private wards.

The government is unable to provide care to the citizens through its networks and it is the private healthcare providers, who are providing safe and quality healthcare to around 70 percent of the citizens. If this happens it will destroy the healthcare delivery system and the citizens of our state will have no access to the state of the art technology. If the GoK succeeds, other states will follow suit.

Current Position

Clinical Establishment Act: rule 9 (2) The clinical establishment shall charge the rates for each type of procedure and services within the range of rated determined and issued by the central government from time to time in consultation with the state government

Recommendations of inter-ministerial committee

The committee recommends that the position of the rule 9 (2) of the CE rules can be considered to be changed to the extent that central government should specify the list of procedures and costing templates while actual determination of the range of rates could be left to the state governments who can take into consideration the relevant facts while deciding upon the range of rates for their respective states in consultation with relevant states holders including the Indian Medical Association.

IMA Position

1.        Challenge the rule 9 as ultra vires as there is no provision of this in the parent act.
2.        No rates can be decided without involvement of Indian Medical Association.
3.        IMA is launching IMA costing department to decide templates and range of costing.
4.        Government has powers to regulate the rates under municipal acts, only in emergency and national calamities, not otherwise.

Legal Position taken by AHPI and CAHO

1.                   The anticipated governmental action may arise in one of two ways—(a) legislative action, through the enactment of a fresh law, or the amendment of existing laws by the State Legislature; or (b) executive/administrative action, through the issuance of Rules/Regulations, or notifications/circulars, etc. under the existing laws or otherwise.

2.                   Legislative action by the State is subject to challenge on broadly the following parameters—(a) legislative incompetence [Whether the State Legislature has the right to legislate on that subject], and (b) other constitutional grounds, including violation of fundamental rights [right to equality and right to trade and profession etc.]. Administrative actions are subject to the same constitutional parameters, but can additionally be challenged on grounds that they do not derive authority from any statutory framework, or fall foul of the statutory framework from which they derive.

3.                   In particular, any legislative or administrative action to control or regulate rates applicable in private medical establishments (or charged by professionals) would predominantly be open to challenge on grounds that (a) the body taking action does not have the competence to do so, and (b) violation of the fundamental rights of medical practitioners/establishments, or other constitutional provisions.

4.                   In the absence of any details of the nature and mechanism of the anticipated action in Karnataka, the present Note restricts itself to a broad discussion on the feasibility of a challenge on grounds of violation of the right to practice any profession or carry on any occupation, trade or business, under Article 19(1)(g) read with Article 19(6) of the Constitution.  The question centers around the power of the Government to control price of private enterprise.

5.                   At present, the statutory framework for private medical practice in Karnataka consists of (a) the Karnataka Medical Registration Act, 1961 and (b) the Karnataka Private Medical Establishments Act, 2007 (and Rules framed thereunder). These laws are enacted for (a) the registration of medical professionals and establishments, and (b) for regulation of the technical and professional standards to be followed in medical practice.

6.                   The existing framework in Karnataka requires private medical establishments and professionals to (a) conspicuously publish their charges, and (b) adhere to them. There is no restriction in the present framework on the quantum of rates/fee that may be charged by private establishments/professionals [See: Section 10, Karnataka Private Medical Establishments Act, 2007, and Section 15, Karnataka Medical Registration Act, 1961 read with the Code of Medical Ethics issued by the Medical Council of India in 2002].

7.                   However, measures to regulate the quantum of rates chargeable by medical establishments/professionals do exist in territories outside the state of Karnataka. For example, the Clinical Establishments (Central Government) Rules, 2012, framed under the Clinical Establishments (Registration and Regulation) Act, 2010, mandate that all registered establishments (which includes individual doctors) in the territories to which the Act applies, shall charge for procedures/services within the range of rates determined and issued by the Central Government from time to time, in consultation with the State Governments [See: Rule 9(ii), Clinical Establishments (Central Government) Rules, 2012]. It is pertinent that the Act itself does not contain any provision related to the regulation of rates (and may therefore be subject to challenge on grounds of “excessive delegation”).

8.                   Under the Clinical Establishments (Registration and Regulation) Act, 2010, a National Council has been set up to oversee its implementation. A Sub-Committee to give recommendations on the range of charges was also formed, and appears to have submitted its report, but it is presently unclear what the status of implementation of this report is.

9.                   It is notable however that there is precedent to suggest that the State has no ability to introduce price control measures through Rules when the parent Act does not provide for the same. Notifications/Rules have been struck down in the past on grounds of "excessive delegation”. Whilst the constitutional validity of the Clinical Establishments (Registration and Regulation) Act, 2010 has been upheld by the Delhi High Court, the said Act and the Rules do not appear to have been tested before any court on the ground of excessive delegation (or even otherwise on the constitutionality of imposing rate regulation on private medical establishments/professionals).

10.                It is worth cautioning that while there is no legal precedent specific to price regulation of medical establishments/professions, challenges to price/fee regulation in other fields have not met with considerable success in the past. The High Courts and Supreme Court have time and again upheld the competence of the Centre and States to regulate rates/fee as a “reasonable restriction” under Article 19(6) of the Constitution, if the same is found to be in greater public interest.

11.                For example, the Supreme Court has categorically outlawed “commercialization” in the field of education, whilst holding the same to be predominantly “charitable” in nature. It has specifically prohibited the charging of “capitation fees” for admission into any educational institution (including private unaided educational institutions) and has upheld legislative/administrative action to fix and regulate the fees that may be charged. Such regulation has been held to be a “reasonable restriction” in “public interest” under Article 19(6) of the Constitution. Landmark judgments occupying this field include:
a.        TMA Pai Foundation v. State of Karnataka (2002) 8 SCC 481
b.       Islamic Academy v. State of Karnataka (2003) 6 SCC 697
c.        PA Inamdar v. State of Maharashtra (2005) 6 SCC 537
d.       Modern Dental College v. State of Madhya Pradesh (2016) 7 SCC 353

12.                By way of another example, in Deepak Theatre v. State of Punjab 1992 Supp (1) SCC 684, the Supreme Court upheld Rules framed under various State legislations, which empowered the government to fix rates for admission to cinema theatres. Whilst repelling the challenge made by theatre owners under Article 19(1)(g), and holding such regulation to be “reasonable” and in “public interest” in terms of Article 19(6) of the Constitution, the Supreme Court observed that:

“Witnessing a motion picture has become an amusement to every person; a reliever to the weary and fatigue; a reveler to the pleasure seeker; an importer of education and enlightenment enlivening to news and current events; disseminator of scientific knowledge; perpetrator of cultural and spiritual heritage, to the teeming illiterate majority of population. Thus, cinemas have become tools to promote welfare of the people to secure and protect as effectively as it may a social order as per directives of the State Policy enjoined under Article 38 of the Constitution. Mass media, through motion picture has thus become the vehicle of coverage to disseminate cultural heritage, knowledge, etc. The passage of time made manifest this growing imperative and the consequential need to provide easy access to all sections of the society to seek admission into theatre as per his paying capacity. Though the right to fix rates of admission is a business incident, the appellant having created an interest in the general public therein, it has become necessary for the State to step in and regulate the activity of fixation of maximum rates of admission to different classes, as a welfare wealThereby fixation of rates of admission became a legitimate ancillary or incidental power in furtherance of the regulation under the Act.”

13.                It is notable that the governmental responsibility to improve public health finds place in the Directive Principles of State Policy set out in the Constitution (Article 47). It is furthermore notable that the Supreme Court/High Courts have upheld the right to health as a part of the right to life under Article 21 of the Constitution, and have observed that improvement to public health is one of the “primary duties” of the State. There is also language in the Code of Ethics framed by MCI as well as the Oath taken by all medical professionals that will go a long way in establishing the public nature and interest in these services. [See: Mukhtiar Chand v. State of Punjab (1998) 7 SCC 79, Rajasthan Pradesh VS Sardarshahar v. Union of India (2010) 12 SCC 609, Delhi Medical Association v. Principal Secretary, Health 229 (2016) DLT 322].

14.                We should challenge the Rules framed under the Clinical Establishments Act, 2010, given the availability of other stronger legal grounds (including “excessive delegation”) for getting the provision related to rate regulation/price control struck off as ultra vires the parent Act. This will help us get audience in court, and will allow us to raise challenge based on Article 19(1)(g) of the Constitution as well. If and when the Karnataka legislation is passed, it may be easier to club the challenge (based on the language used in the statute/notification etc.) to this.

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