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A little conflict of interest music, please By Jackee Cox Austin In the State of Texas, one man has administrative authority to decide who shall or shall not be allowed to establish non-profit corporations for the delivery of health care. His name is Sam V. Stone. Stone is paid $800 per month plus actual expenses for his duties as outside counsel to the Board of Medical Examiners. He also draws a check for his activities as registered lobbyist for the Texas Medical Association and Ace Pickens, are also registered as lobbyists for the T.M.A. How did Mr. Stone fall into his job as Czar of the corporate practice of medicine? His position was conferred upon him by the Board of Medical Examiners. The relationship between the board and the Overton firm is long-standing. Overton himself served as attorney to the baord, and two of his previous partners, Pat Bailey C. Dean Davis \(now with the Texas Hospital Association and the Pharmacy services on behalf of the board. Stone’s employment with the board is somewhat in the nature of a dynastic succession. Stone met with the board to negotiate the terms of his employment in December of 1970. One of his specifically delegated duties was to “advise the board on rules and regulations pertaining to the Medical Practices Act.” The board was getting ready to prepare the amendments to the Medical Practices Act which were passed late in the ’71 legislative session. Snuggled way down at the end of those amendments was a sleeper. The bill analysis circulated to the legislators described it as “New section 4509a, pertaining to approval and certification by the board of health, research and educational organizations.” Neither the title of the bill nor the amendment on its face would have given the legislators the impression that 4509a would modify administratiVe procedures in the corporate division of the Secretary of State’s office and give the Board of Medical Examiners the power to decide who should and who should not be allowed to incorporate for the purpose of delivering health care. It is interesting to note that Dr. Merle Delmer, who collaborated with Sam Stone in preparing the administrative guidelines pertaining to the administration of 4509a, Ms. Cox is an Austin freelance writer. Funds supporting the research for this article were provided by the Juarez-Lincoln Migrant Information Clearinghouse. 12 The Texas Observer introduced those guidelines to the board as the means for “enforcing the Provisions of Article 4509a Texas Non-Profit Corporation Act.” Dr. Delmer may have been misinformed as to the name of the legislation in question, but his error got to the heart of its hidden intent. HISTORICALLY, both the Board of Medical Examiners and the TMA have regarded the corporate practice of medicine as blasphemous. They would have the public believe that to allow anyone other than doctors to collect fees for the delivery of medical services seriously endangers the public welfare. Opposition of the board and the TMA notwithstanding, until 1957 nothing in Texas law forbade non-profit corporations from employing licensed physicians for the delivery of health care. 1 Then in 1957 the secretary of the Board of Medical Examiners got an attorney general’s “Whenever a corporation employs a licensed physician to treat patients and itself receives the fee, the corporation is unlawfully engaged in the practice of medicine and the licensed physician so employed is … subject to having his license to practice medicine in this state cancelled, revoked, or suspended by the Board of Medical Examiners.” Through the Fifties and Sixties the board wielded that opinion as a threat of reprisal against any doctor who might think of engaging his services to a corporate group. The problems which that policy created are documented in correspondence to the board from various unhappy hospitals and nursing home associations which were prevented from providing emergency room and visitation coverage for their patients. The most striking feature of the correspondence is the board’s indifference to the plight of individuals deprived of vital medical attention because the board would not permit a third party to arrange for the provision of services. Although the board’s duty is to protect the public welfare, their actions served to defeat that purpose. The absolute prohibition of the corporate practice of medicine was not in the interests of the people. This became more obvious with the advent of H.E.W. and O.E.O. programs which provide grant funds to non-profit corporations for the delivery of health care. The amendments to the Medical Practices Act written in 1971 served to structure the law in a way that would allow physicians and only physicians to control such funds. When the board hired Sam Stone, they and the TMA Jurisprudence Committee were engaged in discussions of the needed amendments to the Medical Practices Act. In April of ’71, Sam Stone wore his TMA hat over to the House Public Health Committee hearing to testify on behalf of those amendments. In June the amendments were passed, and step one of the game plan was completed. Step two the drafting of the administrative guidelines for Article 4509a that secured the TMA monopolistic coup took another year. In December of ’72 Sam Stone suggested that the board develop their “guidelines.” After several revisions, those guidelines passed in June of ’72. Why the delay? Article 4509a specifically required that the board promulgate administrative “rules and regulations.” Why did Mr. Stone suggest the use of guidelines? There is an important difference between administrative “rules and regulations” and administrative guidelines. Rules and regulations as promulgated by an administrative agency fill out the details of duties specifically delegated by law. They are an extension of the law and have the force of law. Rules and regulations, however, may not exceed the authority conferred upon the agency by the Legislature through express statutory language. And rules and regulatoins are subject to judicial review. If a court decides they exceed the authority delegated by the act, they may be struck down. As a matter of course, administrative agencies are supposed to file their rules and regulations with the secretary of state within 90 days of the effective date of their enabling legislation. By contrast, guidelines apply only to internal matters of administrative procedure. They are not a part of the law, and an administrative agency may decide to follow or abandon their guidelines according to the dictates of convenience. The advantages of leaving oneself the operational latitude and legal fail-safe of 1. See Republic Reciprocal Insurance Company v. Colgin Hospital and Clinic 65 S.W. 2d 286, Texas A.G. Opinion 0.3572, and Texas A.G. Opinion 0-4986-A.