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One small step for MALDEF By Jackee Cox Austin The territory staked out by the Texas Medical Association is still under legal siege. On April 4 the Fifth Circuit Court of Appeals in New Orleans ruled that a three judge panel must give full hearing to a constitutional challenge of the T.M.A.’s contention that only licensed physicians may own and operate non-profit corporations for the delivery of health care. The test will be brought before the judges in San Antonio sometime this summer. The case, Garcia v. the State Board of Medical Examiners. attacked a 1971 amendment to the Texas Medical Practices Act which has been used by the State Board of Medical Examiners to claim authority to approve or disapprove all non-profit corporate charters for organizations which propose to deliver health care \(Ohs., April The amendment in question, Article 4509a, says that the Board of Medical Examiners shall have authority to “approve and certify any health organization formed by persons licensed by the Board of Medical Examiners . . .” At issue is whether the Legislature intended to give the board blanket authority to forbid incorporation by persons not licensed by the Board of Medical Examiners. FORMER State Sen. Joe Bernal of San Antonio said he voted for Article 4509a only because T.M.A. lobbyist Phil Overton assured him that the board’s jurisdiction was strictly limited to organizations formed by persons licensed by the board. Then in August of 1972, Bernal and a group of friends in San Antonio drew up articles of incorporation for a non-profit group wishing to set up health care facilities for the poor in San Antonio. According to the 1972 Texas O.E.O. report Poverty in Texas, San Antonio has the sad distinction of being one of the few areas in the country where one can still find cases of diphtheria, polio, leprosy, measles and pertussis. In 1971 San Antonio had the nation’s only reported diphtheria epidemic. Seventy-five percent of the 200 reported victims were blacks and browns living in ghetto areas, where there are very few medical facilities. The need for additional physicians and clinics was obvious. When Bernal and his colleagues submitted their articles of incorporation to the secretary of state, Bob Bullock was in that office. By then, Sam Stone, lobbyist for the T.M.A. and outside counsel for the Board of Medical Examiners, had negotiated the procedures for the implementation of 4509a which required that any articles of incorporation pertaining to the delivery of health care must be forwarded to the medical examiners. Previously the approval of such corporate charters was within the purview of the secretary of state. The submission of Bernal’s corporate charter raised a jurisdictional problem. Bullock turned the matter over to Buck said he and Bernal held a strategy conference on the state of the law. THE STICKY wicket was a clause of the 1962 non-profit corporations act which said that you cannot set up a corporation to deliver services requiring a license if “such license cannot lawfully be granted to a corporation.” Since only people can be licensed to practice medicine, no corporation could qualify. There are tricks of legal definition which have been used in other states to get around the prohibition of the corporate practice of medicine. What is required is a distinction between the art of healing the prevention, diagnosis and treatment of disease and the corporate administrative functions of collecting and dispersing fees for the delivery of care. The Harvard Law Review reports that, “the courts .. . distinguish between the professional and the fiscal and administrative aspects of medical practice. So long as the corporate organization refrains from exercising any control over the manner in which the physicians treat their patients, the danger of lay interference with the practice of medicine is minimized. No case has held a prepaid group practice plan which is incorporated as a nonprofit entity and which carefully separates control over medical practice from administrative control invalid under the corporate practice rule.” \(Vol. 84:887, 1971, at The articles of incorporation drawn up by Bernal’s group carefully made that distinction, and it was Buck Wood’s opinion that the secretary of ‘state’s office might lawfully have certified the articles as submitted. Wood, however, could not guarantee that the Board of Medical Examiners would let the action go by without challenge. Bernal was reluctant to incorporate and get his constituency involved in a program which might be slaughtered by the medical association and the Board of Medical Examiners. He therefore decided to force the issue out in court. He told Wood to forward his articles to the board. Obviously the Medical Examiners could not certify Bernal’s charter, since none of the incorporators were licensed physicians. When the board refused certification, the Mexican American Legal Defense and complaint with the district court in San Antonio, demanding a hearing by a three judge panel on the grounds that the applicant incorporators’ constitutional right to assemble had been violated. That was in December of ’72. On April 24, Judge John Wood heard the state’s motion to dismiss. On May 18 he handed down the ruling which will now be reexamined before a three judge panel. As MALDEF lawyer Mario Obledo points out, only 22 of the 50 states presently have legislation restricting the corporate practice of medicine. Furthermore, any corporate group which can meet the requirements set forward in recent federal HMO legislation will be exempt from certain restrictive state laws. The trouble with the federal legislation is that it requires that corporations. provide a scope of services that may well be out of the price range of small clinics serving poverty populations. Jim Huffsey, HMO program officer for the Dallas regional office of HEW, says that there is little hope that the federal HMO laws will provide much relief for such groups. Now it is up to the judges in San Antonio to decide whether the poor in Texas shall have rights equal to those of the poor in the 28 . other states that allow the establishment of community controlled clinics for the delivery of health care. 41 p 41111 April 26, 1974 17 I believe I have found the lowest cost individual life insurance protection available anywhere. Example: $100,000 annual renewable term, age 35, for an annual premium of $189.00. 836-8230. toripriz’ Since 1866 The Place in Austin GOOD FOOD GOOD BEER 1607 San Jacinto 477-4171