Legislative Report: Maryland Radiologists Defends State’s Anti-Self Referral Law

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In 1993, the Maryland General Assembly passed legislation to prohibit self-referrals by physicians for three types of imaging services to patients. They were MRI, CT, and radiation oncology. The legislation was introduced on behalf of the Maryland Hospital Association, at that time concerned about the outside influence of physician- and non-physician-owned operations in the field of oncology, which would refer their cancer patients to their own operations for radiation treatment.

The Maryland Radiological Society was aligned with the hospitals on this and brought significant resources to the table to pass this bill. Opposing the legislation was the entire community of organized medicine, including Med Chi, which is the state association of physicians, as well as many specialty medical organizations. Their arguments against the legislation were that there was no need to prohibit ownership as long as disclosure existed, which it did. While the Maryland law was patterned after the federal Stark legislation, it went much further in specifically banning referrals. Enforcement of the prohibited practice of self-referral was left to the Maryland Board of Physicians, the independent body that oversees the professional practice of Maryland licensed physicians.

Unfortunately, the art of writing legislation is not easy. When this bill was finally passed it was written with exceptions, exclusions, and exceptions to the exceptions. That left a great deal of leeway in the interpretations by attorneys in the advice they gave to their medical practice clients.

Since ’93, the Board of Physicians received many requests from insurers and physicians to enforce this law. In January of 2004, the Attorney General, at the request of an orthopedic practice, published an Attorney General’s Opinion to answer the question of ownership of imaging equipment once and for all. The opinion was very strong and stated that under no circumstances was a nonradiologist to own this equipment, nor could they hire or contract with a radiologist to do any interpretations. Was the matter settled? Not by a long shot. If anything, this opinion created the firestorm that the opposition needed to figure out ways around the law. Following this opinion, the Board cited one practice for violating the law, and it divested of its imaging equipment. Immediately, there was a chilling effect on some practices and we began to see a reduction in non-radiology practices owning equipment. However, there were those at work to test this law in a court in Maryland and that lead to Dye vs. Orthopedic Associates. While the judge ruled for the practice, in this case, it was on a technicality, but it did bolster many practices to go forward, or continue with what we believed at the Maryland Radiological Society, to be the violation of the 1993 statute. Thus, we requested that the Attorney General issue a new opinion that would in fact clarify that the judge acted without full knowledge of the law and the legislative intent when he ruled in Dye. This new opinion, published in 2006, once again upheld the original interpretation by the AG, and we thought that we had clarified the meaning of the law.

The next step was to press the Board into enforcement of the law and they did issue a Declaratory Ruling in their newsletter announcing that nonradiology practices should no longer perform MRI, CT, or radiation oncology. Once again, the interpretation was challenged. This time, the challenge came in Circuit Court in Baltimore City with a number of practices, including emergency physicians, orthopedists, urologists, and others asking for declaratory and injunctive relief against the Board of Physicians. This was based on the technicality that the Board had acted outside their authority by issuing this ruling by newsletter rather than through proper channels. As time went on, the Board withdrew its declaratory ruling by newsletter and stated that they would issue a separate Declaratory Ruling some time in the next several months to clarify the situation. With the withdrawal from the Board, the case was dropped.

When the Board of Physicians did issue its Declaratory Ruling in December, 2006, three days later there was a group of plaintiffs that filed, challenging the board in Montgomery County Circuit Court. That case, Potomac Valley Orthopedic Associates, et al for judicial Review of the Decision of the Maryland State Board of Physicians, was heard on May 30th. The Maryland Radiological