The opinion of the court was delivered by: Mencer, District Judge.
By banning the practice of "balance billing," Pennsylvania
limits the amount physicians may charge medicare recipients.
Currently before this court is a declaratory judgment action
challenging the Pennsylvania law under the supremacy clause of
the United States Constitution. U.S. Const. Art. VI, cl. 2.
Plaintiffs are three professional medical associations,
Pennsylvania Medical Association (PMS), American Medical
Association (AMA) and the Crawford County Medical Society
(CCMS), and one doctor, Dr. Robert N. Moyers, M.D. (Moyers)
(collectively The Societies). Defendants, sued in both their
individual and official capacities, are the individual members
of the Pennsylvania State Board of Medicine (collectively The
Board); they are responsible for enforcing the Act against the
members of PMS, AMA and CCMS including Dr. Moyers. See
Stipulation of Facts ¶ 5 (Exhibit 2).*fn1 Both parties now
move for summary judgment. For the reasons discussed below,
defendants' motion will be granted.
Medicare is the federal insurance program designed to pay for
medical care of those 65 and older. 42 U.S.C. § 1395 et seq. It
is composed of two main parts, Part A and Part B. Part A covers
hospitalization and institutional charges, and it is not
implicated in the current case. Part B establishes an insurance
program to pay for doctors' services. 42 U.S.C. §
1395j-1395w-4. Benefits under Part B are administered by local
insurance carriers under the supervision of the United States
Department of Health and Human Services (HHS). 42 U.S.C. § 1395u.
Benefits are paid on a fee-for-service basis. However, the
"fee" that medicare pays out is not necessarily the same as
that which the doctor charges. Medicare has established a
"reasonable charge" (MRC)*fn2 for each procedure, and although
beneficiaries are covered for 80% of Part B costs,*fn3
Medicare pays out no more than 80% of the MRC regardless of
what the doctor actually charges.
Physicians have two payment options under Part B. They can
"accept assignment" which means that they bill Medicare
directly and accept the MRC as full payment for their services.
They receive 80% from Medicare and the 20% of the MRC from the
patient. One advantage of "accepting assignment" is the
guarantee of prompt payment from medicare. As their other
option, physicians can charge "on the basis of an itemized
bill." By this method the doctor can charge more than the MRC.
Even if it is higher than the MRC, the Doctor bills the patient
directly for her entire fee, and the patient is responsible for
100% of doctor's bill while Medicare still only reimburses the
patient for 80% of the MRC. 42 U.S.C. § 1395u(b)(3)(B). Billing
in excess of the MRC is known as "balance billing."
Congress has established several mechanisms to encourage
doctors to accept assignment rather than balance bill. The
Deficit Reduction Act of 1984 (DEFRA) created the participating
physicians program under which doctors may annually elect to
accept assignment on all medicare patients for the coming year.
Among other incentives, if they "participate" they can receive
a 5% increase over the MRC. 42 U.S.C. § 1395u(b)(4)(A)(iv).
DEFRA also froze charges for non-participating physicians.
42 U.S.C. § 1395u(j)(1); Whitney v. Heckler, 780 F.2d 963, 970-72
(11th Cir. 1986).
The Omnibus Budget Reconciliation Act of 1986 (OBRA 86)
lifted the DEFRA freeze and substituted a system of "maximum
allowable actual charges" (MAACs) as a new form of "price
control for non-participating doctors." AMA v. Bowen,
857 F.2d 267, 268-69 (5th Cir. 1988). MAACs place an across the board
limit on the amount that non-participating doctors can charge
(balance bill) medicare beneficiaries. 42 U.S.C. § 1395u
(j)(1)(C). OBRA 86 also established the Physician Payment
Review Commission (PPRC) as an advisory body to Congress. The
PPRC is to submit annual recommendations for rates and methods
of payment for physician's services under medicare part B.
42 U.S.C. § 1395w-1.
Against this backdrop of federal activity, Pennsylvania
enacted the Pennsylvania Health Care Practitioners Medicare Fee
Control Act, Pub.L. 1990-81, 35 P.S. § 449.31 et seq. (the
Act), which makes it flatly unlawful to balance bill at
all.*fn4 The plaintiffs claim that the Act is preempted by the
sprawling Medicare legislation, while the defendants argue that
the Act is of no concern or consequence to the federal scheme.
The parties agree that there are no factual disputes which a
trial is needed to resolve, and thus resolution by summary
judgment is particularly appropriate. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202
(1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct.
2548, 2552, 91 L.Ed.2d 265, 273 (1986); Chipollini v. Spencer
Gifts, 814 F.2d 893, 896 (3d Cir. 1987).
In deciding whether a federal law preempts a state law, our
"sole task" is to discern Congressional intent. California Fed.
Savings & Loan v. Guerra, 479 U.S. 272, 280, 107 S.Ct. 683,
689, 93 L.Ed.2d 613 (1987). Intent to preempt is found in three
interrelated ways. Schneidewind v. ANR Pipeline, 485 U.S. 293,
300, 108 S.Ct. 1145, 1150, 99 L.Ed.2d 316 (1988); Pokorny v.
Ford, 902 F.2d 1116, 1120 (3d Cir. 1990). First, Congress may
expressly preempt state law by so stating. No such express
provision is present in the instant case. Second, courts will
imply preemption where Congress has "occupied the field" by
extensive regulation. Rice v. Santa Fe Elevator, 331 U.S. 218,
230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947); Schneidewind,
485 U.S. at 300, 108 S.Ct. at 1150. Preemption will also be
found in a third situation: where there is "an actual conflict"
between state and federal law. The presence of an actual
conflict, though most often referring to situations where it
would be physically impossible to comply with both laws, may
also be found where the state law "stands as an obstacle to the
accomplishment of and execution of the full purposes and
objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67,
61 S.Ct. 399, 404, 85 L.Ed. 581 (1941); Hillsborough County v.
Automated Medical, 471 U.S. 707, 105 S.Ct. 2371, 85 L.Ed.2d 714
Under any approach, "we start with the basic assumption that
Congress did not intend to displace state law." Maryland v.
Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 2129, 68 L.Ed.2d
576 (1981). When Congress legislates within "the historic
police powers of the States" plaintiff bears the heavy burden
of proving that preemption "was the clear and manifest purpose
of Congress." Pacific Gas & Elec. v. Energy Resources Comm'n,
461 U.S. 190, 206, 103 S.Ct. 1713, 1723, 75 L.Ed.2d 752 (1983)
(quoting Rice, 331 U.S. at 230, 67 S.Ct. at 1152); California
v. ARC America, 490 U.S. 93, 101, 109 S.Ct. 1661, 1665, 104
L.Ed.2d 86, 94 (1989). The regulation of public health, and
therefore medical care costs, is well within those historic
police powers. Hillsborough, 471 U.S. at 707, 719, 105 S.Ct. at
2371, 2378; Great Atlantic and Pacific Tea Co. v. Cottrell,
424 U.S. 366, 371, 96 S.Ct. 923, 927, 47 L.Ed.2d 55 (1976);
Massachusetts Nurses Association v. Dukakis, 726 F.2d 41, 44
(1st Cir. 1984); Rebaldo v. Cuomo, 749 F.2d 133, 138 (2d Cir.
1984). In fact, from its inception, the medicare program itself
specifically sought to prevent any impact on the state's
traditional role in the health care area. 42 ...