Update on IMA and IMA HBI impleadment into the PIL of Veterans forum in Hon Supreme Court regarding fixing of charges. (9-4-2024)
Mr. Maninder Singh, Sr. Adv. appeared for IMA and argued that Rule 9(ii) of the CE Rules is unconstitutional. He also argued that IMA has filed an impleadment application as well as a separate Writ Petiton (which is listed on Friday) challenging the Rule. He said that like all professions, medical profession is also regulated, but regulation cannot mean fixing the rates and that it is not possible to fix one single rate across the board.
Mr. Harish Salve appeared for National Health Federation and submitted that they don't challenge the power of Government to fix the rates, but they are only saying that Court should not issue such a direction.
Attorney General for India appeared and said that this issue will require detailed hearing by the Court.
After hearing all parties, court said that the matter requires detailed hearing and will be listed on 10th September 2024 for consideration. The Court also said that when IMA's Writ Petition comes up on Friday, it will also be listed on 10th September.
Analysis of Nagpur court judgment
The issue
of regulation of prices in private hospitals has long dominated the discourse
on patient rights in India.Maharashtra, one of the first State that imposed
controls on the prices for non-Covid-19 treatment(notification dated 22 May
2020).The notification ostensibly derived its power from various legislations
including The Epidemic Diseases Act, 1897 (“EDA”), The Disaster Management Act,
2005 (“DM Act”), The Maharashtra Essential Services (Amendment) Act, 2011, The
Maharashtra Nursing Home (Amendment) Act, 2006 and the Bombay Public Trust Act,
1950 without referring to any specific provision.
The
notification was challenged with respect to its application to non-Covid-19
treatment by private healthcare providers who did not have any pre-existing
insurance arrangements to cover the costs of treatment.
Legislative
competence
In
Hospitals’ Association, the Court held that price controls for non-Covid-19
treatment would not fall within the ambit for Entry 6, List II of the Seventh
Schedule and therefore the State Legislature and consequently the Executive had
no competence to impose them. This is because legislative powers are
co-extensive with executive powers under the constitutional scheme. Under
India’s federal Constitution, legislative powers have been divided between the
Union and States through the enumeration of subjects in the three lists of the
Seventh Schedule. List I enumerates subjects allocated to the Union, List II
enumerates subjects allocated to the State, while List III enumerates subjects
over which the Union and States enjoy concurrent competence. The entry in
question, in this case, was Entry 6, List II which deals with “Public health
and sanitation; hospitals and dispensaries.” Referring to specific entries of
the Seventh Schedule, the Court reasoned that whenever the Constitution wanted
the legislature to control rates, tolls, taxes etc., or regulate a profession,
the same had been specifically provided for and since Entry 6, List II does not
explicitly mention prices controls, such power could not be read into
it.
There are
three issues with the Court’s reasoning. First, while interpreting the entries
of the Seventh Schedule the Supreme Court has repeatedly held that entries
should be interpreted liberally since legislative power is conferred through
Article 246 of the Constitution and the legislative entries only demarcate the
fields of the legislation. The Supreme Court has specifically held that
the language of the entries should be given the broadest possible meaning and
should extend to all subsidiary and ancillary matters that can be reasonably
comprehended in it. In the instant case, it is hard to argue that the
regulation for prices for healthcare services are not part of public health
since the affordability of healthcare is an intrinsic component of healthcare
governance.
Second,
the Court seems to distinguish prices for Covid-19 and non-Covid-19 treatment
for its analysis. However, the Court’s conclusion that the States have no
competence to regulate prices of non-Covid-19 treatment under Entry 6, List II
would necessarily mean that the State also does not have the competence to
regulate the prices for Covid-19 treatment under the Entry either. The
competence to regulate prices for Covid-19 treatment would therefore
necessarily have to be derived from the legislative entry on control of epidemic
disease. Part II of this blog will discuss this in further detail. The logical
conclusion of such an argument would, however, be that the State Governments
have no competence to regulate prices for private healthcare under the Seventh
Schedule generally. Such a conclusion seems far-fetched since affordability of
healthcare is an essential component of the access to health and therefore of
healthcare governance. Third, the Court overlooks Entry 34, List III which
specifically deals with ‘price controls’ and therefore gives concurrent
competence to both the States and the Union to regulate prices.
In fact,
Article 47 of the Constitution makes improvement of public health one of the
primary duties of the government. Further, the Supreme Court in a number of
decisions has read the right to health as part of the fundamental right to life
under Article 21 of the Constitution. While the content of the right to health
has been incrementally
determined through judicial interpretation, it is difficult to argue
that the reasonable pricing of healthcare services will not be an aspect of
such a right. The Court, however, does not discuss any of these constitutional provisions
in determining the ambit of healthcare governance and its interplay with
questions of legislative competence.
The
Court’s conclusion, therefore, seems to overlook settled principles guiding the
interpretation of legislative entries and ignores aspects of the constitutional
scheme of healthcare governance.
State
government’s exercise of executive powers
The second
argument which the Court addresses is whether, for the sake of argument, the
Maharashtra government could have exercised executive power to control prices
for non-Covid-19 treatment. Under Article 162 of the Constitution, the State
Government’s executive powers are co-extensive with the legislative powers of
the State Legislatures. The Supreme Court, in the leading case of Ram Jawaya Kapoor, has
clarified that legislation is not a pre-condition for the exercise of such
powers. Subsequent cases have however imposed certain limitations on the
exercise of this power. First, such executive power can only be exercised
as long as no legislation has been enacted on the same subject. Therefore, the
exercise of executive power cannot contradict an existing statutory scheme. The
Madras High Court’s decision in S Arunachalam’s case and
the Supreme Court’s decision in Indian Medical Association clarify
this. Second, the Supreme Court in Thakur Bharat Singh’s case has
held that the exercise of such executive power cannot violate fundamental
rights. Restrictions impinging on individual rights must be imposed
through legislation.
In
Hospitals’ Association, the High Court, by applying the ‘doctrine of occupied
field’ first concludes that by the enactment of the Maharashtra Essential
Services Maintenance Act, 2017 (“MESMA”) and the Maharashtra Nursing Homes
Registration Act, 1949 (“Nursing Homes Act”) the State has occupied the
legislative field under Entry 6, List II. The merits of this conclusion apart,
the Court’s subsequent reasoning seems far more convoluted. It relies on the
proviso to Article 162 to conclude that the notification of the Government of
Maharashtra would not carry the force of law since Maharashtra has already
enacted the above laws that ostensibly cover the issue. This reliance is
clearly misplaced since the proviso to Article 162 seems to be restricted to
matters over which both the Parliament and the State Legislature have the power
to make laws i.e., subjects in the Concurrent List. This is clarified by the
first line of the proviso which states that “Provided that in any matter with
respect to which the Legislature of a State and Parliament have power to make
laws…”. In contrast, the instant case was only concerned with a comparison
between the exercise of executive power and legislations enacted by the State
of Maharashtra and not Parliament.
Leaving
aside the misapplication of the proviso to Article 162, the Court seems to have
applied a far lower standard in concluding that the enactment of MESMA and the
Nursing Homes Act prevent the State from exercising its executive power to
regulate prices. The Court’s confusion seems to stem from what it refers to as
the “doctrine of occupied field” in its reasoning. In Indian Constitutional
Law, the doctrine
of occupied field is usually used to refer to the entries of List II
which are made subject to entries in List I and List III, thereby making the
exercise of the State’s legislative power subject to the Union’s. Even a
liberal reading of the doctrine would potentially only cover instances where
the Union has enacted a law on a Concurrent subject thereby overriding a State
law on the subject if such a State law conflicts with the Union law under the
rule of repugnancy in Article 254 of the Constitution. Cases in India, which
have struck down executive action under Article 162 have done so when such
action clearly conflicted with or tried to override existing statutory
frameworks. For instance, the Madras High Court in S Arunachalam’s case
held that an executive order, by a State Government, changing the process
of registration of property documents was not valid since such a process
already existed under the Registration Act. If a change in process were to be
brought about then the same had to be legislative. In the instant case,
however, the Court merely reasons that since both MESMA and the Nursing Homes
Act deal with issues connected with public health and healthcare
establishments, respectively, they already cover the issue. With respect, this
reasoning is insufficient since the Court does not record any clear finding of
repugnance between the executive notifications and these legislations. There is
no indication that these legislations were ever intended to regulate pricing in
private healthcare establishments. In fact, a bare reading of the two
legislations indicates that while MESMA is specifically concerned with the
continuity of essential services in the event of strikes and lockouts, the
Nursing Homes Act is concerned with registration and the setting of standards
at healthcare establishments. The Court itself observes that none of the
provisions of these legislations justify price controls. Therefore, its
conclusion that MESMA and the Nursing Homes Act occupy the field and therefore
prevent the exercise of executive power seems without adequate basis since
these legislations do not specifically deal with price controls.
Restriction
on the freedom of trade and profession
Article
19(1)(g) of the Constitution guarantees the freedom to practice any profession
and carry out any trade. This freedom, however, is subject to reasonable
restriction under Article 19(6). In Hospitals’ Association, the High Court
concludes the pricing restrictions for non-Covid-19 treatment are a prima facie
violation of Article 19(1)(g) and does not go into the question further.
However, it also precludes the question of whether such price controls amount
to a reasonable restriction on the private hospital’s right since it concludes
that the notification was not an executive instruction having the force of law,
as the legislative field under Entry 6, List II had already been occupied by
MESMA and the Bombay Nursing Homes Act. The correctness of the argument aside,
by not going into this question, the Court leaves many questions unanswered
which may gain prominence in any effort to regulate private healthcare
establishments. First, what is the scope of a private hospital’s right to
charge unfettered rates for healthcare treatment? Does the right to freedom of
trade need to be balanced with regulation pursuant to the right to health?
Second, whether pricing restrictions can be imposed through executive action or
do they necessarily need a legislative route due to their impact on the right
to freedom of trade or private hospitals?
Conclusion
The High Court’s handling of constitutional questions in Hospitals Association leaves much to be desired. On one hand, the Court’s conclusion that States have no legislative competence to regulate prices for healthcare treatment may have far-reaching implications for any State Government’s ability to regulate the private healthcare sector; a demand which has been gaining prominence in recent times. On the other, by adopting convoluted reasoning with regard to the State’s exercise of executive powers the Court failed to engage with significant issues regarding whether such restrictions could be imposed through executive powers or whether they necessarily need a legislative route. Moreover, what implications would such regulation have on private hospitals’ right to freedom of trade and the interplay of such a right with the broader right to health? We will have to await further judicial developments in this regard to resolve these issues.
courtesy Akshat Agarwal👈
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