Could Maryland send unpaid bills owed to a county health department to the state's central debt collection agency, or were those local debts off limits to a state collector?

Plain-English summary

The President of the Frederick County Board of Commissioners asked whether delinquent debts owed to local health departments for services funded partly by the State could be referred to the Central Collection Unit ("CCU") of the State Department of Budget and Fiscal Planning, the state agency responsible for collecting debts owed to the State or its units. The answer turned on whether a county health department counted as a "unit" of State government, a term the debt collection statute did not define.

The Attorney General concluded that local health departments were units of the State for this purpose. The opinion traced an extensive web of state control: the Secretary of Health and Mental Hygiene set statewide health policy binding on every county, appointed and could remove county health officers jointly with the county, approved local health budgets and fee schedules in detailed regulations, and treated local health department employees as "State personnel" for certain purposes. Weighing that degree of state policy and fiscal control against the county's own role, the office concluded that debts owed to local boards of health qualified as debts "owed to the State or any of its officials or units," so the CCU had authority to collect them.

Currency note

This opinion was issued in 1986. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Were Maryland county health departments treated as arms of the State or as purely local agencies for debt collection purposes?
The 1986 opinion concluded they were units of the State for this specific purpose, based on the Secretary of Health and Mental Hygiene's binding policy authority, budget and fee approval power, and role in appointing and supervising county health officers.

Could the answer about a health department's state-agency status be different for other legal questions?
Yes, according to the opinion itself. The Attorney General cautioned that an entity can count as a state agency for one purpose but not another, citing prior opinions where the same entity was treated differently depending on the specific statute at issue.

Did this analysis apply the same way to Baltimore City's health department?
The opinion noted that Baltimore City and its health commissioner were technically excluded from the specific statutory definitions discussed, but concluded the same state-control relationship existed there under the City's own charter, so the reasoning applied equally.

Background and statutory framework

Under §3-302 of the State Finance and Procurement Article, the Central Collection Unit was responsible for collecting delinquent debts "owed to the State or any of its officials or units," but its authority did not extend beyond State government, and the statute did not define "unit of State government." The opinion applied Court of Appeals precedent holding that there is no single test for an entity's state-agency status; instead, all aspects of the relationship between the State and the entity must be examined for the particular purpose at issue, since the same entity (such as the Washington Suburban Sanitary Commission in separate cases) could be treated as a State agency for one statute and not for another.

Applying that approach, the opinion found substantial State control over county boards of health: they were created by public general law to implement Department of Health and Mental Hygiene programs, bound by the Secretary's statewide health regulations, subject to Secretary approval of local health budgets, program plans, and fee schedules under detailed COMAR regulations, and subject to DHMH audit of local disbursements and revenues. County health officers, though nominated locally, were appointed by and answerable to the Secretary, and local health department employees were treated as State personnel for certain purposes. The opinion concluded this combination of policy, fiscal, and personnel control, together with the State's strong interest in recouping funds spent on state- and federally-funded local health services, supported treating local health departments as State units for CCU debt collection purposes.

Citations

Statutes:

• §3-302 of the State Finance and Procurement Article, including SF §3-302(a)(1), (a)(2), and (b) (CCU's debt collection authority and its limits)
• SF §3-305(b) (CCU authority over off-Treasury State funds)
• Article 81, §215 and §§215-216 of the Maryland Code (refund procedure discussed in the WSSC case law)
• Chapter 22, Laws of Maryland 1886 (creation of county boards of health)
• Chapter 355, Laws of Maryland 1973 (creation of the CCU)
• HG §3-202(a), (b), (c), (c)(2), and (d) (county boards of health powers, fees, and DHMH approval)
• Article 25, §3(n), and Article 25A, §5(J) (county health authority does not override State health law)
• HG §2-105(a) and (b) (Secretary's statewide health policy and supervisory authority)
• HG §3-304 and §3-306(c)(2), (c)(4) (appointment, removal, and duties of county health officers)
• §12-401(6) of the State Government Article, and Article 64A, §25 (status of local health department employees)
• HG §16-201(b), §16-202(d), and §16-208 (State approval of local fee schedules and collection procedures)
• HG §18-315 (Baltimore City health programs)
• HG §3-101(b), (c), §§3-101 through 3-309, and §§3-201 and 3-202(b) (statutory scope and Baltimore City treatment)
• COMAR 10.04.01.05A, 10.04.01.05 to .07, and 10.04.01.08M(2) (local health program plans, budgets, and audits)
• COMAR 10.02.01.03B and C, and 10.02.01.05C(4) (fee schedules and billing/collection plans)
• COMAR 17.01.01.04 (CCU regulation requiring prior collection attempts)

Cases:

• Holy Cross Hospital v. Health Services Cost Review Commission, 283 Md. 677, 683 (1983)
• A.S. Abell Publishing Co. v. Mezzanote, 297 Md. 26, 35 (1983)
• Katz v. Washington Suburban Sanitary Comm'n, 284 Md. 503, 512 (1979)
• Donocam Associates v. Washington Suburban Sanitary Comm'n, 302 Md. 501, 510 (1985)
• Washington Suburban Sanitary Comm'n v. C.J. Mitchell & Best Co., 303 Md. 544, 561 (1985)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1986/Volume71_1986.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

HEALTH

Local Health Departments—Central Collection Unit-Delinquent Debts Owed To Local Health Departments May Be Referred To Central Collection Unit.

June 2, 1986

Mr. Galen R. Clagett, President
Board of Commissioners of Frederick County

You have requested our opinion on the proper method of collection of certain debts owed to local health departments. Specifically, you ask whether delinquent debts for services rendered under programs financed or administered in part by the State may be referred for collection to the Central Collection Unit of the State Department of Budget and Fiscal Planning ("CCU") as debts "owed to the State or... its units" within the meaning of §3-302 of the State Finance and Procurement Article ("SF" Article).

For the reasons given below, it is our opinion that, for purposes of collection of those debts, local health departments are units of the State.1 Accordingly, the debts about which you inquire may be referred to the CCU for collection after they become delinquent.

I
Collection of State Debts

Under SF §3-302(a)(1), the CCU "is responsible for the collection of each delinquent account or other debt that is owed to the State or any of its officials or units." To that end, "[a]n official or unit of the State government shall refer to the Central Collection Unit each debt for which the Central Collection Unit has collection responsibility under this subsection." SF §3-302(a)(2). Thus, the CCU has broad statutory authority to collect delinquent debts owed to the various State government entities.2 Moreover, the CCU's authority extends to units of State government whose funds are not part of the State Treasury. SF §3-305(b).

However, the CCU's authority does not extend beyond State government. Its responsibility is expressly limited to debts "owed to the State or any of its officials or units." Accordingly, the CCU may not collect debts owed to local health departments unless those departments are units of State government for the purposes of SF §3-302. See Holy Cross Hospital v. Health Services Cost Review Commission, 283 Md. 677, 683 (1983) (agencies of State may exercise only those powers granted expressly or by necessary implication).

The term "unit of State government" is not defined. Therefore, we turn to the principles underlying a determination of whether an entity is a component of State government.

II
Determination of Status as Unit of State Government

Determining whether a particular entity is a unit of State government for a particular purpose is not necessarily a simple matter. "[T]here is no single test for determining whether a statutorily-established entity is an agency or instrumentality of the State for a particular purpose. All aspects of the interrelationship between the State and the statutorily-established entity must be examined in order to determine its status." A.S. Abell Publishing Co. v. Mezzanote, 297 Md. 26, 35 (1983).3

Moreover, the status of an entity for some purpose is not determinative of its status for other purposes. Thus, for example, the Washington Suburban Sanitary Commission ("WSSC") was held to be a State agency for the applicability of sovereign immunity in Katz v. Washington Suburban Sanitary Comm'n, 284 Md. 503, 512 (1979). Again, in Donocam Associates v. Washington Suburban Sanitary Comm'n, 302 Md. 501, 510 (1985), the WSSC was held to be a State agency for the Administrative Procedure Act's applicability. Yet, in Washington Suburban Sanitary Comm'n v. C.J. Mitchell & Best Co., 303 Md. 544, 561 (1985), the WSSC was held not to be a State agency for the purpose of a statute creating an administrative remedy for persons seeking to recover excess charges mistakenly paid to State agencies.

The decisions of the Court of Appeals in Katz and Mitchell & Best demonstrate that the determination of an entity's status must be based on the relationship between it and the State. Further, that relationship must be viewed in the context of the particular law whose applicability is in question.4

In Katz, the WSSC's assertion of the defense of governmental immunity from tort liability was opposed on the ground that the WSSC is not a State agency. The Court of Appeals noted that the members of the WSSC are appointed by the county executives and the county councils of the two counties in which the Washington Suburban Sanitary District lies and that its capital and operating budgets are subject to review and approval by the county executives and county councils. Notwithstanding that degree of local control, the Court of Appeals held that the WSSC is a State agency for the purpose of determining its immunity to suit. The WSSC was created by public general law, it has "regional functions and responsibilities," and it was "created by the General Assembly as [a] State agenc[y] responsible for providing services which would otherwise be the responsibility of the counties." 284 Md. at 512.

In Mitchell & Best, the Court of Appeals considered the applicability to the WSSC of a statutorily created administrative procedure for claiming refunds of charges "erroneously or mistakenly paid to any State ... agency authorized to collect the same." Article 81, §215 of the Maryland Code. The Court concluded that the refund procedure did not apply to charges assessed by the WSSC:

"The budget of WSSC is not included in the State budget submitted by the Governor and approved by the General Assembly. WSSC's budget is approved by the county councils of the two counties within which the [Washington Suburban Sanitary] District lies. The refund provisions of Article 81, §§215 and 216 contemplate a state agency which is at least subject to some role of the Comptroller in connection with disbursing funds." Mitchell and Best, 303 Md. at 544.

Thus, the determination of whether county boards of health are units of State government for the purpose of CCU's debt collection powers must be based on the relationship between the State and the county boards, considered in light of the purposes of the debt collection statute, SF §3-302.

III
Relationship of County Boards of Health to State

A. State Policy Direction

The county boards of health were created by public general law to implement and administer the programs of the Department of Health and Mental Hygiene ("DHMH"), in order "to provide more efficient means for promoting the public health in this State." Chapter 22, Laws of Maryland 1886. Although county boards of health have power to "adopt and enforce rules and regulations on any nuisance or cause of disease in the county" under HG §3-202(d) of the Health-General Article ("HG" Article), their primary duties are established by public general law. HG §3-202(a). And, the authority given to the counties to regulate health matters "may not be construed to affect in any manner any of the powers and duties of the Secretary of Health and Mental Hygiene or any public general law relating to the subject of health." Article 25, §3(n). Accord Article 25A, §5(J).

The Secretary of Health and Mental Hygiene "shall establish general policy for, and adopt standards to promote and guide the development of, the environmental, physical, and mental hygiene services of this State and its subdivisions." HG §2-105(a). Further, the Secretary "shall supervise generally the administration of the health laws of this State and its subdivisions." HG §2-105(b). Thus, basic health policy is set and administered at the State, rather than local, level.

Indeed, the rules and regulations promulgated by the Secretary are binding on the counties. See 43 Opinions of the Attorney General 190, 191 (1958) ("The rules and regulations of the State Board of Health which have been duly promulgated are to be followed by all political subdivisions of the State, and no political subdivision may issue its own rules and regulations which conflict with the policies set forth in the regulations and rules of the State Board of Health."). The county health officers, who are the executive officers of the county boards of health, are required to enforce "the State health laws and the policies, rules, and regulations that the Secretary adopts." HG §3-306(c)(4). The local boards of health must coordinate their activities with those of DHMH and must report to DHMH on sanitary conditions whenever necessary. HG §3-202(b).

While the health officer of each county is nominated by the county governing body, the health officer is appointed by the Secretary and may be removed from office only with the concurrence of both the county governing body and the Secretary. HG §3-304. The county health officer, in turn, appoints the staff of the local health department. HG §3-306(c)(2). All employees of local health departments are "State personnel," for purposes of the statutory authorization for the State to pay certain settlements or judgments. §12-401(6) of the State Government Article. Cf. Article 64A, §25 (status of local health department employees under merit system). Thus, the State has considerable control over the activities of the local health departments. Cf. A.S. Abell Publishing Co. v. Mezzanote, 297 Md. at 37-38 (noting that State control of entity, while not dispositive, is indicative of entity's status as State agency).

B. State Fiscal Direction

Although we understand that local funds constitute about half of the appropriations to local health departments, nevertheless we find significant aspects of overall State fiscal control. Under HG §3-202(c), county boards of health may establish fees for the services they render, but "[a] fee or charge for a service that is provided wholly or partly with State or federal funds that [DHMH] administers is subject to approval and modification by the Secretary." HG §3-202(c)(2). Moreover, HG §16-201(b) provides that "[t]he Secretary shall require political subdivisions and grantees to set, subject to approval and modifications of the Secretary, charges for services that are provided by the political subdivisions or grantees and that are supported wholly or partly by State or federal funds administered by [DHMH]." See also HG §16-208 (legislative intent that uniform payment standards and procedures be applied "to all individuals who receive services under programs that either are operated by [DHMH] or supported wholly or partly by State or federal funds administered by [DHMH]").

In accordance with the authority granted by those statutory provisions, the Secretary has promulgated extensive regulations concerning the fiscal administration of local health services. Those regulations require the health officer of each political subdivision to submit to the Secretary an annual plan for the operation of the local health program and a budget for the program. COMAR 10.04.01.05A. The regulations describe in detail the contents of the plan and, indeed, the format to be used for the plan. COMAR 10.04.01.05 to 10.04.01.07 and Addendum 1. Moreover, the records of political subdivisions' disbursements and revenues "relating to local health department activities" are subject to audit by DHMH. COMAR 10.04.01.08M(2).

Similarly detailed regulations govern the setting and collection of fees or charges for services rendered by local health departments. Those regulations are designed to ensure "that charges for health services reflect the full costs of rendering those services [and] that the methods for determining full costs be uniform among all units." COMAR 10.02.01 Preface. To that end, they require the political subdivisions to provide schedules of recommended charges for approval or modification by the Secretary. COMAR 10.02.01.03B and C. In addition, the regulations require submission for the Secretary's approval or modification of a plan for billing and collection of those charges and fees, which must set forth the subdivision's proposed "procedure to be followed in making a reasonable effort to collect unpaid amounts due." COMAR 10.02.01.05C(4).5

C. Summary

This degree of State control over local health administration reflects the strong public interest in maintaining a coordinated and fully effective statewide system of health services. This office has previously noted that "the preservation of the health and physical safety of the people of the State is one of the prime functions of the General Assembly in the exercise of the police power." 43 Opinions of the Attorney General at 191. Thus, the county boards of health serve an important public purpose under significant State control. Cf. A.S. Abell Publishing Co., 297 Md. at 37-38 (noting public purpose of and State control over Maryland Insurance Guaranty Association).

Moreover, the health programs administered by the local boards, with few exceptions, are financed wholly or partly by State funds or by federal funds administered by DHMH. Hence, the State has a strong interest in the recoupment of those funds through efficient collection of debts owed for the services so financed. The CCU was created, of course, to centralize and make more efficient just such recoupment efforts. See Chapter 355, Laws of Maryland 1973 (creating CCU and removing collection functions from other State agencies).

The strength of the State's interest in recoupment of State and federal funds used to provide health services at the local level is exemplified by HG §16-202(d). Under that provision, DHMH may, but need not, "delegate to the political subdivision ... the determination and collection of the amount payable" for services provided by a political subdivision. "However, the political subdivision ... shall follow each law and each rule and regulation of [DHMH]" in making the determination. Id. By thus assigning to DHMH the primary responsibility for collecting payments due for services provided at the local level, that provision evidences the General Assembly's view that such payments are properly regarded as due to the State.

Hence, in view of the relationship between the State and the local boards of health, we think those boards are units of the State government for purposes of CCU's debt collection powers.6

IV
Conclusion

In summary, it is our opinion that debts owed to local boards of health are debts "owed to the State or any of its officials or units" within the meaning of SF §3-302. Accordingly, CCU has authority to collect those debts in accordance with its procedures.7

Stephen H. Sachs
Attorney General
Gail Cohn
Assistant Attorney General
C.J. Messerschmidt
Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions and Advice

1 We caution, however, that this conclusion cannot be regarded as determinative of the status of local health departments in other contexts. "[I]t is well established that an entity may be considered an agency, unit, or instrumentality of government for one purpose, but not for another." 70 Opinions of the Attorney General 30, 32 (1985). Cf. 67 Opinions of the Attorney General 244, 247 n. 5 (1982) (conclusion that Legal Services Corporation is not State entity for purposes of Maryland Public Ethics Law has no bearing on whether Corporation is State entity for other purposes); 65 Opinions of the Attorney General 356, 363 n. 3 (1980) (county boards of education are State agencies for some purposes, local agencies for others).

2 The breadth of the CCU's authority is underscored by the express itemization, in SF §3-302(b), of claims for which the CCU is not responsible.

3 In A.S. Abell, the Court of Appeals held that the Maryland Insurance Guarantee Association ("MIGA") is an agency or instrumentality of the State for purposes of the Public Information Act. 297 Md. at 39. In reaching that conclusion, the Court particularly rejected the contention that MIGA could not be regarded as a State agency because it had not been so designated by the General Assembly. While the General Assembly has expressly designated some entities as State agencies, "the absence of a legislative designation is not determinative of MIGA's status." Id.

4 This point is further illustrated by the categorizations of MIGA. As discussed in note 3 above, the Court of Appeals held that MIGA was a State agency for purposes of the Public Information Act. But we later concluded that MIGA was not a "unit of the State government," for purposes of the statutory ban against retaining private counsel. 70 Opinions of the Attorney General 30 (1985). See also 71 Opinions of the Attorney General 206, 211 (1986).

5 Under the regulations of the CCU, any organization to which a debt is owed must attempt to collect the debt before referring it to CCU for enforced collection action. COMAR 17.01.01.04.

6 The definitions of the terms "county" and "health officer" in HG §3-101(b) and (c) explicitly exclude Baltimore City and the Baltimore City Commissioner of Health. Hence, the provisions of HG §§3-101 through 3-309 are not applicable to Baltimore City. See Special Revisor's Note to HG §3-101(b). The Baltimore City Commissioner of Health has the same powers, however, under the City's Charter. Id. State health programs are administered in Baltimore City in the same way as in the counties. See, e.g., HG §18-315 (antirabies clinics). Moreover, the Secretary of Health and Mental Hygiene "supervise[s] generally the administration of the health laws of this State and its subdivisions," including Baltimore City. HG §2-105(b). Therefore, the relationship between the State and the City with regard to State-mandated health programs is essentially the same as that between the State and the counties. Cf. 67 Opinions of the Attorney General 356, 363 (1982) (Baltimore City Department of Social Services is in same position as other local departments of social services). The provisions of HG §§3-101 through 3-309 clearly are applicable in the same way and to the same extent to both "home rule" and "non-home rule" counties. HG §§3-201 and 3-202(b). Accordingly, the relationship between the State and the various counties with regard to these health programs, and the authority of CCU, is not affected by the degree of autonomy particular counties have in other contexts.

7 See note 5 above.