Did Maryland's Health Department need to adopt formal regulations before charging the Kidney Disease Program fee the legislature had already set by statute?

Plain-English summary

A delegate asked the Attorney General whether the Department of Health and Mental Hygiene ("DHMH") could start charging patients the fee required by a new Kidney Disease Program law, Chapter 439 of the Laws of Maryland 1991, without first adopting formal regulations after consulting the Commission on Kidney Disease. The underlying statute split rulemaking responsibility: the Commission handled medical eligibility standards, while DHMH handled "nonmedical eligibility criteria" in consultation with the Commission, and the new fee provision required patients earning above certain income and asset thresholds to pay an annual fee calculated by a formula spelled out in the statute itself.

The Attorney General concluded that DHMH did not need to adopt a regulation before applying the fee, because a "regulation" under Maryland's Administrative Procedure Act means a statement that creates new obligations beyond what a statute already requires, and DHMH's implementation of the fee formula did nothing more than carry out what the General Assembly had already prescribed in detail. The opinion distinguished this from other nonmedical eligibility criteria, like residency and citizenship requirements, which the statute left DHMH to flesh out and which therefore would require a proper rulemaking. On the separate question of what "consultation" with the Commission meant, the opinion concluded DHMH had to give the Commission a real chance to review and comment on any proposed regulation before it was published, though the Commission's views were advisory only and it had no power to veto DHMH's regulation.

Currency note

This opinion was issued in 1991. 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 mentioned here, particularly the current fee formula and eligibility criteria for Maryland's Kidney Disease Program, which the opinion notes was created by emergency legislation and may have since been amended.

Common questions

Did Maryland's Health Department need to write regulations before it could charge the Kidney Disease Program fee? No, according to this opinion, because the fee formula, income and asset thresholds, and collection schedule were already fully spelled out in the statute itself, so DHMH's implementation of that formula did not create any new legal obligation requiring notice-and-comment rulemaking.

When would DHMH have needed to adopt a regulation for this program? The opinion concluded a regulation would be required if DHMH went beyond simply applying the statutory fee formula, for example by adopting nonmedical eligibility criteria like residency or citizenship requirements that the statute left to DHMH to define in more detail.

What did "consultation" with the Commission on Kidney Disease require? The opinion concluded DHMH had to give the Commission a real opportunity to review and comment on a draft regulation before it was published and to consider the Commission's input, but the Commission's role was advisory only, since it had no veto power over DHMH's proposed regulation.

Why didn't publishing a notice about the new fee count as adopting a regulation? The opinion reasoned that a statement merely restating what a statute already requires isn't an exercise of the kind of quasi-legislative power the Administrative Procedure Act's notice and hearing requirements are meant to check, since public comment serves no purpose when the legal obligation already comes directly from the statute.

Background and statutory framework

Maryland's Kidney Disease Program provided funding for kidney disease treatment to enrollees who agreed to pay fees set out in the program's statute. The Health-General Article split rulemaking authority: the Commission on Kidney Disease had broad authority over medical eligibility standards, while DHMH was responsible, "in consultation with the Commission," for nonmedical eligibility criteria. A newly enacted provision, HG §13-313, added a detailed fee requirement for higher-income enrollees, prescribing the exact percentage-based formula, a quarterly collection schedule, a documentation requirement, and a grace period for hardship cases.

The opinion applied the Administrative Procedure Act's definition of "regulation," a statement adopted by an agency to "detail or carry out a law that the agency administers," reasoning that this definition is aimed at agency-created obligations, not obligations that flow directly from a fully specified statute. Because HG §13-313 left DHMH no discretion to add to or modify the fee formula, applying it did not require rulemaking, in contrast to areas like residency and citizenship criteria where the statute delegated real discretion to DHMH. The opinion supported this reading with out-of-state case law reaching the same conclusion for statutory formulas that leave an agency no interpretive discretion, while treating the consultation requirement with the Commission as meaningful but non-binding, giving the Commission a real chance to weigh in before a proposed regulation was published without giving it authority to block DHMH's final decision.

Citations and references

Statutes:

• HG §13-301, describing the purpose of the Kidney Disease Program
• HG §13-303(a)(5), the General Assembly's finding that program recipients should bear some treatment costs based on ability to pay
• HG §13-308(c)(1), the Commission's authority to adopt medical eligibility standards
• HG §13-308(e), DHMH's authority, in consultation with the Commission, to adopt nonmedical eligibility criteria
• HG §13-309(1), DHMH's general responsibility for the program's operation
• HG §13-311(a) and (a)(2), DHMH's duty to certify eligibility, including residency and citizenship requirements
• HG §13-313, the statutory fee formula, collection schedule, documentation requirement, and hardship grace period at issue
• SG §10-101(e)(1), defining "regulation" under Maryland's Administrative Procedure Act
• Chapter 439 (House Bill 1211) of the Laws of Maryland 1991, the emergency legislation enacting the fee requirement
• §6-704(a) of the Education Article, cited as an example of a statute expressly giving one board veto power over another board's regulations, a power the Commission on Kidney Disease was not given here

Cases:

• CBS, Inc. v. Comptroller, 319 Md. 687, 692, 575 A.2d 324 (1990), on the notice, hearing, and publication procedures required when an agency acts by rulemaking
• K-Mart Corp. v. State Industrial Ins. System, 693 P.2d 562 (Nev. 1985), holding rulemaking procedures were not required to implement a fully specified statutory fee formula
• Barry Laboratories v. Wisconsin State Board of Pharmacy, 132 N.W.2d 833, 838 (Wis. 1965), holding an agency letter describing an existing statute's terms is not a rule
• District of Columbia v. North Wash. Neighbors, Inc., 367 A.2d 143 (D.C. 1976), holding a mere description of an existing regulation's effect is not itself a regulation
• Burke v. Public Welfare Div., 31 Or. App. 161, 570 P.2d 87 (1977), reaching the same conclusion as North Wash. Neighbors
• Mid-America Regional Council v. Mathews, 416 F. Supp. 896, 903-04 (W.D. Mo. 1976), on a federal consultation requirement being satisfied by a real opportunity to review and comment

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/1991/Volume76_1991.pdf (this opinion appears at printed pages 19-24 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

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

Administrative Law - Rulemaking - Health - Rulemaking Not Required For Direct Implementation of Statutory Fee

October 29, 1991

The Honorable Kenneth H. Masters
Maryland House of Delegates

You have requested our opinion concerning the procedures to be followed by the Department of Health and Mental Hygiene in implementing Chapter 439 (House Bill 1211) of the Laws of Maryland 1991. Specifically, you ask whether DHMH may require patients to pay a certain fee without first adopting implementing regulations after consultation with the Commission on Kidney Disease. You also asked about the nature of that consultation.

For the reasons stated below, we conclude that DHMH need not adopt a regulation as a prerequisite to applying the fee payment and related requirements set out in §13-313 of the Health-General Article ("HG" Article). Should DHMH decide to apply nonmedical criteria other than those set out in HG §13-313, it must first adopt a regulation after consulting with the Commission. DHMH would satisfy the consultation requirement of the statute by affording the Commission a timely opportunity to review and comment on any proposed regulation prior to publication.

I

Kidney Disease Program

The purpose of the Kidney Disease Program is to "provid[e] funding of kidney disease treatment for qualified individuals who elect to enroll in the Program and agree to pay fees which are described in this subtitle." HG §13-301. Among other findings, the General Assembly concluded that "[i]ndividuals who receive State benefits for kidney disease treatment should be responsible for bearing some of the cost of that care taking into account their ability to pay." HG §13- 303(a)(5).

The statute divides regulatory responsibility for the program. On the one hand, the Commission on Kidney Disease, a 12-member commission appointed by the Governor, has broad rulemaking authority over the program, including authority to "adopt reasonable medical standards for acceptance of an individual for treatment." HG §13- 308(c)(1). On the other hand, DHMH, "in consultation with the Commission," is to adopt regulations governing "nonmedical eligibility criteria for recipients." HG §13-308(e)(l).

DHMH is also generally responsible for the program's operation.
HG §13-309(1). In particular, DHMH is given the duty to "certify an individual as eligible for benefits under the program" if:

(1) The individual has chronic kidney disease as defined in the Commission's regulations; and

(2) The individual meets the residency, citizenship, and other nonmedical eligibility requirements established by [DHMH].

HG §13-311(a).

II

Payment of Fee as Eligibility Requirement

The requirement that one pay a fee as a prerequisite to acceptance into the Program is unquestionably a "nonmedical eligibility requirement." Thus, if the provisions quoted in Part I above were the only ones pertinent to the issue, we have no doubt that DHMH could not require payment of a fee in advance of its adoption of a regulation on fees, after consultation with the Commission.

But another provision of the statute changes this result. HG §13- 313 itself prescribes the fee requirement, the method by which an individual is to calculate the amount that he or she owes, and a documentation requirement:

(a)(1) Prior to receiving Program benefits, each recipient whose family income exceeds 175 percent of the federal poverty income guidelines shall be required to pay an annual fee equal to the sum of:

(i) 5 percent of the amount by which the sum of the recipient's adjusted gross income as defined in the Internal Revenue Code for federal income tax purposes plus Social Security benefits and tier 1 railroad retirement benefits not otherwise included in the recipient's gross income under §86 of the Internal Revenue Code exceeds 175 percent of the federal poverty guidelines adjusted for family size; and

(ii) 5 percent of the value of the recipient's liquid assets above 200 percent of the federal poverty guidelines adjusted for family size.

(2) The annual fee required under paragraph (1) of this subsection shall be collected quarterly by the Department.

(b) A recipient is required to submit copies of the most recent tax returns of the recipient and of persons in the recipient's family.

(c) The Department shall provide recipients with a grace period after the deadline for a fee payment.

(d) A recipient who has not paid overdue fees by the end of the grace period shall be terminated from the Program.

(e) The Department shall extend the grace period in an appropriate hardship case.1

1
This provision, like the rest of Chapter 439, was emergency legislation effective from the date of passage.

DHMH proceeded to inform interested persons of this statutory requirement and develop a form to implement it. See Patient Notification No. 01-013 (July 15, 1991). In this initial stage of implementation, DHMH did not embellish the statutory fee requirement or seek to impose any obligations apart from those flowing directly from the statute.2 In our view, DHMH was not required to conduct a rulemaking proceeding prior to carrying out the statutory mandate, for it did not impose a "regulation."

2
We understand that DHMH has submitted proposed emergency regulations, including provisions mirroring HG §13-313, for approval of the Joint Committee on Administrative, Executive, and Legislative Review.

The Maryland Administrative Procedure Act defines "regulation," in pertinent part, as a statement adopted by an agency to "detail or carry out a law that the [agency] administers." §10-101(e)(l)(iii) of the State Government Article ("SG" Article). This definition encompasses the creation of new obligations by an agency, that is, obligations not flowing directly from the authorizing statute itself.

The General Assembly has authorized DHMH to adopt "nonmedical eligibility criteria for recipients" of benefits under the Kidney Disease Program. HG §13-308(e). Two examples of such criteria identified in the statute are "residency" and "citizenship." HG §13-311(a)(2). Under this delegation, DHMH is expected to legislate the details of a residency or citizenship requirement, and when it does so it will have adopted a "regulation" under SG §10-101(e). Because a "regulation" will have been adopted in that instance, the rulemaking requirements of the APA must be followed. "When an agency ... undertakes to act by rulemaking, it ordinarily must follow specified procedures that include notice, hearing, and publication procedures." CBS, Inc. v. Comptroller, 319 Md. 687, 692, 575 A.2d 324 (1990).

A statement that merely reiterates what is already required by the statute, however, is not the exercise of quasi-legislative power governed by the APA. Notice and an opportunity for public comment are pointless when the legal obligation is established in the statute.

One out-of-state case speaks directly to the situation presented by the Kidney Disease Program fee provision. In K-Mart Corp. v. State Industrial Ins. System, 693 P.2d 562 (Nev. 1985), the issue was the implementation of a statutory formula for assessment of a workers' compensation fee. The administrative agency imposed the fee without first adopting a regulation under the Nevada APA.3 Rejecting the claim that adherence to rulemaking procedures was a prerequisite to implementation of the fee assessment, the Nevada Supreme Court held

3
The Nevada APA's definition of "regulation" is broad, including any "statement ... which effectuates or interprets law or policy ..." Nev. Rev. Stat.
§233B.038.

that the agency's action was not "a policy-based interpretation of an existing statute which could have been otherwise construed." Rather, the agency's "action in determining the individual assessments by applying the formula set forth in [the statute] was simply the agency's pronouncement of how the statute operated in a specific context. There is no reason to require the formalities of rulemaking whenever an agency undertakes to enforce or implement the necessary requirements of an existing statute." 693 P.2d at 565. Accord, Barry Laboratories v. Wisconsin State Board of Pharmacy, 132 N.W.2d 833, 838 (Wis. 1965) (agency letter informing members of the public of the "existence and terms of the statute" is not a rule). Cf. District of Columbia v. North Wash. Neighbors, Inc., 367 A.2d 143 (D.C. 1976) (mere description of effect of existing regulation is not itself a regulation triggering rulemaking procedures); Burke v. Public Welfare Div., 31 Or. App. 161, 570 P.2d 87 (1977) (same).

The reasoning of these cases is compelling. So long as DHMH limits itself to an implementation of what the General Assembly has itself prescribed in HG §13-313, it need not follow rulemaking procedures. DHMH's obligation to adopt regulations for "nonmedical eligibility criteria" applies to criteria other than payment of the fee mandated in HG §13-313, for example, residency and citizenship requirements. See HG §13-311(a)(2). It would also apply to requirements related to the fee if those requirements went beyond what is provided in HG §13-313.

III

"Consultation" with Commission

When DHMH goes beyond merely implementing HG §13-313 and undertakes to adopt regulations governing other nonmedical criteria, it must do so "in consultation with the Commission." HG §13-308(e). You ask about the meaning of that requirement.

The evident intent is to ensure that DHMH confers with the Commission and obtains its views on any proposed regulation. And, because without this provision the Commission, like anyone else, could nevertheless comment after a regulation was proposed, the objective underlying this provision must be to allow the Commission to express its views while the regulation is still being developed by DHMH.

Thus, before publication of any proposed regulation under HG §13-308(e), DHMH should provide the Commission with a copy of the draft regulation, afford a reasonable amount of time for the Commission to review the draft, and consider any comments or recommendations made by the Commission. See generally Mid-America Regional Council v. Mathews, 416 F. Supp. 896, 903-04 (W.D. Mo. 1976) (consultation requirement in federal statute satisfied if opportunity to review and comment on proposal is afforded). The Commission does not have veto power over a proposed regulation. Cf. §6-704(a) of the Education Article (setting out express authority for one board to "disapprove" proposed regulations of another board).

IV

Conclusion

In summary, it is our opinion that DHMH has acted properly in implementing the fee requirement of Chapter 439.

J. Joseph Curran, Jr.
Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice