KERALA HIGH COURT UPHOLDS LAW REQUIRING HOSPITALS TO DISPLAY TREATMENT RATES; DISMISSES PLEA BY IMA AND PRIVATE HOSPITALS:

On Monday, June 23, the Kerala High Court dismissed a set of petitions filed by various private medical associations challenging the Kerala Clinical Establishments (Registration and Regulation) Act, 2018 and its corresponding Rules. The petitions, filed by bodies including the Indian Medical Association (IMA), Kerala Private Hospitals Association, Medical Laboratory Owners Association, Kerala Private Clinics Association, and Indian Dental Association, primarily opposed provisions mandating transparency in pricing and granting regulatory powers to the authorities.

A major point of contention was Section 39 of the Act, which requires all clinical establishments to display the fee rate and package rate for services provided, in both Malayalam and English, at a conspicuous place in the establishment. Petitioners argued that the terms “fee rate” and “package rate” were undefined, thereby giving authorities arbitrary powers to take action against clinics. They also objected to the prohibition on charging more than the displayed rates.

Justice Harisankar V. Menon, however, found no merit in the challenge. He pointed out that this issue had already been settled by a Division Bench in the 2021 case of Sabu P. Joseph (Adv.) v. State of Kerala and Others, which had upheld the requirement for private hospitals to display their rates. Since the current petitioners, including the IMA and Kerala Private Hospitals Association, had been party to that earlier litigation and the Court had ruled after hearing them, they could not reopen the issue. The judge held that in light of the previous judgment, the petitioners had no right to challenge Section 39 again.

The Court also rejected arguments that Section 25 of the Act granted unregulated power to authorities to cancel the registration of clinical establishments. The provision empowers the District Registering Authority to cancel registration only after issuing a show cause notice and being satisfied that a clinic has violated registration conditions or acted in a manner harmful to public health. Importantly, establishments must be given an opportunity to be heard, and they also have the right to appeal before an Appellate Authority and file a revision petition before the High Court. The Court observed that the authority's satisfaction, supported by material facts and reasons, is a prerequisite for any such cancellation. It emphasized that this is not an unrestrained power and cancellation orders are subject to judicial review.

The petitioners also opposed the application of the Act to dental establishments, arguing that the inclusion of dentistry fell outside the State's legislative competence. This was rejected by the Court, which held that dentistry, being a specialized branch of medical science, can be included within the ambit of a State law regulating health services.

Further, the Court upheld the inclusion of patient representatives in the Executive Committee and State Council under Sections 3 and 8 of the Act. The petitioners had claimed such inclusion in an expert body was inappropriate. The Court, however, noted that if representatives of medical and dental associations were part of the Council, it was only fair and reasonable for the interests of patients together with the service recipients to also be represented.

On the broader argument that the Act was vague and arbitrary, the Court referred to the Supreme Court's ruling in State of A.P. v. McDowell & Co. (1996), which stated that a law cannot be struck down merely for alleged unreasonableness. The petitioners, the Court said, failed to provide concrete examples of harm or misuse resulting from the Act’s implementation. Citing State of Punjab v. Shiv Ram and Others (2005), the Court reiterated the necessity of external regulation in the healthcare sector and noted that similar enactments had been upheld by other High Courts as well.

While dismissing the petitions, the Court allowed that the petitioners could approach the government to highlight any practical difficulties arising from the implementation of the Act and suggested that the government should consider such concerns and adopt appropriate remedial measures.