## Facts

- Massachusetts enacted Chapter 475 of the Acts of 1985, regulating what physicians may charge Medicare beneficiaries.
- The statute required the Massachusetts Board of Registration in Medicine to condition a physician’s license or renewal on an agreement: if the physician treats Medicare beneficiaries, the physician will not charge or collect more than the federally determined “reasonable charge.”
- Physician and medical association plaintiffs challenged the statute, asserting that federal Medicare law permits balance billing and that the state could not bar it through licensing.
- Plaintiffs also alleged the statute violated the Fourteenth Amendment’s Due Process Clause by restricting physicians’ ability to set fees and practice on preferred economic terms.
- Plaintiffs additionally raised claims under the Massachusetts Declaration of Rights (Articles I and X), seeking to invalidate the statute on state constitutional grounds.
- Elderly-advocacy groups intervened in support of the statute, reflecting beneficiary interests in limiting out-of-pocket charges.
- The case proceeded to trial on the merits in federal district court.

## Issues

1. Whether Chapter 475 is preempted by the federal Medicare Act under the Supremacy Clause because it restricts balance billing for Medicare beneficiaries.
2. Whether Chapter 475 violates substantive due process under the Fourteenth Amendment by irrationally burdening physicians’ liberty or property interests through licensure conditions.
3. Whether a federal court may grant relief against state officials based on alleged violations of the Massachusetts Constitution.

## Decision

- The court upheld Chapter 475 and denied relief to plaintiffs.
- The court held the statute was not preempted: Congress did not expressly preempt state regulation here, did not occupy the field of physician billing, and the state law did not conflict with federal law.
- The court held the statute did not violate substantive due process because it was rationally related to legitimate state interests, including regulating medical practice and protecting elderly patients from excessive charges.
- The court declined to grant state-law-based relief against state officials, treating such claims as barred in federal court under principles limiting federal adjudication of state-law obligations of state officers.
- The court expressed skepticism that plaintiffs could assert claims on behalf of beneficiaries whose interests were adverse to the plaintiffs’ economic objectives.

## Legal Principles

- A state law is preempted only where Congress expressly preempts, occupies the field, or where state law conflicts with federal law or poses an obstacle to federal objectives; permissive federal authorization does not necessarily create a protected right against stricter state regulation.
- Federal Medicare provisions permitting balance billing do not, without clear congressional intent, bar a state from restricting balance billing through the state’s medical-licensing authority.
- Economic regulations and professional licensure conditions are reviewed under rational basis scrutiny and are upheld if reasonably related to legitimate governmental purposes, including patient protection and cost control.
- In federal court, claims seeking to compel state officials to comply with state constitutional or statutory requirements may not support injunctive or declaratory relief against those officials on state-law grounds.

## Conclusion

The court sustained Massachusetts’ statutory scheme conditioning physician licensure on an agreement not to charge Medicare beneficiaries more than the federal “reasonable charge,” concluding the measure neither conflicted with federal Medicare law nor violated substantive due process, and it afforded no state-law basis for relief against state officials in federal court.


Massachusetts Medical Soc’y v. Dukakis, 637 F. Supp. 684 (D. Mass. 1986)