On Wednesday, 27 May, the Supreme Court directed the Union to draw up a list of private hospitals that could offer COVID-19 treatment at reduced prices. Hearing a PIL by Advocate Sachin Jain, it is considering if the Union should regulate pricing at private hospitals during the epidemic. According to reports, Jain contends that any private hospital that has received subsidized land or is a declared ‘charitable institution’, should not be profiting from COVID-19 treatment.
Jain may find optimism in the fact that the courts have in the past upheld State regulation of private hospital pricing for the poor. In Social Jurist (2007), the Delhi High Court directed the Delhi NCT Government to ensure that subsidized corporate hospitals provide free treatment to the economically disadvantaged. It held that hospitals which had been allotted subsidized Government land, must reserve 25% of their out-patient and 10% of in-patient beds for free treatment.
A decade later, the Supreme Court affirmed this ruling in Moolchand Khairati Ram Trust (2018). When the NCT Government sought to implement Social Jurist in 2012, the Moolchand Khairati Ram Trust resisted, submitting that its original Lease Deed with the Government didn’t specify free treatment for the poor. The Supreme Court, however, dismissed the Trust’s arguments and held that the Government’s order entailed a reasonable restriction.
While Social Jurist and Moolchand Khairati Ram Trust apply only to NCT Delhi, they set an important precedent for disputes about private hospital pricing regulations. They establish that the State can reasonably require subsidized private hospitals to offer free care to the poor. In other words, the Government can control pricing without violating the fundamental right to free trade under Article 19(1)(g).
Of course, Jain is asking for more than what was promised by Social Jurist. He will be hoping that the Chief Justice’s Bench interprets the above precedents expansively. However, given the Court’s recent U-turn on free testing in private labs, we should perhaps expect the Court to take a more fiscally conservative approach.
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