BILL NUMBER: AB 55 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 3, 2008
AMENDED IN SENATE MAY 22, 2008
AMENDED IN SENATE MARCH 3, 2008
AMENDED IN SENATE JANUARY 17, 2008
AMENDED IN SENATE AUGUST 23, 2007
AMENDED IN SENATE JULY 2, 2007
INTRODUCED BY Assembly Member Laird
(Coauthor: Senator Aanestad)
DECEMBER 4, 2006
An act to amend Section 650 of the Business and Professions Code,
and to amend Section 14107.2 of the Welfare and Institutions Code,
relating to healing arts, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 55, as amended, Laird. Referral fees: information technology
and training services.
Existing law, relative to insurance fraud, makes it a crime for
healing arts practitioners to receive money or other consideration
for, or to engage in, various related activities with respect to, the
referral of patients, clients, or customers to any person, with
certain exceptions. Existing law, upon the effective date of
specified regulations adopted by the Secretary of the United States
Department of Health and Human Services pursuant to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003, exempts
from these provisions specified entities that receive nonmonetary
remuneration in the form of hardware, software, or information
technology training services necessary and used solely to
receive and transmit electronic prescription information, under
certain conditions. Existing law provides that any person who
solicits, receives, offers, or pays any remuneration in return for
the referral, or promised referral, of any individual to a person for
the furnishing or arranging for the furnishing of any service or
merchandise for which payment may be made under the Medi-Cal program,
or in return for the purchasing, leasing, ordering, or arranging
for, or recommending the purchasing, leasing, or ordering of any
goods, facility, service, or merchandise for which payment may be
made under that program, is guilty of a crime, except as specified.
This bill would delete the exemptions relative to insurance fraud
related to nonmonetary remuneration necessary to receive and transmit
electronic prescription information, and would instead exempt from
all of the above provisions nonmonetary remuneration in the form of
hardware, software, or information technology and training services,
as described in specified regulations adopted pursuant to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes
no . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 650 of the Business and Professions Code is
amended to read:
650. (a) Except as provided in Chapter 2.3 (commencing with
Section 1400) of Division 2 of the Health and Safety Code, the offer,
delivery, receipt, or acceptance by any person licensed under this
division or the Chiropractic Initiative Act of any rebate, refund,
commission, preference, patronage dividend, discount, or other
consideration, whether in the form of money or otherwise, as
compensation or inducement for referring patients, clients, or
customers to any person, irrespective of any membership, proprietary
interest or coownership in or with any person to whom these patients,
clients, or customers are referred is unlawful.
(b) The payment or receipt of consideration for services other
than the referral of patients which is based on a percentage of gross
revenue or similar type of contractual arrangement shall not be
unlawful if the consideration is commensurate with the value of the
services furnished or with the fair rental value of any premises or
equipment leased or provided by the recipient to the payer.
(c) The offer, delivery, receipt, or acceptance of any
consideration between a federally qualified health center, as defined
in Section 1396d(l)(2)(B) of Title 42 of the United States Code, and
any individual or entity providing goods, items, services,
donations, loans, or a combination thereof, to the health center
entity pursuant to a contract, lease, grant, loan, or other
agreement, if that agreement contributes to the ability of the health
center entity to maintain or increase the availability, or enhance
the quality, of services provided to a medically underserved
population served by the health center, shall be permitted only to
the extent sanctioned or permitted by federal law.
(d) Except as provided in Chapter 2.3 (commencing with Section
1400) of Division 2 of the Health and Safety Code and in Sections
654.1 and 654.2, it shall not be unlawful for any person licensed
under this division to refer a person to any laboratory, pharmacy,
clinic (including entities exempt from licensure pursuant to Section
1206 of the Health and Safety Code), or health care facility solely
because the licensee has a proprietary interest or coownership in the
laboratory, pharmacy, clinic, or health care facility; provided,
however, that the licensee's return on investment for that
proprietary interest or coownership shall be based upon the amount of
the capital investment or proportional ownership of the licensee
which ownership interest is not based on the number or value of any
patients referred. Any referral excepted under this section shall be
unlawful if the prosecutor proves that there was no valid medical
need for the referral.
(e) Except as provided in Chapter 2.3 (commencing with Section
1400) of Division 2 of the Health and Safety Code and in Sections
654.1 and 654.2, it shall not be unlawful to provide nonmonetary
remuneration, in the form of hardware, software, or information
technology and training services, as described in subsections (x) and
(y) of Section 1001.952 of Title 42 of the Code of Federal
Regulations, as amended October 4, 2007, as published in the Federal
Register (72 Fed. Reg. 56632, 56644), and subsequently amended
versions.
(f) "Health care facility" means a general acute care hospital,
acute psychiatric hospital, skilled nursing facility, intermediate
care facility, and any other health facility licensed by the State
Department of Public Health under Chapter 2 (commencing with Section
1250) of Division 2 of the Health and Safety Code.
(g) A violation of this section is a public offense and is
punishable upon a first conviction by imprisonment in the county jail
for not more than one year, or by imprisonment in the state prison,
or by a fine not exceeding fifty thousand dollars ($50,000), or by
both that imprisonment and fine. A second or subsequent conviction is
punishable by imprisonment in the state prison or by imprisonment in
the state prison and a fine of fifty thousand dollars ($50,000).
SEC. 2. Section 14107.2 of the Welfare and Institutions Code is
amended to read:
14107.2. (a) Any person who solicits or receives any
remuneration, including, but not restricted to, any kickback, bribe,
or rebate, directly or indirectly, overtly or covertly, in cash or in
valuable consideration of any kind , either:
(1) In return for the referral, or promised referral, of any
individual to a person for the furnishing or arranging for the
furnishing of any service or merchandise for which payment may be
made , in whole or in part , under this chapter
or Chapter 8 (commencing with Section 14200); or
(2) In return for the purchasing, leasing, ordering, or arranging
for or recommending the purchasing, leasing, or ordering of any
goods, facility, service or merchandise for which payment may be
made, in whole or in part, under this chapter or Chapter 8
(commencing with Section 14200), is punishable upon a first
conviction by imprisonment in a county jail for not longer than one
year or state prison, or by a fine not exceeding ten thousand dollars
($10,000), or by both that imprisonment and fine. A second or
subsequent conviction shall be punishable by imprisonment in the
state prison.
(b) Any person who offers or pays any remuneration, including, but
not restricted to, any kickback, bribe, or rebate, directly or
indirectly, overtly or covertly, in cash or in valuable consideration
of any kind , either:
(1) To refer any individual to a person for the furnishing or
arranging for furnishing of any service or merchandise for which
payment may be made, in whole or in part, under this chapter or
Chapter 8 (commencing with Section 14200); or
(2) To purchase, lease, order, or arrange for or recommend the
purchasing, leasing, or ordering of any goods, facility, service, or
merchandise for which payment may be made , in whole or in
part , under this chapter or Chapter 8 (commencing with
Section 14200), is punishable upon a first conviction by imprisonment
in a county jail for not longer than one year or state prison, or by
a fine not exceeding ten thousand dollars ($10,000), or by both that
imprisonment and fine. A second or subsequent conviction shall be
punishable by imprisonment in the state prison.
(c) Subdivisions (a) and (b) shall not apply to the following:
(1) Any amount paid by an employer to an employee, who has a bona
fide employment relationship with that employer, for employment with
provision of covered items or services.
(2) A discount or other reduction in price obtained by a provider
of services or other entity under this chapter or Chapter 8
(commencing with Section 14200), if the reduction in price is
properly disclosed and reflected in the costs claimed or charges made
by the provider or entity under this chapter or Chapter 8
(commencing with Section 14200). This paragraph shall not apply to
consultant pharmaceutical services rendered to nursing facilities nor
to all categories of intermediate care facilities for the
developmentally disabled.
(3) The practices or transactions between a federally qualified
health center, as defined in Section 1396d(l)(2)(B) of Title 42 of
the United States Code, and any individual or entity shall be
permitted only to the extent sanctioned or permitted by federal law.
(4) The provision of nonmonetary remuneration in the form of
hardware, software, or information technology and training services,
as described in subsections (x) and (y) of Section 1001.952 of Title
42 of the Code of Federal Regulations, as amended October 4, 2007, as
published in the Federal Register (77 Fed. Reg. 56632, 56644), and
subsequently amended versions.
(d) For purposes of this section, "kickback" means a rebate or
anything of value or advantage, present or prospective, or any
promise or undertaking to give any rebate or thing of value or
advantage, with a corrupt intent to unlawfully influence the person
to whom it is given in actions undertaken by that person in his or
her public, professional, or official capacity.
(e) The enforcement remedies provided under this section are not
exclusive and shall not preclude the use of any other criminal or
civil remedy.
SEC. 3. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to ensure that state law conforms with existing federal
law as soon as possible, it is necessary that this act take effect
immediately.