BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 120| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 120 Author: Hayashi (D) Amended: 7/8/09 in Senate Vote: 21 SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 9-0, 7/6/09 AYES: Negrete McLeod, Wyland, Aanestad, Corbett, Correa, Florez, Romero, Walters, Yee NO VOTE RECORDED: Oropeza ASSEMBLY FLOOR : 78-0, 6/3/09 - See last page for vote SUBJECT : Healing arts: peer review SOURCE : California Medical Association DIGEST : This bill makes changes to the due process requirements for physicians and surgeons who are subject to a final proposed action of a peer review body for which a report (commonly referred to as an 805 report, pursuant to Section 805 of the Business and Professions Code) is required to be filed to the appropriate health care regulatory body. This bill is contingent upon enactment of SB 820 (Negrete McLeod). ANALYSIS : Existing law: 1. Establishes the federal Health Care Quality Improvement CONTINUED AB 120 Page 2 Act (HCQIA) of 1986 which created standards for hospital peer review committees, provided immunity for those involved in peer review, and established the National Practitioner Data Bank (NPDB), a system for reporting physicians whose competency has been questioned or when the physician has been sanctioned. (HCQIA is intended to protect peer review bodies from private money damage liability and prevent incompetent practitioners from moving state to state without disclosure or discovery of previous damaging or incompetent performance.) 2. Establishes the Medical Board of California (MBC) to license, regulate and discipline physicians and surgeons in California and states that the protection of the public is the highest priority of the MBC in exercising its functions. 3. Provides for the professional review of specified healing arts licentiates by a peer review body, as defined. 4. Defines a licentiate for purposes of #3 above, as a physician and surgeon, doctor of podiatric medicine, clinical psychologist, marriage and family therapist, clinical social worker, or dentist. 5. Requires an 805 report to be filed by the chief of staff, chief executive officer, medical director, or administrator of any peer review body and the chief executive officer or administrator of a health facility or clinic, as defined, with the relevant agency having regulatory jurisdiction over a licentiate, as specified. 6. Requires also for an 805 report to be filed within 15 days after the imposition of a summary suspension of staff privileges, membership, or employment, if the summary suspension remains in effect for over 14 days. 7. Requires a copy of the 805 report, and a notice advising the licentiate of his/her right to submit additional statements or other information, as specified, to be sent by the peer review body to the licentiate named in the report. CONTINUED AB 120 Page 3 8. Requires the information to be reported in an 805 report to include the name and license number of the licentiate involved, a description of the facts and circumstances of the medical disciplinary cause or reason, and any other relevant information deemed appropriate by the reporter. 9. Requires a supplemental report to be made within 30 days following the date the licentiate is deemed to have satisfied any terms, conditions, or sanctions imposed as disciplinary action by the reporting peer review body. 10.States that a licentiate who is the subject of a final proposed action of a peer review body for which a report is required to be filed under Section 805 shall be entitled to written notice of the final proposed action. 11.Specifies that if a hearing is requested on a timely basis, the peer review body shall give the licentiate a written notice stating all of the following: the reasons for the final proposed action taken or recommended, including the acts of omissions with which the licentiate is charged, and the place, time, and date of the hearing. 12.Defines final proposed action as the final decision or recommendation of the peer review body after an informal investigatory activity or prehearing meetings. 13.Specifies that the licentiate has a right to the following during a hearing: The right to voir dire the panel members and any hearing officer, and the right to challenge the impartiality of any member or hearing officer. 14.Specifies that both parties have a right to the following: (a) Inspect and copy documents, (b) to be provided with all information made available to the trier of fact, (c) to have a record made of the proceedings, (d) to call, examine and cross-examine witnesses, (e) to present and rebut evidence, and (f) to submit a written statement at the close of the hearing. CONTINUED AB 120 Page 4 15.Specifies who has the burden of presenting evidence and proof during a hearing. This bill: 1. Finds and declares that it is essential that California's peer review system generate a culture of trust and safety so that health care practitioners will participate robustly in the process by engaging in critically important safety activities, such as reporting incidents they believe to reflect substandard care or unprofessional conduct and serving on peer review, quality assurance, and other committees necessary to protect patients. 2. States further the intent of the Legislature that peer review bodies be actively involved in the measurement, assessment, and improvement of quality and that there be appropriate oversight by the peer review bodies to ensure the timely resolution of issues. 3. States that it is the public policy of the state that licentiates who may be providing substandard of care be subject to the peer review hearing and reporting process, as specified. 4. Indicates that to ensure that the peer review process is not circumvented, prohibits requiring a member of a medical or professional staff, by contract or otherwise, from altering or surrendering staff privileges, status, or membership solely due to the termination of a contract between that member and a health care facility. States, however, that with respect to services that may only be provided by members who have, or who are members of a medical group that has, a current exclusive contract for those identified services, termination of the contract or termination of the member's employment by the medical group holding the contract, may result in the member's ineligibility to provide the services covered by the contract. 5. Entitles a peer review body of a health care facility to review and make timely recommendations to the governing body of the facility and its designee regarding quality CONTINUED AB 120 Page 5 considerations relating to clinical services whenever the selection, performance evaluation, or any change in the retention or replacement of licentiates with whom the health care facility has a contract occurs. Requires the governing body to give great weight to the recommendations. 6. States that the provisions contained in #3 through #5 do not impair a governing body's ability to take action against a licentiate, as specified. 7. States that it is the policy of the state that in certain limited circumstances, external peer review may be necessary to promote and protect patient care in order to eliminate perceived bias, obtain needed medical expertise, or respond to other particular circumstances. 8. Encourages a peer review body to obtain external peer review for the evaluation or investigation of an applicant, privilegeholder, or member of the medical staff in the following circumstances: A. Committee or department reviews that could affect a licentiate's membership or privileges do not provide a sufficiently clear basis for action or inaction. B. No current medical staff member can provide the necessary expertise in the clinical procedure or area under review. C. To promote impartial peer review. 9. Defines external peer review as peer review provided by licentiates who do not practice in the same health care facility as the licentiate under review, who are impartial, and who have the necessary expertise in the clinical procedure or area under review. 10.Finds and declares that the sharing of information between peer review bodies is essential to protect the public health. 11.Requires a peer review body, upon receipt of reasonable CONTINUED AB 120 Page 6 copying and processing costs, to respond to the request of another peer review body and produce the records reasonably requested concerning a licentiate under review to the extent not otherwise prohibited by state or federal law. Provides that the responding peer review body has the discretion whether to produce minutes from peer review body meetings. States that the records produced by a peer review body pursuant to this provision will be used solely for peer review purposes and not subject to discovery, as specified. Entitles the peer review body responding to the request to all confidentiality protections and privileges provided by law as to the information and records disclosed pursuant to this provision. 12.States that a licentiate under review by a peer review body requesting records pursuant to #11 above must release the responding peer review, its members, and the health care entity for which the responding peer review body conducts peer review, from liability for the disclosure of records, and the contents of the records, as specified. Provides that if a licentiate does not provide a reasonable release that is acceptable to the responding peer review body, the responding peer review body is not obligated to produce records. 13.Requires the following of a hearing officer: A. Disclose all actual and potential conflicts of interest within the last five years reasonably known to the hearing officer. B. Be an attorney licensed to practice law in the State of California. This provision does not apply to a hearing held before a panel of dental professional peer review body. C. States that unless agreed by the parties, an attorney from a firm utilized by the hospital, the medical staff, or the involved licentiate within the preceding two years is not eligible to serve as a hearing officer. D. Endeavor to ensure that all parties maintain CONTINUED AB 120 Page 7 proper decorum and have a reasonable opportunity to be heard and present all relevant oral and documentary evidence. Entitles the hearing officer to determine the order of, or procedure for, presenting evidence and argument during the hearing and have the authority and discretion to make all rulings on questions pertaining to matters of law, procedure, or the admissibility of evidence. Further requires the hearing officer to take all appropriate steps to ensure a timely resolution of the hearing, but may not terminate the hearing process, unless in the case of flagrant noncompliance with the procedural rules governing the hearing process or egregious interference with the orderly conduct of the hearing, the hearing officer may recommend that the hearing panel terminate the hearing, provided that this activity is authorized by the applicable bylaws of the peer review body. 14.Gives both parties the right to be represented by an attorney of the party's choice at the party's expense. 15.Prohibits a peer review body from being represented by an attorney if the licentiate notifies the peer review body in writing no later than 15 days prior to the hearing that he or she has elected not to be represented by an attorney. States that unless otherwise agreed by the parties, this election is binding. 16.States that if a licentiate does not provide the written notice, as specified within the required timeframe, the peer review body may be represented by an attorney even if the licentiate later elects not to be represented by an attorney. 17.Is contingent upon enactment of SB 820 (Negrete McLeod). Background Peer Review . In peer review, physicians evaluate their colleagues' practice to determine compliance with the standard of care. Peer reviews are intended to detect incompetent or unprofessional physicians early and terminate, suspend, or limit their practice if necessary. CONTINUED AB 120 Page 8 Peer review is triggered by a wide variety of events including patient injury, disruptive conduct, substance abuse, or other medical staff complaints. A peer review committee investigates the allegation, comes to a decision regarding the physician's conduct, and takes appropriate remedial actions. However, there is reluctance among physicians to serve on peer review committees due to the risk of involvement in related future litigation, including medical malpractice lawsuits against a physician under review. In addition, there has been rising concern relating to "sham peer review." Sham peer review is the use of the peer review system to discredit, harass, discipline, or otherwise negatively affect a physician's ability to practice medicine or exercise professional judgment for a non-medical or patient safety related reason. Other criticisms of peer review include over legalization of the process, lack of transparency in the system, and burdensome human and financial toll peer review brings not only to the hospital but also to a physician under review. Medical Board of California (MBC) and 805 Peer Review Reporting Requirements . The MBC is responsible for regulating and licensing physicians in California. The MBC revokes, suspends, or limits the practice of any physicians and surgeons. In exercising regulatory authority over physicians and surgeons the MBC has as its highest priority the protection of the public. Currently, the MBC regulates 125,612 physicians and surgeons, of which 97,878 reside in California. The MBC investigates complaints against physicians and adopts final decisions in disciplinary matters against physicians and surgeons. In 1975, the Legislature passed the Medical Injury Compensation Reform Act of 1975 (MICRA) to limit the legal liability of health care providers and included special rules for medical malpractice cases. MICRA encompasses all of the following: (1) limits the contingency fee counsel may receive in medical malpractice cases, (2) vests the MBC with the responsibility to protect the public from incompetent physicians, (3) permits a health care provider charged with medical malpractice to introduce evidence of a patient's receipt of compensation from "collateral sources" such as insurance policies, (4) limits the time in which a CONTINUED AB 120 Page 9 medical malpractice action can be commenced, (5) requires a patient to provide 90 days' notice of his/her intent to sue to encourage settlement, (6) permits a contract for medical services to include a binding arbitration requirement, (7) permits periodic payment awards, rather than a lump sum award, for future damages, and (8) imposes a strict limit of $250,000 on non-economic damages. Legislative analyses, when MICRA was adopted, indicates that the primary purpose of MICRA was to reduce the cost of medical malpractice litigation and restrain a perceived explosion in the cost of medical malpractice insurance while preserving the rights of medical malpractice victims to receive sufficient compensation for their injuries. As part of MICRA, the Legislature enacted the basic provisions of state law governing medical peer review and mandatory reporting to the MBC. Section 805 requires any peer review body to report certain information to the MBC or other relevant physician licensing agency when specified criteria are met. Generally, an 805 report is required whenever a doctor's application for membership or staff privileges is denied for medical disciplinary reasons, or membership, staff privileges, or employment is terminated, revoked, or restricted for medical disciplinary reasons. In addition, if a doctor resigns in the face of an investigation by a medical peer review body, a report is required. Although the primary reporting obligation lies with hospitals, health plans, physician groups, professional societies and clinics also have reporting obligations. According to the MBC, it received 138 805 reports in 2007-08 from hospitals/clinics (74), health care service plans (17), and medical group/employers (47). Out of all of these reports, one accusation was filed, 92 cases are pending disposition and 45 cases were closed. The number of 805 reports varies from year to year, but it appears that when adjusted to the number of physicians and surgeons licensed and living in California, or the number of people living in California, the trend shows a downward direction. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No CONTINUED AB 120 Page 10 SUPPORT : (Verified 7/14/09) California Medical Association (source) Kaiser Permanente ARGUMENTS IN SUPPORT : According to the bill's sponsor, the California Medical Association, this bill will improve the peer review system in California to ensure quality health care is being provided to patients. Currently, the peer review system works very well in most facilities, but it can be open to manipulation and unreasonable delay in others. According to the author's office, this bill promotes peer review in a number of ways. For example, it provides better tools to ensure that peer review bodies have adequate information concerning licentiates by mandating the sharing of peer review records. It also prevents schemes that circumvent the peer review process through contractual arrangements, and provides increased fairness for the licentiate under review, making it more likely that all physicians will participate in the peer review system. ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Blumenfield, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Torrico, Tran, Villines, Bass NO VOTE RECORDED: Block, Yamada JJA:mw 7/14/09 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE CONTINUED AB 120 Page 11 **** END **** CONTINUED