BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 120|
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                                 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  
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             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.


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          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.


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          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  

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             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  

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             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  

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                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.   

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          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  

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          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


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           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

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