BILL NUMBER: AB 1235 ENROLLED BILL TEXT PASSED THE SENATE AUGUST 18, 2010 PASSED THE ASSEMBLY AUGUST 19, 2010 AMENDED IN SENATE FEBRUARY 16, 2010 AMENDED IN SENATE JULY 23, 2009 AMENDED IN SENATE JUNE 16, 2009 AMENDED IN ASSEMBLY MAY 18, 2009 AMENDED IN ASSEMBLY MAY 4, 2009 AMENDED IN ASSEMBLY APRIL 14, 2009 INTRODUCED BY Assembly Member Hayashi (Coauthor: Assembly Member Emmerson) FEBRUARY 27, 2009 An act to amend Sections 809, 809.2, and 809.3 of, and to add Sections 809.04, 809.07, and 809.08 to, the Business and Professions Code, relating to healing arts. LEGISLATIVE COUNSEL'S DIGEST AB 1235, Hayashi. Healing arts: peer review. Existing law provides for the professional review of specified healing arts licentiates through a peer review process conducted by peer review bodies, as defined. This bill would encourage a peer review body to obtain external peer review, as defined, for the evaluation or investigation of an applicant, privilegeholder, or member of the medical staff in specified circumstances. This bill would require a peer review body to respond to the request of another peer review body and produce the records reasonably requested concerning a licentiate under review, as specified. The bill would specify that the records produced pursuant to this provision are not subject to discovery, as specified, and may only be used for peer review purposes. Existing law requires the governing body of acute care hospitals to give great weight to the actions of peer review bodies and authorizes the governing body to direct the peer review body to investigate in specified instances. Where the peer review body fails to take action in response to that direction, existing law authorizes the governing body to take action against a licentiate. This bill would prohibit a member of a medical or professional staff from being required to alter or surrender staff privileges, status, or membership solely due to the termination of a contract between that member and a health care facility, except as specified. The bill would specify that a peer review body is entitled to review and make timely recommendations to the governing body of a health care facility, and its designee, if applicable, regarding quality considerations relating to clinical services when the selection, performance evaluation, or any change in the retention or replacement of licensees with whom the facility has a contract occurs. The bill would require the governing body to give great weight to those recommendations. Existing law provides various due process rights for licentiates who are the subject of a final proposed disciplinary action of a peer review body, including authorizing a licensee to request a hearing concerning that action. Under existing law, the hearing must be held before either an arbitrator selected by a process mutually acceptable to the licensee and the peer review body or a panel of unbiased individuals, as specified. Existing law prohibits a hearing officer presiding at a hearing held before a panel from, among other things, gaining direct financial benefit from the outcome. This bill would additionally require the hearing officer to be an attorney licensed in California, except as specified, and to disclose all actual and potential conflicts of interest, as specified. The bill would specify that the hearing officer is entitled to determine the procedure for presenting evidence and argument and would give the hearing officer authority to make all rulings pertaining to law, procedure, or the admissibility of evidence. The bill would authorize the hearing officer to recommend termination of the hearing in certain circumstances. Existing law requires the peer review body to adopt written provisions governing whether a licensee may be represented by an attorney and prohibits a peer review body from being represented by an attorney where a licensee is not so represented, except as specified. This bill would give both parties the right to be represented by an attorney but would prohibit a peer review body from being represented if the licensee notifies the peer review body within a specified period of time that he or she has elected to not be represented, except as specified. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 809 of the Business and Professions Code is amended to read: 809. (a) The Legislature hereby finds and declares the following: (1) In 1986, Congress enacted the Health Care Quality Improvement Act of 1986 (Chapter 117 (commencing with Section 11101) of Title 42 of the United States Code) to encourage physicians to engage in effective professional peer review, but giving each state the opportunity to "opt-out" of some of the provisions of the federal act. (2) Because of deficiencies in the federal act and the possible adverse interpretations by the courts of the federal act, it is preferable for California to "opt-out" of the federal act and design its own peer review system. (3) Peer review, fairly conducted, is essential to preserving the highest standards of medical practice. (4) 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 patient 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. (5) Peer review that is not conducted fairly results in harm both to patients and healing arts practitioners by wrongfully depriving patients of their ability to obtain care from their chosen practitioner and by depriving practitioners of their ability to care for their patients, thereby limiting much-needed access to care. (6) Peer review, fairly conducted, will aid the appropriate state licensing boards in their responsibility to regulate and discipline errant healing arts practitioners. (7) To protect the health and welfare of the people of California, it is the policy of the State of California to exclude, through the peer review mechanism as provided for by California law, those healing arts practitioners who provide substandard care or who engage in professional misconduct, regardless of the effect of that exclusion on competition. (8) It is the intent of the Legislature that peer review of professional health care services be done efficiently, on an ongoing basis, and with an emphasis on early detection of potential quality problems and resolutions through informal educational interventions. It is 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. (9) Sections 809 to 809.8, inclusive, shall not affect the respective responsibilities of the organized medical staff or the governing body of an acute care hospital with respect to peer review in the acute care hospital setting. It is the intent of the Legislature that written provisions implementing Sections 809 to 809.8, inclusive, in the acute care hospital setting shall be included in medical staff bylaws that shall be adopted by a vote of the members of the organized medical staff and shall be subject to governing body approval, which approval shall not be withheld unreasonably. (10) (A) The Legislature thus finds and declares that the laws of this state pertaining to the peer review of healing arts practitioners shall apply in addition to Chapter 117 (commencing with Section 11101) of Title 42 of the United States Code, because the laws of this state provide a more careful articulation of the protections for both those undertaking peer review activity and those subject to review, and better integrate public and private systems of peer review. Therefore, California exercises its right to opt out of specified provisions of the Health Care Quality Improvement Act relating to professional review actions, pursuant to Section 11111(c) (2)(B) of Title 42 of the United States Code. This election shall not affect the availability of any immunity under California law. (B) The Legislature further declares that it is not the intent or purposes of Sections 809 to 809.8, inclusive, to opt out of any mandatory national databank established pursuant to Subchapter II (commencing with Section 11131) of Chapter 117 of Title 42 of the United States Code. (b) For the purpose of this section and Sections 809.1 to 809.8, inclusive, "healing arts practitioner" or "licentiate" means a physician and surgeon, podiatrist, clinical psychologist, marriage and family therapist, clinical social worker, or dentist; and "peer review body" means a peer review body as specified in paragraph (1) of subdivision (a) of Section 805, and includes any designee of the peer review body. SEC. 2. Section 809.04 is added to the Business and Professions Code, to read: 809.04. (a) It is the public policy of the state that licentiates who may be providing substandard care be subject to the peer review hearing and reporting process set forth in this article. (b) To ensure that the peer review process is not circumvented, a member of a medical or professional staff, by contract or otherwise, shall not be required to alter or surrender staff privileges, status, or membership solely due to the termination of a contract between that member and a health care facility. However, 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. (c) The peer review body of a health care facility shall be entitled to review and make timely recommendations to the governing body of the facility and its designee, if applicable, regarding quality 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. The governing body shall give great weight to those recommendations. (d) This section shall not impair a governing body's ability to take action against a licentiate pursuant to Section 809.05. SEC. 3. Section 809.07 is added to the Business and Professions Code, to read: 809.07. (a) 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. (b) A peer review body is encouraged to obtain external peer review for the evaluation or investigation of an applicant, privilegeholder, or member of the medical staff in the following circumstances: (1) Committee or department reviews that could affect a licentiate' s membership or privileges do not provide a sufficiently clear basis for action or inaction. (2) No current medical staff member can provide the necessary expertise in the clinical procedure or area under review. (3) To promote impartial peer review. (c) For purposes of this section, the following definitions apply: (1) "External peer review" means 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. (2) "Peer review body" has the meaning provided in paragraph (1) of subdivision (a) of Section 805. SEC. 4. Section 809.08 is added to the Business and Professions Code, to read: 809.08. (a) The Legislature hereby finds and declares that the sharing of information between peer review bodies is essential to protect the public health. (b) Upon receipt of reasonable copying and processing costs, a peer review body shall 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. The responding peer review body shall have the discretion to decide whether to produce minutes from peer review body meetings. The records produced by a peer review body pursuant to this section shall be used solely for peer review purposes and shall not be subject to discovery to the extent provided in Sections 1156.1 and 1157 of the Evidence Code and any other applicable provisions of law. The peer review body responding to the request shall be entitled to all confidentiality protections and privileges provided by law as to the information and records disclosed pursuant to this section. The licentiate under review by the peer review body requesting records pursuant to this section shall, upon request, release the responding peer review body, its members, and the health care entity for which the responding peer review body conducts peer reviews, from liability for the disclosure of records, and the contents thereof, in compliance with this section. If the licentiate does not provide a reasonable release that is acceptable to the responding peer review body, the responding peer review body shall not be obligated to produce records pursuant to this section. SEC. 5. Section 809.2 of the Business and Professions Code is amended to read: 809.2. If a licentiate timely requests a hearing concerning a final proposed action for which a report is required to be filed under Section 805, the following shall apply: (a) The hearing shall be held, as determined by the peer review body, before a trier of fact, which shall be an arbitrator or arbitrators selected by a process mutually acceptable to the licentiate and the peer review body, or before a panel of unbiased individuals who shall gain no direct financial benefit from the outcome, who have not acted as an accuser, investigator, factfinder, or initial decisionmaker in the same matter, and which shall include, where feasible, an individual practicing the same specialty as the licentiate. (b) (1) If a hearing officer is selected to preside at a hearing held before a panel, the hearing officer shall gain no direct financial benefit from the outcome, shall disclose all actual and potential conflicts of interest within the last five years reasonably known to the hearing officer, shall not act as a prosecuting officer or advocate, and shall not be entitled to vote. (2) The hearing officer shall be an attorney licensed to practice law in the State of California. This paragraph shall not apply to a hearing held before a panel of a dental professional society peer review body. (3) Except as otherwise 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 shall not be eligible to serve as a hearing officer. (4) The hearing officer shall endeavor to ensure that all parties maintain proper decorum and have a reasonable opportunity to be heard and present all relevant oral and documentary evidence. The hearing officer shall be entitled to determine the order of, or procedure for, presenting evidence and argument during the hearing and shall have the authority and discretion to make all rulings on questions pertaining to matters of law, procedure, or the admissibility of evidence. The hearing officer shall also take all appropriate steps to ensure a timely resolution of the hearing, but may not terminate the hearing process. However, 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. (c) The licentiate shall have the right to a reasonable opportunity to voir dire the panel members and any hearing officer, and the right to challenge the impartiality of any member or hearing officer. Challenges to the impartiality of any member or hearing officer shall be ruled on by the presiding officer, who shall be the hearing officer if one has been selected. (d) The licentiate shall have the right to inspect and copy at the licentiate's expense any documentary information relevant to the charges which the peer review body has in its possession or under its control, as soon as practicable after the receipt of the licentiate' s request for a hearing. The peer review body shall have the right to inspect and copy at the peer review body's expense any documentary information relevant to the charges which the licentiate has in his or her possession or control as soon as practicable after receipt of the peer review body's request. The failure by either party to provide access to this information at least 30 days before the hearing shall constitute good cause for a continuance. The right to inspect and copy by either party does not extend to confidential information referring solely to individually identifiable licentiates, other than the licentiate under review. The arbitrator or presiding officer shall consider and rule upon any request for access to information, and may impose any safeguards the protection of the peer review process and justice requires. (e) When ruling upon requests for access to information and determining the relevancy thereof, the arbitrator or presiding officer shall, among other factors, consider the following: (1) Whether the information sought may be introduced to support or defend the charges. (2) The exculpatory or inculpatory nature of the information sought, if any. (3) The burden imposed on the party in possession of the information sought, if access is granted. (4) Any previous requests for access to information submitted or resisted by the parties to the same proceeding. (f) At the request of either side, the parties shall exchange lists of witnesses expected to testify and copies of all documents expected to be introduced at the hearing. Failure to disclose the identity of a witness or produce copies of all documents expected to be produced at least 10 days before the commencement of the hearing shall constitute good cause for a continuance. (g) Continuances shall be granted upon agreement of the parties or by the arbitrator or presiding officer on a showing of good cause. (h) A hearing under this section shall be commenced within 60 days after receipt of the request for hearing, and the peer review process shall be completed within a reasonable time, after a licentiate receives notice of a final proposed action or an immediate suspension or restriction of clinical privileges, unless the arbitrator or presiding officer issues a written decision finding that the licentiate failed to comply with subdivisions (d) and (e) in a timely manner, or consented to the delay. SEC. 6. Section 809.3 of the Business and Professions Code is amended to read: 809.3. (a) During a hearing concerning a final proposed action for which reporting is required to be filed under Section 805, both parties shall have all of the following rights: (1) To be provided with all of the information made available to the trier of fact. (2) To have a record made of the proceedings, copies of which may be obtained by the licentiate upon payment of any reasonable charges associated with the preparation thereof. (3) To call, examine, and cross-examine witnesses. (4) To present and rebut evidence determined by the arbitrator or presiding officer to be relevant. (5) To submit a written statement at the close of the hearing. (6) To be represented by an attorney of the party's choice at the party's expense, subject to subdivision (c). (b) The burden of presenting evidence and proof during the hearing shall be as follows: (1) The peer review body shall have the initial duty to present evidence which supports the charge or recommended action. (2) Initial applicants shall bear the burden of persuading the trier of fact by a preponderance of the evidence of their qualifications by producing information which allows for adequate evaluation and resolution of reasonable doubts concerning their current qualifications for staff privileges, membership, or employment. Initial applicants shall not be permitted to introduce information not produced upon request of the peer review body during the application process, unless the initial applicant establishes that the information could not have been produced previously in the exercise of reasonable diligence. (3) Except as provided above for initial applicants, the peer review body shall bear the burden of persuading the trier of fact by a preponderance of the evidence that the action or recommendation is reasonable and warranted. (c) (1) Except as provided in paragraph (3), a peer review body shall not be 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 to not be represented by an attorney. Except as otherwise agreed by the parties, this election shall be binding. (2) If the licentiate does not provide the written notice described in paragraph (1) within the required timeframe, the peer review body may be represented by an attorney even if the licentiate later elects to not be represented by an attorney. (3) Dental professional society peer review bodies may be represented by an attorney even if the licentiate declines to be represented by an attorney.