BILL ANALYSIS                                                                                                                                                                                                    







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          |Hearing Date:April 20, 2009    |Bill No:SB                          |
          |                               |700                                 |
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                     SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND 
                                  ECONOMIC DEVELOPMENT
                          Senator Gloria Negrete McLeod, Chair

                      Bill No:        SB 700Author: Negrete McLeod
                     As Amended:April 13, 2009          Fiscal: Yes

          
          SUBJECT:   Healing arts:  peer review.
          
          SUMMARY:  Makes various changes relating to the peer review  
          process in which a final proposed action may be imposed on a  
          licentiate, if certain conditions are met, for which a report  
          (commonly referred to as 805 report pursuant to Section 805 of  
          the Business and Professions Code) is required to be filed to  
          the appropriate health care regulatory body. Requires the  
          Medical Board of California to include in a licensee's central  
          file a finding by a court that a peer review resulting in an 805  
          report was conducted in bad faith.  Prohibits disclosure by  
          certain health care regulatory bodies of any summaries of  
          hospital disciplinary actions that result in the termination or  
          revocation of a licensee's staff privileges for medical  
          disciplinary cause or reason if a court finds that the peer  
          review resulting in the disciplinary action was conducted in bad  
          faith and the licensee notifies the board of such finding.   
          Requires the chief of staff of a medical or professional staff  
          or other chief executive officer, medical director, or  
          administrator of any peer review body and the chief executive  
          officer or administrator of any licensed health care facility or  
          clinic to file a report with the relevant agency within 15 days  
          after completion of a formal investigation of a licentiate if  
          the investigation resulted in any of the following findings of  
          fact: the licentiate departed from the standard of care; the  
          licentiate suffered from mental illness or substance abuse; or,  
          the licentiate engaged in sexual misconduct.

          Existing law:

          1)Establishes the federal Health Care Quality Improvement Act  





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            (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.  
             States that the protection of the public is the highest  
            priority of the MBC in exercising its functions.

          3)Requires the MBC, along with other specified health care  
            licensing boards, to create and maintain a  central file  of the  
            names of all persons who hold a license, certificate, or  
            similar authority.  Requires the central file to be created  
            and maintained to provide an individual historical record for  
            each licensee and must include specified information including  
            the following:  any conviction of a crime, any judgment or  
            settlement in excess of $3,000, any public complaints as  
            specified, and any disciplinary information, as specified.   
            States that the content of the central file that is not public  
            record under any other provision of law is confidential.   
            Allows a licensee to submit any exculpatory or explanatory  
            statements or other information to be included in the central  
            file.

          4)Provides for the professional review of specified healing arts  
            licentiates by a peer review body, as defined, including:

             a)   A medical or professional staff of any health care  
               facility or a licensed clinic, or a facility certified to  
               participate in the federal Medicare Program as an  
               ambulatory surgical center.

             b)   A health care service plan or a disability insurer, as  
               specified.

             c)   Any medical, psychological, marriage and family therapy,  
               social work, dental, or podiatric professional society, as  
               specified.

             d)   A committee organized by any entity that functions for  





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               the purpose of reviewing the quality of professional care  
               provided by members or employees of that entity.

          5) Defines a licentiate for purposes of item # 4) above, as a  
            physician and surgeon, doctor of podiatric medicine, clinical  
            psychologist, marriage and family therapist, clinical social  
            worker, or dentist.

          6)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 under the following:

             a)   Within 15 days after the effective date of any of the  
               following that occur as a result of an  action of a peer  
               review body  :

               i)     A licentiate's application for staff privileges or  
                 membership is denied or rejected for a medical  
                 disciplinary cause or reason.

               ii)    A licentiate's membership, staff privileges, or  
                 employment is terminated or revoked for a medical  
                 disciplinary cause or reason.

               iii)   Restrictions are imposed, or voluntarily accepted,  
                 on staff privileges, membership, or employment for a  
                 cumulative total of 30 days or more for any 12-month  
                 period, for a medical disciplinary cause or reason.

             b)   Within 15 days if a  licentiate  does any of the following  
               based on information indicating medical disciplinary cause  
               of reason:

               i)     Resigns or takes a leave of absence from membership,  
                 staff, or employment.

               ii)    Withdraws or abandons an application for staff  
                 privileges or membership.

               iii)   Withdraws or abandons the request for renewal of  
                 privileges or membership.

          7)Requires also for an 805 report to be filed within 15 days  





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            after the imposition of a  summary suspension  of staff  
            privileges, membership, or employment, if the summary  
            suspension remains in effect for over 14 days.  

          8)Defines the following terms:

             a)   Staff privileges as any arrangement under which a  
               licentiate is allowed to practice in or provide care for  
               patients in a health facility.  Such arrangements include,  
               but are not limited to, full staff privileges, active staff  
               privileges, limited staff privileges, auxiliary staff  
               privileges, courtesy staff privileges, locum tenens  
               arrangements, and contractual arrangements to provide  
               professional services, including arrangements to provide  
               outpatient services.

             b)   Denial or termination of staff privileges, membership,  
               or employment includes failure or refusal to renew a  
               contract or to renew, extend, or reestablish any staff  
               privileges, if the action is based on medical disciplinary  
               cause or reason.  

             c)   Medical disciplinary cause or reason as the aspect of a  
               licentiate's competence or professional conduct that is  
               reasonably likely to be detrimental to patient safety or to  
               the delivery of patient care.

          9)Requires a  copy  of the 805 report, and a  notice  advising the  
            licentiate of his or 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.

          10)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.

          11)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.  

          12)States that if another peer review body is required to file  
            an 805 report, a health care service plan is not required to  
            file a separate report with respect to action attributable to  





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            the same medical disciplinary cause or reason.  Further  
            specifies that if the MBC or a licensing agency of another  
            state revokes or suspends, without a stay, the license of a  
            physician and surgeon, a peer review body is not required to  
            file an 805 report when it takes an action as a result of the  
            revocation or suspension.

          13)Indicates that the reporting required under Section 805 does  
            not act as a waiver of confidentiality of medical records and  
            committee reports.  Requires that the information reported or  
            disclosed be kept confidential, as specified.

          14)Specifies that a  willful failure  to file an 805 report by any  
            person who is designated or otherwise required by law to file  
            is punishable by a fine not to exceed one hundred thousand  
            dollars ($100,000) per violation; and a  ny failure  by the  
            administrator of any peer review body, the chief executive  
            officer or administrator of any health care facility, or any  
            person who is designated or otherwise required by law to file  
            an 805 report, shall be punishable by a fine not to exceed  
            fifty thousand dollars ($50,000) per violation.

          15)Requires, prior to granting or renewing staff privileges for  
            any physician and surgeon, psychologist, podiatrist or  
            dentist, any licensed health care facility, health care  
            service plan or medical care foundation, or the medical staff  
            of an institution, to request a  report  from the MBC, the Board  
            of Psychology, the Osteopathic Medical Board of California, or  
            the Dental Board of California to determine if any 805 report  
            has been made, indicating that the applying physician and  
            surgeon, psychologist, podiatrist or dentist has been denied  
            staff privileges, been removed from medical staff, or had his  
            or her staff privileges restricted as provided in Section 805.  
             Prohibits providing any report in the following  
            circumstances:

             a)   If the denial, removal, or restriction was imposed  
               solely because of the failure to complete medical records.

             b)   If the MBC found the information reported is without  
               merit.

             c)   If a period of three years has elapsed since the report  
               was submitted.

          16)Specifies findings and declarations on the reasons California  





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            opted out of some of the provisions of the federal HCQIA.

          17)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.  Requires the  
            written notice to include the following information:

             a)   That an action against the licentiate has been proposed  
               by the peer review body which, if adopted, shall be taken  
               and reported pursuant to Section 805.

             b)   The final proposed action.

             c)   That the licentiate has the right to request a hearing  
               on the final proposed action.

          18)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.

          19)Defines final proposed action as the final decision or  
            recommendation of the peer review body after an informal  
            investigatory activity or prehearing meetings.

          20)Specifies certain  hearing  requirements, if a licentiate  
            timely requests a hearing concerning a final proposed action,  
            including the following:

             a)   The hearing to be held, as determined the peer review  
               body, before a trier of fact, which shall be an  
               arbitrator/s selected by a process mutually acceptable to  
               all the parties or before a panel of unbiased individuals  
               who shall gain no financial benefit from the outcome;

             b)   If a hearing officer is selected, the hearing officer  
               shall gain no financial benefit from the outcome, shall not  
               act as a prosecuting officer or advocate, and not entitled  
               to vote.

          21)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  





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            impartiality of any member or hearing officer.

          22)Specifies that both parties have a right to the following: a)  
            inspect and copy documents; b) 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.

          23)Specifies who has the burden of presenting evidence and proof  
            during a hearing.

          24)Allows a peer review body to  immediately suspend  or restrict  
            clinical privileges of a licentiate where the failure to take  
            an action may result in an imminent danger to the health of  
            any individual, provided that the licentiate is subsequently  
            provided with the notice and hearing rights as specified.

          25)States that specified peer review proceedings does not apply  
            to state or county hospitals, hospitals owned or operated by  
            the Regents of the University of California or health  
            facilities which serve as primary teaching facilities, as  
            specified.

          26)Requires the MBC to post on the Internet specified  
            information regarding licensed physicians, including  
            information relating to the status of a license, felony  
            convictions, malpractice judgment or arbitration awards, or  
            any hospital disciplinary action that resulted in the  
            termination or revocation of a licensee's hospital staff  
            privileges for a medical disciplinary cause or reason.

          27)Requires, subject to specified limitations, any accusations  
            filed against a physician and surgeon be filed within three  
            years after the MBC discovers the act or omission alleged as  
            the grounds for disciplinary action, or within seven years  
            after the act or omission alleged as the grounds for  
            disciplinary action, whichever occurs first. 

          28)Requires the MBC, the Osteopathic Medical Board of  
            California, and the California Board of Podiatric Medicine to  
            disclose to an inquiring member of the public specific  
            information regarding enforcement actions taken against a  
            licensee.

          This bill:





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          1)Requires the MBC to include in a licensee's central file a  
             finding  by a court that a peer review resulting in an 805  
            report was conducted in bad faith, and the licensee who is the  
            subject of the report notifies the MBC of such finding.

          2)Prohibits the MBC, the OMBC, and the California Board of  
            Podiatric Medicine from disclosing to an inquiring member of  
            the public any summaries of hospital disciplinary actions that  
            result in the termination or revocation of a licensee's staff  
            privileges for medical disciplinary cause or reason if a court  
            finds that the peer review resulting in the disciplinary  
            action was conducted in bad faith and the licensee notifies  
            the board of the finding.

          3)Defines peer review as a process in which a peer review body  
            reviews the basic qualifications, staff privileges,  
            employment, medical outcomes, and professional conduct of  
            licentiates to determine whether the licentiate may practice  
            or continue to practice in a health care facility, clinic, or  
            other setting providing medical services and, if so, to  
            determine the parameters of that practice.  

          4)Clarifies that the definition of peer review body includes any  
            clinic specified in the Health and Safety Code, and deletes  
            reference to licensed clinics.

          5)Clarifies that if any of the following are imposed on a  
            licentiate as a result of an action by a peer review body: a)  
            a licentiate's application for staff privileges or membership  
            is denied or rejected for a medical disciplinary cause or  
            reason, b) a licentiate's membership, staff privileges, or  
            employment is terminated or revoked for a medical disciplinary  
            cause or reason, or c) restrictions are imposed, or  
            voluntarily accepted, on staff privileges, membership or  
            employment for a cumulative total of 30 days or more for any  
            12-month period, for a medical disciplinary cause or reason,  
            an 805 report must be filed by the chief of staff or a medical  
            or professional staff or other chief executive officer,  
            medical director or administrator of any peer review body and  
            the chief executive officer or administrator of any licensed  
            health care facility or clinic with the relevant agency within  
            15 days after the effective date on any of the actions  
            specified above, regardless of whether a hearing has occurred,  
            as specified.  






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          6)Clarifies that if a licentiate undertakes any of the  
            following: a) resigns or takes a leave of absence from  
            membership, staff privileges, or employment;
            b) withdraws or abandons his or her application for  
            membership, staff privileges, or employment; or c) withdraws  
            or abandons his or her request for renewal of membership,  
            staff privileges or employment after receiving notice of a  
            pending investigation initiated for a medical disciplinary  
            cause or reason after receiving notice that his or her  
            application for membership, staff privileges, or employment is  
            denied or will be denied for a medical disciplinary cause or  
            reason, the chief of staff or whoever is authorized under  
            existing law must file an 805 report within 15 days after the  
            licentiate takes the action.

          7)Clarifies existing law by requiring an 805 report to be filed  
            within 15 days following the imposition of summary suspension  
            of staff privileges, membership, or employment, if the summary  
            suspension remains in effect for a period in excess of 14  
            days, regardless of whether a hearing has occurred, as  
            specified.

          8)Requires an 805 report to be maintained electronically for  
            dissemination purposes for a period of three years after  
            receipt. 

          9)Requires the chief of staff of a medical or professional staff  
            or other chief executive officer, medical director, or  
            administrator of any peer review body and the chief executive  
            officer or administrator of any licensed health care facility  
            or clinic to file a report with the relevant agency within 15  
            days after completion of a formal investigation of a  
            licentiate if the investigation resulted in any of the  
            following findings of fact:

             a)   The licentiate departed from the standard of care.

             b)   The licentiate suffered from mental illness or substance  
               abuse.

             c)   The licentiate engaged in sexual misconduct

          10)Entitles the relevant agency, without subpoena, to inspect  
            and copy the following unredacted documents in the record of  
            any formal investigation required to be reported pursuant to  
            item # 9) above:





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             a)   Any statement of charges

             b)   Any document, medical chart, or exhibit.

             c)   Any opinions, findings, or conclusions;

             d)   Any peer review minutes or reports.

          11)States that the information reported pursuant to item # 9)  
            above shall be kept confidential and not subject to discovery,  
            but the information may be reviewed, as specified, and may be  
            disclosed in any subsequent disciplinary hearing, as  
            specified.

          12)Specifies that the report required by item # 9) above is in  
            addition to any other report currently required to be reported  
            under Section 805.

          13)Defines formal investigation for purposes of item # 9) above  
            as an investigation performed by a peer review body based on  
            the allegations specified above.

          14)Requires that a licensee's central file of individual  
            historical record that is maintained by specified agencies  
            include information reported pursuant to item # 9) above.

          15)Entitles the MBC, the Osteopathic Medical Board of  
            California, and the Dental Board of California to inspect and  
            copy specified documents relating to any disciplinary  
            proceeding resulting in an action that is required to be  
            reported pursuant to Section 805 without subpoena and that the  
            specified documents be unredacted.  Includes in the list of  
            documents that may be copied and inspected any peer review  
            minutes or reports.
            
          16)Prohibits the disclosure of an 805 report to specified health  
            care entities if a court finds that the peer review resulting  
            in the 805 report was conducted in bad faith and the licensee  
            who is the subject of the report notifies the board of the  
            court's finding.  

          17)Requires the MBC to remove from its Internet Website any  
                     information concerning a hospital disciplinary action that is  
            posted on the Internet Website if a court finds that peer  
            review resulting in a hospital disciplinary action was  





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            conducted in bad faith and the licensee notifies the MBC of  
            the court finding.

          18)Requires the MBC to post on the Internet a factsheet that  
            explains and provides information on the reporting  
            requirements under Section 805.
          

          FISCAL EFFECT:  Unknown.  This bill has been keyed "fiscal" by  
          Legislative Counsel.

          
          COMMENTS:
          
          1.Purpose.  The  Author  is the sponsor of this measure.   
            According to the Author, this bill is necessary to ensure that  
            the current peer review process continues to protect the  
            public from incompetent physicians.  The Author points out  
            that given the indispensable nature of health care, high  
            quality patient care is vital.  Patients expect their treating  
            physicians or other medical professionals to be competent and  
            qualified, and physicians who fail to meet established  
            professional standards must be discovered, reviewed and  
            disciplined if necessary in a timely manner.  The Author  
            indicates that physician peer review is one of the regimes  
            used to ensure that quality of care is delivered while  
            minimizing medical errors and managing patient risks.  

          The Author further points out that the MBC is the agency  
            ultimately responsible for the oversight of physicians and  
            surgeons and it is necessary that the MBC must be notified  
            when its licensees are practicing below the standard of care,  
            have substance abuse or mental illness problems, or have  
            committed sexual misconduct.  Furthermore, the Author states  
            that it is not the bill's intent to cast physicians and  
            surgeons in a false light but to improve the delivery of  
            quality health care to consumers.

          2.Background.  

             a.   What is Peer Review?  In peer review, physicians  
               evaluate their colleagues' work 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.   
               Peer review is triggered by a wide variety of events  





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               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.  

             b.   Federal Requirements.  Recognizing that peer review is  
               necessary to maintain and improve quality medical care,  
               Congress, in 1986, enacted the HCQIA.  HCQIA established  
               standards for hospital peer review committees, provided  
               immunity for those who participate in peer review, and  
               created the NPDB.  The NPDB is a confidential repository of  
               information related to the professional competence and  
               conduct of physicians, dentists, and other health care  
               practitioners.  Credentialing bodies are required to check  
               the NPDB database before granting privileges to physicians  
               or re-appointing them.  Entities such as hospitals,  
               professional societies, state boards, and plaintiffs'  
               attorneys are given access to the NPDB.  In enacting the  
               NPDB, the United States Congress intended to improve the  
               quality of health care by encouraging State licensing  
               boards, hospitals, and other health care entities, and  
               professional societies to identify and discipline those who  
               engage in unprofessional behavior; and to restrict the  
               ability of incompetent physicians, dentists, and other  
               health care practitioners to move from State to State  
               without disclosure or discovery of previous medical  
               malpractice payment and adverse action history.  The NPDB  
               is a central repository of information about: (1)  
               malpractice payments made for the benefit of physicians,  
               dentists, and other health care practitioners; (2)  
               licensure actions taken by State medical boards and State  





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               boards of dentistry against physicians and dentists; (3)  
               professional review actions primarily taken against  
               physicians and dentists by hospitals and other health care  
               entities, including health maintenance organizations, group  
               practices, and professional societies; (4) actions taken by  
               the Drug Enforcement Administration (DEA), and (5)  
               Medicare/Medicaid Exclusions.  

             It appears that hospitals may not be complying with the  
               reporting requirements of the NPDB.  In a 1995 report, the  
               Office of Inspector General of the Department of Health and  
               Human Services found that for the period September 1, 1990,  
               when the NPDB became operational, to December 1993, about  
               75 percent of all hospitals in the country did not report  
               an adverse action.  More current data indicates that for  
               the period September 1990 through September 30, 1998 about  
               67% of hospitals have never reported an adverse action.   
               The most recent numbers suggest many of the trends  
               highlighted above continue.  The 2006 NPDB Annual Report  
               highlights many of the same issues reported above continue  
               to be a problem; including a diminishing number of reports.  
                The 15,843 Medical Malpractice Payment Reports received  
               during 2006 are 8.3 percent less than the number of  
               Malpractice Payment Reports received by the NPDB during  
               2005.  This decrease comes after a decrease of 2.2 percent  
               in 2005 in comparison to 2004.  Of those hospitals  
               currently in "active" registered status with the NPDB, 48.9  
               percent have never submitted a Clinical Privileges Action  
               Report. This percentage has slowly decreased over the  
               years, from 53.4 percent in 2004 and 52.0 percent in 2005.
             
             c.   Medical Board of California 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 California Legislature passed the Medical Injury  
               Compensation Reform Act of 1975 (commonly referred to as  
               MICRA) to limit the legal liability of health care  





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               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 medical  
               malpractice action can be commenced; 5) requires a patient  
               to provide 90 days' notice of his or 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 California 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 one hundred thirty-eight  
               805 reports in 2007-2008 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  





                                                                         SB 700
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               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.

             d.   Due Process Provisions.  In 1989, several due process  
               provisions for physicians subject to an 805 report were  
               adopted and codified under Section 809 et. seq. of the  
               Business and Professions Code.  Committee analysis on  SB  
               1211  (Keene, Chapter 336, Statutes of 1989), which  
               contained the provisions of Section 809, indicated that the  
               California Medical Association (CMA) was the sponsor of the  
               legislation, and on the due process provisions of the  
               measure, CMA indicated that "the clear procedural standards  
               in SB 1211 will reduce the risk of erroneous peer review  
               decisions."  Under Section 809, any physician, for which an  
               805 report may be required to be filed, is entitled to  
               specified due process rights, including notice of the  
               proposed action, an opportunity for a hearing with full  
               procedural rights (including discovery, examination of  
               witnesses, formal record of the proceedings and written  
               findings).  Furthermore, a physician may seek a judicial  
               review in the Superior Court pursuant to Code of Civil  
               Procedure Section 1094.5 (writ of mandate).  It should be  
               noted that the due process requirements do not apply to  
               peer review proceedings conducted in state or county  
               hospitals, to the University of California hospitals or to  
               other teaching hospitals as defined.

             e.   Industry Standards.  Private standard setting is also  
               common in peer review.  Organizations like the Joint  
               Commission (formerly the Joint Commission on Accreditation  
               of Healthcare Organizations or JCAHO), which accredits over  
               4,000 hospitals, health care providers and other health  
               care settings across the country have established peer  
               review standards for the entities it accredits.  In order  
               to receive Joint Commission accreditation, hospitals must  
               have peer review and other quality assurance measures.   
               Eligibility for federal funds such as Medicare and Medicaid  
               often depends on accreditation.  In 2004, the Joint  
               Commission renamed peer review into "Focused Review of  
               Practitioner Performance" which was later renamed to  
               Focused Professional Practice Evaluation (FPPE).  In 2007,  
               the Joint Commission defined two types of reviews aimed at  
               assuring physician competence: the FPPE and "ongoing  
               professional practice evaluation" (OPPE.)   The FPPE  





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               applies to  new applicants  for medical staff membership and  
               to  existing practitioners  requesting new privileges for  
               which the hospital has no documented evidence of their  
               competence.  FPPE may also apply to a practitioner whose  
               current abilities are questioned because of negative  
               performance issues or because an adequate volume of cases  
               are not available to assess current competence.  In the  
               case of initial medical staff appointments, the hospital  
               must check with primary sources to determine whether the  
               practitioner requesting medical staff membership and  
               privileges has the requisite current training, knowledge,  
               skills and abilities.  These same parameters must be  
               evaluated for practitioners during the re-credentialing  
               process, with the additional requirement that granting of  
               privileges is based in part on the results of peer review  
               and OPPE.  Proctoring is a form of focused evaluation  
               involving one-on-one evaluation of a practitioner's  
               performance by another peer practitioner (a proctor).   
               Direct observation is used to gauge the ability of the  
               proctoree to perform a procedure or use a new technology.   
               Focused proctoree evaluation may occur retrospectively  
               through peer review if on-site, real-time evaluations are  
               not feasible.  In the case where same specialty peer  
               reviewers are not available internally, external peer  
               review can be used as a viable substitute for on-site  
               proctoring.

             In 2007, the Joint Commission established OPPE because of the  
               recognition that there is need to evaluate practitioners on  
               an ongoing basis rather than at the usual two year  
               reappointment process and allow practitioners to take steps  
               to improve performance on a more timely basis.  OPPE  
               applies to practitioners who have already been granted  
               patient care privileges, to revise existing privileges, or  
               to revoke an existing privilege prior to or at the time of  
               renewal.  The revised OPPE process requires a clearly  
               defined process for the evaluation of each practitioner's  
               professional practice which would include the following:   
               who will be responsible for reviewing performance data, how  
               often the data will be received, the process to be  
               implemented to make a decision on whether to continue,  
               limit or revoke privileges, and how the data will be  
               incorporated into the credentials' files?  OPPE standards  
               require an evaluation for all practitioners and not just  
               those with performance issues.






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             f.   Lumetra Report - Comprehensive Study of Peer Review in  
               California.  
              SB 231  (Figueroa) Chapter 674, Statutes of 2005, required the  
               MBC to contract with an independent entity to conduct a  
               comprehensive study of the existing peer review process.   
               SB 231 required specific components of the study,  
               including: a comprehensive description of the various steps  
               of and decision makers in the peer review process; a survey  
               of peer review cases to determine the incidence of peer  
               review; assessment of the cost of peer review to  
               licentiates and the facilities which employ them and the  
               average time consumed on peer review proceedings and an  
               assessment of the need to amend Section 805 and Section 809  
               of the Business and Professions Code to ensure that they  
               continue to be relevant to the actual conduct of peer  
               review.  Lumetra was chosen by the MBC to conduct the study  
               and the report was submitted to the Legislature on July 31,  
               2008.  In the report, Lumetra concluded that "the present  
               peer review system is broken for various reasons and is in  
               need of a major fix, if the process is to truly serve the  
               citizens of California."   The study surveyed California's  
               peer review bodies, including hospitals, healthcare plans,  
               professional societies, and medical groups/clinics.  The  
               survey included entities from the entire state of  
               California and represented both urban and rural entities as  
               well as public and private entities.  The chart below  
               identifies study participation:
          
                ------------------------------------------------------- 
               |Entity type     |Population|Final      |% of           |
               |                |          |Sample     |Population     |
               |----------------+----------+-----------+---------------|
               |Hospitals       |366       |132        |36.1%          |
               |----------------+----------+-----------+---------------|
               |Health care     |51        |28         |54.9%          |
               |plans           |          |           |               |
               |----------------+----------+-----------+---------------|
               |Professional    |9         |9          |100%           |
               |Societies       |          |           |               |
               |----------------+----------+-----------+---------------|
               |Medical         |123       |76         |61.8%          |
               |groups/clinics  |          |           |               |
               |----------------+----------+-----------+---------------|
               |Total           |549       |245        |46.5%          |
               |                |          |           |               |
                ------------------------------------------------------- 





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              Medical entities, particularly hospitals, exhibited a  
              substantial amount of anxiety about providing Lumetra with the  
              information they requested.  Over one third of hospitals  
              communicated with Lumetra via their attorneys.  A number of  
              entities or their attorneys sent letters to Lumetra detailing  
              their reasons for refusing to submit the requested information  
              to Lumetra.  Most of these letters reference a telephone  
              conference call held on October 5, 2007 which was arranged by  
              the California Hospital Association.  This conference call was  
              ostensibly to allow Lumetra to address concerns and answer  
              questions that the hospitals had regarding the information  
              Lumetra sought.  According to Lumetra, "a few individuals  
              dominated the call and expressed a desire to substantially  
              change the study design."  Due to the conference call and other  
              concerns Lumetra set up a website that described the study  
              purposes, pertinent legislation, and posted answers to  
              frequently asked questions.  

              Lumetra outlined the vital information categories which it  
              sought information from medical entities regarding their peer  
              review process including peer review hearing minutes, peer  
              review and hospital by-laws, and other related documents.   
              Unfortunately, despite a legislative mandate and immunity from  
              discovery or other adverse action for disclosure of the  
              information to Lumetra, it encountered significant problems  
              gathering the information from the medical entities it surveyed.  
               Many entities refused to comply with the requests for a variety  
              of reasons; the two most common reasons given by entities for  
              non-participation were: (1) lack of time/resources/staff to  
              provide the information; and (2) fear of legal discovery/breach  
              of confidentiality requirements.  

               i.     Findings of Lumetra's Study:

                  (1)       Variation and inconsistency in entity peer review  
                    policies and standards.  Variations exist on the  
                    definition, procedures, commencement, practice and subject  
                    of peer review.  Peer review means different activities to  
                    different entities, and can be triggered by a number of  
                    ways but is mostly part of the quality/safety/risk process  
                    of an entity.  In addition, risk management/peer review  
                    issues are combined with mundane issues related to the  
                    "business" of an entity.  All medical entities set their  
                    own standards for peer review, some more rigorous than  
                    others, and some adhere to them more meticulously than  





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                    others.  Additionally, each entity creates its own peer  
                    review policies, which can vary substantially.  If a  
                    physician is found to have provided substandard care, that  
                    physician may leave or be forced to leave the entity but  
                    can practice elsewhere, potentially endangering other  
                                                    patients.  The peer review process is often lengthy and  
                    can take months or even years.  There are also variations  
                    on the name of the peer review body, the number of members  
                    and the length of time a member serves on a committee  
                    (usually could be years before a peer review action is  
                    taken).

                  (2)       Poor tracking of peer review events.  Many  
                    entities, especially hospitals, expressed anxiety and  
                    concern in providing documents for review, particularly  
                    peer review minutes, due to fear of legal discovery.  Most  
                    entities do not have their documents in electronic form  
                    and do not have readily accessible tracking systems that  
                    would allow staff members to efficiently follow events  
                    over time.    


                  (3)       Confusion on 805 reporting.  Few cases lead to  
                    actual 805 reporting because of (a) disagreement or legal  
                    interpretation on whether 809 due process is required  
                    before every 805 report is submitted, and, (b) 809 due  
                    process leads to a substantial delay in the process (often  
                    2 to 5 years).  In addition, although entities make a  
                    sincere effort to conduct peer review, it rarely leads to  
                    actual 805 or 809 actions, perhaps due to the confusion  
                    over when to file a report.  In addition, entities have  
                    devised other methods to correct a physician behavior  
                    before filing an 805 report.  The most common cases being  
                    referred to a high level peer review are: disruptive  
                    physician behavior/impairment, substandard technical  
                    skills, substance abuse, and failure to document/record  
                    patient treatment.  It is also possible that some  
                    physicians would never be subject to peer review because  
                    they have practices that are not subject to any peer  
                    review requirements.

                  (4)       Lack of coordination among state agencies, and  
                    licensing agencies.  There is no systematic communication  
                    or coordination among various boards and agencies that  
                    would coordinate patient quality and safety issues.  There  
                    is much complexity on the complaint process, enforcement  





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                    process, and the public disclosure rules that apply to the  
                    MBC.  There is also criticism that the MBC may not quickly  
                    investigate all 805 reports, or if reports were  
                    investigated, the MBC often did not find any wrongdoing.   
                    In addition, others indicated that MBC's follow-up for 805  
                    reports took as long as one year after submission of a  
                    report.  It is unclear what factors provide barriers to a  
                    more effective and efficient process. It is also not clear  
                    that MBC receives valid and complete information from  
                    entities or individuals when investigating 805 reports,  
                    even with subpoena power.  

                  (5)       Burdensome costs of peer review.  Latest data  
                    indicates that an estimated 0-250 hours was spent on peer  
                    review activities.  Most of the respondents (68%)  
                    indicated that the cost estimate in the last calendar year  
                    was between $0-50,000 excluding physician costs in time.   
                    Cost to an individual physician ranged from $0-$50,000;  
                    focus group participants indicate that an 809 hearing  
                    would never cost less than $100,000, excluding estimates  
                    of physician costs in time and legal representation for  
                    the person being reviewed, and could cost upwards of  
                    several million dollars.

               ii.    Lumetra Study Recommendations:
               
                  (1)       Redesign the peer review process and create an  
                    independent review organization.  Allow the current peer  
                    review system to continue where a health care entity acts  
                    as a "first level" screener, as defined, and continues to  
                    investigate complaints and conduct periodic reviews of  
                    physicians.  If a physician's action related to patient  
                    care does not meet the standards of care at the screening,  
                    then the physician would be referred to an unbiased  
                    independent review organization with no vested interest in  
                    the review outcome.  The independent review organization  
                    then conducts its own investigation, including random site  
                    visits and audits, and makes recommendations regarding the  
                    filing on an 805 report or any other action.  A copy of  
                    all recommendations would be sent to the MBC.  Any serious  
                    issues/events would be "fast-tracked" and reported to the  
                    independent review organization within five hours.  The  
                    independent review organization would then investigate and  
                    take immediate action.  The independent review  
                    organization would also be responsible for maintaining a  
                    database and a tracking system to monitor trends. 





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                  (2)       Improve transparency of the entire peer review  
                    process.  The MBC would notify interested parties when an  
                    investigation begins, concluded, and when changes will be  
                    made on the MBC's website regarding a physician's status.   
                    The MBC website must be redesigned to include more  
                    information available indefinitely to the general public  
                    about a physician's profile, and the website must be  
                    redesigned to make it user-friendly to the general public  
                    so that the average layperson can chart and understand the  
                    entire process with minimal difficulty.

                  (3)       Revise role of the MBC.  The MBC would continue to  
                    investigate all 805 reports, and make determinations about  
                    any licensee's action.  MBC would be required to initiate  
                    an investigation within 48 hours of receiving an 805  
                    report, and make recommendations within 5 days of  
                    completing the investigation.  

                  (4)       Revise due process hearings or 809 process.   
                    Remove 809 hearing process from health care entities and  
                    have the independent review organization or the MBC  
                    conduct them to ensure fairness and timeliness.  Create a  
                    professional jury of practicing physicians comprised of  
                    all licensed physicians who rotate and serve for a set  
                    period of time.  Eliminate the requirement that the MBC  
                    obtain a subpoena for documents related to a complaint or  
                    broaden subpoena power to include all related medical and  
                    peer review hearing related documents.

                  (5)       Emphasize credentialing and re-credentialing.    
                    Credentialing and re-credentialing should still occur at  
                    the healthcare entity level and the healthcare entity  
                    would report any changes in credentialing or privilege to  
                    practice to the independent review organization.  

                  (6)        Promote education of physicians, entities, and  
                    the general public.  The MBC should create programs to  
                    continuously educate and update all physicians and  
                    employees of health care entities required to submit 805  
                    reports and any related laws and regulations.  Further,  
                    patient and public rights must be clearly summarized on  
                    the MBC's website.  Lastly, the MBC is to emphasize to  
                    entities that there are penalties for failure to file an  
                    805 report.   






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                  (7)       Clarify and improve specific provisions of  
                    existing law. The Legislature should clarify whether or  
                    not an 809 hearing is required prior to submission of an  
                    805 report; or whether or not the hearing before the 805  
                    is only waived after a summary suspension of greater than  
                    14 days or a termination/revocation of privileges.   
                    Further, there is a need to clarify whether or not failure  
                    to complete patient records should trigger an 805 report.   
                    The MBC and Legislature should require a tracking system  
                    in each entity and require peer review body minutes to be  
                    maintained and available for a period of 5 years which is  
                    separate from all other committee business.  Require  all   
                    medical facilities and groups to have peer review bodies  
                    and procedures as well as being made subject to 805  
                    reporting 
                  requirements.  Define specifically what peer review consists  
                    of and what events trigger a peer review.


                  (8)       Identify Funding Sources.  Funding is needed to  
                    implement these recommendations and funding sources could  
                    include increasing licensing fees, charging malpractice  
                    insurance companies a percentage of the premiums they  
                    receive, charging entity attorneys a percentage of their  
                    billing incomes, and use a percentage of malpractice  
                    awards to fund the process.

                  (9)       Pilot Project.  The Study specifies that these  
                    recommendations be made part of a 5-year pilot program to  
                    determine which have positive and negative impacts on peer  
                    review reporting and whether or not further fixes or  
                    changes are needed.   

          3.Informational Hearing on the Peer Review Process - Reforms  
            Needed.  On March 9, 2009, this Committee held an  
            informational hearing on physician peer review entitled "Is  
            the Physician Peer Review A Broken System?"  The informational  
            hearing provided a brief overview of peer review in California  
            and included discussions on how hospitals and other entities  
            conduct peer review.  The hearing also included a discussion  
            on a legislatively mandated report on peer review authored by  
            Lumetra, as discussed above, which pointed out that the peer  
            review process in California is broken and in need of a major  
            fix for it to truly serve the people.   In addition to  
            representatives from Lumetra, who presented the study,  
            stakeholders, including representatives from the  MBC  ,  





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             California Medical Association  ,  California Ambulatory Surgery  
            Association  , various hospitals including  Cedars-Sinai Health  
            System  ,  Kaiser Permanente Medical Group  , and  UC Davis Medical  
            Center  ,  Department of Managed Health Care  ,  DPH  and the  Joint  
            Commission  testified during the hearing.  The MBC testified  
            that it does not usually get an 805 report until later and if  
            there is a process whereby it receives information from  
            hospitals earlier, then this would speed up consumer  
            protection.  In addition, MBC pointed out that smaller  
            hospitals and surgery centers, because of their size and cost  
            limitations, usually escape or have little peer review and  
            outside or external peer review may be appropriate.  A few  
            physicians echoed these sentiments and indicated that to help  
            eliminate inadequate and malicious peer review, an independent  
            body should perform it.  

          During the hearing, hospital representatives indicated that the  
            peer review process is not broken and disagreed with the  
            findings of the Lumetra report.  It appears that hospitals  
            have created different levels of peer review, depending on the  
            circumstances or cases.  Some hospitals pointed out that  
            practice restrictions may be imposed on a physician that does  
            not necessarily require an 805 report and the remedy imposed  
            is usually continuing education or other performance enhancing  
            activities or corrective actions.  One hospital representative  
            indicated that if impartiality is compromised, it is not  
            unusual to send a case to another hospital within the system  
            or to utilize external peer review.  Hospital representatives  
            however cautioned that removing peer review from hospitals may  
            have unintended consequences and further jeopardize patient  
            care.  In addition, a couple of hospital representatives  
            indicated that if an interim report or informal reporting  
            mechanism to the MBC is created, this may improve the process  
            and enhance patient care.  It should be noted that this bill  
            creates an early reporting mechanism to the MBC of specific  
            cases, similar to the concept specified during the hearing.
          In addition, DPH testified during the hearing on its oversight  
            of acute care hospitals and the peer review process.  It  
            appears that DPH has no specific authority on peer review but  
            it assures that elements of professional review by peers  
            exists, usually included in a hospital bylaws.  

          Finally, on discussions of how to improve the peer review  
            process, one physician indicated that there is a need to audit  
            peer review and DPH must audit hospitals that conduct the peer  
            review, and impose penalty on hospitals that do not have a  





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            peer review process.   In addition, to expand 805 reporting, a  
            mechanism must be created where complaints about physicians  
            are reported to the MBC and the MBC conducts its own  
            investigation of the physician and surgeon independent of a  
            hospital's investigation.  

          4.Recent California Supreme Court Decision on Physician Peer  
            Review.  On April 6, 2009, the California Supreme Court issued  
            an opinion relating to peer review in Mileikowsky v. West  
            Hills Hospital Medical Center (available at  
             http://www.courtinfo.ca.gov/opinions/documents/S156986  ).  In  
            this case, the Supreme Court discussed the importance of the  
            peer review process and pointed out the following:  "The  
            primary purpose of the peer review process is to protect the  
            health and welfare of the people of California by excluding  
            through the peer review mechanism those healing arts  
            practitioners who provide substandard care or who engage in  
            professional misconduct.  This purpose also serves the  
            interest of California's acute care facilities by providing a  
            means of removing incompetent physicians from a hospital's  
            staff to reduce exposure to possible malpractice liability.   
            Another purpose, if not equally important, is to protect  
            competent practitioners from being barred from practice for  
            arbitrary or discriminatory reasons."

          5.Similar Legislation this Session.  
          
              a.   SB 58  (Aanestad) among other provisions, provides for  
               changes in a physician and surgeon's central file of  
               individual historical records and the information that is  
               publicly disclosed regarding licensing and enforcement  
               actions; requires a peer review body to annually report to  
               the MBC on its peer review activities; defines an external  
               peer review organization; encourages external peer review  
               under certain conditions; mandates external peer review for  
               specific circumstances; and, establishes an early detection  
               and resolution program for physicians and surgeons in lieu  
               of the filing of an 805 report.  SB 58 is currently pending  
               in this Committee.

              b.   SB 788  (Wyland) among other provisions, would revise the  
               definition of a licentiate and peer review body for  
               purposes of an 805 report to include licensed professional  
               clinical counselors.  SB 788 is pending in this Committee  
               and will be heard of April 27, 2009.






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              c.   AB 120  (Hayashi) makes changes to peer review provisions  
               in existing law including the following:  Encourages a peer  
               review body of a health care facility to obtain external  
               peer review, as specified; requires a peer review body to  
               respond to the request of another peer review body and  
               produce records requested concerning a licentiate;  
               prohibits 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;  
               gives the licensee the choice of having a peer review  
               hearing before a mutually acceptable arbitrator or a panel  
               of unbiased individuals and makes specified changes  
               relating to a hearing officer.  AB 120 is currently pending  
               in the Assembly Business and Professions Committee.

              d.   AB 834  (Solorio) authorizes a peer review body to  
               impose, and a licentiate may accept, voluntary remediation  
               when deemed appropriate by the peer review body, including  
               for a medical disciplinary cause or reason; makes changes  
               relating to the qualifications of a hearing officer.

              e.   AB 245  (Ma) Requires the MBC to verify information on  
               licensed physicians and surgeons posted on its Internet  
               Website.  AB 245 is currently pending in the Assembly  
               Business and Professions Committee.

          6.Oppose Unless Amended.  The  California Hospital Association   
            (CHA) has taken an oppose unless amended position on this  
            bill.  CHA states that new requirements of reporting  
            investigations for peer review bodies where there is a  
            departure from the standard of care, mental illness, substance  
            abuse and sexual misconduct, will have a number of deleterious  
            effects including chilling the peer review process, very low  
            threshold for reporting and reporting could distract from  
            meaningful board oversight.

          7.Author's Amendments.  The Author is proposing to amend this  
            bill in an effort to try and address CHA concerns.  The  
            amendments clarify that the report required by this bill,  
            where there is deviation from the standard of care,  must   
             result   in   patient   harm  , or includes any adverse event as  
            specified in existing law under the Health and Safety Code,  
            and that the report would be filed with the MBC  after  a  
            decision or recommendation by a peer review body.   
            Furthermore, the Author intends that this report should  not  be  





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            disclosed to entities that are required to request a report  
            from the MBC prior to granting or renewing staff privileges. 

           
          NOTE  :  Double-referral to Rules Committee second.
          

          SUPPORT AND OPPOSITION:
          
           Support:  None on file as of April 15, 2009

            Oppose Unless Amended:   California Hospital Association

            Opposition:   None on file as of April 15, 2009



          Consultant:Rosielyn Pulmano