BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1548|
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THIRD READING
Bill No: AB 1548
Author: Carter (D), et al.
Amended: 3/22/12 in Assembly
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 9-0,
6/11/12
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Strickland, Vargas, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 4/26/12 (Consent) - See last page
for vote
SUBJECT : Practice of medicine: cosmetic surgery:
employment of
physicians and surgeons
SOURCE : American Society for Dermatologic Surgery
Association
CalDerm-California Society of Dermatology &
Dermatologic
Surgery
DIGEST : This bill provides that when a business
organization that provides outpatient elective cosmetic
medical procedure or treatment employs a physician to serve
as a medical director of a health care practice in which
the physician does not own, and the business organization
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provides medical care that can only be provided by the
holder of a valid California medical license, the business
would be guilty of specified violations of law.
ANALYSIS :
Existing law:
1. Establishes the Medical Board of California within the
Department of Consumer Affairs, which licenses
physicians and surgeons and regulates their practice
under the Medical Practice Act (Act). (Business and
Professions Code (BPC) Section 2000 et seq.)
2. Restricts the employment of licensed physicians and
surgeons and podiatrists by a corporation or other
artificial legal entity, subject to specified
exemptions. (BPC Section 2400 et seq.)
3. Makes it unlawful to knowingly make, or cause to be
made, any false or fraudulent claim for payment of a
health care benefit, or to aid, abet, solicit, or
conspire with any person to do so, and makes a violation
of this prohibition a public offense punishable as
follows: (Penal Code Section 550)
A. When the fraudulent medical services transaction
at issue exceeds $950, the offense is punishable by
imprisonment in the state prison for two, three or
five years, or by a fine not exceeding $50,000 or
double the amount of the fraud, whichever is greater,
or by both that imprisonment and fine, or by
imprisonment in a county jail not to exceed one year,
by a fine of not more than $10,000 or by both
imprisonment and fine.
B. When the fraudulent medic al services transaction
at issue is $950 or less, the offense is punishable
by imprisonment in a county jail not to exceed six
months or by a fine of not more than $1,000 or by
both imprisonment and fine, unless the aggregate
amount of the claims or amount at issue exceeds $950
in any consecutive 12 month period, in which case the
claims or amounts may be charged as in #A above.
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4. Specifies that any person, whether licensed under the
Act or not, who violates specified provisions of the Act
is guilty of a misdemeanor. (BPC Section 2314)
5. Establishes that except as otherwise provided by law,
any person found guilty of a misdemeanor for violation
of the Act shall be punished by a fine of not less than
$200 nor more than $1,200 or by imprisonment for a term
of not less than 60 days nor more than 180 days, or by
both such fine and imprisonment. (BPC Section 2315 (a))
6. Prohibits the corporate practice of medicine by
specifying that laypersons or lay entities may not own
any part of a medical practice. (BPC Section 2400)
7. Allows medical corporations to be shareholders,
officers, directors, or professional employees of the
professional corporations so long as the sum of all
shares owned by those licensed persons does not exceed
49% of the total number of shares of the professional
corporation so designated herein, and so long as the
number of those licensed persons owning shares in the
professional corporation so designated herein does not
exceed the number of persons licensed by the
governmental agency regulating the designated
professional corporation. (Corporations Code Section
13401.5 (a))
8. Defines "surgical clinic" to mean a clinic that is not
part of a hospital and that provides ambulatory surgical
care for patients who remain less than 24 hours. A
surgical clinic does not include any place or
establishment owned or leased and operated as a clinic
or office by one or more physicians or dentists in
individual or group practice, regardless of the name
used publicly to identify the place or establishment,
provided, however, that physicians or dentists may, at
their option, apply for licensure. (Health and Safety
Code (HSC) Section 1204 (b) (1))
This bill:
1. Provides that a business organization that offers or
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provides outpatient elective cosmetic medical procedures
or treatments, that is owned and operated in violation
of the prohibition against employment of licensed
physicians and surgeons and podiatrists, and that
contracts with or employs a physician and surgeon to
facilitate the offer or provision of outpatient elective
cosmetic medical procedures or treatments that may be
provided only by a licensed physician and surgeon, is
guilty of knowingly making or causing to be made a false
or fraudulent claim for payment of a health care
benefit, thereby making the penalties outlined in
Existing Law # 3 above applicable.
2. Defines "outpatient elective cosmetic medical procedures
or treatments" to mean medical procedures or treatment
that are performed to alter or reshape normal structures
of the body solely in order to improve appearance.
3. Prohibits construing the bill's provisions to alter or
apply to any arrangements currently authorized by law.
4. States that the bill's provisions are declaratory of
existing law.
Background
Since the early 2000s, the popularization of medi-spas has
increased. These spas provide a variety of non-surgical
cosmetic procedures such as laser skin resurfacing,
cellulite treatments and dermal fillers. The employees who
provide these services are medical doctors, who may or may
not have been formally trained in cosmetic procedures, or
allied health professionals who have been trained by a
supervising medical doctor. These professionals conduct
simple to complex procedures in settings outside of
hospitals such as outpatient surgery centers and doctors'
offices, often referred to as medi-spas. According to
California law, a medical doctor must own at least 51% of
the business and the medi-spa personnel who treat patients
must also be supervised by a medical doctor.
In recent years, numerous complaints have been made by
clients of various medi-spas. Under current law, a client
may seek legal action against a licensed employee. If the
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medi-spa is found to be operating in violation to the law,
an individual employee may be found guilty of a misdemeanor
offense and fined from $200 to $1,200 dollars. Many argue
that this fine is minor and not enough to deter the
medi-spas from employing unscrupulous individuals or
allowing improper practices to persist. Further, the
penalty is currently only applied to the licensee and not
the business or corporate entity.
The Corporate Practice of Medicine doctrine generally
prohibits corporations or other entities that are not
controlled by physicians from practicing medicine to ensure
that lay persons are not controlling or influencing the
professional judgment and practice of medicine by licensed
physicians and surgeons. In 2007, the joint findings of
the Medical Board of California and the Board of Registered
Nursing on cosmetic medical procedures in California
concluded better enforcement is needed of existing
California law that prohibits laypersons or corporate
entities from owning any part of a medical practice.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/25/12)
American Society for Dermatologic Surgery Association
(co-source)
CalDerm-California Society of Dermatology & Dermatologic
Surgery (co-source)
American Academy of Dermatology Association
American Academy of Facial Plastic and Reconstructive
Surgery
American Academy of Otolaryngology - Head & Neck Surgery
American Medical Association
American Society of Ophthalmic Plastic & Reconstructive
Surgery, Inc.
California Medical Association
Medical Board of California
Physicians Coalition for Injectable Safety
ARGUMENTS IN SUPPORT : According to the American Society
for Dermatologic Surgery Association, this bill will
stiffen financial penalties for corporate scoff-laws
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violating the existing bar on the corporate practice of
medicine through sham "rent-a-doc" business schemes that
are all too common in the cash-intensive cosmetic medical
procedures segment of patient care. They indicate that
this bill will provide the Medical Board of California and
other consumer protection agencies with enhanced
enforcement tools.
The California Society of Dermatology & Dermatologic
Surgery writes that "each year more non-physician
practitioners who received substantially less training and
minimal supervision are receiving legal approval to perform
the same procedures that dermatologists do regardless of
the adverse effects to patient health?allowing patients to
risk their lives for these elective procedures in
unconscionable."
ASSEMBLY FLOOR : 74-0, 4/26/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Hall, Hayashi, Roger Hernández, Hill, Huber,
Hueso, Huffman, Jeffries, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel Pérez, Portantino, Silva, Skinner,
Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Cedillo, Furutani, Halderman, Harkey,
Jones, Smyth
JJA:m 6/26/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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