BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 509
AUTHOR: DeSaulnier and Emmerson
AMENDED: April 22, 2013
HEARING DATE: May 8, 2013
CONSULTANT: Bain
SUBJECT : California Health Benefit Exchange: background checks.
(Urgency)
SUMMARY : Authorizes the California Health Benefit Exchange
(known as Covered California) to require, and to submit to the
Department of Justice (DOJ), fingerprint images and related
information of employees, prospective employees, contractors,
subcontractors, volunteers, or vendors to obtain criminal
history information. Requires DOJ to forward requests to the
Federal Bureau of Investigation (FBI) for federal summary
criminal history information, and requires DOJ to review the
information from the FBI and compile and disseminate a response
to Covered California. Requires DOJ to charge a fee sufficient
to cover the processing costs. Urgency clause.
Existing law:
1.Establishes Covered California in state government, which is
governed by a board composed of 5 members.
2.Requires, under federal law, Covered California to make
available qualified health plans to qualified individuals and
qualified employers.
3.Requires Covered California to inform individuals of
eligibility requirements for the Medi-Cal program, the Healthy
Families Program, or any applicable state or local public
program. Requires Covered California to enroll individuals in
any such program, if, through screening of the application,
Covered California determines that such an individual is
eligible.
4.Permits Covered California to adopt rules and regulations, as
necessary, and permits Covered California to adopt any
necessary rules and regulations as emergency regulations in
accordance with the Administrative Procedure Act until January
1, 2016.
Continued---
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5.Requires, under federal law, any person who receives
information provided by an applicant for coverage or receives
information from a federal agency, to use the information only
for the purposes of ensuring the efficient operation of the
Exchange, including verifying the eligibility of an individual
to enroll in the Exchange or to claim a premium tax credit or
cost-sharing reduction, and to not disclose the information to
any other person except as provided.
6.Makes any person authorized by law to receive state summary
criminal history information record or information obtained
from a record who knowingly furnishes the record or
information to a person who is not authorized by law to
receive the record or information guilty of a misdemeanor
This bill:
1.Permits the Covered California executive board to require and
submit to DOJ fingerprint images and related information of
all employees, prospective employees, contractors,
subcontractors, volunteers, or vendors for the purposes of
obtaining information as to the following information:
a. The existence and content of a record of state
or federal convictions; and,
b. The existence and content of a record of state
or federal arrests for which DOJ establishes that the
person is free on bail or released on his or her own
recognizance pending trial or appeal.
2.Requires DOJ to forward to FBI requests for federal summary
criminal history information received. Requires DOJ to review
the information returned from the FBI and compile and
disseminate a response to Covered California.
3.Requires DOJ to provide to Covered California, on individuals
who were initially subject to a criminal history information
check, subsequent conviction and arrest information for
individuals awaiting trial who are incarcerated, released on
bail, or released on their own recognizance pending trial.
Requires Covered California to request from DOJ this
subsequent notification service.
4.Requires DOJ to charge a fee sufficient to cover the cost of
processing requests under this bill.
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5.Contains an urgency clause that will make this bill effective
upon enactment.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. In 2010, California was the first state
in the nation to enact legislation to implement the provisions
of the federal Affordable Care Act by creating Covered
California. Covered California is expected to begin enrolling
individuals and small employers in health plans in October of
this year. Recently-released federal privacy and security
guidelines require state exchanges to perform criminal
background checks on any personnel or potential personnel
whose duties include, or would include, having access to
personal health or financial information for exchange
applicants and enrollees. The guidelines also require a
process for periodic rescreening of personnel with access to
this information.
Covered California has determined that these requirements apply
broadly to employees, prospective employees, contractors,
subcontractors, volunteers and vendors who will have access to
personal information for Covered California applicants and
enrollees. This group will have access to applicant or
enrollee Personal Identifying Information, Personal Health
Information and/or Federal Tax Information as defined in the
Health Insurance Portability and Accountability Act (HIPAA),
the California Information Practices Act, and Internal Revenue
Service (IRS) regulations. Federal guidance requires that
Covered California protect and safeguard customers from
unauthorized and illegal access to or disclosure of this
information.
To comply with federal guidance, Covered California must
implement fingerprint-based background checks to identify, and
exclude from accessing personal information, applicants with a
demonstrated history of abuse of personal information or other
offenses that may indicate potential propensity to abuse such
information. SB 509 simply authorizes Covered California to
require and submit to DOJ fingerprint images and related
information of employees, prospective employees, contractors,
subcontractors, volunteers or vendors for the purpose of
obtaining criminal offender record information. SB 509 also
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authorizes DOJ to forward the fingerprints to the FBI for
federal criminal offender record information. Similar
authority is given to the California Department of Insurance
(CDI) and the Department of Managed Health Care (DMHC) as well
as numerous other state departments and agencies.
2.Background. Covered California will be providing coverage to
small employers and individuals, including individuals
eligible for federal health insurance premium and cost-sharing
subsidies. Since some of the individuals applying for coverage
will be applying for coverage subsidies that are means-tested
(for example, federal premium and cost-sharing subsidies for
Exchange coverage are based on the individual's income), staff
for Covered California will have access to information about
where the individual works, financial (income, wage data) and
personal identifying information (Social Security Number,
name, age, address, dependents) about individuals seeking
coverage.
Covered California indicates the requirement for a fingerprint
check against federal and state arrest and comes from the
federal Minimum Acceptable Risk Standards for Exchanges
(MARS-E) Personnel Screening Requirements. MARS-E requires
organizations to screen individuals prior to authorizing
access to information systems, and rescreen individuals
periodically, consistent with the criticality/sensitivity
rating of the position. To meet these MARS-E requirements,
Covered California must perform a criminal history check for
all persons prior to employment and, require appropriate
personnel to obtain and hold a moderate-risk security
clearance as defined in the federal personnel
security/suitability handbook.
3.Differing requirements for agents, state health insurance
programs, and eligibility entities. The Managed Risk Medical
Insurance Board (MRMIB), which administers the Healthy
Families Program (HFP), the Access for Infants and Mothers
Program (AIM), the Major Risk Medical Insurance Program and
the federal Pre-Existing Condition Insurance Program (PCIP),
does not require its employees to undergo fingerprinting or a
criminal background check. In addition, MRMIB does not require
its vendors' employees who perform eligibility-related
functions to undergo fingerprinting or a criminal background
check. However, Maximus, which performs eligibility
determinations for MRMIB's HFP, AIM and PCIP, states if
performs a national criminal background check on all of its
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employees, but does not require them to be fingerprinted.
DHCS' Medi-Cal Eligibility Division indicates its state Medi-Cal
employees are neither fingerprinted nor do they undergo a
criminal background check. Medi-Cal has a privacy and security
agreement between DHCS and the counties, which determine
eligibility for Medi-Cal on behalf of the state. The agreement
between the DHCS and counties contains a confidentiality
statement requirement that requires all county workers who
assist in the administration of Medi-Cal and who access, use
or disclose Medi-Cal personal identifying information to sign
a confidentiality statement that includes, at minimum, general
use, security and privacy standards, unacceptable use and
enforcement policies, which must be signed by the county
worker prior to accessing personal identifying information. In
addition, counties must conduct a background screening of a
county worker before a county worker may access personal
identifying information. The screening requirement is required
to be commensurate with the risk and magnitude of harm the
employee could cause. This screening requirement does not
specifically require fingerprinting and a criminal background
check, though counties have policies that include those
requirements.
The Insurance Commissioner is authorized to require the
fingerprints on applications for any, some, or all of the
licenses issued under the Insurance Code, and to require
authenticated fingerprints. In practice, CDI indicates agents
and brokers are required to be fingerprinted. DMHC is
authorized to require (and in practice requires) fingerprint
images and associated information from a prospective employee
whose duties would include access to medical information.
4.Equal Employment Opportunity Enforcement (EEOC) Guidance. In
April 2012, the EEOC published "Enforcement Guidance on the
Consideration of Arrest and Conviction Records in Employment
Decisions Under Title VII of the Civil Rights Act of 1964"
regarding the use of arrest or conviction records in
employment decisions under Title VII of the Civil Rights Act
of 1964 (Title VII). The EEOC Guidance states that an
employer's use of an individual's criminal history in making
employment decisions, may, in some instances, violate the
prohibition against employment discrimination under Title VII.
A violation may occur when an employer treats criminal history
information differently for different applicants or employees,
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based on their race or national origin (disparate treatment
liability). An employer's neutral policy (e.g., excluding
applicants from employment based on certain criminal conduct)
may disproportionately impact some individuals protected under
Title VII, and may violate the law if not job related and
consistent with business necessity (disparate impact
liability). Two circumstances in which the EEOC believes
employers will consistently meet the "job related and
consistent with business necessity" defense are as follows:
a. The employer validates the criminal conduct
exclusion for the position in question in light of the
Uniform Guidelines on Employee Selection Procedures (if
there is data or analysis about criminal conduct as
related to subsequent work performance or behaviors); or
b. The employer develops a targeted screen considering
at least the nature of the crime, the time elapsed, and
the nature of the job (the three factors identified in
case law). The employer's policy then provides an
opportunity for an individualized assessment for those
individuals identified by the screen, to determine if the
policy, as applied, is job related and consistent with
business necessity.
5.Fingerprinting process background. According to DOJ,
approximately 35,000 entities perform background checks
through DOJ's Bureau of Criminal Information and Analysis.
Individuals who are required to be fingerprinted must fill out
a one page form (typically provided by their employer)
entitled "Request for Live Scan Service" that asks for
information about the individual's name, date of birth,
gender, height, weight, place of birth, address, and Social
Security number. The rolling of the individual's fingerprints
must be done by a certified Live Scan operator (which includes
public providers, such as police departments, and private
providers). Once submitted to the DOJ by the Live Scan
operator, the fingerprints are searched against all arrest
fingerprint images submitted to and maintained by DOJ from
California law enforcement agencies. The applicant's
fingerprints are retained and are searched against all new
arrest fingerprint images. Biometric matches result in
subsequent notification to the affected response agency,
generally within 48 to 72 hours.
DOJ does not determine the fingerprint rolling cost of the Live
Scan operators, and the cost can vary by region. Covered
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California estimates the estimated fingerprinting cost per
individual is $65 which includes the cost of rolling
individual fingerprints and fees charged by DOJ and the FBI.
Covered California indicates it will cover the cost for all
its employees and prospective employees, although the
legislation is silent on this issue. Until December 31, 2014,
Covered California will pay the cost for individuals who have
successfully completed the training and certification process
to be an application assister. Contractors, subcontractors,
vendors and volunteers will be responsible for their own
costs. The estimated cost of $65 is a one-time cost, and there
is no additional cost for subsequent reports necessary to meet
the federal "periodic rescreening" requirement. Covered
California indicates it plans to negotiate a statewide
discount rate and extend the discounted service to
contractors, subcontractors, vendors and volunteers.
6.Related legislation. SB X1 4 (Emmerson) and AB X1 3 (Conway)
would require all employees, prospective employees,
contractors, subcontractors, and vendors, who facilitate
enrollment of persons in qualified health plans in Covered
California and who have access to the financial or medical
information of enrollees/potential enrollees to be
fingerprinted for the purpose of obtaining criminal history
information. In addition, SB X1 4 and AB X1 3 would prohibit a
person who has been convicted of felony crimes of dishonesty
or breach of trust in a state or federal jurisdiction or other
specified crimes from being hired by or contracting with
Covered California for the purpose of facilitating enrollment
of persons in a qualified health plan in Covered California,
or for any position where, in the course and scope of his or
her employment, he or she will have access to the financial or
medical information of enrollees or potential enrollees of
Covered California. Finally, SB X1 4 and AB X1 3 would also
require an applicant to notify Covered California of any
prescribed misdemeanor or felony convictions, filing of
charges, or administrative actions.
7.Prior legislation.
a. SB 900 (Alquist), Chapter 659, Statutes of 2010,
establishes Covered California as an independent public
entity within state government, and requires Covered
California to be governed by a board composed of the
Secretary of California Health and Human Services Agency,
or his or her designee, and four other members appointed by
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the Governor and the Legislature who meet specified
criteria.
b. AB 1602 (John A. Pérez), Chapter 655, Statutes of 2010,
specifies the powers and duties of Covered California
relative to determining eligibility for enrollment in the
Covered California, and requires Covered Coverage to
arrange for coverage through QHPs.
c. AB 2343 (Torres), Chapter 256, Statutes of 2012 requires
that, when state or federal summary criminal history
information is furnished, the authorized agency,
organization, or individual furnish a copy of the
information to the person to whom the information relates
if the information is a basis for an adverse employment,
licensing, or certification decision.
8.Covered California. In a letter explaining the provisions of
this bill, Covered California indicates it has determined the
most comprehensive way to meet the federal MARS-E requirements
is to conduct fingerprint-based background checks. To
implement this policy, Covered California states that DOJ
requires clear statutory authority to allow Covered California
to request and to receive criminal history information from
DOJ and the FBI. This bill will provide Covered California
with the statutory authority that will allow it to perform
fingerprint-based background checks prior to the employment of
state service center employees and community-based assisters.
Without the authority in this bill, Covered California will
not be able to promulgate the necessary background check
regulations and cannot hire the needed staff.
9.Support. The California Coverage & Health Initiatives (CCHI)
writes in support that the January 1, 2014 date for the
Exchange to be open to the public is only seven months away
and with open enrollment beginning in October, and it is
crucial that the training and hiring of employees, navigators,
and assisters begin immediately in order to maximize
enrollment and guarantee not only coverage but the success of
Covered California. In addition, CCHI writes that it lends it
support to the efforts to further define disqualifying crimes
and establish a robust appeals process. CCHI concludes it is
essential that this legislation be passed to ensure that
Covered California is fully functioning by January 2014.
10.Support if amended. Health Access (HA) writes that it
supports consumer protections, including fingerprinting and
background checks for Covered California employees,
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contractors and navigators that handle sensitive personal
information, including personal health information, financial
information, and income tax data, and that any Californian who
relies on Covered California should be assured that their
private information is protected. In addition, HA states that
overly stringent background checks disproportionately impact
African-Americans and Latinos, particularly men and boys of
color. HA states African-Americans are 7.7 times more likely
to be incarcerated than whites, and Hispanics are twice as
likely. HA states communities of color that stand to benefit
most from the expansions of coverage through Covered
California and Medi-Cal are the most likely to be barred from
helping enroll their own communities if the background check
standard is overly broad.
HA writes that it does not support a broad grant of authority to
Covered California to determine what crimes should be
disqualifying crimes and what the appeals process should be.
Instead, HA provides amendments based on the best practices
recommended by the federal EEOC that require the crimes be
substantially related to the qualifications, functions or
duties of the employment sought, to specify the disqualifying
crimes, and to require a formal appeals process for those
whose criminal history includes a potentially disqualifying
offense.
Consumers Union and Western Center on Law & Poverty write with
similar concerns. WCLP seeks amendments that base the
background check on the recommended EEOC best practices, to
require crimes resulting in disqualification have a
correlation to the work (such as fraud or identity theft), and
to limit the individuals who are subject to the fingerprinting
requirement to individuals with access to sensitive
confidential information. Finally, WCLP seeks an amendment to
provide an appeals process for applicants so that incorrect
information that arise in applications can be remedied.
11.Concerns. The California LGBT Health & Human Services Network
(LGBT Network) writes that it is concerned that Covered
California is setting up overly-broad standards for
disqualifying crimes with a "crimes of moral turpitude"
standard. LGBT Network argues LGBT communities would be better
served if this bill specifics disqualifying crimes, rather
than leaving that determination to the Exchange, and those
crimes should be limited to crimes substantially related to
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the qualifications necessary for working with consumers'
personal information.
12.Policy issues:
a. Statute versus regulation for criteria in this bill.
Criminal background checks for employment purposes involve
several policy issues including: (1) which individuals are
subject to the criminal background check requirement; (2)
the crimes that either automatically or potentially
disqualify an individual from employment; (3) whether there
is an appeal mechanism that allows individuals who
otherwise have a disqualifying criminal offense to appeal
or present evidence of rehabilitation; and (4) who pays for
the criminal background check (the employee versus the
employer).
This bill broadly defines the individuals who Covered
California is authorized to subject to criminal background
check (employees, prospective employees, contractors,
subcontractors, volunteers, and vendors), and does not
contain a requirement or a limitation that only subjects
employees and individuals to the criminal background check
who have access to confidential or personal identifying
information of applicants for health subsidy programs
administered by Covered California or require the
disqualifying crime be job related. Under this bill, the
individuals subject to the criminal background check, the
crimes that may disqualify an individual from working or
volunteering for the Exchange or its contractors and
whether there is an extenuating circumstance or appeal
mechanism for individuals who have a criminal background
are to be addressed in regulations by Covered California.
The EEOC guidance on criminal background checks states that
one circumstance in which the EEOC believes employers will
consistently meet the "job related and consistent with
business necessity" defense in using criminal background
checks is if the employer develops a targeted screen
considering at least the nature of the crime, the time
elapsed, and the nature of the job (three factors
identified in case law), and the employer's policy then
provides an opportunity for an individualized assessment
for those people identified by the screen, to determine if
the policy, as applied, is job related and consistent with
business necessity.
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Covered California indicates that, in order to be compliant
with federal requirements, only individuals with access to
personal identifying information, personal health
information, and federal tax information need to be
fingerprinted, and through the regulatory process, it will
develop a fingerprinting policy which identifies the
individuals who need to be fingerprinted. Covered
California indicates that, should the federal requirements
change, it may need to modify which individuals need to be
fingerprinted, and given the newness of the Affordable Care
Act, it is unknown if, or how, the federal requirements
will change. If federal requirements change, Covered
California states it would be able to modify the
regulations, rather than being required to seek a change in
state law.
Draft proposed regulations from Covered California require
fingerprint images and criminal history information from
individuals whose duties include access to federal tax
information, access to personal identifying information,
access to personal health information, access to
confidential or sensitive information (credit card account
number or Social Security number), access to cash, checks
or other forms of payment, responsibility for the
development or maintenance of the CalHEERS system, access
to information technology systems of the Exchange, and
responsibility for the performance of any service center or
county center duties or function. In addition, the proposed
draft proposed regulations require the conviction of a
felony or misdemeanor related to a crime of moral turpitude
be substantially related to the qualifications, functions
or duties of the specific employment sought by the
applicant. The draft proposed regulations also require
Covered California to pay any costs for furnishing the
fingerprints and conducting the searches of all its
employees and prospective employees. Finally, the draft
proposed regulations also contain an appeal process for
assisters if the individual believes his or her criminal
record is inaccurate, and a requirement that Covered
California take into account the nature of the job sought,
the age, nature and gravity of the offense, whether the
individual has a history of prior discipline and any
evidence of rehabilitation when reconsidering the weight of
a disqualifying offense.
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13.Amendments. Following discussion between committee staff and
Covered California, the following amendment would state that
individuals who are subject to the criminal background and
fingerprinting requirement would be in compliance with federal
guidance applicable to state-based Exchanges. The guidance
referred to require Exchanges to assign a
criticality/sensitivity risk designation for all positions,
establishes screening criteria for individuals filling those
positions and requires the criticality/sensitivity
designations be reviewed and revised within every 365 days.
On page 3, lines 3-13:
(a) The executive board of the California Health Benefit
line 4 Exchange, as established by Section 100500, may
require, and may submit to the Department of Justice,
fingerprint images and related information required by the
Department of Justice of all employees, prospective
employees, contractors, subcontractors, volunteers, or
vendors subject to compliance with federal guidance
applicable to state-based Exchanges for the purposes of
obtaining information as to the existence and content of a
record of state or federal convictions and also information
as to the existence and content of a record of state or
federal arrests for which the Department of Justice
establishes that the person is free on bail or on his or
her recognizance pending trial or appeal.
In addition, an amendment is needed to correct an incorrect
cross reference in this bill.
On page 3, lines 20-23:
(c) The Department of Justice shall provide a state or federal
level response to the board pursuant to paragraph (1) of
subdivision (p) of Section 11105 of the Penal Code.
SUPPORT AND OPPOSITION :
Support: California Coverage & Health Initiatives
Oppose: None received.
-- END --
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