BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 509
          Author:   DeSaulnier (D) and Emmerson (D)
          Amended:  5/24/13
          Vote:     27 - Urgency


           SENATE HEALTH COMMITTEE  :  8-0, 5/8/13
          AYES:  Hernandez, Anderson, Beall, De León, DeSaulnier, Monning,  
            Nielsen, Pavley
          NO VOTE RECORDED:  Wolk

           SENATE APPROPRIATIONS COMMITTEE  :  7-0, 5/23/13
          AYES:  De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg


           SUBJECT  :    California Health Benefit Exchange:  background  
          checks

           SOURCE  :     Author


           DIGEST  :    This bill (1) requires the California Health Benefits  
          Exchange (known as Covered California) to submit to the  
          Department of Justice (DOJ), fingerprint images and related  
          information of employees, prospective employees, contractors,  
          subcontractors, volunteers, or vendors for the purposes of  
          obtaining criminal history information; (2) requires Covered  
          California to require any services contract, interagency  
          agreement, or public entity agreement to require the same  
          background check information from their contractors and  
          contractor's employees;  (3) requires the DOJ to forward to the  
          Federal Bureau of Investigation (FBI) requests for federal  
          summary criminal history information, and requires the DOJ to  
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          review the information returned from the FBI and to compile and  
          disseminate a response to the board; and  requires the DOJ to  
          charge a fee sufficient to cover the costs of processing these  
          requests.

           ANALYSIS  :    

          Existing law:

          1.Establishes Covered California in state government, which is  
            governed by the California Health Benefits Exchange  Board  
            composed of five members.

          2.Requires, under federal law, Covered California to make  
            available Qualified Health Plans (QHPs) 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 (HFP), or any applicable state or local  
            public program.  Requires Covered California to enroll  
            individuals in any such program if it is determined that such  
            an individual is eligible.

          4.Permits Covered California to adopt rules and regulations, as  
            necessary, in accordance with the Administrative Procedure Act  
            until January 1, 2016.

          5.Requires, under federal law, any person who receives  
            information provided by an applicant or from a federal agency,  
            to use the information only for the purposes of ensuring the  
            efficient operation of Covered California, as specified.

          6.Makes any person authorized to receive state summary criminal  
            history information, who knowingly furnishes the information  
            to a person who is not authorized, guilty of a misdemeanor.

          This bill:

          1.Requires Covered California executive board (board) to require  
            and submit to the 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  

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            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 the DOJ establishes that the  
               person is free on bail or released on his/her own  
               recognizance pending trial or appeal.

          2.Requires the board to require any services contract,  
            interagency agreement, or public entity agreement to require  
            the same previously mentioned background check information  
            from their contractors and contractor's employees.  

          3.Requires the DOJ to forward to FBI requests for federal  
            summary criminal history information received.  Requires the  
            DOJ to review the information returned from the FBI and  
            compile and disseminate a response to Covered California.

          4.Requires the 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 that are  
            incarcerated, released on bail, or released on their own  
            recognizance pending trial.  Requires Covered California to  
            request from the DOJ this subsequent notification service.

          5.Requires the DOJ to charge a fee sufficient to cover the cost  
            of processing requests under this bill.

          6.Contains an urgency clause that makes this bill effective upon  
            enactment.

           Background
           
           Covered California.  Covered California indicates the requirement  
          for a fingerprint check against federal and state arrest 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  

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          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.

           Differing requirements for agents, state health insurance  
          programs, and eligibility entities  .  The Managed Risk Medical  
          Insurance Board (MRMIB), which administers the 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.  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 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.  Counties must conduct a background  
          screening of a county worker before a county worker may access  
          personal identifying information.  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.

           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.

           Fingerprinting process background  .  According to the DOJ,  
          approximately 35,000 entities perform background checks through  

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          the 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.  Once submitted to the DOJ by the  
          Live Scan operator, the fingerprints are searched against all  
          arrest fingerprint images submitted to and maintained by the 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.

           Prior Legislation
           
          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/her designee, and four other members  
          appointed by the Governor and the Legislature who meet specified  
          criteria.

          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 throughQHPs.

          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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No


          According to the Senate Appropriations Committee:

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                 One-time costs of about $60,000 and ongoing costs of  
               about $40,000 to perform background checks on Health  
               Benefit Exchange employees (federal funds).




                 One-time costs of about $1.2 million to perform  
               background checks for volunteer "assistors" (federal  
               funds).

           SUPPORT  :   (Verified  5/23/13)

          Independent Insurance Agents and Brokers of California


           ARGUMENTS IN SUPPORT  :    According to the author's office:

               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 author's office states that, 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.  Federal guidance requires that Covered  
               California protect and safeguard customers from  
               unauthorized and illegal access to or disclosure of this  
               information.

               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  

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               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.  Covered California  
               states this bill provides 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.

               The California Coverage and Health Initiatives, writes in  
               support that the January 1, 2014 date for Covered  
               California to be open to the public is only seven months  
               away and with open enrollment beginning in October, 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.

          JL:ejd  5/25/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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