BILL ANALYSIS Ó
AB 684
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Date of Hearing: May 7, 2015
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Susan Bonilla, Chair
AB 684
(Bonilla) - As Amended April 30, 2015
NOTE: This bill adds an urgency clause.
SUBJECT: Healing arts: licensees: disciplinary actions.
SUMMARY: Until January 1, 2017, prohibits a registered
dispensing optician (RDO) or optometrist from any disciplinary
action from the Medical Board of California (MBC), the Board of
Optometry or any other state agency with enforcement authority
when both an optometrist and optician practice in the same
location.
EXISTING LAW:
1)Establishes the MBC, within the Department of Consumer
Affairs, to license RDOs and regulate their practice.
(Business and Professions Code (BPC) § 2000 et seq.)
2)Establishes the Board of Optometry, within the Department of
Consumer Affairs, to license optometrists and regulate the
practice of optometry. (BPC § 3000 et seq.)
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3)Prohibits optometrists and RDOs from having any membership,
proprietary interest, co-ownership, landlord-tenant
relationship or any profit-sharing agreement with each other.
(BPC § 655)
4)Prohibits optometrists from having any membership, proprietary
interest, coownership, landlord-tenant relationship or any
profit-sharing arrangement in any form, directly or
indirectly, either by stock ownership, interlocking directors,
trusteeship, mortgage, trust deed or otherwise with those who
manufacture, sell, or distribute lenses, frames, optical
supplies, optometric appliances or devices or kindred products
to physicians and surgeons, optometrists, or dispensing
opticians. (BPC § 655)
5)Provides that it is unlawful for RDOs to: (BPC § 2556)
a) Advertise the furnishing of, or to furnish, the services
of a refractionist, an optometrist or a physician and
surgeon;
b) Directly or indirectly employ or maintain on or near the
premises used for optical dispensing, a refractionist, and
optometrist, a physician and surgeon or a practitioner of
any other profession for the purpose of any examination or
treatment of the eyes; or,
c) Duplicate or change lenses without a prescription or
order from a person duly licensed to issue the same.
THIS BILL:
1)Specifies that on or after January 1, 2016, and until January
1, 2017, no dispensing optician or optometrist shall be
subject to discipline by the MBC, Board of Optometry or any
other state agency with enforcement authority, for engaging in
any business relationship prohibited by BPC §§ 655 and 2556.
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2)Declares that this is an urgency measure necessary for the
immediate preservation of the public peace, health or safety
and is needed in order to protect various businesses,
opticians and optometrists who engage in a business
relationship prohibited by BPC § 655.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This bill is author sponsored. According to the
author, "Co-located vision models have existed in California
for nearly three decades. They serve millions of patients
annually and employ thousands of optometrists and opticians.
With the conclusion of legal suits over the last few years,
the state is compelled to enforce a decades old law. AB 684
will provide a safe harbor as the Legislature, stakeholders
and the Administration work toward statutory solutions that
will maintain patient access to these models and ensure
clinical independence for Optometrists."
Background. In California, there are two eye care service
models: an optometrist's private office and a "co-location"
office, where an optical retail store is co-located with a
Department of Managed Health Care (DMHC)-regulated health
plan, also called a Knox-Keene plan, that provides optometry
care. At co-location sites, patients receive an eye exam and
can fill their prescription for corrective eyewear during the
same visit at the co-located optical retail store [e.g.
Walmart, LensCrafters]. At private optometrist offices,
patients receive an eye exam and can take a prescription
elsewhere or have the optometrist send it out for them.
California law provides that prescriptions are mobile, so the
patient is not required in either setting to have the
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prescription filled on site.
Under BPC §§ 655 and 2556, optometrists and RDOs cannot have any
membership, proprietary interest, co-ownership,
landlord-tenant relationship or any profit-sharing agreement
with each other. Optometrists also cannot have any
membership, proprietary interest, co-ownership,
landlord-tenant relationship or any profit-sharing arrangement
in any form with those who manufacture, sell, or distribute
lenses, frames, optical supplies, optometric appliances or
devices or kindred products to physicians and surgeons,
optometrists or RDOs.
Under these code sections, it is also unlawful for RDOs to do
any of the following:
Advertise the furnishing of, or to furnish, the services
of a refractionist, an optometrist or a physician and
surgeon;
Directly or indirectly employ or maintain on or near the
premises used for optical dispensing, a refractionist, and
optometrist, a physician and surgeon or a practitioner of
any other profession for the purpose of any examination or
treatment of the eyes; or,
Duplicate or change lenses without a prescription or
order from a person duly licensed to issue the same.
The Pearle Case. In February of 2002, Attorney General (AG)
Bill Lockyer brought suit against Pearle Vision, arguing that
the company had violated the Optometry Practice Act. The AG
challenged the business relationship between the Knox-Keene
plan, Pearle VisionCare, and the optical sister company,
Pearle Vision, as well as the ownership of the Knox-Keene plan
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by an optical company, claiming that such relationships
violated BPC §§ 655 and 2556.
The Snow Case. In March 2002, a private plaintiff brought suit
against LensCrafters (the Snow case), raising some of the same
business relationship issues as those raised in the Pearle
case. LensCrafters and others subsequently filed a case in
federal district court to defend their business operations in
California, challenging the constitutionality of BPC §§ 655
and 2556.
California Supreme Court Decision. On appeal, the Pearle case
reached the California Supreme Court, which declared that the
Knox-Keene Act does not create an exemption from restrictions
that BPC §§ 655and 2556 impose on relationships between
optometrists and optical companies for Knox-Keene plans that
employ optometrists and affiliate with optical companies. The
Supreme Court remanded the case to trial court for
determination of whether relationships involved in Pearle
Vision's Knox-Keene arrangement violate BPC §§ 655 and 2556.
The Pearle case ultimately settled, with no determination on
the Knox-Keene/optical company co-location issue. The Snow
case also settled, without a determination on the
Knox-Keene/optical company co-location issue.
Federal Court Decision. The federal court, in December 2006,
struck down BPC §§ 655 and 2556 as unconstitutional,
interpreting the California Supreme Court's ruling in the
Pearle case as a bar to LensCrafters' Knox-Keene plan
arrangement (National Association of Optometrists & Opticians
v. Lockyer, 463 F.Supp.2d 1116 (E.D.Cal.2006). The federal
court determined, "the challenged laws substantially effect
and discriminate against interstate commerce." The Court also
held that "[a]lthough California has legitimate interests in
regulating the provision of health services, defendants have
failed to meet its burden of showing that it has no other
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means to advance its legitimate interests." The Court noted
that the Knox-Keene plan arrangement, if permitted by law,
would be a viable means for the State to achieve its
legitimate interests with less impact on interstate commerce.
Ninth Circuit Court of Appeals Decision. On June 13, 2012, BPC
§ 655 was upheld as constitutional by the Ninth Circuit Court
of Appeals in National Association of Optometrists & Opticians
v. Harris, 682 F.3d 1144 (9th Cir.2012). The optical industry
plaintiffs then petitioned the Supreme Court of the United
States for certiorari review, but on February 19, 2013, the
U.S. Supreme Court declined to hear the case, and the Ninth
Circuit decision upholding the law became final.
Other States. There are 14 U.S. jurisdictions that allow direct
employment of optometrists by optical companies. Direct
landlord-tenant relationships are permitted in 47 states.
Additionally, 49 states allow optical companies to franchise
to optometrists.
Need for This Legislation. Given the complexities of the issue
and the multiple regulatory bodies involved including the
Board of Optometry, the MBC, the AG and other interested
stakeholders, additional time is necessary to develop a
comprehensive legislative solution that includes statutory
language to provide clarity to all parties, including
regulatory bodies.
Without the safe harbor provisions proposed in this bill, the
state may be compelled to take enforcement action against
licensed optometrists who practice in co-located models which
serve to expand patient choice. These locations also offer
choices for optometrists who may seek to serve patients who
may not traditionally have access to care. Additionally,
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according to the Board of Optometry, "Retail optical practices
are becoming increasingly popular for both new graduates and
established Optometrists due to the level of income they
provide, low risk, flexibility they can offer, and the ability
to focus more on the clinical side of the practice rather than
the business operations" (Business Models of Optometry, Agenda
Item 11, California Board of Optometry Memo, June 21, 2011).
According to the author, the evolution of healthcare, evidenced
by the rise of health maintenance organizations, proliferation
of convenient care and co-located healthcare clinics and
changing provider relationships, requires that California law
and policy also evolve to effectuate the state's goals of
increased access to quality affordable care. This bill
proposes a safe harbor provision until January 1, 2017, that
will allow for constructive dialogue between stakeholders and
regulatory entities. The goal is to create a comprehensive
legislative solution that protects patient access to care,
respects optometrists' clinical judgment and professional
choice and provides regulatory entities with clear direction.
Current Related Legislation. AB 595 (Alejo) of the current
legislative session, prohibits a licensed registered dispensing
optician or a manufacturer or distributor of optical goods that
is renting or leasing office space to or from, sharing office
space with, or receiving space from an optometrist from engaging
in conduct that would influence or interfere with the clinical
decisions, as defined, of that optometrist, as specified.
STATUS: This bill is in the Assembly Committee on Business and
Professions.
Prior Related Legislation. AB 778 (Atkins) of 2011, would have
specifically permitted a licensed vision health plan, who is
owned by an optical manufacturer, to locate next to a registered
dispensing optician. NOTE: This bill was never set for hearing
in the Senate Committee on Business, Professions and Economic
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Development.
ARGUMENTS IN SUPPORT:
The National Association of Optometrists and Opticians support
the bill and write in their letter, "Ambiguity in current law
has created confusion about whether vision care centers can
continue to operate in California; years of past litigation have
not resolved this ambiguity?It is critically important that the
state guarantees uninterrupted vision care for the working
families that depend on optometrists who work at vision care
centers."
Sears Optical also supports the bill. They write, "Sears
Optical is pleased to write in support of AB 684, which will
protect vision care access for working Californians while the
state deliberates the best way to bring clarity to outdated laws
governing how and where optometrists can provide eye care
services in the state."
Walmart Inc., on behalf of Walmart Vision Centers and Sam's Club
Opticals , U.S. Vision, owner of JCPenney Optical, National
Vision Inc. , LensCrafters , Eyexam and For Eyes Opticals,
supports the bill and writes, "[We] have been a part of a
stakeholder process that includes out industry partners, the
Attorney General's office and the Governor's office designed to
put this issue to rest once and for all. As we continue these
productive conversations, it critically important that
Californians continue to have access to the high-quality care
provided by optometrists and support employees who work at these
locations. AB 684 guarantees uninterrupted vision care for the
patients that depend on the Doctors practicing at our Walmart
and Sam's Club locations. This bill provides the Doctors and
patients assurance that they can continue providing and
receiving high quality care as the state continues working
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toward a collaborative, comprehensive eye care solution."
ARGUMENTS IN OPPOSITION:
None on file.
AMENDMENTS:
Assemblymember Alejo carried legislation (AB 595, of the current
legislation session) that sought to provide a solution for the
issues as outlined in this analysis. As such, Assemblymember
Bonilla desires to add Assemblymember Alejo as a joint author to
this measure.
Since this is an urgency measure, the following amendments
should be made to ensure the legislation goes into effect
immediately:
On page 2, line 4, strike: January 1, 2016
On page 3, line 8, strike: and on and after
On page 3, line 9, strike: January1, 2016
REGISTERED SUPPORT:
EYEXAM of California
AB 684
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For Eyes Optical Company
LensCrafters
National Association of Optometrists and Opticians
National Vision, Inc.
Sam's Club Opticals
Sears Optical
U.S. Vision, JCPenny Optical
Walmart Stores Inc.
2 individuals
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Le Ondra Clark Harvey, Ph.D. / B. & P. /
(916) 319-3301
AB 684
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