BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 684 Hearing Date: July 6,
2015
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|Author: |Alejo and Bonilla |
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|Version: |June 30, 2015 |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant|Sarah Huchel |
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Subject: Healing arts: licensees: disciplinary actions.
SUMMARY: Prohibits the Medical Board of California (MBC) and the
California Board of Optometry (CBO) from enforcing provisions
related to business relationships between registered dispensing
opticians (RDOs) and optometrists.
Existing law:
1)Defines individuals, corporations, and firms engaged in the
business of filling prescriptions lenses and related products
and performing allied services as "dispensing opticians" and
states that they are prohibited from engaging in that business
unless registered with the MBC. (Business and Professions
Code (BPC) § 2550)
2)Establishes the CBO within the Department of Consumer Affairs
to license optometrists and regulate the practice of
optometry. (BPC § 3000 et seq.)
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
AB 684 (Alejo) Page 2
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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:
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, an
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. (BPC
§ 2556)
6)Establishes the Knox-Keene Health Care Service Plan Act of
1975 which establishes rules for mandatory basic services,
financial stability, availability and accessibility of
providers, and other standards for patient care. (Health and
Safety Code (HSC) §§ 1340 et seq.)
7)Declares Legislative intent and purpose to promote the
delivery and the quality of health and medical care to the
people of the State of California who participate in a health
care service plan by:
a) Ensuring the continued role of the professional as the
determiner of the patient's health needs which fosters the
traditional relationship of trust and confidence between
the patient and the professional.
b) Prosecuting malefactors who make fraudulent
solicitations or who use deceptive methods,
misrepresentations, or practices which are inimical to the
general purpose of enabling a rational choice for the
consumer public.
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c) Ensuring that subscribers and enrollees receive
available and accessible health and medical services
rendered in a manner providing continuity of care. (HSC §
1342)
This bill:
1) Prohibits an individual, corporation, or firm operating as a
RDO before the effective date of this bill, or an employee of
such an entity, or an optometrist licensed before the
effective date of this bill, from being subject to any action
by the MBC, the CBO, another state agency, or a district
attorney for engaging in any prohibited business relationship
between optometrists and RDOs, as specified.
2) Prohibits this bill from being construed to imply or suggest
that a RDO or optometrist engaging in any business
relationship is in violation of or in compliance with the
law.
3) Prohibits this bill from applying to any business
relationships prohibited by specified law that are registered
and operating on or after the effective date of this bill.
4) States that nothing in this bill shall prohibit an
individual, corporation, or firm operating as a RDO from
engaging in a business relationship with a licensed
optometrist before the effective date of this bill at
locations registered with the MBC before the effective date
of this bill.
5) Prohibits any individual, corporation, or firm, or an
employee of such an entity, operating as a RDO before the
effective date of this bill, from being subject to any action
for advertising the furnishing of, or furnishing, the
services of a refractionist, an optometrist, or a physician
and surgeon; or directly or indirectly employing or
maintaining on or near the premises used for optical
dispensing, a refractionist, an optometrist, a physician and
surgeon or a practitioner of any other profession for the
purpose of any examination or treatment of the eyes.
6) Prohibits this bill from being construed to imply or suggest
AB 684 (Alejo) Page 4
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that a RDO is in violation of or in compliance with the law.
7) Prohibits this bill from applying to any business
relationships prohibited by specified law that are registered
and operating on or after the effective date of this bill.
8) States that nothing in this bill shall prohibit an
individual, corporation, or firm operating as a RDO from
engaging in a business relationship with a licensed
optometrist before the effective date of this bill at
locations registered with the MBC before the effective date
of this section.
9) Sunsets the above provisions of this bill on January 1, 2017.
10)Tolls the limitations period during the time this bill is in
effect for any actions taken against an individual or
entity's license or registration in regards to a violation
discussed in this bill.
11)States that this bill is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety
within the meaning of Article IV of the Constitution and
shall go into immediate effect. The facts constituting the
necessity are: In order to protect various businesses,
opticians, and optometrists who engage in a business
relationship that is prohibited by specified law from
discipline by the MBC, the CBO, or other state agency with
enforcement authority while the Legislature, with the
assistance of appropriate regulatory agencies, develops a
model that will allow California businesses to provide
services to patients and also protect the interests of
practitioners.
FISCAL
EFFECT: This bill is keyed "fiscal" by the Legislative Counsel.
According to the analysis by the Assembly Appropriations
Committee dated May 20, 2015, this bill will have negligible
state fiscal effect.
COMMENTS:
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1.Purpose. This bill is sponsored by the Author . According to
the Author's office, "Current state law governing the
relationship between optometrists and opticians, co-located
sellers of eyewear has not been updated for many years. The
result is that these laws no longer reflect today's realities
and needs as the health care landscape has evolved
significantly. This evolution, evidenced by the rise of HMO's,
proliferation of convenient care and co-located healthcare
clinics, changing provider relationships, and now the
Affordable Care Act, requires that California law and policy
also evolve to effectuate the state's goals of increased
access to quality, affordable care?.
"AB 684 will temporarily allow [vision care centers] to
continue to operate in the state by suspending any new
disciplinary action against optometrists and opticians by the
Board of Optometry and the Medical Board of California until
January 1, 2017, while negotiations continue on a permanent
fix [to California law restricting certain business
arrangements affecting optometrists and opticians]."
2.Background. This bill is a result of over a decade of
litigation debating the legitimacy of current law prohibiting
certain business relationships between an optometrist and a
registered dispensing optician. The final case, National
Association of Optometrists & Opticians v. Harris, 682 F.3d
1144 (9th Cir.2012) affirmed California statutes.
The plaintiffs in the case, the National Association of
Optometrists and Opticians, LensCrafters, Inc., and Eye Care
Centers of America, Inc., argued that the laws prohibiting
licensed opticians from offering prescription eyewear at the
same location in which eye examinations are provided and the
advertising that eyewear and eye examinations are available in
the same location, violate the dormant Commerce Clause. The
plaintiffs argued it was unfair that optometrists and
ophthalmologists may set up a practice where patients may
receive both eye examinations and prescription eyewear, but
opticians may offer only the sale of eyewear, not eye
examinations, and therefore are unable to offer the
convenience of "one-stop shopping" in California.
The Court upheld the California law as constitutional, stating
that the law was not discriminatory and did not place a
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significant burden on interstate commerce "just because it
precludes a preferred, more profitable method of operating in
a retail market."
While the decision placed a final affirmation on existing law,
determining its impact on California's optical market has not
been concluded. The law did not anticipate the myriad
leasing, co-locating, and employment relationships that sprung
up during its debated legality.
3.Practice Models. There are several basic ways in which
California consumers obtain eye exams and prescription
eyewear:
a. Private practice . An optometrist owns his or her own
location in which the optometrist provides eye examinations
and sells prescription eyewear.
b. Co-located optician and optometrist . Many department
stores, warehouse stores, and retail stores have a
full-service optical department that offer an eye exam and
prescription eyewear in one place. The business
arrangements governing these entities vary, but there is
usually a lease of space involved, with varying contract
terms.
c. Full Service HMO : Kaiser Permanente offers eye
examination services and optical dispensing services at
same location.
d. Optician-Owned Dispensary : A RDO offers prescription
eyewear but does not offer or provide access to
optometrist/eye examination services.
It is currently unsettled as to the legality of co-located
optometrists and opticians, and hundreds of jobs and access to
eye care are at stake until there is agreement as to the
appropriate nature of the business types.
This bill will provide a safe harbor to individuals involved
in business relationships that may be subject to current
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prohibitions until January 1, 2017, at which time an agreement
among stakeholders is anticipated.
1.Related Legislation. AB 595 (Alejo) of 2015 would have
specifically authorized in statute vision care models that
currently exist in California where a registered dispensing
optician is located next to an optometrist. ( Status : This
bill is currently pending in the Assembly Business and
Professions Committee.)
2.Arguments in Support. Wal-Mart Stores, Inc. , on behalf of
Walmart Vision Centers and Sam's Club Opticals ? is pleased to
write in supp9ort of AB 684, which will protect vision care
access for Californians while the state deliberates the best
way to bring clarity to outdated laws governing how and where
optometrists may provide vision care services in the state."
LensCrafters writes in support, "Optometrists associated with
EYEXAM of California, our sister company, and a Knox-Keene
licensed vision care plan have been providing quality vision
care to patients at LensCrafters locations for 28 years.
These optometrists are closely regulated by the state, and
patients value the convenience, accessibility and flexibility
of being able to receive comprehensive eye care at a location
where they do other shopping and where they can receive
services during the evenings and on weekends. However, years
of litigation relating to a 1960s law have caused ambiguity
about whether doctors can continue seeing patients at vision
care centers like ours.
"LensCrafters has been part of a robust stakeholder process
that includes our 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 is critically important that the more than 2
million Californians who receive eye care at one of
California's more than 600 vision care centers continue to
have access to the high-quality care provided by the nearly
2,000 optometrists and support employees who work at these
locations."
EYEXAM of California, For Eyes Optical Company, National
Association of Optometrists and Opticians, National Vision,
Inc. and its subsidiaries , Sears Optical, The California
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Chamber of Commerce, U.S. Vision , and numerous individuals
express the same sentiment.
3.Arguments in Opposition. The California Optometric
Association (COA) writes in opposition, "As amended, this
measure would prohibit enforcement of Business and Professions
Code Section 655 and 2556 until January 2017, and allow large
corporate optical chains to put undue influence on an
optometrist's business practices, potentially impacting their
clinical judgment about what is best for their patients. ?
"COA has fought for more than a decade to see these two laws
enforced. The problems that have occurred have been severe
and patient care has suffered. LensCrafters alone has paid
more than $20 million in class action awards and has silenced
critics with confidential settlements. The AG has official
court examples of real harm that have happened when a patient
believes they are getting a comprehensive eye exam that in a
traditional setting would detect eye disease and end up
receiving a cursory exam that is given to only sell eyeglasses
and other product. In fact, the AG first initiated litigation
because they found that the poor quality eye exam at Pearle
Vision (owned by Luxottica, which is the same parent company
as LensCrafters) was responsible for a patient's blindness.
These laws are in place for a good reason and they have been
affirmed by the courts.
"If a tweak to California law is necessary to modernize the
statute and ensure retail optometry businesses like Costco
that do not employ eye doctors can continue to operate, COA is
more than willing to address those legitimate concerns this
year. We can do that now without the need for a moratorium.
COA cannot support a proposal that prevents the optometry and
medical board from enforcing the law against all bad actors in
the marketplace."
California Association of Dispensing Opticians "believes that
[AB 684]'s proponents should not be rewarded for years of
violation of California patient protection laws by a 'get out
of jail free card' embodied in [this bill]."
VSP Vision Care writes, "The sponsors and proponents of the
bill failed in years of federal litigation to invalidate state
patient protection laws. Those laws bar the specific business
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model established in California by the multinational corporate
sponsors of the bill, and operated without regard to existing
law during the sustained period of that unsuccessful
litigation. ?
"Now, after over two-years of advertised meetings and
discussions with the Department of Justice, ostensibly on how
to come into compliance with California law, AB 684 is simply
the latest bill sponsored by proponents to prolong operations
in California while not complying with California law. "
SUPPORT AND OPPOSITION:
Support:
EYEXAM of California
For Eyes Optical Company
LensCrafters
National Association of Optometrists and Opticians
National Vision, Inc. and its subsidiaries
Sears Optical
The California Chamber of Commerce
U.S. Vision
Wal-Mart Stores, Inc.
Numerous individuals
Opposition:
California Association of Dispensing Opticians
The California Optometric Association
VSP Vision Care
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