BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 684 Hearing Date: September
10, 2015
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|Author: |Alejo and Bonilla |
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|Version: |September 4, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Sarah Huchel |
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Subject: State Board of Optometry: optometrists: nonresident
contact lens sellers: registered dispensing opticians
SUMMARY: Authorizes the establishment of landlord-tenant relationships
between a registered dispensing optician (RDO), optometrist and
an optical company as specified; transfers the regulation of
RDOs from the Medical Board of California (MBC) to the
California State Board of Optometry (CBO); replaces an
optometrist with a RDO on the CBO; establishes a RDO advisory
committee; and establishes a three-year period for the
transition of direct employment of optometrists to leasing
arrangements.
Existing law:
1)Declares that individuals, corporations, and firms engaged in
the business of filling prescriptions of physicians and
surgeons or optometrists for prescription lenses and kindred
products, and, as incidental to the filling of those
prescriptions, taking facial measurements, fitting and
adjusting those lenses and fitting and adjusting spectacle
frames, shall be known as dispensing opticians and shall not
engage in that business unless registered with the MBC.
(Business and Professions Code (BPC) § 2550)
2)Establishes the CBO within the Department of Consumer Affairs
(DCA) to license optometrists and regulate the practice of
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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, co-ownership, 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:
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 licensed person. (BPC § 2556)
6)Establishes the Knox-Keene Health Care Service Plan Act of
1975 (Knox-Keene) 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
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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; and,
c) Ensuring that subscribers and enrollees receive
available and accessible health and medical services
rendered in a manner providing continuity of care.
(HSC § 1342)
8)Defines "personal information" as any information that is
maintained by an agency that identifies or describes an
individual, including, but not limited to, his or her name,
social security number, physical description, home address,
home telephone number, education, financial matters, and
medical or employment history. It includes statements made
by, or attributed to, the individual. (Civil Code § 1798.3).
This bill:
1)Defines the following terms:
a) "Health plan" means a health care service plan licensed
pursuant to the Knox-Keene;
b) "Optical company" means a person or entity that is
engaged in the manufacture, sale, or distribution to
physicians and surgeons, optometrists, health plans, or
dispensing opticians of lenses, frames, optical supplies,
or optometric appliances or devices or kindred products;
c) "Optometrist" means a licensed person or an optometric
corporation, as specified;
d) "Registered dispensing optician" means a person so
licensed; and,
e) "Therapeutic ophthalmic product" means lenses or other
products that provide direct treatment of eye disease or
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visual rehabilitation for diseased eyes.
2)Prohibits an optometrist from having any membership,
proprietary interest, co-ownership, or any profit-sharing
arrangement, either by stock ownership, interlocking
directors, trusteeship, mortgage, or trust deed, with any RDO
or any optical company, except as specified.
3)Permits a RDO or optical company to operate, own, or have an
ownership interest in a health plan so long as the health plan
does not directly employ optometrists to provide optometric
services directly to enrollees of the health plan, and permits
a RDO or optical company to provide, direct or indirectly,
products and services to the health plan or its contracted
providers, enrollees, or to other optometrists.
4)Permits, for purposes of this bill, an optometrist to be
employed by a health plan as a clinical director or to perform
services related to utilization management, quality assurance,
or other similar related services that do not require the
optometrist to directly provide health care services to
enrollees. Prohibits an optometrist serving as a clinical
director from employing optometrists to provide health care
services to enrollees of the health plan.
5)Prohibits the RDO or optical company from interfering with the
professional judgment of the optometrist.
6)Requires the Department of Managed Health Care (DMHC) to
forward consumer complaints to the CBO and requires DMHC and
CBO to enter into an Inter-Agency Agreement regarding
information sharing.
7)Permits an optometrist, a RDO, an optical company, or a health
plan to enter into a direct or indirect landlord-tenant
relationship with an optometrist under the following
conditions:
a) The practice shall be owned by the optometrist and in
every phase be under the optometrist's exclusive control,
including:
i) Selection and supervision of optometric staff;
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ii) Scheduling patients;
iii) Determining the amount of time the optometrist
spends with patients;
iv) Fees charged for optometric products and services;
v) The examination procedures and treatment provided to
patients; and,
vi) The optometrist's contracting with managed care
organizations.
b) The optometrist's records shall be the sole property of
the optometrist. Only the optometrist and those persons
with written authorization from the optometrist shall have
access to the patient records and the examination room,
except as otherwise provided by law;
c) The optometrist's leased space shall be definite and
distinct from space occupied by other occupants of the
premises, have a sign designating that the leased space is
occupied by an independent optometrist and be accessible to
the optometrist after hours or in the case of an emergency,
subject to the facility's general accessibility. This shall
not require a separate entrance to the optometrist's leased
space;
d) All signs and displays shall be separate and distinct
from that of the other occupants and shall have the
optometrist's name and the word "optometrist" prominently
displayed. This shall not prohibit the optometrist from
advertising the optometrist's practice location with
reference to other occupants or prohibit the optometrist or
RDO from advertising participation in any health plan's
network or the health plan's products in which the
optometrist or RDO participates;
e) There shall be no signs displayed on any part of the
premises or in any advertising indicating that the
optometrist is employed or controlled by the RDO, health
plan, or optical company;
f) Except as otherwise permitted by this bill, the RDO or
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optical company shall not link its advertising with the
optometrist's name, practice, or fees. However, a health
plan may advertise its products and associated premium
costs and any copayments, coinsurance, deductibles, or
other forms of cost-sharing, and the names and locations of
the health plan's providers, including any optometrists or
RDOs that provide professional services, in compliance with
the Knox-Keene. However, a health plan shall not advertise
the optometrist's fees for products and services that are
not included in the health plan's contract with the
optometrist;
g) The optometrist shall not be precluded from collecting
fees for services that are not included in a health plan's
products and services, subject to any patient disclosure
requirements contained in the health plan's provider
agreement with the optometrist or that are not otherwise
prohibited by the Knox-Keene;
h) The term of the lease shall be no less than one year and
shall not require the optometrist to contract exclusively
with a health plan;
i) The lease, rent terms, or payments shall not be based on
the number of eye exams performed, prescriptions written,
patient referrals, or the sale or promotion of the products
of a RDO or an optical company; and,
j) The landlord shall provide the optometrist with written
notice of the scheduled expiration date of a lease at least
60 days prior to the scheduled expiration date. The
landlord shall not interfere with an outgoing optometrist's
efforts to inform the optometrist's patients, in accordance
with customary practice and professional obligations, of
the relocation of the optometrist's practice.
8)Permits the landlord to terminate the lease for the following
reasons:
a) The optometrist's failure to maintain a license to
practice optometry or the imposition of restrictions,
suspension, or revocation of the optometrist's license, or
if the optometrist or the optometrist's employee is or
becomes ineligible to participate in state or federal
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government-funded programs;
b) Termination of any underlying lease where the
optometrist has subleased space, or the optometrist's
failure to comply with the underlying lease provisions that
are made applicable to the optometrist;
c) If the health plan is the landlord, the termination of
the provider agreement between the health plan and the
optometrist, in accordance with the Knox-Keene; and,
d) Other reasons pursuant to the terms of the lease or
permitted under the Civil Code.
9)Requires the landlord to act in good faith in terminating the
lease and prohibits the landlord from terminating the lease
for reasons that constitute interference with the practice of
optometry.
10)Prohibits the landlord from terminating the lease solely
because of a report, complaint, or allegation filed by the
optometrist against the landlord, a RDO or a health plan, to
the CBO, the DMHC, or any other law enforcement or regulatory
agency.
11)Authorizes the CBO to inspect, upon request, an individual
lease agreement and requires the landlord or tenant, as
applicable, to promptly comply with the request. Failure or
refusal to comply with the request for a lease agreement
within 30 days of receiving the request constitutes
unprofessional conduct and is grounds for disciplinary action
by the appropriate regulatory agency. This bill permits only
the redaction of personal information on the lease agreements,
as specified by Civil Code.
12)Declares any financial information contained in the lease
submitted to a regulatory entity to be considered confidential
trade secret information and is exempt from disclosure under
the California Public Records Act.
13)Permits a lease to include commercially reasonable terms
that:
a) Require the provision of optometric services at the
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leased space during certain days and hours;
b) Restrict the leased space from being used for the sale
or offer for sale of spectacles, frames, lenses, contact
lenses, or other ophthalmic products, except that the
optometrist shall be permitted to sell therapeutic
ophthalmic products if the RDO, health plan, or optical
company located on or adjacent to the optometrist's leased
space does not offer any substantially similar therapeutic
ophthalmic products for sale;
c) Require the optometrist to contract with a health plan
network, health plan, or health insurer; and,
d) Permit the landlord to directly or indirectly provide
furnishings and equipment in the leased space.
14)Prohibits a RDO from having any membership, proprietary
interest, coownership, or profit sharing arrangement either by
stock ownership, interlocking directors, trusteeship,
mortgage, or trust deed, with an optometrist, except as
permitted under this bill.
15)Clarifies that nothing in this bill shall prohibit a
physician and surgeon or his or her professional corporation
from contracting with or employing optometrists,
ophthalmologists, or optometric assistants and entering into a
contract or landlord tenant relationship with a health plan,
optical company, or RDO, as specified.
16)States that any violation of this bill constitutes a
misdemeanor.
17)Permits the CBO to promulgate regulations that impose
administrative fines, which may be assessed in addition to any
other applicable fines, citations, or administrative or
criminal actions.
18)Transfers the regulation of RDOs from the MBC to the CBO.
19)Requires an RDO to display specified consumer information
related to the CBO.
20)Requires an optometrist who practices in a setting with a RDO
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to report the business relationship to the CBO, as determined
by the CBO.
21)Authorizes the CBO to inspect any premises at which the
business of a RDO is co-located with the practice of an
optometrist. Requires the CBO to provide a copy of its
inspection results, if applicable, to the DMHC.
22)Prohibits any individual, corporation, or firm operating as a
RDO before January 1, 2016, or an employee of such an entity,
from being subject to any action for engaging in conduct
prohibited by specified current laws as they exist prior to
this bill's enactment until January 1, 2019, except that a RDO
shall be subject to discipline for duplicating or changing
lenses without a prescription or order.
23)States that nothing in this bill shall be construed to imply
or suggest that an RDO is in violation of or in compliance
with the law.
24)States that the exemption shall not apply to any business
relationships prohibited by current law commencing
registration or operations on or after January 1, 2016.
25)Permits an individual, corporation, or firm operating as a
RDO engaging in a business relationship with an optometrist at
locations registered with the MBC before January 1, 2016 to
continue to do so until January 1, 2019.
26)States that the three-year safe harbor period does not apply
to any administrative action or litigation pending, cause for
discipline, or cause of action accruing prior to September 1,
2015.
27)Requires any health plan, as specified, to report to the CBO
in writing that:
a) 15% of its locations no longer employ an optometrist by
January 1, 2017;
b) 45% of its locations no longer employ an optometrist by
August 1, 2017; and,
c) 100% of its locations no longer employ an optometrist by
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January 1, 2019.
28)Requires the CBO to provide health plans' compliance reports
to the director of the DCA and the Legislature.
29)Replaces one optometrist with an RDO on the CBO.
30)Permits the RDO member of the CBO to be a stockholder in,
owner of, or a member of the board of trustees of any school
of optometry, or financially interested, directly or
indirectly, in any concern manufacturing or dealing in optical
supplies at wholesale.
31)Establishes a RDO committee to advise and make
recommendations to CBO regarding the regulation of a RDO. The
committee shall consist of five members, two of whom shall be
RDOs, two of whom shall be public members, and one of whom
shall be a member of the CBO. Initial appointments to the
committee shall be made by the CBO.
32)States that the RDO committee shall be responsible for:
a) Recommending registration standards and criteria for the
registration of dispensing opticians;
b) Reviewing of the disciplinary guidelines relating to
RDOs;
c) Recommending to the CBO changes or additions to
regulations; and,
d) Carrying out and implementing all responsibilities and
duties imposed upon it pursuant to this bill or as
delegated to it by the CBO.
33)Requires the RDO committee to meet at least twice a year and
as needed.
34)Requires recommendations by the RDO committee regarding scope
of practice or regulatory changes to be approved, modified, or
rejected by the CBO within 90 days of submission to the CBO.
If the CBO rejects or significantly modifies the intent or
scope of the recommendation, the RDO committee may request
that the CBO provide its reasons in writing, which shall be
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provided within 30 days.
35)Requires the Governor to appoint the RDO and public members
to the RDO committee after the initial appointments by the
CBO. The RDO committee shall submit a recommendation to the
CBO regarding which CBO member should be appointed to serve on
the RDO committee, and the CBO shall appoint the member to
serve. Committee members shall serve a term of four years
except for the initial staggered terms. A member may be
reappointed, but no person shall serve as a member of the
committee for more than two consecutive terms.
36)Makes clarifying and technical amendments.
FISCAL
EFFECT: This bill is keyed fiscal by Legislative Counsel.
According to the Senate Appropriations Committee analysis dated
August 27, 2015, this bill will result in unknown additional
costs for the CBO to assume licensing and enforcement
responsibilities for dispensing opticians from the MBC (State
Optometry Fund), offset by reduced costs to the MBC (Contingent
Fund of the Medical Board of California). The bill will also
result in unknown additional enforcement costs for the CBO to
enforce licensing requirements on dispensing opticians and
optometrists that enter into lease agreements (State Optometry
Fund).
COMMENTS:
1. Purpose. According to the Author, "AB 684 is seeking a
legislative solution that allows multiple models to continue
to operate, while also leveling the playing field for both
large and small operators, ensuring that consumers' interests
are protected, and optometrists' clinical judgment is
preserved. This legislation would clarify and modernize the
law. Without legislative action, these centers are under
threat of closure, which would cause significant job loss and
cut off care for the more than 2 million California patients
served by these centers every year."
2. Background.
a) RDOs and optometrists . This bill is a result of over a
decade of litigation debating the legitimacy of current law
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prohibiting certain business relationships between an
optometrist and a RDO. The final case, National Association
of Optometrists & Opticians v. Harris, confirmed the
constitutionality of 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 restricting
business arrangements between opticians and optometrists violate
the dormant Commerce Clause of the United States Constitution.
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
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 was not
concluded. The law did not anticipate the myriad leasing,
co-locating, and employment relationships that rose during its
debated legality.
This bill authorizes leasing arrangements between an
optometrist, RDO, and an optical company under specified terms,
and establishes a three year transition period for entities not
currently in compliance with the terms of this bill.
b) Transition of RDOs from MBC to CBO . MBC began
regulating individuals selling eyewear and related products
in the 1930s. While it seems incongruous for the MBC to
handle this population, the MBC has long been a catch-all
for various license and registration types.
Polysomnographic trainees, technicians, and technologists
are currently regulated by the MBC, as are midwives and
research psychoanalysts. Prior to getting its own board,
the Physician Assistant Committee was also housed under the
MBC.
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The MBC raised the possibility of transferring regulation of the
RDO program to the CBO in its 2013 Sunset Review report. MBC
indicated that many complaints it received involve optometrists
and optometric assistants, in addition to RDOs, and moving the
program to CBO may lead to more efficient complaint resolution.
Stakeholder RDOs expressed concern over the combination of the
professions' regulation in this bill because RDOs and
optometrists may be in direct competition over the sale of
eyewear and related products. However, this bill adds an RDO to
the CBO, giving voice and vote to the regulated population -
representation not available under the MBC -- and establishes an
advisory committee with a requirement that the CBO hear its
concerns.
Further, there has been little realization of industry concerns
about domination in the combination of related professions into
a single board. Of particular note are the following:
Cosmetology regulation was added to barbering,
creating the Board of Barbering and Cosmetology;
The funeral home and cemetery industries are
regulated by the Cemetery and Funeral Bureau;
Land surveyors, professional engineers, geologists,
and geophysicists share regulation by the Board for
Professional Engineers, Land Surveyors and Geologists.
The Speech-Language Pathology, Audiology and Hearing
Aid Dispensers Board regulate those named individuals.
This bill directs the transfer of all funds, duties,
powers, purposes, responsibilities, and records from the
MBC to the CBO to regulate RDOs.
1. Related Legislation. AB 595 (Alejo) of 2015 would authorize
in law existing business models under which a RDO is located
next to an optometrist. ( Status : This bill is pending in
the Assembly Business and Professions Committee.)
AB 778 (Atkins) of 2011 would have authorized a registered
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dispensing optician, an optical company, a manufacturer or
distributor of optical goods, or a non-optometric corporation
to own a specialized health care service plan that provides
or arranges for the provision of vision care services.
( Status : The bill was held in this Committee.)
2. Arguments in Support. National Vision, Inc. and FirstSight
Vision Services, Inc. write, "[W]e are pleased to write in
support of Assembly Bill 684, which will protect vision care
access for working Californians by bringing clarity to
outdated laws governing how and where optometrists can
provide eye care services in the state.
"Optometrists have been providing quality vision care to
patients next to National Vision optical locations for over
20 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.
" National Vision and FirstSight have been part of a robust
stakeholder process that included our industry partners, the
Attorney General's office and the Governor's Office that has
resulted in the language that was amended into AB 684 on
September 4th, 2015. AB 684 will now ensure 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."
The California Optometric Association writes, "Recent
litigation prompted by issues of consumer safety created
uncertainty. AB 684 solves that by allowing optometrists to
lease space from an optician, optical company or health plan
and includes sufficient protections to ensure the doctors who
work in these settings can practice independently. Most
importantly, it consolidates enforcement under one regulatory
entity and authorizes new enforcement tools to ensure any
violation of the law will be penalized."
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National Association of Optometrists and Opticians writes,
"We believe that AB 684 will eliminate the ambiguity in
existing law, which governs the relationships between
optometrists and registered dispensing opticians, co-located
sellers of eyewear. By including important protections and
prohibitions, we believe that this bill serves to protect
doctor's clinical judgment and provide greater transparency
for both patients and regulatory entities."
Wal-Mart Stores, Inc. , LensCrafters , and EYEXAM also express
support for AB 684 and the opportunities for new business
forms it will provide.
3. Arguments in Opposition. The CBO writes, "We recognize that
AB 684 now contains more than just an enforcement moratorium.
However, the Board believes this late emerging solution both
creates some problematic issues and leaves some key policy
concerns unresolved, which cannot be addressed in the
remainder of the legislative session. In order to put
consumer protection first, the Board opposes this bill.
While we acknowledge the substantial amount of effort that
interested parties put into the current version of AB 684,
the Board respectfully believes additional debate, meetings,
and discussions with the Board and the Legislature is
warranted."
SUPPORT AND OPPOSITION:
Support:
California Optometric Association
EYEXAM
FirstSight Vision Services, Inc.
LensCrafters
National Association of Optometrists and Opticians
National Vision, Inc.
Wal-Mart Stores, Inc.
Opposition:
California State Board of Optometry
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-- END --