BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 684|
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THIRD READING
Bill No: AB 684
Author: Alejo (D) and Bonilla (D)
AmendedAmended:9/4/15 in Senate
Vote: 21
PRIOR SENATE VOTES NOT RELEVANT
SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NO VOTE RECORDED: Bates, Nielsen
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 8-0, 9/10/15
(pursuant to Senate Rule 29.10)
AYES: Hill, Bates, Block, Galgiani, Hernandez, Jackson,
Mendoza, Wieckowski
NO VOTE RECORDED: Berryhill
ASSEMBLY FLOOR: Not relevant
SUBJECT: State Board of Optometry: optometrists: nonresident
contact lens sellers: registered dispensing opticians
SOURCE: Author
DIGEST: This bill 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
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optometrists to leasing arrangements.
ANALYSIS:
Existing law:
1) 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. (Business and
Professions Code (BPC) § 655)
2) 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)
This bill:
1) 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.
2) 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.
3) 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
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clinical director from employing optometrists to provide
health care services to enrollees of the health plan.
4) Prohibits the RDO or optical company from interfering with
the professional judgment of the optometrist.
5) 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
specified conditions, including:
a) The practice shall be owned by the optometrist and in
every phase be under the optometrist's exclusive control,
as specified;
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;
e) Except as otherwise permitted by this bill, the RDO or
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 Health Care Service Plan Act of 1975
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(Knox-Keene);
f) 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;
g) 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; and,
h) 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.
1) Permits the landlord to terminate the lease for specified
reasons, including the following:
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
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.
1) 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.
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2) 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.
3) Permits a lease to include commercially reasonable terms,
including those that:
a) Require the provision of optometric services at the
leased space during certain days and hours; and,
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.
4) States that any violation of this bill constitutes a
misdemeanor.
5) Transfers the regulation of RDOs from the MBC to the CBO.
6) 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 Department of
Managed Health Care.
7) 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.
8) 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.
9) States that the exemption shall not apply to any business
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relationships prohibited by current law commencing
registration or operations on or after January 1, 2016.
10)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.
11)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.
12)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 January 1, 2019.
13)Replaces one optometrist with an RDO on the CBO.
14)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.
15)Makes other changes, as specified.
Background
RDOs and optometrists. 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 RDO.
The final case, National Association of Optometrists & Opticians
v. Harris, confirmed the constitutionality of California
statutes.
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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.
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.
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.
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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.
This bill directs the transfer of all funds, duties, powers,
purposes, responsibilities, and records from the MBC to the CBO
to regulate RDOs.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, 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). This 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).
SUPPORT: (Verified9/10/15)
California Optometric Association
Consumer Attorneys of California
EYEXAM
FirstSight Vision Services, Inc.
LensCrafters
National Association of Optometrists and Opticians
National Vision, Inc.
Wal-Mart Stores, Inc.
OPPOSITION: (Verified9/10/15)
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California State Board of Optometry
ARGUMENTS IN SUPPORT: 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."
"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."
Wal-Mart Stores, Inc., LensCrafters, and EYEXAM also express
support for AB 684 and the opportunities for new business forms
it will provide.
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."
ASSEMBLY FLOOR: 76-0, 5/26/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bonilla,
Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,
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Page 10
Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Grove, Hadley, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Bloom, Chávez, Harper, Mathis
Prepared by:Sarah Huchel / B., P. & E.D. / (916) 651-4104
9/10/15 23:08:56
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