Amended in Assembly May 11, 2016

Amended in Assembly April 25, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1774

Introduced by Assembly Member Bonilla

February 3, 2016

An act to amend Sections 654.1, 655.5, 1206, 1206.6, 1220, 1244, 1246.5, 1271.1, 1272, 1300, 1301, and 1320 of, to add Section 1272.1 to, to repeal Sections 1241.1, 1265, 1265.1, 1266, 1267, 1268, 1272.4, 1272.6, 1281, 1300.1, 1324, and 1325 of, and to repeal and add Sections 1223, 1227, and 1310 of, the Business and Professions Code, to amend Section 9272 of the Food and Agricultural Code, to amend Sections 1206 and 1600.3 of the Health and Safety Code, and to amend Section 14043.27 of the Welfare and Institutions Code, relating to clinical laboratories.

LEGISLATIVE COUNSEL’S DIGEST

AB 1774, as amended, Bonilla. Clinical laboratories: licensure.

Existing federal law, the Clinical Laboratory Improvement Amendments of 1988 (CLIA) requires the federal Centers for Medicare and Medicaid Services to certify and regulate clinical laboratories that perform testing on humans. Complaints against individual laboratories are directed to the state.

Existing law provides for the licensure, registration, and regulation of clinical laboratories and various clinical laboratory personnel by the State Department of Public Health. Under existing law the department inspects clinical laboratories and assesses a fee for licensure of those facilities.

This bill would repeal the laws requiring a clinical laboratory to be licensed by the department, including the licensing fee, and would recast the inspection role of the department to involve inspection and monitoring of specified issues for clinical laboratories that are not accredited by an accrediting organization approved under CLIA, investigation upon complaint, and sanctions, as provided. begin insert The bill would authorize the department, after the balance in the Clinical Laboratory Improvement Fund that is attributable to licensing fees previously assessed on clinical laboratories is less than $1,000,000, to assess a fee, upon inspection, for clinical laboratories that are not accredited by an agency approved under federal law. end insert The bill would also make conforming changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 654.1 of the Business and Professions
Code is amended to read:

654.1.  

(a) A person licensed under Chapter 4 (commencing
with Section 1600) of this division or licensed under Chapter 5
(commencing with Section 2000) of this division or licensed under
any initiative act referred to in this division relating to osteopaths
may not refer patients, clients, or customers to a clinical laboratory
in which the licensee has a membership, proprietary interest, or
coownership in any form, or has a profit-sharing arrangement,
unless the licensee at the time of making the referral discloses in
writing the interest to the patient, client, or customer. The written
disclosure shall indicate that the patient may choose any clinical
laboratory for purposes of having laboratory work or assignment
performed.

(b) This does begin delete shall end delete not apply to persons who are members of a
medical group that contracts to provide medical care to members
of a group practice prepayment plan registered under the
Knox-Keene Health Care Service Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and
Safety Code).

(c) This does begin delete shall end delete not apply to a referral to a clinical laboratory
that is owned and operated by a health facility licensed pursuant
to Chapter 2 (commencing with Section 1250) of Division 2 of
the Health and Safety Code.

(d) This section does not prohibit the acceptance of evaluation
specimens for proficiency testing or referral of specimens or the
assignment from one clinical laboratory to another clinical
laboratory, either licensed or exempt under this chapter, providing
the report indicates clearly the laboratory performing the test.

(e) “Proprietary interest” does not include ownership of a
building where space is leased to a clinical laboratory at the
prevailing rate under a straight lease arrangement.

(f) A violation of this section is a public offense and is
punishable upon a first conviction by imprisonment in a county
jail for not more than one year, or by imprisonment pursuant to
subdivision (h) of Section 1170 of the Penal Code, or by a fine not
exceeding ten thousand dollars ($10,000), or by both that
imprisonment and fine. A second or subsequent conviction shall
be punishable by imprisonment pursuant to subdivision (h) of
Section 1170 of the Penal Code.

SEC. 2.  

Section 655.5 of the Business and Professions Code
is amended to read:

655.5.  

(a) It is unlawful for a person licensed under this
division or under an initiative act referred to in this division, or a
clinical laboratory, or a health facility when billing for a clinical
laboratory of the facility, to charge, bill, or otherwise solicit
payment from a patient, client, or customer for a clinical laboratory
service not actually rendered by the person or clinical laboratory
or under his, begin delete her end delete begin insert her, end insert or its direct supervision unless the patient,
client, or customer is apprised at the first time of the charge, billing,
or solicitation of the name, address, and charges of the clinical
laboratory performing the service. The first written charge, bill,
or other solicitation of payment shall separately set forth the name,
address, and charges of the clinical laboratory concerned and shall
clearly show whether or not the charge is included in the total of
the account, bill, or charge. This subdivision is satisfied if the
required disclosures are made to the third-party payer of the patient,
client, or customer. If the patient is responsible for submitting the
bill for the charges to the third-party payer, the bill provided to
the patient for that purpose shall include the disclosures required
by this section. This subdivision does not apply to a clinical
laboratory of a health facility or a health facility when billing for
a clinical laboratory of the facility nor to a person licensed under
this division or under any initiative act referred to in this division
if the standardized billing form used by the facility or person
requires a summary entry for all clinical laboratory charges. For
purposes of this subdivision, “health facility” has the same meaning
as defined in Section 1250 of the Health and Safety Code.

(b) A clinical laboratory shall provide to each of its referring
providers, upon request, a schedule of fees for services provided
to patients of the referring provider. The schedule shall be provided
within two working days after the clinical laboratory receives the
request. For the purposes of this subdivision, a “referring provider”
means a provider who has referred a patient to the clinical
laboratory in the preceding six-month period. A clinical laboratory
that provides a list of laboratory services to a referring provider
or to a potential referring provider shall include a schedule of fees
for the laboratory services listed.

(c) It is also unlawful for a person licensed under this division
or under any initiative act referred to in this division to charge
additional charges for a clinical laboratory service that is not
actually rendered by the licensee to the patient and itemized in the
charge, bill, or other solicitation of payment. This section shall not
be construed to prohibit any of the following:

(1) An itemized charge for a service actually rendered to the
patient by the licensee.

(2) A summary charge for services actually rendered to a patient
by a health facility, as defined in Section 1250 of the Health and
Safety Code, or by a person licensed under this division or under
any initiative act referred to in this division if the standardized
billing form used by the facility or person requires a summary
entry for all clinical laboratory charges.

(d) As used in this section, the term “a person licensed under
this division” includes a registered laboratory, as defined in Section
1206, all wholly owned subsidiaries of the person, a parent
company that wholly owns the person, and any subsidiaries wholly
owned by the same parent that wholly owns the person. “Wholly
owned” means ownership directly or through one or more
subsidiaries. This section shall not apply to billings by a registered
laboratory when the registered laboratory bills for services
performed by a laboratory owned or operated by the registered
laboratory.

(e) This section does not apply to a person or clinical laboratory
who or which contracts directly with a health care service plan
licensed pursuant to Section 1349 of the Health and Safety Code,
if the services are to be provided to members of the plan on a
prepaid basis and without additional charge or liability on account
thereof.

(f) A violation of this section is a public offense and is
punishable upon a first conviction by imprisonment in a county
jail for not more than one year, or by imprisonment pursuant to
subdivision (h) of Section 1170 of the Penal Code, or by a fine not
exceeding ten thousand dollars ($10,000), or by both that
imprisonment and fine. A second or subsequent conviction is
punishable by imprisonment pursuant to subdivision (h) of Section
1170 of the Penal Code.

(g) (1) Notwithstanding subdivision (f), a violation of this
section by a physician and surgeon for a first offense shall be
subject to the exclusive remedy of reprimand by the Medical Board
of California if the transaction that is the subject of the violation
involves a charge for a clinical laboratory service that is less than
the charge would have been if the clinical laboratory providing
the service billed a patient, client, or customer directly for the
clinical laboratory service, and if that clinical laboratory charge is
less than the charge listed in the clinical laboratory’s schedule of
fees pursuant to subdivision (b).

(2) This subdivision does not permit a physician and surgeon
to charge more than he or she was charged for the laboratory
service by the clinical laboratory providing the service unless the
additional charge is for service actually rendered by the physician
and surgeon to the patient.

SEC. 3.  

Section 1206 of the Business and Professions Code is
amended to read:

1206.  

(a) For the purposes of this chapter the following
definitions are applicable:

(1) “Analyte” means the substance or constituent being
measured, including, but not limited to, glucose, sodium, or
theophylline, or any substance or property whose presence or
absence, concentration, activity, intensity, or other characteristics
are to be determined.

(2) “Biological specimen” means any material that is derived
from the human body.

(3) “Blood electrolyte analysis” means the measurement of
electrolytes in a blood specimen by means of ion selective
electrodes on instruments specifically designed and manufactured
for blood gas and acid-base analysis.

(4) “Blood gas analysis” means a clinical laboratory test or
examination that deals with the uptake, transport, and
metabolization of oxygen and carbon dioxide in the human body.

(5) “Clinical laboratory test or examination” means the
detection, identification, measurement, evaluation, correlation,
monitoring, and reporting of any particular analyte, entity, or
substance within a biological specimen for the purpose of obtaining
scientific data that may be used as an aid to ascertain the presence,
progress, and source of a disease or physiological condition in a
human being, or used as an aid in the prevention, prognosis,
monitoring, or treatment of a physiological or pathological
condition in a human being, or for the performance of
nondiagnostic tests for assessing the health of an individual.

(6) “Clinical laboratory science” means any of the sciences or
scientific disciplines used to perform a clinical laboratory test or
examination.

(7) “Clinical laboratory practice” means the application of
clinical laboratory sciences or the use of any means that applies
the clinical laboratory sciences within or outside of a licensed or
registered clinical laboratory. Clinical laboratory practice includes
consultation, advisory, and other activities inherent to the
profession.

(8) “Clinical laboratory” means a place used, or an establishment
or institution organized or operated, for the performance of clinical
laboratory tests or examinations or the practical application of the
clinical laboratory sciences. That application may include any
means that applies the clinical laboratory sciences.

(9) “Direct and constant supervision” means personal
observation and critical evaluation of the activity of unlicensed
laboratory personnel by a physician and surgeon, or by a person
licensed under this chapter other than a trainee, during the entire
time that the unlicensed laboratory personnel are engaged in the
duties specified in Section 1269.

(10) “Direct and responsible supervision” means both of the
following:

(A) Personal observation and critical evaluation of the activity
of a trainee by a physician and surgeon, or by a person licensed
under this chapter other than a trainee, during the entire time that
the trainee is performing clinical laboratory tests or examinations.

(B) Personal review by the physician and surgeon or the licensed
person of all results of clinical laboratory testing or examination
performed by the trainee for accuracy, reliability, and validity
before the results are reported from the laboratory.

(11) “Licensed laboratory” means a clinical laboratory licensed
pursuant to the federal Clinical Laboratory Improvement
Amendments of 1988 (CLIA).

(12) “Location” means either a street and city address, or a site
or place within a street and city address, where any of the clinical
laboratory sciences or scientific disciplines are practiced or applied,
or where clinical laboratory tests or examinations are performed.

(13) “Physician office laboratory” means a clinical laboratory
that is either: (A) owned and operated by a partnership or
professional corporation that performs clinical laboratory tests or
examinations only for patients of five or fewer physicians and
surgeons or podiatrists who are shareholders, partners, or
employees of the partnership or professional corporation that owns
and operates the clinical laboratory; or (B) owned and operated
by an individual licensed physician and surgeon or a podiatrist,
and that performs clinical laboratory tests or examinations only
for patients of the physician and surgeon or podiatrist who owns
and operates the clinical laboratory.

(14) “Point-of-care laboratory testing device” means a portable
laboratory testing instrument to which the following applies:

(A) It is used within the proximity of the patient for whom the
test or examination is being conducted.

(B) It is used in accordance with the patient test management
system, the quality control program, and the comprehensive quality
assurance program established and maintained by the laboratory
pursuant to paragraph (2) of subdivision (d) of Section 1220.

(C) It meets the following criteria:

(i) Performs clinical laboratory tests or examinations classified
as waived or of moderate complexity under the federal Clinical
Laboratory Improvement Amendments of 1988 (CLIA) (42 U.S.C.
Sec. 263a).

(ii) Performs clinical laboratory tests or examinations on
biological specimens that require no preparation after collection.

(iii) Provides clinical laboratory tests or examination results
without calculation or discretionary intervention by the testing
personnel.

(iv) Performs clinical laboratory tests or examinations without
the necessity for testing personnel to perform calibration or
maintenance, except resetting pursuant to the manufacturer’s
instructions or basic cleaning.

(15) “Public health laboratory” means a laboratory that is
operated by a city or county in conformity with Article 5
(commencing with Section 101150) of Chapter 2 of Part 3 of
Division 101 of the Health and Safety Code and the regulations
adopted thereunder.

(16) “Registered laboratory” means a clinical laboratory that
performs clinical laboratory tests or examinations subject to a
certificate of waiver or a certificate of provider-performed
microscopy under CLIA.

(17) “Specialty” means histocompatibility, microbiology,
diagnostic immunology, chemistry, hematology,
immunohematology, pathology, genetics, or other specialty
specified by regulation adopted by the department.

(18) “Subspecialty” for purposes of microbiology, means
bacteriology, mycobacteriology, mycology, parasitology, virology,
molecular biology, and serology for diagnosis of infectious
diseases, or other subspecialty specified by regulation adopted by
the department; for purposes of diagnostic immunology, means
syphilis serology, general immunology, or other subspecialty
specified by regulation adopted by the department; for purposes
of chemistry, means routine chemistry, clinical microscopy,
endocrinology, toxicology, or other subspecialty specified by
regulation adopted by the department; for purposes of
immunohematology, means ABO/Rh Type and Group, antibody
detection for transfusion, antibody detection nontransfusion,
antibody identification, compatibility, or other subspecialty
specified by regulation adopted by the department; for pathology,
means tissue pathology, oral pathology, diagnostic cytology, or
other subspecialty specified by regulation adopted by the
department; for purposes of genetics, means molecular biology
related to the diagnosis of human genetic abnormalities,
cytogenetics, or other subspecialty specified by regulation adopted
by the department.

(b) This chapter does not restrict, limit, or prevent a person
licensed to provide health care services under the laws of this state,
including, but not limited to, licensed physicians and surgeons and
registered nurses, from practicing the profession or occupation for
which he or she is licensed.

(c) This chapter does not authorize a person to perform or order
health care services, or utilize the results of the clinical laboratory
test or examination, unless the person is otherwise authorized to
provide that care or utilize the results. The inclusion of a person
in Section 1206.5 for purposes of performing a clinical laboratory
test or examination shall not be interpreted to authorize a person,
who is not otherwise authorized, to perform venipuncture, arterial
puncture, or skin puncture.

SEC. 4.  

Section 1206.6 of the Business and Professions Code
is amended to read:

1206.6.  

Subdivision (a) of Section 1206.5 does not apply to a
pharmacist at a community pharmacy who, upon customer request,
performs only blood glucose, hemoglobin A1c, or cholesterol tests
that are classified as waived under CLIA and are approved by the
federal Food and Drug Administration for sale to the public without
a prescription in the form of an over-the-counter test kit, provided
that all of the following requirements are satisfied:

(a) The pharmacy obtains a valid CLIA certificate of waiver
and complies with all other requirements for the performance of
waived clinical laboratory tests under applicable federal
regulations. For purposes of CLIA, the person identified as
responsible for directing and supervising testing oversight and
decisionmaking shall be the pharmacist-in-charge, as defined in
Section 4036.5.

(b) The pharmacy complies with this chapter.

(c) The tests are performed only by a pharmacist, as defined in
Section 4036, in the course of performing routine patient
assessment procedures in compliance with Section 4052.4.

SEC. 5.  

Section 1220 of the Business and Professions Code is
amended to read:

1220.  

(a) (1) Each clinical laboratory shall maintain records,
equipment, and facilities that are adequate and appropriate for the
services rendered.

(2) (A) Except for tests or examinations classified as waived
under CLIA, each clinical laboratory shall enroll, and demonstrate
successful participation, as defined under CLIA, for each specialty
and subspecialty in which it performs clinical laboratory tests or
examinations, in a proficiency testing program approved by the
department or by CMS, to the same extent as required by CLIA
in Subpart H (commencing with Section 493.801) of Title 42 of
the Code of Federal Regulations. This requirement does not
prohibit a clinical laboratory from performing clinical laboratory
tests or examinations in a specialty or subspecialty for which there
is no department or begin delete CMS approved end delete begin insert CMS-approved end insert proficiency
testing program.

(B) Each clinical laboratory shall authorize its proficiency test
results to be reported to the department in an electronic format that
is compatible with the department’s proficiency testing data
monitoring system and shall authorize the release of proficiency
tests results to the public to the same extent required by CLIA.

(b) Each clinical laboratory shall be conducted, maintained, and
operated without injury to the public health.

(c) The department shall conduct an investigation of complaints
received concerning a clinical laboratory that may include an
inspection of the laboratory.

(d) (1) Each clinical laboratory shall perform all clinical
laboratory tests or examinations classified as waived under CLIA
in conformity with the manufacturer’s instructions.

(2) Except for those clinical laboratories performing only tests
or examinations classified as waived under CLIA, each clinical
laboratory shall establish and maintain all of the following:

(A) A patient test management system that meets the standards
of CLIA in Subpart J (commencing with Section 493.1100) of
Title 42 of the Code of Federal Regulations.

(B) A quality control program that meets the requirements of
CLIA in Subpart K (commencing with Section 493.1200) of Title
42 of the Code of Federal Regulations as in effect on January 1,
2015, and that may include the clinical laboratory’s use of an
Individualized Quality Control Plan, as incorporated into Appendix
C of the State Operations Manual adopted by the federal Centers
for Medicare and Medicaid Services (CMS).

(C) A comprehensive quality assurance program that meets the
standards of CLIA in Subpart P (commencing with Section
493.1701) of Title 42 of the Code of Federal Regulations.

SEC. 6.  

Section 1223 of the Business and Professions Code is
repealed.

SEC. 7.  

Section 1223 is added to the Business and Professions
Code, to read:

1223.  

begin insert (a) end insert begin insert   end insert Clinical laboratories shall begin delete choose to be overseen end delete
begin insert select to be regulated end insert by the department, pursuant to begin delete subdivision
(a), end delete begin insert paragraph (1), end insert or may seek certification of deemed status by
an accrediting organization approved under CLIA, pursuant to
begin delete subdivision (b). end delete begin insert paragraph (2). end insert The accrediting organization may
issue certificates of deemed status and may provide continued
oversight to ensure compliance with state law.

begin delete

(a)

end delete

begin insert (1) end insert  The department shall monitor, inspect, and investigate all
clinical laboratories that are not accredited by an organization
approved under CLIA for compliance with state standards that are
in excess of federal standards.

begin delete

(b) (1) 

end delete

begin insert (2) end insert begin insert   end insert begin insert (A) end insert begin insert   end insert A clinical laboratory that is accredited by an
organization approved under CLIA shall be deemed to meet all
state standards and shall not require monitoring, inspection, or
investigation pursuant to begin delete subdivision (a), end delete begin insert paragraph (1) end insert but may
be subject to investigation by the department under other provisions
of law.

begin delete

(2)

end delete

begin insert (B) end insert  An accrediting organization shall provide the department
with documentation of approval by the federal Centers for Medicare
& Medicaid Services as an accrediting body under CLIA, a detailed
comparison of the individual accreditation or approval
requirements, with the comparable California condition-level
requirements, including standards that are in excess of federal law,
and a list of all of the clinical laboratories that operate in California,
including the CLIA number and the expiration date of their
accreditation, as applicable.

begin delete

(c)

end delete

begin insert (b) end insert  The department may concentrate its resources on upholding
personnel standards.

begin insert

(c) (1) The department may charge a fee to inspect clinical
laboratories that are regulated by the department pursuant to
paragraph (1) of subdivision (a). The fee shall be assessed upon
inspection and shall be set at the reasonable cost of inspection,
but in no case shall the fee exceed one thousand fifty dollars
($1,050).

end insert begin insert

(2) The department shall not assess a fee pursuant to this
subdivision until the balance in the Clinical Laboratory
Improvement Fund that is attributable to fees assessed on clinical
laboratories under Section 1300, as it existed prior to January 1,
2017, is less than one million dollars ($1,000,000).

end insert

SEC. 8.  

Section 1227 of the Business and Professions Code is
repealed.

SEC. 9.  

Section 1227 is added to the Business and Professions
Code, to read:

1227.  

The department shall post on its Internet Web site a
comprehensive list of the differences between state begin insert law end insert and CLIA.

SEC. 10.  

Section 1241.1 of the Business and Professions Code
is repealed.

SEC. 11.  

Section 1244 of the Business and Professions Code
is amended to read:

1244.  

begin insert (a) end insert begin insert   end insert This chapter does not restrict, limit, or prevent a
program of nondiagnostic general health assessment provided that:

(1) The program complies with the requirements of CLIA for
waived testing.

(2) The purpose of the program is to screen asymptomatic
individuals for chronic health disorders and to refer individuals to
licensed sources of care as indicated.

(3) The program does not test for human immunodeficiency
virus or any reportable disease or condition identified in Section
120130 of the Health and Safety Code or the regulations adopted
under that section.

(4) The program utilizes only those devices that comply with
all of the following:

(A) Meet all applicable state and federal performance standards
pursuant to Section 111245 of the Health and Safety Code.

(B) Are not adulterated as specified in Article 2 (commencing
with Section 111250) of Chapter 6 of Part 5 of Division 104 of
the Health and Safety Code.

(C) Are not misbranded as specified in Article 3 (commencing
with Section 111330) of Chapter 6 of Part 5 of Division 104 of
the Health and Safety Code.

(D) Are not new devices unless they meet the requirements of
Section 111550 of the Health and Safety Code.

(E) Are approved as waived tests and are used according to the
manufacturer’s instructions.

(5) Blood collection is performed by skin puncture only.

(6) Testing of a urine specimen is performed by the dipstick
method only.

(7) Testing is performed begin delete on site end delete begin insert on-site end insert and reported directly to
the person requesting the test.

(8) The program maintains a supervisory committee consisting
of, at a minimum, a licensed physician and surgeon and a clinical
laboratory scientist licensed pursuant to this code.

(9) The supervisory committee for the program adopts written
protocols that shall be followed in the program and that shall
contain all of the following:

(A) Provision of written information to individuals to be
assessed that shall include, but not be limited to, the following:

(i) The potential risks and benefits of assessment procedures to
be performed in the program.

(ii) The limitations, including the nondiagnostic nature, of
assessment examinations of biological specimens performed in
the program.

(iii) Information regarding the risk factors or markers targeted
by the program.

(iv) The need for followup with licensed sources of care for
confirmation, diagnosis, and treatment as appropriate.

(B) Proper use of each device utilized in the program including
the operation of analyzers, maintenance of equipment and supplies,
and performance of quality control procedures including the
determination of both accuracy and reproducibility of
measurements in accordance with instructions provided by the
manufacturer of the assessment device used.

(C) Proper procedures to be employed when collecting blood,
if blood specimens are to be obtained.

(D) Proper procedures to be employed in handling and disposing
of all biological specimens to be obtained and material
contaminated by those biological specimens. These procedures
shall comply with all county and city ordinances for medical waste
management and blood-borne pathogen control that apply to the
location where the program operates.

(E) Proper procedures to be employed in response to fainting,
excessive bleeding, or other medical emergencies.

(F) Documentation that the testing personnel are following the
instructions of the instrument’s manufacturer, are trained in the
performance of the test, and are competent to perform the testing
without supervision.

(G) Reporting of assessment results to the individual being
assessed.

(H) Referral and followup to licensed sources of care as
indicated.

(10)  begin delete (a) end delete begin delete   end delete The written protocols adopted by the supervisory
committee shall be maintained for at least one year following
completion of the assessment program, during which period they
shall be subject to review by department personnel and the local
health officer or his or her designee, including the public health
laboratory director.

(b) If skin puncture to obtain a blood specimen is to be
performed in a program of nondiagnostic general health
assessment, the individual performing the skin puncture shall be
authorized to perform skin puncture under this chapter.

(c) A program of nondiagnostic general health assessment that
fails to meet the requirements set forth in subdivisions (a) and (b)
shall not operate.

(d) For purposes of this section, “skin puncture” means the
collection of a blood specimen by the finger prick method only
and does not include venipuncture, arterial puncture, or any other
procedure for obtaining a blood specimen.

(e) This chapter does not prohibit a licensed clinical laboratory
from operating a program of nondiagnostic general health
assessment provided that the clinical laboratory complies with the
requirements of this section.

(f) A program for a health fair providing diagnostic or screening
tests is not a nondiagnostic general health assessment program if
all of the requirements of this chapter are met, and the laboratory
performing the testing is licensed by federal law or is operating
with a waiver for the applicable procedures. For a test that is not
authorized for self-ordering pursuant to Section 1246.5 and that
is not for a nondiagnostic general health assessment pursuant to
this section, the clinical laboratory participating in the health fair
shall assure that the test is ordered onsite only by a person licensed
under this division who is authorized under his or her scope of
practice to order the test or by a person authorized by that licensee.
The results of a test performed at a health fair shall be provided
to the test subject along with an explanation of the results.

SEC. 12.  

Section 1246.5 of the Business and Professions Code
is amended to read:

1246.5.  

(a) Notwithstanding any other law, a person may
request, and a licensed clinical laboratory or public health
laboratory may perform, the laboratory tests specified in this
section. A registered clinical laboratory may perform the laboratory
tests specified in this section if the test is subject to a certificate
of waiver under CLIA. A program for nondiagnostic general health
assessment that includes a laboratory test specified in this section
shall comply with the provisions of Section 1244. The results from
any test may be provided directly to the person requesting the test
if the test is on or for his or her own body. These test results shall
be provided in a manner that presents clear information and that
identifies results indicating the need for referral to a physician and
surgeon.

(b) The tests that may be conducted pursuant to this section are:
pregnancy, glucose level, cholesterol, occult blood, and any other
test for which there is a test for a particular analyte approved by
the federal Food and Drug Administration for sale to the public
without a prescription in the form of an over-the-counter test kit.
A test approved only as an over-the-counter collection device may
not be conducted pursuant to this section.

SEC. 13.  

Section 1265 of the Business and Professions Code
is repealed.

SEC. 14.  

Section 1265.1 of the Business and Professions Code
is repealed.

SEC. 15.  

Section 1266 of the Business and Professions Code
is repealed.

SEC. 16.  

Section 1267 of the Business and Professions Code
is repealed.

SEC. 17.  

Section 1268 of the Business and Professions Code
is repealed.

SEC. 18.  

Section 1271.1 of the Business and Professions Code
is amended to read:

1271.1.  

(a) A clinical laboratory that provides cytology
services shall, if the laboratory ceases operation, preserve records,
reports, cytology slides, and cell blocks as prescribed in subdivision
(g) of Section 1271 and Section 1274.

(b) A person injured as a result of the laboratory’s abandonment
of records may bring an action in a court of competent jurisdiction
for the amount of damages suffered as a result. If the laboratory
was a corporation or partnership that has been dissolved, the person
injured may bring an action against that corporation’s or
partnership’s principal officers of record at the time of the
dissolution.

(c) For purposes of this section, the following definitions shall
apply:

(1) “Abandonment of records” means violating subdivision (a)
and thereby leaving patients and physicians and surgeons without
access to information to which they are entitled pursuant to this
chapter.

(2) “Principal officers” means:

(A) In the case of a partnership other than a limited partnership,
any partner.

(B) In the case of a limited partnership, any general partner, as
defined in Section 15904.02 of the Corporations Code.

(C) In the case of a corporation, the chairperson of the board,
the chief executive officer, and the president of the corporation.

SEC. 19.  

Section 1272 of the Business and Professions Code
is amended to read:

1272.  

A clinical laboratory shall participate in a CLIA-approved
proficiency testing program and demonstrate satisfactory
performance in all of the laboratory specialities that include tests
performed in the laboratory. Proficiency shall be tested in the
following specialties: microbiology, serology, clinical chemistry,
hematology, cytology, and immunohematology.

SEC. 20.  

Section 1272.1 is added to the Business and
Professions Code, to read:

1272.1.  

(a) If a clinical laboratory ceases operations, the
laboratory owners, or delegated representatives of the owners, and
the laboratory directors shall notify the department of this fact, in
writing, within 30 calendar days from the date a clinical laboratory
ceases operation. For purposes of this section, a laboratory ceases
operations when it suspends the performance of all clinical
laboratory tests or examinations for 30 calendar days at the location
for which the clinical laboratory is licensed or registered.

(b)  (1) Notwithstanding any other law, owners and laboratory
directors of all clinical laboratories, including those laboratories
that cease operations, shall preserve medical records and laboratory
records, as defined in this section, for three years from the date of
testing, examination, or purchase, unless a longer retention period
is required by any other law, and shall maintain an ability to
provide those records when requested by the department or any
duly authorized representative of the department.

(2) For purposes of this subdivision, “medical records” means
the test requisition or test authorization, or the patient’s chart or
medical record if used as the test requisition, the final and
preliminary test or examination result, and the name of the person
contacted if the laboratory test or examination result indicated an
imminent life-threatening result or was of panic value.

(3) For purposes of this subdivision, “laboratory records” means
records showing compliance with CLIA and this chapter during a
laboratory’s operation that are actual or true copies, either
photocopies or electronically reproducible copies, of records for
patient test management, quality control, quality assurance, and
all invoices documenting the purchase or lease of laboratory
equipment and test kits, reagents, or media.

(4) Information contained in medical records and laboratory
records shall be confidential, and shall be disclosed only to
authorized persons in accordance with federal, state, and local
laws.

(c) The department or any person injured as a result of a
laboratory’s abandonment or failure to retain records pursuant to
this section may bring an action in a court of proper jurisdiction
for any reasonable amount of damages suffered as a result thereof.

SEC. 21.  

Section 1272.4 of the Business and Professions Code
is repealed.

SEC. 22.  

Section 1272.6 of the Business and Professions Code
is repealed.

SEC. 23.  

Section 1281 of the Business and Professions Code
is repealed.

SEC. 24.  

Section 1300 of the Business and Professions Code
is amended to read:

1300.  

The amount of application and license fees under this
chapter shall be as follows:

(a) The application fee for a histocompatibility laboratory
director’s, clinical laboratory bioanalyst’s, clinical chemist’s,
clinical microbiologist’s, clinical laboratory toxicologist’s, clinical
cytogeneticist’s, or clinical genetic molecular biologist’s license
is sixty-three dollars ($63).

(b) The annual renewal fee for a histocompatibility laboratory
director’s, clinical laboratory bioanalyst’s, clinical chemist’s,
clinical microbiologist’s, clinical laboratory toxicologist’s, clinical
cytogeneticist’s, or clinical genetic molecular biologist’s license
is sixty-three dollars ($63).

(c) The application fee for a clinical laboratory scientist’s or
limited clinical laboratory scientist’s license is thirty-eight dollars
($38).

(d) The application and annual renewal fee for a
cytotechnologist’s license is fifty dollars ($50).

(e) The annual renewal fee for a clinical laboratory scientist’s
or limited clinical laboratory scientist’s license is twenty-five
dollars ($25).

(f) The application fee for a trainee’s license is thirteen dollars
($13).

(g) The annual renewal fee for a trainee’s license is eight dollars
($8).

(h) The application fee for a duplicate license is five dollars
($5).

(i) The personnel licensing delinquency fee is equal to the annual
renewal fee.

(j) The director may establish a fee for examinations required
under this chapter. The fee shall not exceed the total cost to the
department in conducting the examination.

(k) The state, a district, city, county, city and county, or other
political subdivision, or a public officer or body shall be subject
to the payment of fees established pursuant to this chapter or
regulations adopted thereunder.

(l) The department shall establish an application fee and a
renewal fee for a medical laboratory technician license, the total
fees collected not to exceed the costs of the department for the
implementation and operation of the program licensing and
regulating medical laboratory technicians pursuant to Section
1260.3.

SEC. 25.  

Section 1300.1 of the Business and Professions Code
is repealed.

SEC. 26.  

Section 1301 of the Business and Professions Code
is amended to read:

1301.  

(a) The department shall give written notice to all
persons licensed pursuant to Section 1260, 1260.1, 1261, 1261.5,
1262, 1264, or 1270 at least 30 days in advance of the regular
renewal date that a renewal fee has not been paid. In addition, the
department shall give written notice to licensed clinical laboratory
bioanalysts or doctoral degree specialists and clinical laboratory
scientists or limited clinical laboratory scientists by registered or
certified mail 90 days in advance of the expiration of the fifth year
that a renewal fee has not been paid and, if not paid before the
expiration of the fifth year of delinquency, the licensee may be
subject to reexamination.

(b) If the renewal fee is not paid for five or more years, the
department may require an examination before reinstating the
license, except that an examination shall not be required as a
condition for reinstatement if the original license was issued
without an examination. An examination shall not be required for
reinstatement if the license was forfeited solely by reason of
nonpayment of the renewal fee if the nonpayment was for less than
five years.

(c) If the license is not renewed within 60 days after its
expiration, the licensee, as a condition precedent to renewal, shall
pay the delinquency fee identified in subdivision (i) of Section
1300, in addition to the renewal fee in effect on the last preceding
regular renewal date. Payment of the delinquency fee is not
necessary if, within 60 days of the license expiration date, the
licensee files an application for inactive status.

SEC. 27.  

Section 1310 of the Business and Professions Code
is repealed.

SEC. 28.  

Section 1310 is added to the Business and Professions
Code, to read:

1310.  

(a) If the department determines that a clinical laboratory
does not substantially meet the requirements of this chapter or
federal law, the department may impose any of the following:

(1) Directed plans of correction, as defined under CLIA.

(2) Civil money penalties in an amount ranging from fifty dollars
($50) to three thousand dollars ($3,000) per day of noncompliance,
or per violation, for a condition-level deficiency that does not pose
immediate jeopardy, to an amount ranging from three thousand
fifty dollars ($3,050) to ten thousand dollars ($10,000) per day of
noncompliance, or per violation, for a condition-level deficiency
that poses immediate jeopardy, but only after notice and an
opportunity to respond in accordance with Section 100171 of the
Health and Safety Code, and consideration of facts enumerated in
CLIA in Section 493.1834 of Title 42 of the Code of Federal
Regulations.

(3) Civil money penalties in an amount ranging from fifty dollars
($50) to three thousand dollars ($3,000) per day of noncompliance,
or per violation, for failure to comply with disease reporting
requirements, but only after notice and an opportunity to respond
in accordance with Section 100171 of the Health and Safety Code.

(4) Onsite monitoring, as defined under CLIA, and payment for
the costs of onsite monitoring.

(5) Any combination of the actions described in paragraphs (1)
to (4), inclusive.

(b) The department or its agents may enter and inspect a clinical
laboratory at any time to enforce state laws and regulations,
including, but not limited to, state standards that are more stringent
than federal standards.

begin insert

(c) The costs to the department in conducting a complaint
investigation, imposing sanctions, or conducting a hearing under
this chapter shall be paid by the clinical laboratory. The fee shall
not exceed the fee that the clinical laboratory would pay under
CLIA for the same type of activity and shall not be payable if the
clinical laboratory would not be required to pay those fees under
CLIA.

end insert

SEC. 29.  

Section 1320 of the Business and Professions Code
is amended to read:

1320.  

The department may deny, suspend, or revoke a license
issued pursuant to this chapter for any of the following reasons:

(a) Conduct involving moral turpitude or dishonest reporting
of tests.

(b) Violation by the applicant or licensee of this chapter or a
rule or regulation adopted pursuant thereto.

(c) Aiding, abetting, or permitting the violation of this chapter,
the rules or regulations adopted pursuant to this chapter, or the
Medical Practice Act (Chapter 5 (commencing with Section 2000)
of Division 2).

(d) Permitting a licensed trainee to perform tests or procure
specimens unless under direct and responsible supervision.

(e) Violation of any provision of this code governing the practice
of medicine and surgery.

(f) Proof that an applicant or licensee has made false statements
in any material regard on the application for a license or renewal
issued pursuant to this chapter.

(g) Conduct inimical to the public health, morals, welfare, or
safety of the people of the State of California in the provision of
services for which a license is issued pursuant to this chapter.

(h) Proof that the applicant or licensee has used a degree or
certificate as a means of qualifying for licensure that has been
purchased or procured by barter or by any unlawful means or
obtained from an institution that, at the time the degree, certificate,
or title was obtained, was not recognized or accredited by the
department of education of the state where the institution is or was
located to give training in the field of study in which the degree,
certificate, or title is claimed.

(i) Violation of any of the prenatal laws or regulations pertaining
thereto in Chapter 2 (commencing with Section 120675) of Part
3 of Division 105 of the Health and Safety Code and Article 1
(commencing with Section 1125) of Group 4 of Subchapter 1 of
Chapter 2 of Part 1 of Title 17 of the California Code of
Regulations.

(j) Knowingly accepting an assignment for clinical laboratory
tests or specimens from, and the rendering of a report thereon to,
persons not authorized by law to submit those specimens or
assignments.

(k) Rendering a report on clinical laboratory work actually
performed in another clinical laboratory without designating clearly
the name and address of the laboratory in which the test was
performed.

(l) Conviction of a felony or misdemeanor involving moral
turpitude under the laws of any state or of the United States arising
out of or in connection with the practice of clinical laboratory
technology. The record of conviction or a certified copy thereof
shall be conclusive evidence of that conviction.

(m) Unprofessional conduct.

(n) The use of drugs or alcoholic beverages to the extent or in
a manner as to be dangerous to a person licensed under this chapter,
or any other person to the extent that use impairs the ability of the
licensee to conduct, with safety to the public, the practice of clinical
laboratory technology.

(o) Misrepresentation in obtaining a license.

(p) Performance of a clinical laboratory test or examination or
other procedure that is not within the specialties or subspecialties,
or category of laboratory procedures authorized by the license.

SEC. 30.  

Section 1324 of the Business and Professions Code
is repealed.

SEC. 31.  

Section 1325 of the Business and Professions Code
is repealed.

SEC. 32.  

Section 9272 of the Food and Agricultural Code is
amended to read:

9272.  

The provisions of this chapter shall not apply (1) to
facilities primarily engaged in the collection, preparation, testing,
processing, storage, or distribution of human blood or blood
products, provided the facility is licensed pursuant to Chapter 4
(commencing with Section 1600) of Division 2 of the Health and
Safety Code and any biologic, as defined in Section 9203, produced
by the facility is sold or distributed only to an establishment
licensed by this chapter or (2) to clinical laboratories whose only
biologics are autogenous bacterins prepared at the request of
licensed veterinarians.

SEC. 33.  

Section 1206 of the Health and Safety Code is
amended to read:

1206.  

This chapter does not apply to the following:

(a) Except with respect to the option provided with regard to
surgical clinics in paragraph (1) of subdivision (b) of Section 1204
and, further, with respect to specialty clinics specified in paragraph
(2) of subdivision (b) of Section 1204, a place or establishment
owned or leased and operated as a clinic or office by one or more
licensed health care practitioners and used as an office for the
practice of their profession, within the scope of their license,
regardless of the name used publicly to identify the place or
establishment.

(b) A clinic directly conducted, maintained, or operated by the
United States or by any of its departments, officers, or agencies,
and any primary care clinic specified in subdivision (a) of Section
1204 that is directly conducted, maintained, or operated by this
state or by any of its political subdivisions or districts, or by any
city. Nothing in this subdivision precludes the department from
adopting regulations that utilize clinic licensing standards as
eligibility criteria for participation in programs funded wholly or
partially under Title XVIII or XIX of the federal Social Security
Act.

(c) (1) A clinic conducted, maintained, or operated by a
federally recognized Indian tribe or tribal organization, as defined
in Section 450 or 1603 of Title 25 of the United States Code, that
is located on land recognized as tribal land by the federal
government.

(2) A clinic conducted, maintained, or operated by a federally
recognized Indian tribe or tribal organization, as defined in Section
450 or 1603 of Title 25 of the United States Code, under a contract
with the United States pursuant to the Indian Self-Determination
and Education Assistance Act (Public Law 93-638), regardless of
the location of the clinic, except that if the clinic chooses to apply
to the State Department of Public Health for a state facility license,
then the State Department of Public Health will retain authority
to regulate that clinic as a primary care clinic as defined by
subdivision (a) of Section 1204.

(d) Clinics conducted, operated, or maintained as outpatient
departments of hospitals.

(e) A facility licensed as a health facility under Chapter 2
(commencing with Section 1250).

(f) A freestanding clinical or pathological laboratory.

(g) A clinic operated by, or affiliated with, an institution of
learning that teaches a recognized healing art and is approved by
the state board or commission vested with responsibility for
regulation of the practice of that healing art.

(h) A clinic that is operated by a primary care community or
free clinic and that is operated on separate premises from the
licensed clinic and is only open for limited services of no more
than 30 hours a week. An intermittent clinic, as described in this
subdivision, shall meet all other requirements of law, including
administrative regulations and requirements, pertaining to fire and
life safety.

(i) The offices of physicians in group practice who provide a
preponderance of their services to members of a comprehensive
group practice prepayment health care service plan subject to
Chapter 2.2 (commencing with Section 1340).

(j) Student health centers operated by public institutions of
higher education.

(k) Nonprofit speech and hearing centers, as defined in Section
1201.5. A nonprofit speech and hearing clinic desiring an
exemption under this subdivision shall apply to the director, who
shall grant the exemption to any facility meeting the criteria of
Section 1201.5. Notwithstanding the licensure exemption contained
in this subdivision, a nonprofit speech and hearing center shall be
deemed to be an organized outpatient clinic for purposes of
qualifying for reimbursement as a rehabilitation center under the
Medi-Cal Act (Chapter 7 (commencing with Section 14000) of
Part 3 of Division 9 of the Welfare and Institutions Code).

(l) A clinic operated by a nonprofit corporation exempt from
federal income taxation under paragraph (3) of subsection (c) of
Section 501 of the Internal Revenue Code of 1954, as amended,
or a statutory successor thereof, that conducts medical research
and health education and provides health care to its patients through
a group of 40 or more physicians and surgeons, who are
independent contractors representing not less than 10
board-certified specialties, and not less than two-thirds of whom
practice on a full-time basis at the clinic.

(m) A clinic, limited to in vivo diagnostic services by magnetic
resonance imaging functions or radiological services under the
direct and immediate supervision of a physician and surgeon who
is licensed to practice in California. This shall not be construed to
permit cardiac catheterization or any treatment modality in these
clinics.

(n) A clinic operated by an employer or jointly by two or more
employers for their employees only, or by a group of employees,
or jointly by employees and employers, without profit to the
operators thereof or to any other person, for the prevention and
treatment of accidental injuries to, and the care of the health of,
the employees comprising the group.

(o) A community mental health center, as defined in Section
5667 of the Welfare and Institutions Code.

(p) (1) A clinic operated by a nonprofit corporation exempt
from federal income taxation under paragraph (3) of subsection
(c) of Section 501 of the Internal Revenue Code of 1954, as
amended, or a statutory successor thereof, as an entity organized
and operated exclusively for scientific and charitable purposes and
that satisfied all of the following requirements on or before January
1, 2005:

(A) Commenced conducting medical research on or before
January 1, 1982, and continues to conduct medical research.

(B) Conducted research in, among other areas, prostatic cancer,
cardiovascular disease, electronic neural prosthetic devices,
biological effects and medical uses of lasers, and human magnetic
resonance imaging and spectroscopy.

(C) Sponsored publication of at least 200 medical research
articles in peer-reviewed publications.

(D) Received grants and contracts from the National Institutes
of Health.

(E) Held and licensed patents on medical technology.

(F) Received charitable contributions and bequests totaling at
least five million dollars ($5,000,000).

(G) Provides health care services to patients only:

(i) In conjunction with research being conducted on procedures
or applications not approved or only partially approved for payment
(I) under the Medicare program pursuant to Section 1359y(a)(1)(A)
of Title 42 of the United States Code, or (II) by a health care service
plan registered under Chapter 2.2 (commencing with Section 1340),
or a disability insurer regulated under Chapter 1 (commencing
with Section 10110) of Part 2 of Division 2 of the Insurance Code;
provided that services may be provided by the clinic for an
additional period of up to three years following the approvals, but
only to the extent necessary to maintain clinical expertise in the
procedure or application for purposes of actively providing training
in the procedure or application for physicians and surgeons
unrelated to the clinic.

(ii) Through physicians and surgeons who, in the aggregate,
devote no more than 30 percent of their professional time for the
entity operating the clinic, on an annual basis, to direct patient care
activities for which charges for professional services are paid.

(H) Makes available to the public the general results of its
research activities on at least an annual basis, subject to good faith
protection of proprietary rights in its intellectual property.

(I) Is a freestanding clinic, whose operations under this
subdivision are not conducted in conjunction with any affiliated
or associated health clinic or facility defined under this division,
except a clinic exempt from licensure under subdivision (m). For
purposes of this subparagraph, a freestanding clinic is defined as
“affiliated” only if it directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, a clinic or health facility defined under this division,
except a clinic exempt from licensure under subdivision (m). For
purposes of this subparagraph, a freestanding clinic is defined as
“associated” only if more than 20 percent of the directors or trustees
of the clinic are also the directors or trustees of any individual
clinic or health facility defined under this division, except a clinic
exempt from licensure under subdivision (m). Any activity by a
clinic under this subdivision in connection with an affiliated or
associated entity shall fully comply with the requirements of this
subdivision. This subparagraph shall not apply to agreements
between a clinic and any entity for purposes of coordinating
medical research.

(2) By January 1, 2007, and every five years thereafter, the
Legislature shall receive a report from each clinic meeting the
criteria of this subdivision and any other interested party
concerning the operation of the clinic’s activities. The report shall
include, but not be limited to, an evaluation of how the clinic
impacted competition in the relevant health care market, and a
detailed description of the clinic’s research results and the level
of acceptance by the payer community of the procedures performed
at the clinic. The report shall also include a description of
procedures performed both in clinics governed by this subdivision
and those performed in other settings. The cost of preparing the
reports shall be borne by the clinics that are required to submit
them to the Legislature pursuant to this paragraph.

SEC. 34.  

Section 1600.3 of the Health and Safety Code is
amended to read:

1600.3.  

“Blood bank depository” means a place other than a
blood bank where human whole blood and human whole blood
derivatives specified by regulation are stored and held for
transfusion. Blood bank depositories shall be clinical laboratories,
licensed in accordance with the provisions of federal law, or other
places where services essentially equivalent are maintained, as
determined by the department.

SEC. 35.  

Section 14043.27 of the Welfare and Institutions
Code is amended to read:

14043.27.  

(a) If an applicant or provider is granted provisional
provider status or preferred provisional provider status pursuant
to Section 14043.26 and, if at any time during the provisional
provider status period or preferred provisional provider status
period, the department conducts any announced or unannounced
visits or any additional inspections or reviews pursuant to this
chapter or Chapter 8 (commencing with Section 14200), or the
regulations adopted thereunder, or pursuant to Section 100185.5
of the Health and Safety Code, and discovers or otherwise
determines the existence of any ground to deactivate the provider’s
number and business addresses or suspend the provider from the
Medi-Cal program pursuant to this chapter or Chapter 8
(commencing with Section 14200), or the regulations adopted
thereunder, or pursuant to Section 100185.5 of the Health and
Safety Code, or if any of the circumstances listed in subdivision
(c) occur, the department shall terminate the provisional provider
status or preferred provisional provider status of the provider,
regardless of whether the period of time for which the provisional
provider status or preferred provisional provider status was granted
under Section 14043.26 has elapsed.

(b) Termination of provisional provider status or preferred
provisional provider status shall include deactivation of the
provider’s number, including all business addresses used by the
provider to obtain reimbursement from the Medi-Cal program and
removal of the provider from enrollment in the Medi-Cal program,
except where the termination is based upon a ground related solely
to a specific location for which provisional provider status was
granted. Termination of provisional provider status based upon
grounds related solely to a specific location may include failure
to have an established place of business, failure to possess the
business or zoning permits or other approvals necessary to operate
a business, or failure to possess the appropriate licenses, permits,
or certificates necessary for the provider of service category or
subcategory identified by the provider in its application package.
Where the grounds relate solely to a specific location, the
termination of provisional provider status shall include only
deactivation of the specific locations that the grounds apply to and
shall include removal of the provider from enrollment in the
Medi-Cal program only if, after deactivation of the specific
locations, the provider does not have any business address that is
not deactivated.

(c) The following circumstances are grounds for termination of
provisional provider status or preferred provisional provider status:

(1) The provider, persons with an ownership or control interest
in the provider, or persons who are directors, officers, or managing
employees of the provider have been convicted of any felony, or
convicted of any misdemeanor involving fraud or abuse in any
government program, related to neglect or abuse of a patient in
connection with the delivery of a health care item or service, or in
connection with the interference with, or obstruction of, any
investigation into health care related fraud or abuse, or have been
found liable for fraud or abuse in any civil proceeding, or have
entered into a settlement in lieu of conviction for fraud or abuse
in any government program within 10 years of the date of the
application package.

(2) There is a material discrepancy in the information provided
to the department, or with the requirements to be enrolled, that is
discovered after provisional provider status or preferred provisional
provider status has been granted and that cannot be corrected
because the discrepancy occurred in the past.

(3) The provider has provided material information that was
false or misleading at the time it was provided.

(4) The provider failed to have an established place of business
at the business address for which the application package was
submitted at the time of any onsite inspection, announced or
unannounced visit, or any additional inspection or review
conducted pursuant to this article or a statute or regulation
governing the Medi-Cal program, unless the practice of the
provider’s profession or delivery of services, goods, supplies, or
merchandise is such that services, goods, supplies, or merchandise
are rendered or delivered at locations other than the business
address and this practice or delivery of services, goods, supplies,
or merchandise has been disclosed in the application package
approved by the department when the provisional provider status
or preferred provisional provider status was granted.

(5) The provider meets the definition of a clinic under Section
1200 of the Health and Safety Code, but is not licensed as a clinic
pursuant to Chapter 1 (commencing with Section 1200) of Division
2 of the Health and Safety Code and fails to meet the requirements
to qualify for at least one exemption pursuant to Section 1206 or
1206.1 of the Health and Safety Code.

(6) The provider performs clinical laboratory tests or
examinations, but it or its personnel do not meet CLIA, and the
regulations adopted thereunder, do not possess valid CLIA
certificates, or are not exempt pursuant to Section 1241 of the
Business and Professions Code.

(7) The provider fails to possess either of the following:

(A) The appropriate licenses, permits, certificates, or other
approvals needed to practice the profession or occupation, or
provide the services, goods, supplies, or merchandise the provider
identified in the application package approved by the department
when the provisional provider status or preferred provisional
provider status was granted and for the location for which the
application was submitted.

(B) The business or zoning permits or other approvals necessary
to operate a business at the location identified in its application
package approved by the department when the provisional provider
status or preferred provisional provider status was granted.

(8) The provider, or if the provider is a clinic, group, partnership,
corporation, or other association, any officer, director, or
shareholder with a 10 percent or greater interest in that
organization, commits two or more violations of the federal or
state statutes or regulations governing the Medi-Cal program, and
the violations demonstrate a pattern or practice of fraud, abuse, or
provision of unnecessary or substandard medical services.

(9) The provider commits any violation of a federal or state
statute or regulation governing the Medi-Cal program or of a statute
or regulation governing the provider’s profession or occupation
and the violation represents a threat of immediate jeopardy or
significant harm to any Medi-Cal beneficiary or to the public
welfare.

(10) The provider submits claims for payment that subject a
provider to suspension under Section 14043.61.

(11) The provider submits claims for payment for services,
goods, supplies, or merchandise rendered at a location other than
the business address or addresses listed on the application for
enrollment, unless the practice of the provider’s profession or
delivery of services, goods, supplies, or merchandise is such that
services, goods, supplies, or merchandise are rendered or delivered
at locations other than the business address and this practice or
delivery of services, goods, supplies, or merchandise has been
disclosed in the application package approved by the department
when the provisional provider status was granted.

(12) The provider has not paid its fine, or has a debt due and
owing, including overpayments and penalty assessments, to any
federal, state, or local government entity that relates to Medicare,
begin delete medicaid, end delete begin insert Medicaid, end insert Medi-Cal, or any other federal or state health
care program, and has not made satisfactory arrangements to fulfill
the obligation or otherwise been excused by legal process from
fulfilling the obligation.

(d) If, during a provisional provider status period or a preferred
provisional provider status period, the department conducts any
announced or unannounced visits or any additional inspections or
reviews pursuant to this chapter or Chapter 8 (commencing with
Section 14200), or the regulations adopted thereunder, and
commences an investigation for fraud or abuse, or discovers or
otherwise determines that the provider is under investigation for
fraud or abuse by any other state, local, or federal government law
enforcement agency, the provider shall be subject to termination
of provisional provider status or preferred provisional provider
status, regardless of whether the period of time for which the
provisional provider status or preferred provisional provider status
was granted under Section 14043.26 has elapsed.

(e) A provider whose provisional provider status or preferred
provisional provider status has been terminated pursuant to this
section may appeal the termination in accordance with Section
14043.65.

(f) Any department-recovered fine or debt due and owing,
including overpayments, that are subsequently determined to have
been erroneously collected shall be promptly refunded to the
provider, together with interest paid in accordance with subdivision
(e) of Section 14171 and Section 14172.5.