Amended in Senate June 16, 2016

Amended in Senate June 6, 2016

Amended in Assembly April 11, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2744


Introduced by Assembly Member Gordon

(Coauthor: Senator Hill)

February 19, 2016


An act to amend Section 650 of the Business and Professions Code, relating to the healing arts.

LEGISLATIVE COUNSEL’S DIGEST

AB 2744, as amended, Gordon. Healing arts: referrals.

Existing law provides for the licensure and regulation of various healing arts professions and vocations by boards within the Department of Consumer Affairs. Under existing law, it is unlawful for licensed healing arts practitioners, except as specified, to offer, deliver, receive, or accept any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers to any person. Existing law makes a violation of this provision a public offense punishable upon a first conviction by imprisonment, as specified, or a fine not exceeding $50,000, or by imprisonment and that fine.

This bill would provide that the payment or receipt of consideration for advertising, wherein a licensed healing arts practitioner offers or sells services through a third-party advertiser does not constitute a referral of patients when the third-party advertiser does not itself recommend, endorse, or otherwise select a licensee. The bill would require the purchaser of the service to receive a refund of the full purchase price if the licensee determines, after consultation with the purchaser, that the service is not appropriate for thebegin delete purchaser.end deletebegin insert purchaser, as specified.end insert The bill would specify that these provisions do not apply to basic health care services or essential health benefits, as defined. The bill would also provide that the entity that provides advertising is required to be able to demonstrate that the licensee consented in writing to these provisions. The bill would require a third-party advertiser to make availablebegin delete for purchase services advertised by all licenseesend deletebegin insert to prospective purchasers advertisements for services of all licensees then advertising through the third-party advertiserend insert in the applicable geographic region.

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

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

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SECTION 1.  

Section 650 of the Business and Professions Code
2 is amended to read:

3

650.  

(a) Except as provided in Chapter 2.3 (commencing with
4Section 1400) of Division 2 of the Health and Safety Code, the
5offer, delivery, receipt, or acceptance by any person licensed under
6this division or the Chiropractic Initiative Act of any rebate, refund,
7commission, preference, patronage dividend, discount, or other
8consideration, whether in the form of money or otherwise, as
9compensation or inducement for referring patients, clients, or
10customers to any person, irrespective of any membership,
11proprietary interest, or coownership in or with any person to whom
12these patients, clients, or customers are referred is unlawful.

13(b) The payment or receipt of consideration for services other
14than the referral of patients which is based on a percentage of gross
15revenue or similar type of contractual arrangement shall not be
16unlawful if the consideration is commensurate with the value of
17the services furnished or with the fair rental value of any premises
18or equipment leased or provided by the recipient to the payer.

19(c) The offer, delivery, receipt, or acceptance of any
20consideration between a federally qualified health center, as defined
21in Section 1396d(l)(2)(B) of Title 42 of the United States Code,
22and any individual or entity providing goods, items, services,
P3    1donations, loans, or a combination thereof to the health center
2entity pursuant to a contract, lease, grant, loan, or other agreement,
3if that agreement contributes to the ability of the health center
4entity to maintain or increase the availability, or enhance the
5quality, of services provided to a medically underserved population
6served by the health center, shall be permitted only to the extent
7sanctioned or permitted by federal law.

8(d) Except as provided in Chapter 2.3 (commencing with Section
91400) of Division 2 of the Health and Safety Code and in Sections
10654.1 and 654.2 of this code, it shall not be unlawful for any person
11licensed under this division to refer a person to any laboratory,
12pharmacy, clinic (including entities exempt from licensure pursuant
13to Section 1206 of the Health and Safety Code), or health care
14facility solely because the licensee has a proprietary interest or
15coownership in the laboratory, pharmacy, clinic, or health care
16facility, provided, however, that the licensee’s return on investment
17for that proprietary interest or coownership shall be based upon
18the amount of the capital investment or proportional ownership of
19the licensee which ownership interest is not based on the number
20or value of any patients referred. Any referral excepted under this
21section shall be unlawful if the prosecutor proves that there was
22no valid medical need for the referral.

23(e) Except as provided in Chapter 2.3 (commencing with Section
241400) of Division 2 of the Health and Safety Code and in Sections
25654.1 and 654.2 of this code, it shall not be unlawful to provide
26nonmonetary remuneration, in the form of hardware, software, or
27information technology and training services, as described in
28subsections (x) and (y) of Section 1001.952 of Title 42 of the Code
29of Federal Regulations, as amended October 4, 2007, as published
30in the Federal Register (72 Fed. Reg. 56632 and 56644), and
31subsequently amended versions.

32(f) “Health care facility” means a general acute care hospital,
33acute psychiatric hospital, skilled nursing facility, intermediate
34care facility, and any other health facility licensed by the State
35Department of Public Health under Chapter 2 (commencing with
36Section 1250) of Division 2 of the Health and Safety Code.

37(g) The payment or receipt of consideration for advertising,
38wherein a licensee offers or sells services through a third-party
39advertiser, shall not constitute a referral of patients when the
40third-party advertiser does not itself recommend, endorse, or
P4    1otherwise select a licensee.begin delete To the extentend deletebegin insert Ifend insert the licensee determines,
2after consultation with the purchaser of the service, that the service
3is not appropriate for the purchaser, the purchaser shall receive a
4refund of the full purchasebegin delete price.end deletebegin insert price as determined by the terms
5of the advertising service agreement between the third-party
6advertiser and the licensee.end insert
This subdivision shall not apply to
7basic health care services, as defined in subdivision (b) of Section
81345 of the Health and Safety Code, or essential health benefits,
9as defined in Section 1367.005 of the Health and Safety Code and
10Section 10112.27 of the Insurance Code. The entity that provides
11the advertising shall be able to demonstrate that the licensee
12consented in writing to the requirements of this subdivision. A
13third-party advertiser shall make availablebegin delete for purchase services
14advertised by all licenseesend delete
begin insert to prospective purchasers
15advertisements for services of all licensees then advertising through
16the third-party advertiserend insert
in the applicable geographic region.

17(h) A violation of this section is a public offense and is
18punishable upon a first conviction by imprisonment in a county
19jail for not more than one year, or by imprisonment pursuant to
20subdivision (h) of Section 1170 of the Penal Code, or by a fine not
21exceeding fifty thousand dollars ($50,000), or by both that
22imprisonment and fine. A second or subsequent conviction is
23punishable by imprisonment pursuant to subdivision (h) of Section
241170 of the Penal Code, or by that imprisonment and a fine of fifty
25thousand dollars ($50,000).



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