BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            SB 1195         Hearing Date:    April 18,  
          |Author:   |Hill                                                  |
          |Version:  |April 6, 2016                                         |
          |Urgency:  |No                     |Fiscal:    |Yes              |
          |Consultant|Nicole Billington, Bill Gage                          |
          |:         |                                                      |
                Subject:  Professions and vocations:  board actions:   
                                 competitive impact

          SUMMARY: Grants authority to the Director of the Department of Consumer  
          Affairs (DCA) to review a decision or other action, except as  
          specified, of a board within the DCA to determine whether it  
          unreasonably restrains trade and to approve, disapprove, or  
          modify the board decision or action, as specified; eliminates  
          the requirement that the executive officer of the Board of  
          Registered Nursing be a registered nurse; clarifies when a  
          judgment or settlement for treble damages antitrust award would  
          be granted for a member of a regulatory board; provides for an  
          additional standard for the Office of Administrative Law to  
          follow when reviewing regulatory actions of state boards.  Also  
          makes various changes that are intended to improve the  
          effectiveness of the Veterinary Medical Board (Board) and  
          extends the Board's sunset dates.       

          Existing law:  

          1)Provides for the licensure and regulation of various  
            professions and vocations by the boards within the DCA, and  
            authorizes those boards to adopt regulations to enforce the  
            laws pertaining to the profession and vocation for which they  
            have jurisdiction.  

          2)Makes decisions of any board within the DCA pertaining to  
            setting standards, conducting examinations, passing  


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            candidates, and revoking licenses final, except as specified,  
            and provides that those decisions are not subject to review by  
            the Director of the DCA.  (Business and Professions Code (BPC  
             109 (a))

          3)Provides that the Director may initiate an investigation of  
            any allegations of misconduct in the preparation,  
            administration, or scoring of any examination which is  
            administered by a board, or in the review and qualifications  
            which are part of the licensing process of any board.  (BPC   
            109 (b))

          4)Provides that the Director may intervene in any matter of any  
            board where an investigation by the Division of Investigation  
            discloses probably cause to believe that the conduct or  
            activity of a board, or its members or employees constitutes a  
            violation of criminal law.  (BPC  109 (c))

          5)Authorizes the Director to audit and review, upon his or her  
            own initiative, or upon the request of a consumer or licensee,  
            inquiries and complaints regarding licensees, dismissals of  
            disciplinary cases, the opening, conduct, or closure of  
            investigations, informal conferences, and discipline short of  
            formal accusation by the Medical Board of California, the  
            allied health professional boards, and the California Board of  
            Podiatric Medicine and the Director may make recommendations  
            for changes to the disciplinary system to the appropriate  
            board, the Legislature, or both.  
          (BPC  116 (a)) 

          6)Requires the Director to annually report to the chairpersons  
            of certain committees of the Legislature information regarding  
            findings from any audit, review, of monitoring and evaluation.  
             (BPC  116 (b))

          7)Authorizes the Director to contract for services of experts  
            and consultants where necessary.  (BPC  307)

          8)Requires regulations, except those pertaining to examinations  
            and qualifications for licensure and fee changes proposed or  
            promulgated by a board within the DCA, to comply with certain  
            requirements before the regulation or fee change can take  
            effect, including that the Director is required to be notified  
            of the rule or regulation and given 30 days to disapprove the  


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            regulation.  (BPC  313.1)

          9)Prohibits a rule or regulation that is disapproved by the  
            Director from having any force or effect, unless the  
            Director's disapproval is overridden by a unanimous vote of  
            the members of the board, as specified.

          10)Provides, until January 1, 2018, for the licensure and  
            regulation of registered nurses by the Board of Registered  
            Nursing (BRN) which is within the DCA, and requires the BRN to  
            appoint an executive officer who is a nurse currently licensed  
            by the BRN.

          11)Establishes the California Veterinary Medicine Practice Act  
            until January 1, 2017, and requires the Veterinary Medical  
            Board (VMB) within the Department of Consumer Affairs (DCA)  
            to, among other things, license and regulate veterinarians,  
            registered veterinary technicians (RVTs), RVT schools and  
            programs, and veterinary premises.  (BPC  4800 et seq.)

          12)Requires a public entity to pay any judgment or any  
            compromise settlement of a claim or action against an employee  
            or former employee of the public entity if the employee or  
            former employee requests the public entity to defend him or  
            her against any claim or action against him or her for an  
            injury arising out of an act or omission occurring within the  
            scope of his or her employment as an employee of the public  
            entity, the request is made in writing not less than 10 days  
            before the day of the trial, and the employee or former  
            employee reasonably cooperates in good faith in the defense of  
            the claim or action.  (Government Code  825)

          13)Specifies that the Administrative Procedure Act governs the  
            procedure for the adoption, amendment, or repeal of  
            regulations by state agencies and for review of those  
            regulatory actions by the Office of Administrative Law and  
            requires the review of the office to follow certain standards,  
            including, among others, necessity, as defined.  (Government  
            Code  11340 et seq.)

          This bill:

          1) Authorizes the Director, upon his or her own initiative, and  
             require the Director, upon the request of a consumer or  


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             licensee, to review a decision or other action, except as  
             specified, of a board within the DCA to determine whether it  
             unreasonably restrains trade and to approve, disapprove, or  
             modify the board decision or action, as specified.

          2) Requires the Director to post on the DCA's website his or her  
             final written decision and the reasons for the decision  
             within 90 days from receipt of the request of a consumer or  

          3) Commencing on March 1, 2017, would require the Director to  
             annually report to the chairs of specified committees of the  
             Legislature information regarding the Director's  
             disapprovals, modifications, or findings from any audit,  
             review or monitoring and evaluation.

          4) Authorizes the Director to seek, designate, employ, or  
             contract for services of independent antitrust experts for  
             purposes of reviewing board actions for unreasonable  
             restraints of trade.

          5) Requires the Director to review and approve any regulation  
             promulgated by a board within the DCA, as specified, and  
             would authorize the Director to modify any regulation as a  
             condition of approval, and to disapprove a regulation because  
             it would have an impermissible anticompetitive effect.

          6) Prohibits any rule or regulation from having any force or  
             effect if the Director does not approve the regulation  
             because it has an impermissible anticompetitive effect. 

          7) Extends the sunset date for the VMB and Executive Officer of  
             the Board until January 1, 2021. 

          8) Authorizes a veterinarian and registered veterinarian  
             technician who is under the director supervision of a  
             veterinarian with a current and active license to compound a  
             drug for anesthesia, the prevention, cure, or relief of a  
             wound, fracture, bodily injury, or disease of an animal in a  
             premises currently and actively registered with the VMB, as  
             specified, and would authorize the California State Board of  
             Pharmacy and the VMB to ensure compliance with these  


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          9) Requires veterinarians engaged in practice of veterinary  
             medicine employed by the University of California or by  
             Western University of Health Sciences while engage in the  
             performance of specific duties to be licensed as a  
             veterinarians in the state or hold a university license  
             issued by the VMB, and that the applicant for a university  
             license to meet certain requirements, including that the  
             applicant passes a specified exam. 

          10)Provides that a veterinary premise registration may be  
             canceled after five years of delinquency, unless the VMB  
             finds circumstances or conditions that would justify a new  
             premise registration to be issued. 

          11)Makes technical changes to BPC regarding the VMB.

          12)Requires a public entity to pay a judgment or settlement for  
             treble damage antitrust awards against a member of a  
             regulatory board for an act or omission occurring within the  
             scope of her or her employment as a member of a regulatory  

          13)Adds competitive impact, as defined, as an additional  
             standard for the Office of Administrative Law (Office) to  
             follow when reviewing regulatory actions of a state board on  
             which a controlling number of decisionmakers are active  
             market participants in the market that the board regulates,  
             and requires the Office to, among other things, consider  
             whether the anticompetitive effects of the proposed  
             regulation are clearly outweighed by the public policy  

          14)Authorizes the Office to designate, employ, or contract for  
             the services of independent antitrust or applicable economic  
             experts when reviewing proposed regulations for competitive  

          15)Requires state boards on which a controlling number of  
             decisionmakers are active market participants in the market  
             that the board regulates, when preparing the public notice,  
             to additionally include a statement that the agency has  
             evaluated the impact of the regulation on competition and  
             that the effect of the regulation is within a clearly  
             articulated and affirmatively expressed state law or policy.


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          FISCAL EFFECT:  Unknown.  This bill is keyed "fiscal" by  
          Legislative Counsel.  

          1. Purpose.  This bill is sponsored by the  Author  , and is one of  
             five "sunset bills" the Author is sponsoring this Session.   
             According to the Author, this bill is necessary to make  
             changes to the California Veterinary Medicine Practice Act  
             relating to the operation of the Veterinary Medical Board and  
             to both the authority of the Director of the DCA and the  
             Office of Administrative Law to assure compliance with a  
             recent U.S. Supreme Court Decision, North Carolina State  
             Board of Dental Examiners v. FTC.  These changes arose from  
             issues raised in the Board's sunset review process, and  
             require legislative action.  

          2. Oversight Hearings and Sunset Review of Licensing Boards and  
             Programs.  Beginning in 2015, the Senate Business,  
             Professions, and Economic Development Committee and the  
             Assembly Business and Professions Committee (Committees)  
             conducted joint oversight hearings to review 12 regulatory  
             entities:  DCA, Acupuncture Board, Board of Behavioral  
             Sciences, California Massage Therapy Association, Court  
             Reporters Board, Board of Pharmacy, Physician Assistant  
             Board, Board of Podiatric Medicine, Bureau of Private  
             Postsecondary Education, Board of Psychology, Bureau of Real  
             Estate, Bureau of Real Estate Appraisers, and Veterinary  
             Medical Board.  The Committees conducted three hearings in  
             March to review these entities.  This bill and the  
             accompanying sunset bills are intended to implement  
             legislative changes as recommended by staff of the Committees  
             and which are reflected in the Background Papers prepared by  
             Committee staff for each agency and program reviewed this  

          3. Potential Antitrust (Anticompetitive) Actions of Boards -  
             Compliance with North Carolina State Board of Dental  
             Examiners v. FTC.


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          In 2010, the Federal Trade Commission (FTC) brought an  
             administrative complaint against the North Carolina State  
             Board of Dental Examiners (Board) for exclusion of  
             non-dentists from the practice of teeth whitening.  The FTC  
             alleged that the Board's decision was an uncompetitive and  
             unfair method of competition under the Federal Trade  
             Commission Act.  This opened the Board to lawsuits and  
             substantial damages from affected parties.

             The Board was composed of 6 licensed, practicing dentists and  
             2 public members. The practice of teeth whitening was not  
             addressed in the statutes comprising the Dental Practice Act.  
              Instead of initiating a rulemaking effort to clarify the  
             appropriate practice of teeth whitening, the Board sent  
             cease-and-desist letters to non-dentists in the state  
             offering teeth whitening services.  The Board argued that the  
             FTC's complaint was invalid because the Board was acting as  
             an agent of North Carolina, and according to state-action  
             immunity, one cannot sue the state acting in its sovereign  
             capacity for anticompetitive conduct.  A federal appeals  
             court sided with the FTC, and the Board appealed to the  
             United States Supreme Court (Court).

             In February 2015, the Court agreed with the FTC and  
             determined that the Board was not acting as a state agent and  
             could be sued for its actions. The Court ruled, "Because a  
             controlling number of the Board's decision-makers are active  
             participants in the occupation the Board regulates, the Board  
             can invoke state-action antitrust immunity only if it was  
             subject to active supervision by the State, and here that  
             requirement is not met."

             The Court was not specific about what may constitute "active  
             participants" or "active supervision." However, the Court did  
             say that "active supervision" requires "that state officials  
             have and exercise power to review particular anticompetitive  
             acts of private parties and disapprove those that fail to  
             accord with state policy," and that "the supervisor must  
             review the substance of the anticompetitive decision, not  
             merely the procedures followed to produce it."

              FTC Staff Guidance on Active Supervision of State Regulatory  
             Boards.   In October 2015, the FTC released a staff guidance,  
             "Active Supervision of State Regulatory Boards Controlled by  


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             Market Participants," in order to better explain when active  
             supervision of a state regulatory board would be required in  
             order for a board to invoke the state action defense.  The  
             guidance also aimed to highlight what factors are relevant  
             when determining if the active supervision requirement has  
             been satisfied.  The FTC stated that active supervision  
             includes the ability of a state supervisor to review the  
             substance of the anticompetitive decision and have the power  
             to veto or modify a decision.  The state supervisor may not  
             be an active market participant. In addition, the FTC states  
             that active supervision must precede the implementation of  
             the alleged anticompetitive restraint.

             The FTC stated that the guidance addresses only the active  
             supervision requirement of the state action defense, and  
             antitrust analysis is fact-specific and context-dependent.  
             This means that although a state action defense might not be  
             applicable in a certain case, this does not mean that the  
             conduct of a regulatory board necessarily violates federal  
             antitrust laws. 

              Implications for the Boards under the DCA  .  On October 22,  
             2015, the Senate Committee on Business, Professions and  
             Economic Development and Assembly Business and Professions  
             Committee held a joint informational hearing to explore the  
             implications of the Court decision on the DCA's 26  
             professional regulatory boards and consider recommendations.
             In response to the Court's decision, the Chair of this  
             Committee, State Senator Jerry Hill, requested an opinion  
             from the Office of Attorney General Kamala Harris (AG).  The  
             AG released the following: 

               North Carolina Dental has brought both the composition of  
               licensing boards and the concept of active state  
               supervision into the public spotlight, but the standard it  
               imposes is flexible and context-specific. This leaves the  
               state with many variables to consider in deciding how to  

               Whatever the chosen response may be, the state can be  
               assured that North Carolina Dental's "active state  
               supervision" requirement is satisfied when a  
               non-market-participant state official has and exercises the  
               power to substantively review a board's action and  


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               determines whether the action effectuates the state's  
               regulatory policies.

             The DCA boards are semiautonomous bodies whose members are  
             appointed by the Governor and the Legislature.  It is  
             important to note that although a most of the non-healing  
             arts boards have the statutory authority for a public  
             majority allotment in their makeup, more than half of the  
             healing arts and non-healing arts boards are currently  
             comprised of a majority of members representing the  
             profession, based on vacancies and current appointments.   
             There are currently only one health board and four non-health  
             boards that are comprised of a public member majority with  
             their current makeup.  While the boards operate largely  
             independently, they also fall within the DCA's jurisdiction.  
             The Legislature provides routine oversight and the Office of  
             Administrative Law reviews regulations stemming from  
             rulemaking undertaken by the boards.

             Although the boards are tied to the state through various  
             structural and statutory oversights, it is presently unclear  
             whether current laws and practices are sufficient to ensure  
             that the boards are state actors and, thus, immune from legal  
             action. The recent decision against the Texas Medical Board  
             in the Teladoc case emphasizes the need for California to  
             prove that it provides active state supervision.  In that  
             case, one of the nation's largest providers of telephone  
             medical services, Teladoc, sued the Texas Medical Board after  
             the Board issued a rule that requires physicians to either  
             meet with patients in person before treating them remotely,  
             or to treat them face-to-face via technology while other  
             providers are physically present with them when treating a  
             patient for the first time.  Teladoc alleged that this rule  
             violates antitrust laws because it would restrict the  
             company's ability to compete, resulting in higher prices and  
             less access to doctors for Texans.  The Board argued that it  
             should be immune from antitrust liability as a state agency  
             but a judge rejected that argument, writing that "for a board  
             to be considered actively supervised, the state supervisor  
             must have power to veto or modify the board's decisions, and  
             supervision of the Texas Medical Board does not meet that  

            It appears necessary for the Legislature and the Department to  


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            devise a mechanism for independent state review of regulatory  
            board actions, including the ability of some type of state  
            supervisor to veto or modify decisions, as cited in the Texas  
            Teladoc case, in order for these boards and board members to  
            ensure that boards
            can continue to effectively regulate California's professions  
            without fear of being sued.

            During the sunset review hearing in March, in which several  
            DCA issue were discussed, the need to respond to the  
            implications surrounding this recent Court decision were  
            reviewed by the Committees and the DCA.  The DCA at that time  
            was asked to address two questions and was asked to respond to  
            the Committees in 
            30 days:

            (1) How does the DCA plan on addressing the "active state  
              supervision" requirement; and,

            (2) What does the DCA believe are necessary next steps to  
              ensure robust protection of the public from potentially  
              problematic trust forming coalitions on regulatory boards..

            It was also recommended by the Committees, that in light of  
            the FTC guidance on the active supervision of state regulatory  
            boards controlled by market participants, that the Committees  
            should remove the active license requirement for the Executive  
            Officer position for the BRN and that that there should  
            basically be no Executive Officer of any board who was a  
            licensee of the board they serve. 

            As indicated earlier, North Carolina State Board of Dental  
            Examiners v. FTC placed limitations on the immunity of  
            regulatory boards controlled by active market participants.    
                                  This is because individuals who are directly affected by their  
            own rulemaking may not be able to detect their biases,  
            purposefully or inadvertently placing their benefit over those  
            of the public.  Or, as the Supreme Court stated, "Dual  
            allegiances are not always apparent to an actor."  In the  
            North Carolina case, the focus was on board members, but the  
            argument against interested participants could also be made  
            for boards' administrative managers.  The DCA executive  
            officers (EOs) wield a great deal of power, daily directing  
            and running the administrative machine with often only  


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            occasional guidance from an ever-changing board.  EOs are  
            vested with substantial decision-making authority and have the  
            ability to shape policy direction of a particular board  
            through their recommendations, management, and relationships.   

            Presently, the Board of Registered Nursing (BRN) is the only  
            board within the DCA that requires its EO to be currently  
            licensed by the board he or she regulates; the Board of  
            Vocational Nursing and Psychiatric Technicians removed this  
            requirement last year in light of serious allegations of  
            mismanagement.  According to the recent hiring bulletin for  
            the BRN's Executive Officer, the EO is responsible for  
            "?planning, organizing and directing the activities of the  
            Board in areas of administration, enforcement and licensure.  
            The EO serves as the liaison between the Board and  
            stakeholders. The EO enforces the overall policies established  
            by the Board relating to Board programs?."  To place this  
            control with an interested stakeholder may be directly  
            contrary to the intent of a well-balanced regulatory system.  

            Response by the DCA  . On April 11, 2016, the DCA responded to  
            the questions and recommendations of the Committees as  

            (1) How does the DCA plan on addressing the "active state  
            supervision" requirement? 

            According to the DCA, they have proactively provided training  
            and guidance to its constituent entities regarding the North  
            Carolina case, including the active state supervision  
            requirement.  Based upon the case, the California Attorney  
            General's opinion, and the Federal Trade Commission's  
            published guidelines, the Department has provided guidance to  
            its entities regarding best practices, including: 

                     Continuing to promote their primary mission of  
                 consumer protection; 

                     Identifying when the board may be making  
                 market-sensitive decisions; 

                     Conducting an analysis of the competitive aspects of  


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                     Utilizing the applicable state processes which  
                 contain elements of state supervision; 

                     Considering objective evidence; and, 

                     Adequately documenting the discussions on a  
                 particular decision. 

             The Department and the Attorney General's Office have also  
             collaborated to develop and present training regarding the  
             case for executive officers and board presidents.   
             Additionally, DCA indicates that information related to the  
             case has been incorporated in the Board Member Orientation  
             Training which is held each quarter. Presentations regarding  
             the case have taken place at numerous board meetings. 

            The Department addressed potential statutory changes and  
            identified two areas where it believes that the law should be  
            strengthened and clarified.

            First, the existing regulatory review process must be made  
            stronger. Under current law, the Director reviews board  
            regulations and has the authority to disapprove them if they  
            are "injurious to the public health, safety or welfare."   
            However, current law does not specifically authorize the  
            Director to disapprove regulations for anticompetitive impacts  
            in the market without furthering a clearly articulated state  
            policy.  In order to ensure appropriate state supervision, the  
            Department believes that the Director should have the specific  
            authority to disapprove regulations that will have  
            anticompetitive impacts in the market, if these are not  
            substantiated by state policy.

             Second, the DCA stated that current potential liability of  
             board members needs to be addressed.  Lawsuits regarding  
             antitrust violations, if successful, can lead to awards of  
             treble damages. The Department believes that these damages  
             are not punitive in nature, and wishes to clarify this  
             position in statue to ensure that if a board member is acting  
             pursuant to a state policy, they will be indemnified by the  
             state for an antitrust violation in the same way they are for  
             other types of lawsuits.


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             (2) What does the DCA believe are necessary next steps to  
             ensure robust protection of the public from potentially  
             problematic trust forming coalitions on regulatory boards?

             As noted above, the Department states that it will continue  
             to encourage the boards to utilize best practices and provide  
             training in this area, which should assist in mitigating the  
             potential for board actions which violate antitrust laws. As  
             discussed at the hearing, the Department believes that some  
             legislative change is warranted in the areas of the  
             Director's review of regulations, the classification of  
             treble damages arising in anti-trust litigation as damages  
             that can be indemnified by the state, and the employment of  
             Executive Officers that are licensees. The Department further  
             states that it will continue to evaluate the impact of the  
             North Carolina case and continue to work closely with the  
             Administration and committee staff to vet policies related to  
             potential antitrust liability based upon the board governance  

             (3) In light of the FTC guidance on the Active Supervision of  
             State Regulatory Boards Controlled by Market Participants,  
             the Committees should remove the active license requirement  
             for the Executive Officer position for the Board of  
             Registered Nursing. 

             The Department agrees, in concept, with the Committees'  
             recommendation that the active license requirement for  
             executive officers should be removed. Having a nonmarket  
             participant serve as an executive officer is critical in  
             minimizing the impact an active market participant executive  
             officer may have on the operations. This would be an  
             additional step in addressing the concerns of the North  
             Carolina case. 

             This measure is intended to address the concerns raised by  
             the DCA and both its suggested changes and recommendations to  
             comply with the recent U.S. Supreme Court decision.  It will  
             expand the authority of the Director to review and take  
             appropriate action regarding regulations or board decisions  
             which may have potential antitrust (anticompetitive)  
             implications, clarify potential liability for board members  
             involved in possible antitrust litigation, and eliminate the  
             requirement that the Executive Officer of the BRN be a  


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             registered nurse.

          1. Background on VMB.  The mission of the Veterinary Medical  
             Board (VMB) is to protect consumers and animals through  
             development and maintenance of professional standards,  
             licensing of veterinarians, registered veterinary  
             technicians, and premises, and diligent enforcement of the  
             California Veterinary Medicine Practice Act.  The Board is  
             composed of eight members: four veterinarians, one RVT, and  
             three public members. The Board licenses 12,086 Veterinarians  
             and 6,424 RVTs. The licensee population has increased  
             steadily over the past five years. The Board also requires  
             registration of all premises where veterinary medicine,  
             veterinary dentistry, veterinary surgery, and the various  
             branches thereof, is being practiced. The Board currently  
             registers 3,636 veterinary premises.

          The pet-owning public expects that the providers of their pet's  
             health care are well-trained and are competent to provide  
             these services. The Board assures the public that  
             veterinarians and RVTs possess the level of competence  
             required to perform these services by developing and  
             enforcing standards for examinations, licensing, and hospital  
             and school inspection. The Board also conducts regular  
             practice analyses to validate the licensing examinations for  
             both veterinarians and RVTs. Additional eligibility pathways  
             have also been approved for licensure of internationally  
             trained veterinary graduates and certification of RVTs to  
             allow qualified applicants from other states in the U.S. and  
             countries around the world to come to California and to  
             improve the provision of veterinary health care for consumers  
             and their animals.  The Board's goals, as stated in its  
             Strategic Plan, include decreased enforcement cycle times,  
             enhanced quality and training of hospital inspectors,  
             inspecting existing hospitals within one year of  
             registration, and working with DCA to reduce the amount of  
             unlicensed activity occurring in the marketplace.
          2. Review of the VMB - Issues Identified and Recommended  
             Changes.  The Board was last reviewed by the Senate Committee  
             on Business, Professions and Economic Development and  
             Assembly Committee on Business, Professions and Consumer  
             Protection (now Assembly Business and Professions) in  
             2012-13. At that time, both committees identified 12 issues  


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             for discussion. The Board's sunset date was only extended for  
             two years because of serious concerns raised by the  
             Committees during its review. However, it was determined that  
             the Board would only have to submit a report to the  
             Committees that addressed only the most significant issues  
             for the Board to discuss. On December 1, 2015, the Board  
             submitted its required Supplemental Sunset Review Report to  
             the Committees.
             The following are some of the major issues pertaining to the  
             Board along with background information concerning the  
             particular issue.  Recommendations were made by Committee  
             staff regarding the particular issue areas that needed to be  

              a)   Issue  :  University Licensure.

                Background  :  Exiting law, BPC Section 4830(a)(4) allows for  
               an exemption to licensure for veterinarians working at both  
               veterinary medical schools in California, UC Davis and  
               Western University.

               States that have veterinary schools typically have  
               exemptions or some form of university licensure to  
               accommodate the schools' hiring needs. Veterinary schools  
               hire veterinarians from all over the world who sometimes  
               come into a state for a limited period of time, and who do  
               not practice outside the confines of the university.  
               However, problems can arise when the university veterinary  
               hospital is providing services to the general public and  
               the consumer does not have recourse through a licensing  
               board for standard of care issues.

               The Board receives calls periodically from consumers whom  
               are unhappy with the services at a university teaching  
               hospital and request the Board to intervene. Since  
               veterinarians working at the universities are exempt from  
               licensure, the Board states that it has no authority to  
               pursue disciplinary action and must advise the consumer to  
               seek recourse through the university's complaint mediation  
               process. The exemption presents consumer protection issue,  
               and the Board believes that all veterinarians providing  
               treatment to the public's animals should be licensed and  
               regulated. Faculty recruited for clinical positions within  


          SB 1195 (Hill)                                          Page 16  
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               the university typically specialize in certain species and  
               conditions, are experts in their field of study, and have  
               undergone intensive specialty testing that exceeds the  
               examinations required for entry-level licensure. In fact,  
               for employment in clinical faculty positions, the  
               university requires specialty training or other advanced  
               clinical training. Some faculty may have graduated from  
               foreign veterinary schools that are recognized but not  
               accredited by the American Veterinary Medical Association.  
               As reported by UC Davis and Western University, requiring  
               full licensure would negatively impact the universities'  
               ability to attract and recruit the best qualified  

               During the past two years, the MDC has debated the issue of  
               requiring veterinarians working in a university setting to  
               obtain a University License and therefore, no longer be  
               exempt from Board oversight. As part of the MDC's research,  
               former legal counsel reviewed the pertinent statutes, BPC  
               section 4830 (a)(4), and concluded that the existing  
               exemption for veterinarians employed by the universities  
               would need to be amended to either to strike the language  
               in section 4830 (a)(4) and thus require a license for  
               university personnel or include language in 4830 (a)(4)  
               that would qualify when a "University License" must be  
               issued in order for a veterinarian employed by a university  
               to provide veterinary services to the public's animals.

               The MDC voted to recommend to the Board that a separate  
               University License be issued to veterinarians who are  
               employed by and who engage in the practice of veterinary  
               medicine in the performance of their duties for the  
               university. Both UC Davis and Western University are  
               supportive of requiring a University License for  
               veterinarians practicing within the university setting as  
               it will provide consumer recourse through the Board and  
               allow the Board to assist the university in handling  
               enforcement matters involving university employees.

               The Board voted to approve the request for a statutory  
               change at its October 2015 meeting and requests assistance  
               from the Legislature to amend Section BPC Section 4830 and  
               add new BPC 4848.1.


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               The change would require an implementation date set out at  
               least 6 months from the effective date to enable university  
               personnel to comply with the proposed examination  
               requirements (California jurisprudence exam) and  
               educational course on regionally specific diseases and  

                Recommendation and Proposed Statutory Change  :  The  
               Committees may wish to amend Business and Professions Code  
               to require the Board to separately license veterinarians  
               practicing within a university setting. 

               This bill requires the Board to provide a separate  
               licensure category for veterinarians practicing solely  
               within the university setting. 

              b)   Issue  :  Delinquent Registration Status.

                Background  :  Currently there is no provision for the  
               premises registration to cancel after five years, as would  
               be consistent with other license types regulated by the  
               Board. Instead hospital premises registrations are left in  
               a delinquent status indefinitely and remain on the Board's  
               records. The records are accessible on the Board's website  
               under the "License Verification" feature. It is confusing  
               for consumers who use the website to find registered  
               veterinary premises and retrieve data on hospitals that  
               have been in a delinquent status for more than five years.  
               Many of these hospitals are no longer operating veterinary  
               premises, yet there is not mechanism by which the Board may  
               cancel the premises registration. In addition, the  
               retention of electronic records for delinquent premises  
               registrations is a resource issue for the Board as there is  
               a "per record" cost for maintaining the data.
                Recommendation and Proposed Statutory Change  :  The  
               Committees may wish to amend Business and Professions Code  
               to allow the Board to cancel the premises registration of  
               veterinary premises that have remained in delinquent status  
               for more than five years. 

               This bill allows for a premise registration to be canceled  
               after five years of delinquency. 


          SB 1195 (Hill)                                          Page 18  
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              c)   Issues  :  Drug Compounding.

                Background  :  During hospital inspections, Board inspectors  
               routinely encounter bulk form drugs used for compounding  
               medications stored at veterinary hospitals. If the drugs  
               are not properly stored, labeled, or are expired, the  
               inspector will advise the Licensing Manager of the  
               compliance issue. However, there are no specific provisions  
               in the Practice Act to provide oversight of a veterinarian  
               compounding drugs for use in day-to-day veterinary  
               practices and for dispensing to clients. Instead, the Board  
               has looked to laws and regulations governing pharmacies  
               (BPC Sections 4051, 4052, and 4127 & Title 16 CCR Sections  
               1735-1735.8 and 1751 et. seq.) since veterinarians are  
               authorized prescribers under BPC Section 4170. Pharmacy  
               regulations not only include specific requirements for  
               pharmacies that compound and dispense medications, but also  
               define the "reasonable quantity" of a compounded medication  
               that may be furnished to a prescriber (in this case,  
               veterinarian) by the pharmacy to administer to the  
               prescriber's patients within their facility, or to dispense  
               to their patient/client. It should be noted that the Board  
               of Pharmacy is currently pursuing a regulatory amendment to  
               its Compounding Drug Preparation regulations that includes  
               amendments to the "reasonable quantity" definition of  
               compounded drugs that may be supplied to veterinarians for  
               the purposes of dispensing. In addition to pharmacy  
               provisions, federal law provides for Extralabel Drug Use in  
               Animals, CFR Title 21 Part 530.13, which authorizes  
               veterinarians to compound medications in following  

                           There is no approved animal or human drug  
                    available that is labeled for, and in a concentration  
                    or form appropriate for, treating the condition  

                           The compounding is performed by a licensed  
                    veterinarian within the scope of a professional  

                           Adequate measures are followed to ensure the  
                    safety and effectiveness of the compounded product.


          SB 1195 (Hill)                                          Page 19  
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                           The quantity of compounding is commensurate  
                    with the established need of the identified patient.

               The Board has been actively engaged in discussions  
               regarding the regulation of veterinarians compounding drugs  
               since October 2014 when the US Government Accountability  
               Office contacted the Board to obtain information on  
               California's regulation of animal drug compounding. At that  
               time, the federal Food and Drug Administration (FDA) was  
               considering changes to its guidance on Compounding Animal  
               Drugs from Bulk Drug Substances. Ultimately, the FDA  
               released Draft Guidance #230 in May 2015, which was  
               intended to provide parameters for compounding animal  

               At its October 20, 2014 meeting, the MDC reviewed the issue  
               of drug compounding by veterinarians for their animal  
               patients. The issue, as raised by Board legal counsel, was  
               that there is no explicit grant of authority in the  
               Practice Act authorizing licensed veterinarians to compound  
               drugs pursuant to federal law. Board counsel advised that  
               provisions for veterinarians to compound drugs for animal  
               patients would need to be added to the veterinary medicine  
               scope of practice. The MDC examined the lack of statutory  
               guidance for veterinarians and ultimately recommended that  
               the Board consider a legislative proposal to grant  
               veterinarians the authority to compound drugs for their  
               animal patients under the existing limitations of CFR Title  
               21 Part 530.13.

                Recommendation and Proposed Statutory Change  :  The  
               Committees may wish to amend Business and Professions Code  
               to grant limited state authority for veterinarians to  
               compound drugs. 

               This bill establishes authority for drug compounding in the  
               practice of veterinary medicine.

                Note  : The exact language for this section is still under  
               revision and will likely be amended at a later date. 
          1. Prior Related Legislation.   SB 1243  (Lieu, Chapter 395,  
             Statutes of 2014) Extended until January 1, 2017, the  


          SB 1195 (Hill)                                          Page 20  
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             provisions establishing the Veterinary Medical Board and the  
             term of the executive officer of the Board.

              SB 304  (Lieu, Chapter 515, Statutes of 2013) extended until  
             January 1, 2016, the provisions establishing the VMB,  
             subjects the VMB to a review by the appropriate policy  
             committees of the Legislature, and clarifies that the review  
             of the VMB shall be limited to those issues identified by the  
             appropriate policy committees.  

          2. Arguments in Support.  The  University of California - Davis  
             School of Veterinary Medicine  supports the licensing  
             provisions for veterinarians practicing solely within a  
             university setting. They cite that the proposed change in  
                                                                 licensing requirements respects the need for consumer  
             protection in California and provides recourse for consumers  
             with complains while retaining sufficient flexibility for the  
             University to fulfill its mission by recruiting the very best  
             veterinary faculty. 

             The  California Veterinary Medical Association  has a "support,  
             if amended" position on SB 1195. While they support the  
             continued existence of a Veterinary Medical Board, CVMA is  
             concerned with components of the current language as it  
             relates to veterinary drug compounding. The proposed language  
             seeks to substitute the terms "pharmacist" and "pharmacies"  
             with "veterinarian" and "veterinary premises" in statute and  
             in reference to numerous compounding regulations. CVMA  
             believes the compounding for veterinarians is uniquely  
             different from the pharmacy profession and requires separate  
             regulations. They also raise concern that the language may  
             inadvertently cancel out previous statutory agreements  
             relative to veterinary labeling and drug packaging. However,  
             they indicated confidence that they will be able to achieve a  
             positive resolution at an upcoming meeting with stakeholders  
             including the Board, Board of Pharmacy, CVMA, and Committee  
             staff. As previously noted in this analysis, the drug  
             compounding language is still under revision pending the  
             outcome of that meeting. 



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          University of California - Davis School of Veterinary Medicine

           Support if Amended:
          California Veterinary Medical Association 

           Opposition:  None on file as of April 12, 2016.

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