BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                       SB 1195|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 

          Bill No:  SB 1195
          Author:   Hill (D) 
          Amended:  6/1/16  
          Vote:     21 

           SENATE BUS., PROF. & ECON. DEV. COMMITTEE:  6-0, 4/18/16
           AYES:  Hill, Block, Galgiani, Hernandez, Mendoza, Wieckowski
           NO VOTE RECORDED:  Bates, Berryhill, Jackson

           AYES:  Lara, Beall, Hill, McGuire, Mendoza
           NO VOTE RECORDED:  Bates, Nielsen

           SUBJECT:   Professions and vocations:  board actions  

          SOURCE:    Author

          DIGEST:   This bill makes various changes that are intended to  
          improve the effectiveness of the Veterinary Medical Board (VMB),  
          extends the VMB's sunset dates.  This bill also authorizes the  
          Director of the Department of Consumer Affairs (DCA) to review,  
          veto, or modify actions and decisions of DCA boards to ensure  
          such actions or decisions conform with public policy; and  
          prohibits any board executive officer (EO) from being an  
          actively licensed member of the profession the board regulates.   

          Existing law:

          1)Establishes the California Veterinary Medicine Practice Act  


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            until January 1, 2017, and requires the VMB within the DCA to,  
            among other things, license and regulate veterinarians,  
            registered veterinary technicians (RVTs), RVT schools and  
            programs, and veterinary premises.  (Business and Professions  
            Code (BPC)  4800 et seq.)

          2)Makes decisions of any board within the DCA pertaining to  
            setting standards, conducting examinations, passing  
            candidates, and revoking licenses final, except as specified,  
            and provides that those decisions are not subject to review by  
            the Director of the DCA.  (BPC  109 (a))

          3)Authorizes the Director to 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)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  
            regulation.  (BPC  313.1)

          5)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. (BPC  313.1 (e)(3))

          6)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 EO who is a nurse currently licensed by the BRN.  
            (BPC  2708)

          This bill: 

           1) Extends the sunset date for the VMB and the VMB EO until  
             January 1, 2021. 

           2) Authorizes a veterinarian and RVT who is under the direct  
             supervision of a veterinarian with a current and active  


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             license to compound a drug for animal use pursuant to federal  
             regulations and in accordance with regulations promulgated by  
             the VMB.

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

           4) 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. 

           5) Makes technical changes to BPC regarding the VMB.

           6) Authorizes the Director to review actions or decisions  
             related to the setting of professional standards and  
             conducting examinations. 

           7) Authorizes the Director, upon his or her own initiative, and  
             requires the Director upon the request of Legislature or the  
             DCA board making the subject decision or action, to review a  
             decision or other action, except for disciplinary actions, to  
             determine whether it furthers state law. 

           8) Authorizes the Director, after reviewing a board action or  
             decision, to approve, disapprove, modify, or request further  
             information from the board regarding the action or decision. 

           9) Requires the Director to post on the DCA's Web site his or  
             her final written decision on the board action or decision  
             and the reasons for his or her decision within 90 days.

           10)Requires, commencing March 1, 2017, 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.

           11)Prohibits a DCA board from overruling a Director's decision  


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             to disapprove a regulation.

           12)Prohibits any DCA board's executive director from being an  
             active licensee of the profession the board regulates.  

           13)Clarifies that treble damages awarded pursuant to the  
             Clayton Act are not punitive or exemplary damages.


          In March of 2015, the Senate Business, Professions, and Economic  
          Development Committee and the Assembly Business and Professions  
          Committee (Committees) conducted three joint oversight hearings  
          to review 12 regulatory entities including the VMB.  This bill  
          and the accompanying sunset bills are intended to implement  
          legislative changes as recommended by staff of the Committees  
          and that are reflected in the Background Papers prepared by  
          Committee staff for each agency and program reviewed this year. 

          Changes to the DCA are in response to a recent U.S. Supreme  
          Court decision, North Carolina State Board of Dental Examiners  
          v. FTC, regarding potential anticompetitive actions taken by  
          licensing boards which could result in antitrust litigation.  In  
          2010, the Federal Trade Commission (FTC) brought an  
          administrative complaint against the North Carolina State Board  
          of Dental Examiners (Board) for excluding non-dentists from the  
          practice of teeth whitening.  The FTC alleged that the Board's  
          decision was anticompetitive under the FTC Act because the Board  
          was not acting as a state agent.  The Board appealed to the  
          Supreme Court, arguing that it was acting on behalf of the  
          government and should be afforded immunity from antitrust  

          The Supreme Court ruled in the FTC's favor, stating that  
          regulatory bodies comprised of active market participants in the  
          occupation regulated by that body may invoke state-action  
          antitrust immunity only if it is subject to active supervision  
          by the state.  
          The Supreme Court has stated that to qualify as active  
          supervision "the [state] supervisor must have the power to veto  
          or modify particular decisions to ensure they accord with state  
          policy." N. Carolina State Bd., 135 S. Ct. at 1116. 


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          In order to establish active supervision for California boards,  
          this bill builds upon the current authority of the Director DCA  
          to review certain board decisions (except those relating to  
          disciplinary actions) in order to ensure they conform with state  
          policy.  This bill also ensures that DCA board members are not  
          personally liable in the event they are sued in an antitrust  
          matter related to their board service.

          This bill also prohibits an active licensee in the profession a  
          board regulates from serving as EO of a DCA board.  This  
          provision will apply to all boards, but currently only the BRN  
          requires its EO to be an active licensee.  There are no other  
          licensees serving as EOs of other DCA boards.  Because the EO  
          has such influence on a board's proceedings, especially with  
          regards to disciplinary decisions, it is important to comply  
          with the Supreme Court's holding that this person not be an  
          "active" market participant.   The California Nurses Association  
          has expressed concern that this bill will prohibit a nurse from  
          serving as the BRN's EO.  However, this is not the case.  A  
          retired nurse or a nurse with a license on "inactive" status may  
          serve as the EO under this bill.  

          The author's office has worked closely with the DCA, the  
          Governor's and Attorney General's offices in crafting this bill.  

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes

          According to the Senate Appropriations Committee, this bill will  
          result in one-time costs of $600,000 and ongoing costs of  
          $570,000 per year for DCA to establish an Anti-Trust Unit to  
          review board actions for their impacts on trade, costs which  
          would be paid from the DCA boards and bureaus, which are  
          supported by license fees.  This bill would also result in  
          ongoing costs of about $4.8 million per year for the continued  
          operation of the VMB, funded through licensing fees.  Minor  
          costs are anticipated by the VMB for the changes in the bill to  
          its statutory requirements and procedures.  This bill would  
          result in ongoing costs of about $160,000 per year for the Board  
          of Pharmacy to coordinate inspection and enforcement activities  
          with respect to the regulation of drug compounding on veterinary  


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          premises .

          SUPPORT:   (Verified5/31/16)

          Center for Public Interest Law 

          OPPOSITION:   (Verified5/31/16)

          California Nurses Association
          California Pharmacists Association
          California Psychiatric Association
          California Society of Certified Public Accountants

          ARGUMENTS IN SUPPORT:     The Center for Public Interest Law  
          (CPIL) supports this bill and just suggests some minor  
          amendments to clear up inconsistency in the language.  The CPIL  
          makes clear that boards are not immune from federal antitrust  
          scrutiny unless they are controlled by public members (and not  
          licensees) or the state has created a mechanism to actively  
          supervise the acts and decisions of these boards to ensure they  
          benefit the public, and not merely the professions themselves.   
          "Indeed, failure to approve SB 1195 will continue to expose  
          consumers to anticompetitive actions and decisions made by  
          occupational licensing boards within the Department of Consumer  
          Affairs (DCA) that are controlled by 'active market  
          participants' in the relevant market, and will expose DCA boards  
          and board members to potential federal antitrust criminal and  
          civil liability."

          The CPIL further argues that the opposition to this bill  
          registered by trade associations misunderstands federal  
          antitrust law and the North Carolina decision itself.  States  


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          have to either require occupational licensing boards to be  
          controlled by public members, or they can create an "adequate  
          state supervision" mechanism to oversee, review, veto, and/or  
          modify acts and decisions that violate federal antitrust laws  
          made by boards controlled by active market participants. In  
          addition, CPIL supports the provision which eliminates the  
          requirements that the EO of the BRN be a licensee of the Board.   

          ARGUMENTS IN OPPOSITION:     The California Pharmacists  
          Association, the California Psychiatric Association and the  
          California Society of Certified Public Accountants writes, "We  
          do not believe that the additional authority the bill would give  
          to the Director of Consumer Affairs will best serve our  
          collective goals of protecting the legitimate actions of  
          licensing boards." 

          The California Nurses Association are also concerned about the  
          new authority of the director, stating that "The DCA director,  
          no matter who fills the position, may be influenced or swayed by  
          political agendas designed to overturn board actions and  
          regulations somehow vaguely harmful to corporate profits or, as  
          part of a general ideological bias against government and  
          regulations. This power is particularly dangerous when  
          countenanced in one person, subject to the varying winds of  
          political pressure."

          Prepared by:Nicole Billington / B., P. & E.D. / (916) 651-4104,   
          Bill Gage / B., P. & E.D. / (916) 651-4104
          6/1/16 19:23:19

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