BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 1195| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 SENATE APPROPRIATIONS COMMITTEE: 5-0, 5/27/16 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. ANALYSIS: Existing law: 1)Establishes the California Veterinary Medicine Practice Act SB 1195 Page 2 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 SB 1195 Page 3 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 SB 1195 Page 4 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. Background 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 lawsuits. 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. SB 1195 Page 5 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 SB 1195 Page 6 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 SB 1195 Page 7 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 **** END ****