BILL ANALYSIS �
AB 783
Page 1
Date of Hearing: April 5, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 783 (Hayashi) - As Introduced: February 17, 2011
SUBJECT : Professional corporations: licensed physical
therapists.
SUMMARY : Adds licensed physical therapists to the list of
healing arts practitioners who may be shareholders, officers,
directors or professional employees of a medical corporation or
a podiatric medical corporation, so long as the sum of all
shares owned by those licensed persons does not exceed 49% of
the total number of shares, and so long as the number of those
licensed persons owning shares in the professional corporation
so designated herein does not exceed the number of persons
licensed by the governmental agency regulating the designated
professional corporation.
EXISTING LAW :
1)Defines a "professional corporation" as one that renders
professional services in a single profession, except as
otherwise authorized in Corporations Code, Section 13401.5.
2)Authorizes medical corporations to permit the following
licensees be shareholders, officers, directors or professional
employees:
a) Licensed doctors of podiatric medicine;
b) Licensed psychologists;
c) Registered nurses;
d) Licensed optometrists;
e) Licensed marriage and family therapists;
f) Licensed clinical social workers;
g) Licensed physician assistants;
AB 783
Page 2
h) Licensed chiropractors;
i) Licensed acupuncturists; and,
j) Naturopathic doctors.
3)Authorizes podiatric medical corporations to permit the
following licensees be shareholders, officers, directors or
professional employees:
a) Licensed physicians and surgeons;
b) Licensed psychologists;
c) Registered nurses;
d) Licensed optometrists;
e) Licensed chiropractors;
f) Licensed acupuncturists; and,
g) Naturopathic doctors.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
Purpose of this bill . According to the author's office, "This
bill will prevent the unnecessary loss of employment during this
economic recession by allowing medical and podiatric medical
corporations to continue to employ physical therapists (PTs), as
they have done for over 21 years.
"Since 1990, the Physical Therapy Board of California (Board)
has allowed PTs to be employed by medical and podiatric medical
corporations. The recent rescission of this policy threatens
the livelihood of most licensed PTs, those who are currently
employed by physicians and other health practitioners,
hospitals, home health care services, and nursing care
facilities. It is essential that these PTs continue to provide
necessary care to their patients.
"Medical and podiatric medical corporations have been legally
employing various health professionals for years, including
AB 783
Page 3
psychologists, optometrists, chiropractors, acupuncturists, and
registered nurses. This bill maintains the status quo by
enumerating PTs on this list. It was never the intent of the
legislature to exclude them."
Background . Since 1990, the Board has allowed physical
therapist's to be employed by both medical and podiatric
corporations and general corporations. The Board's resolution
titled "Physical Therapy Corporation Ownership by a Layperson"
determined that the Moscone-Knox Professional Corporation Act
was intended to cover medicine, dentistry, and law, and not
physical therapy. This resolution was rescinded on November 3,
2010. At the same time, the Board reacted to a separate
Legislative Counsel opinion which stated that, as the law
currently stands, a physical therapist may be subject to
discipline for providing physical therapy services as an
employee of a medical corporation, or any professional
corporation other than a naturopathic corporation. The Board
then drafted a letter, threatening those physical therapists
employed by medical and podiatric medical corporations with the
choice of losing their jobs or having the Board take action
against their license to practice physical therapy.
The Board was created in 1953 to protect the public from the
incompetent, unprofessional, and criminal practice of physical
therapy. There are over 15,000 physical therapists in
California today, with an average growth of 440 jobs each year,
according to the Employment Development Department.
Approximately 80% work in offices of physicians and other health
practitioners, hospitals, home health care services and nursing
care facilities.
The Moscone-Knox Professional Corporation Act, beginning with
Corporations code section 13400, permits certain individuals to
be shareholders, officers, directors, or professional employees
of professional corporations, so long as the sum of all shares
owned by those licensed persons does not exceed 49% of the total
number of shares of the professional corporation.
Continuity of Care . PTs treat individuals who have been
diagnosed by a physician to have medical problems or other
health-related conditions, illnesses, or injuries that limit
their ability to move and perform functional activities, often
consulting and practicing with a variety of other professionals,
such as physicians, dentists, nurses, educators, social workers,
AB 783
Page 4
occupational therapists, speech-language pathologists, and
audiologists. When creating treatment plans, PTs collaborate
with these other professionals and the patient and determine
goals and expected outcomes, predicted level of optimal
improvement, specific interventions to be used, and proposed
duration and frequency of the interventions. Because of this
coordinated treatment, continuity of care, or a long-term
partnership between healthcare professions and the patient, are
essential. Disrupting the continuity of care can both prolong
treatment and prevent optimum results.
Physician Self-Referral . Federal self-referral restrictions,
commonly referred to as the "Stark Rules," generally prohibit a
physician from making referrals to an entity with which he or
she has a financial relationship. However, physician groups are
allowed to provide PT services under the In-Office Ancillary
Services exception. Likewise, the Business and Professions Code
specifically allows PT referrals within a medical group and
indeed requires that physicians with a financial interest in PT
provide each referred patient with a written disclosure of this
interest and advise the patient that he or she may obtain PT
services elsewhere.
Arguments in support . The California Orthopaedic Association
writes in support, "AB 783 is essential to correct an
unintentional oversight in the law, by merely adding "physical
therapists" to the long list of other providers such as
podiatrists, optometrists, psychologists, chiropractors, and
acupuncturists who may be employees by medical corporations?�N]o
one has ever challenged the legality of these long-standing
employment arrangements until quite recently. There have been
no allegations of patient harm. There are many physical
therapists in California who want to remain employed by their
corporation and believe it is the best model for delivering
coordinated care."
The California Podiatric Medical Association, co-sponsor,
writes, "Rather than terminate the employment of physical
therapists up and down the state, we seek a clarification that
both medical corporations and podiatric medical corporations can
employ physical therapists. Firing people with good jobs and
good benefits is simply the last thing we should be doing in
this economy."
Support if amended . Occupational Therapy Association of
AB 783
Page 5
California (OTAC) writes, "Occupational therapists and
occupational therapy assistants work in numerous health care
settings throughout California including hospitals, long term
care facilities, schools, home health agencies, physician owned
practices, medical clinics, as well as independent therapy
practices?OTAC believes its members should have the choice of
being employed by a medical corporation and thus would ask that
the law be clarified to add occupational therapists and
occupational therapy assistants to the list of licensees
authorized to be professional employees of a medical
corporation."
Arguments in opposition . The California Physical Therapy
Association writes in opposition, "The real intent of AB 783 is
to legalize the employment of physical therapists by medical and
podiatric medical corporations. In effect, under this
legislation, medical corporations can control the point of
access to physical therapy services and then refer patients only
to themselves. This poses an inherent conflict of interest,
removes choice for the consumer, and runs counter to studies
showing that self-referral by physicians to services in which
they have an ownership interest results in unnecessary and
inadequate care, as well as higher costs for both consumers and
payers.
"Additionally, this legislation sets up an unfair competition
with physical therapist-owned clinics. If enacted, it could
cause many physical therapist-owned clinics to close their doors
and severely limit the ability of hospitals to staff adequately
to meet the need of Californians hospitalized in acute care,
acute rehabilitation, and long-term care facilities."
REGISTERED SUPPORT / OPPOSITION :
Support
California Medical Association (co-sponsor)
California Orthopaedic Association (co-sponsor)
California Podiatric Medical Association (co-sponsor)
California Chiropractic Association
California Hospital Association
California Labor Federation
California Nurses Association
California Teamsters Public Affairs Council
Kaiser Permanente
AB 783
Page 6
Western States Council of the United Food & Commercial Workers
Numerous individuals
Opposition
California Physical Therapy Association
Capitol Physical Therapy, Inc.
Numerous individuals
Analysis Prepared by : Marina Wiant / B.,P. & C.P. / (916)
319-3301