BILL ANALYSIS �
AB 1548
Page 1
Date of Hearing: March 27, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 1548 (Carter) - As Amended: March 22, 2012
SUBJECT : Practice of medicine: cosmetic surgery: employment of
physicians and surgeons.
SUMMARY : Makes it unlawful for a business organization to
violate the prohibition against the corporate practice of
medicine (CPM), if that organization is in the business of
outpatient elective cosmetic medical procedures or treatments.
Specifically, this bill :
1)Provides that a business organization that offers to provide,
or provides, outpatient elective cosmetic medical procedures
or treatments, that is owned or operated in violation of the
CPM, and that contracts with, or otherwise employs, a
physician and surgeon to facilitate its offers to provide, or
the provision of, outpatient elective cosmetic medical
procedures or treatments that may be provided only by the
holder of a valid physician's and surgeon's certificate is
guilty of knowingly making or causing to be made a false or
fraudulent claim for payment of a health care benefit. States
that this provision is declaratory of existing law.
2)Defines "outpatient elective cosmetic medical procedures or
treatments" to mean medical procedures or treatments that are
performed to alter or reshape normal structures of the body
solely in order to improve appearance.
3)Provides that nothing in this bill shall be construed to alter
or apply to arrangements currently authorized by law, as
specified.
4)States legislative findings and declarations.
EXISTING LAW
1)Requires, under the Medical Practice Act (MPA), any person who
practices medicine to hold a valid certificate to practice
medicine. Establishes the Medical Board of California (MBC)
to license and certify physicians and surgeons.
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2)Prohibits corporations and other artificial legal entities
from having any medical professional rights, privileges, or
powers (known as the prohibition against the CPM). However,
existing law further provides that the MBC may, pursuant to
regulations it has adopted, grant approval for the employment
of physicians and surgeons on a salary basis by a licensed
charitable institution, foundation, or clinic if no charge for
professional services rendered to patients is made by that
institution, foundation, or clinic. Provides other certain
exceptions to the prohibition against the CPM.
3)Makes it unprofessional conduct for any licensee to violate,
or attempt to violate, assist in, or abet the violation of, or
to conspire to violate the prohibition against the CPM.
Requires the MBC to take action against any licensee who is
charged with unprofessional conduct. Specifies the types of
actions that constitute unprofessional conduct.
4)Makes it unlawful to knowingly make or cause to be made any
false or fraudulent claim for payment of a health care
benefit. Specifies that any person who violates this
provision is guilty of a public offense and provides for the
following penalties:
a) When the claim or amount at issue exceeds $950, the
offense is punishable by imprisonment in the state prison
for two, three, or five years, or by a fine not to exceed
$50,000 or double the amount of the fraud, whichever is
greater, or by both that imprisonment and fine, or by
imprisonment in a county jail not to exceed one year, by a
fine of not more than $10,000, or by both that imprisonment
and fine; or,
b) When the claim or amount at issue is $950 or less, the
offense is punishable by imprisonment in a county jail not
to exceed six months, or by a fine of not more than $1,000
or by both, unless the aggregate amount of the claims or
amount at issue exceeds $950 in any 12-consecutive-month
period, in which case the claims or amounts may be charged
as in item a), above.
5)Defines cosmetic surgery for purposes of health insurance and
health plan coverage as any surgery that is performed to alter
or reshape normal structures of the body in order to improve
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the patient's appearance.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author, "Several large,
corporate laser and medi-spa chains operate in flagrant
violation of the law because current penalties are minor in
costs compared to business profits. Alternative patient
treatment sites, often called "medi-spas" have become a major
and often misleading presence in the medical cosmetic skin care
field. Medical spas are marketing vehicles for medical
procedures. The use of the term "medi-spa" is for advertising
purposes to make the procedures seem more appealing. In
reality, however, it is the practice of medicine."
Background . The CPM is typically referred to in the context of
a prohibition, banning hospitals from employing physicians. The
CPM evolved in the early 20th century when mining companies
hired physicians directly to provide care for their employees in
remote areas. However, problems arose when physicians' loyalty
to the mining companies conflicted with patients' needs.
Eventually, physicians, courts, and legislatures prohibited the
CPM in an effort to preserve physicians' autonomy and improve
patient care. The Attorney General's (AG's) office states, "In
a professional corporation, it is not always possible to divide
the 'business' side of the corporation from the part which
renders professional services; the subject is treated as a
whole."
Existing state law generally mirrors the principles described
above against CPM, with specific exceptions. The policy is
intended to prevent persons who are not medical professionals
from interfering with or influencing the physician's
professional judgment.
In an attempt to circumvent this legal prohibition, some
individuals have created business and management schemes that
violate the spirit of the law by providing management services,
franchises, or participating in other models that result in the
potential for unlicensed persons or entities to influence or
make medical decisions in violation of the law.
Physicians who are employees of non-physician owned spas are in
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violation of the CPM prohibition and may be disciplined for
unprofessional conduct.
Medical practice models . The MBC has published guidance on the
CPM for physicians on its website, which states that the
following business or management decisions should be made by a
licensed physician and surgeon:
1)Selection, hiring, and firing (as it relates to clinical
competency or proficiency) of physicians, allied health staff
and medical assistants;
2)Setting the parameters under which the physician will enter
into contractual relationships with third-party payers;
3)Decisions regarding coding and billing procedures for patient
care services; and,
4)Approving of the selection of medical equipment and medical
supplies for the medical practice.
While a physician may consult with unlicensed persons in making
the "business" or "management" decisions described above, the
physician must retain the ultimate responsibility for, or
approval of, these decisions.
The following types of medical practice ownership and operating
structures are prohibited:
1)Non-physicians owning or operating a business that offers
patient evaluation, diagnosis, care and/or treatment;
2)Physician(s) operating a medical practice as a limited
liability company, a limited liability partnership, or a
general corporation;
3)Management service organizations arranging for, advertising,
or providing medical services rather than only providing
administrative staff and services for a physician's medical
practice (non-physician exercising controls over a physician's
medical practice, even where physicians own and operate the
business); and,
4)A physician acting as "medical director" when the physician
does not own the practice. For example, a business offering
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spa treatments that include medical procedures such as Botox
injections, laser hair removal, and medical microdermabrasion,
that contracts with or hires a physician as its "medical
director."
This bill would enhance the penalty for "medi-spa" corporations
violating the ban on the CPM to a public offense, punishable by
imprisonment for six months to five years, or by a fine of up to
$50,000 or double the amount of the fraud, whichever is greater,
or by both the imprisonment and fine. Current law states that a
violation of the MPA is punishable as a misdemeanor and/or a
fine of up to $1,200 and imprisonment for up to 180 days.
Previous legislation . AB 2566 (Carter) of 2010 was identical to
this bill. The bill was vetoed by the Governor, who stated,
"Existing law already addresses the issues highlighted by the
sponsors and author. The real problem is that the sponsors want
enforcement of this issue moved up on the prioritization of
enforcement issues pending with the MBC. California currently
ranks 41st in the county for taking serious disciplinary action
against doctors and this bill attempts to move those serious
disciplinary actions behind businesses that operate "medi-spas"
providing skin peels, dermabrasion and laser hair removal. Good
doctors are the backbone of our health delivery system. I
believe the members of the Board want to protect patients. I
just don't agree that the Board's time is better spent on
medi-spa enforcement when other physicians should be more
quickly investigated and prohibited from practicing medicine
when they have caused serious patient harm or death."
AB 252 (Carter) of 2009 authorizes the revocation of a license
of a physician and surgeon who provides elective cosmetic
medical procedures or treatments in violation of the prohibition
against CPM. This bill was vetoed by the Governor, who stated,
"This bill is duplicative of existing law and unnecessary. MBC
already has significant legal authority to take action against
physicians that violate the MPA."
AB 2398 (Nakanishi) of 2008 contains provisions identical to
this bill. The bill also authorizes the revocation of the
license of a physician and surgeon who practices medicine with a
business organization that provides outpatient elective cosmetic
medical procedures or treatments, knowing that the practice is
owned or operated in violation of the prohibition against CPM.
This bill was held on the Senate floor.
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REGISTERED SUPPORT / OPPOSITION :
Support
American Society for Dermatologic Surgery Association (sponsor)
California Society of Dermatology and Dermatologic Surgery
(sponsor)
American Academy of Dermatology Association
American Academy of Facial Plastic and Reconstructive Surgery
American Academy of Otolaryngology-Head and Neck Surgery
American Medical Association
American Society of Ophthalmic Plastic and Reconstructive
Surgery, Inc.
California Society of Plastic Surgeons
Medical Board of California
Opposition
None on file.
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301