BILL ANALYSIS �
AB 1548
Page 1
Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1548 (Carter) - As Amended: March 22, 2012
Policy Committee: Business and
Professions Vote: 9-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill clarifies enforcement of the Corporate Practice of
Medicine (CPM) with respect to medi-spas. Specifically, this
bill:
1)Defines outpatient elective cosmetic medical procedures.
2)Specifies that medi-spa businesses are guilty of perpetrating
health care fraud under the Penal Code if they violate CPM
statutes.
FISCAL EFFECT
1)Potential minor, absorbable increases in Medical Board of
California (MBC) enforcement workload related to violations of
Corporate Practice of Medicine prohibitions.
2)To the extent this bill results in more enforcement actions
against medi-spas by state and local law enforcement,
potential for unknown increased workload and penalty revenue
for law enforcement entities choosing to pursue enforcement
activities.
3)If penalties authorized under this bill are assessed, a
further amount in fees, surcharges and other penalty
assessments of approximately 300% of the base penalty amount
would also be assessed under existing state law. For example,
current law specifies an additional state penalty assessment
of $10 for every $10 of base fine. These additional
assessments are distributed under current law to the state and
a number of local governmental entities.
AB 1548
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COMMENTS
1)Rationale . This bill addresses concerns of dermatologists that
limited enforcement authority leaves the public inadequately
protected against unscrupulous business practices in the
medical spa (medi-spa) industry. Medi-spas are businesses
that generally offer cosmetic medical services such as
chemical peels, medical microdermabrasion, laser procedures,
and injectable wrinkle treatments such as Botox in a spa-like
environment. According to the author, some medi-spas have
sought to create and maintain business arrangements that are
in flagrant violation of current law barring the corporate
practice of medicine. These arrangements include recruitment
of physicians as "medical directors" of medi-spas with limited
involvement or oversight of medical care delivery.
The author argues that medi-spas have sought such arrangements
in part because current penalties are minor compared to
business profits. This bill is intended to clarify enforcement
mechanisms to ensure that penalties are adequate to deter
unlawful practices, and that law enforcement has sufficiently
specific authority to prosecute these cases.
2)Corporate Practice of Medicine (CPM) and Medi-Spas . Current
law barring CPM generally prohibits employment of physicians
by non-physician entities, with limited exceptions. In the
context of medi-spas, under the CPM prohibition, a business
offering spa treatments that include medical procedures such
as those described above, may not contract with or hire a
physician as its "medical director." In order to offer
medical services, the practice must be physician-owned.
Physicians who become contractors or employees of
non-physician-owned spas may be disciplined by the Medical
Board for unprofessional conduct.
Physicans may choose to delegate the administration of
cosmetic medical procedures to non-physician allied health
professionals (such as nurses), but such professionals must be
directly supervised by a physician. Some cosmetic procedures,
such as facials that do not use prescription-level chemicals,
are not considered medical and may be performed by licensed
estheticians.
3)Enforcement actions against medi-spas that violate the law
AB 1548
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have been limited, although the Medical Board revoked one
physician's license in January 2012 for aiding and abetting
CPM violations while serving as medical director for four
medi-spas. The Medical Board's authority is principally over
its licensees, so it lacks effective mechanisms to regulate
non-physician entities who may be involved in unlawful
practice of medicine. Such enforcement is generally up to the
state Attorney General or local DAs. Anecdotally, it is
reported that local law enforcement has limited interest in
the issue, perhaps due to the difficulty of prosecuting these
cases and nominal penalties of up to $1,200 under current law.
This bill's authorization of enhanced fines of up to $50,000
for violation of the specified CPM provisions may deter such
illegal business arrangements.
4)Related Legislation .
a) AB 2566 (Carter) in 2010 was virtually identical to this
bill. It was vetoed due to concerns it would lead the
Medical Board to prioritize medi-spa enforcement above more
serious violations that result in severe patient harm.
This bill's sponsors respond that the veto message is
inaccurate, and that this legislation would not change the
Board's enforcement priorities, which are well-defined in
statute.
b) AB 252 (Carter) in 2009 was similar to this bill, and
was vetoed due to concerns the bill was duplicative of
existing law. This bill's sponsors respond that this bill
provides stiffer penalties and an easier way for law
enforcement to assemble a solid case against illicit
medi-spa operations.
c) AB 2398 (Nakanishi) in 2008 was similar to this bill and
died on the Senate floor.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081