BILL ANALYSIS �
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|Hearing Date:June 11, 2012 |Bill No:AB |
| |1548 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 1548Author:Carter
As Amended:March 22, 2012 Fiscal:Yes
SUBJECT: Practice of medicine: cosmetic surgery: employment of
physicians and surgeons.
SUMMARY: Provides that when a business organization that provides
outpatient elective cosmetic medical procedure or treatment employs a
physician to serve as a medical director of a health care practice in
which the physician does not own, and the business organization
provides medical care that can only be provided by the holder of a
valid California medical license, the business would be guilty of
specified violations of law.
Existing law:
1) Establishes the Medical Board of California within the Department
of Consumer Affairs, which licenses physicians and surgeons and
regulates their practice under the Medical Practice Act (Act).
(Business and Professions Code (BPC) � 2000 et seq.)
2) Restricts the employment of licensed physicians and surgeons and
podiatrists by a corporation or other artificial legal entity,
subject to specified exemptions. (BPC � 2400 et seq.)
3) Makes it unlawful to knowingly make, or cause to be made, any false
or fraudulent claim for payment of a health care benefit, or to
aid, abet, solicit, or conspire with any person to do so, and makes
a violation of this prohibition a public offense punishable as
follows: (Penal Code � 550)
a) When the fraudulent medical services transaction at issue
exceeds $950.00, the offense is punishable by imprisonment in the
state prison for two, three or five years, or by a fine not
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exceeding fifty thousand dollars ($50,000.00) 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 ten thousand dollars
($10,000.00) or by both imprisonment and fine.
b) When the fraudulent medic al services transaction at issue is
nine hundred fifty dollars ($950.00) 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 one thousand dollars
($1000.00) or by both imprisonment and fine, unless the aggregate
amount of the claims or amount at issue exceeds nine hundred
fifty dollars ($950.00) in any consecutive 12 month period, in
which case the claims or amounts may be charged as in (a), above.
4) Specifies that any person, whether licensed under the Act or not,
who violates specified provisions of the Act is guilty of a
misdemeanor. (BPC � 2314)
5) Establishes that except as otherwise provided by law, any person
found guilty of a misdemeanor for violation of the Act shall be
punished by a fine of not less than $200 nor more than $1,200 or by
imprisonment for a term of not less than 60 days nor more than 180
days, or by both such fine and imprisonment. (BPC � 2315 (a))
6) Prohibits the corporate practice of medicine by specifying that
laypersons or lay entities may not own any part of a medical
practice. (BPC � 2400)
7) Allows medical corporations to be shareholders, officers,
directors, or professional employees of the professional
corporations so long as the sum of all shares owned by those
licensed persons does not exceed 49 percent of the total number of
shares of the professional corporation so designated herein, 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. (Corporations Code �
13401.5 (a))
8) Defines "surgical clinic" to mean a clinic that is not part of a
hospital and that provides ambulatory surgical care for patients
who remain less than 24 hours. A surgical clinic does not include
any place or establishment owned or leased and operated as a clinic
or office by one or more physicians or dentists in individual or
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group practice, regardless of the name used publicly to identify
the place or establishment, provided, however, that physicians or
dentists may, at their option, apply for licensure. (Health and
Safety Code (HSC) 1204 (b) (1))
This bill:
1) Provides that a business organization that offers or provides
outpatient elective cosmetic medical procedures or treatments, that
is owned and operated in violation of the prohibition against
employment of licensed physicians and surgeons and podiatrists, and
that contracts with or employs a physician and surgeon to
facilitate the offer or provision of outpatient elective cosmetic
medical procedures or treatments that may be provided only by a
licensed physician and surgeon, is guilty of knowingly making or
causing to be made a false or fraudulent claim for payment of a
health care benefit, thereby making the penalties outlined in
Existing Law # 3, above applicable.
2) Defines "outpatient elective cosmetic medical procedures or
treatments" to mean medical procedures or treatment that are
performed to alter or reshape normal structures of the body solely
in order to improve appearance.
3) Prohibits construing the bill's provisions to alter or apply to any
arrangements currently authorized by law.
4) States that the bill's provisions are declaratory of existing law.
FISCAL EFFECT: According to the Assembly Appropriations Committee
analysis dated April 18, 2012, the following are the estimated fiscal
impacts of this bill:
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
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approximately 300% of the base penalty amount would also be assessed
under existing stated 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.
COMMENTS:
1.Purpose. The bill is co-sponsored by the American Society for
Dermatologic Surgery Association (ASDSA) and the California Society
of Dermatology and Dermatologic Surgery (CalDerm). According to the
Author, alternative patient treatment sites, often called
"medi-spas" have become a major and often misleading presence in the
medical cosmetic skin care field. Every year, an increasing number
of inadequately staffed medi-spas employ unsupervised non-physician
practitioners in violation of state laws established to protect
patient safety. Some medi-spa practitioners are reaching outside
their scope of practice and are simply not equipped to ensure the
safety of patients if a life-threatening complication or other
emergency were to occur during a procedure. 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. This bill accomplishes the Medical Board of
California's goal of strengthening enforcement of current laws by
punishing the unlawful, corporate-owned, chain medi-spa operators
who want to practice medicine without proper licensure or ownership
structure. The Author states that the substantial improvement in
penalties will justify the commitment of enforcement resources to
these kinds of cases by the Medical Board of California, as well as
local consumer protection agencies.
2. Background. Since the early 2000's, the popularization of
medi-spas has increased. These spas provide a variety of
non-surgical cosmetic procedures such as laser skin resurfacing,
cellulite treatments and dermal fillers. The employees who provide
these services are medical doctors, who may or may not have been
formally trained in cosmetic procedures, or allied health
professionals who have been trained by a supervising medical
doctor. These professionals conduct simple to complex procedures
in settings outside of hospitals such as outpatient surgery centers
and doctors' offices, often referred to as medi-spas. According to
California law, a medical doctor must own at least 51% of the
business and the medi-spa personnel who treat patients must also be
supervised by a medical doctor.
In recent years, numerous complaints have been made by clients of
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various medi-spas. Under current law, a client may seek legal
action against a licensed employee. If the medi-spa is found to be
operating in violation to the law, an individual employee may be
found guilty of a misdemeanor offense and fined from $200 to $1,200
dollars. Many argue that this fine is minor and not enough to
deter the medi-spas from employing unscrupulous individuals or
allowing improper practices to persist. Further, the penalty is
currently only applied to the licensee and not the business or
corporate entity.
The Corporate Practice of Medicine doctrine generally prohibits
corporations or other entities that are not controlled by
physicians from practicing medicine to ensure that lay persons are
not controlling or influencing the professional judgment and
practice of medicine by licensed physicians and surgeons. In 2007,
the joint findings of the Medical Board of California and the Board
of Registered Nursing on cosmetic medical procedures in California
concluded better enforcement is needed of existing California law
that prohibits laypersons or corporate entities from owning any
part of a medical practice.
3. Arguments in Support. According to the American Society for
Dermatologic Surgery Association , AB 1548 will stiffen financial
penalties for corporate scoff-laws violating the existing bar on
the corporate practice of medicine through sham "rent-a-doc"
business schemes that are all too common in the cash-intensive
cosmetic medical procedures segment of patient care. They indicate
that the bill will provide the Medical Board of California and
other consumer protection agencies with enhanced enforcement tools.
The California Society of Dermatology & Dermatologic Surgery writes
that each year more non-physician practitioners who received
substantially less training and minimal supervision are receiving
legal approval to perform the same procedures that dermatologists
do regardless of the adverse effects to patient health?allowing
patients to risk their lives for these elective procedures in
unconscionable.
The Medical Board of California indicates that the board feels that
the intent of the bill will improve the efficiency in their efforts
to protect consumers by elevating penalties for violating the
corporate practice of medicine.
The California Medical Association notes that penalties found in
existing law for a violation are paltry in relation to the money
fraudulently obtained from patients. These penalties are
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disregarded by the violators a "the cost of doing business" in the
largely cash-only field.
According to the Physicians Coalition for Injectable Safety , the
Coalition is extremely concerned with the lack of enforcement of
existing California law as it relates to the unlicensed practice of
medicine, particularly the injection of cosmetic medical drugs and
devices in illegally-operated facilities. These practices are not
concerned with patient safety, but rather are interested only in
financial gain.
The American Academy of Dermatology states: "As dermatologists, our
utmost concerns are quality patient care and patient safety, which
includes evaluating a patient's needs and current condition,
selecting an appropriate course of treatment, and providing
adequate information and follow-up care. Physicians engaged in the
corporate practice of medicine, working in 'name-only' for business
entities offering cosmetic procedures do not provide the necessary
supervision or patient evaluation to avoid adverse events. AB 1548
will keep medical spas and other establishments from offering
cosmetic medical procedures that should be performed only by
licensed and appropriately trained physicians or under their
direct, onsite supervision."
The American Medical Association believes that AB 1548 is not
simply a corporate medicine issue. They believe that it is also an
important patient safety issue: "While many patients may not fully
appreciate the potential serious consequences of procedures such as
laser hair removal, dermabrasion or chemical skin peels, we believe
that procedures that use powerful instruments that structurally
alter human tissue, such as lasers, should only be performed by
individuals licensed to practice medicine and surgery or by those
categories of practitioners currently licensed by the state to
perform surgical services."
The American Academy of Facial Plastic and Reconstructive Surgery
lends their support as well. They note that legitimate
physician-owned cosmetic medical practices and the allied health
professionals that work for them will not be negatively affected by
the passage of this legislation.
The American Academy of Otolaryngology Head and Neck Surgery and
the American Society of Ophthalmic Plastic & Reconstructive Surgery
both note that AB 1548 will send a powerful message to those
corporate entities that are violating the law.
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4. Related Legislation. AB 2566 (Carter) of 2010 was nearly identical
to this bill. It was vetoed due to concerns that it would lead the
Medical Board to prioritize medi-spa enforcement above more serious
violations that result in severe patient harm.
AB 252 (Carter) of 2009 is substantially similar to the provisions of
this bill. Additionally,
AB 252 would have authorized the revocation of the license of a
physician and surgeon who practices medicine with a business
organization that offers to provide or provides outpatient elective
cosmetic medical procedures or treatments (cosmetic procedures), as
defined, knowing that the practice is owned or operated in
violation of the prohibition against the corporate practice of
medicine. AB 252 was vetoed by the Governor who indicated that AB
252 "is duplicative of existing law and unnecessary. The MBC
already has significant legal authority to take action against
physicians that violate the Medical Practice Act."
AB 2398 (Nakanishi) of 2008 was substantially similar to the
provisions of this bill, and would have further authorized 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. AB 2398 failed
passage on the Senate Floor.
SB 100 (Price, Chapter 645, Statutes of 2011) requires the Medical
Board of California (MBC) to adopt regulations on or before January
1, 2013, on the appropriate level of physician availability
necessary within clinics using laser or intense pulse light devices
for elective cosmetic surgery; makes a number of changes regarding
the approval, oversight and inspection of "outpatient settings", as
defined, by MBC and accreditation agencies approved by the MBC, and
in developing a plan of corrective action for any deficiencies
found by the accreditation agencies or the MBC during inspections,
or otherwise; and revises the existing definition of "outpatient
settings" to include fertility clinics that offer in vitro
fertilization.
AB 1116 (Carter, Chapter 509, Statutes of 2009) enacted the Donda West
Law, which prohibits the performance of an elective cosmetic
surgery procedure on a patient unless, within 30 days prior to the
elective facial procedure, and confirmed as up-to-date on the day
of the procedure, the patient has received an appropriate physical
examination, and a written clearance for the surgery, as specified.
AB 2968 (Carter) of 2008 would have enacted the Donda West Law, which
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would prohibit elective cosmetic surgery on a patient unless, prior
to surgery, the patient has completed a physical examination by,
and has received written clearance for the procedure from, a
licensed physician and surgeon. AB 2968 was vetoed by Governor
Schwarzenegger citing the State budget crisis.
SB 1454 (Ridley-Thomas) of 2008 would have required for
purposes of advertising that a health care practitioner, as
specified, provide the type of license under which the licensee
is practicing and the type of degree received upon graduation
from professional training and that a health care practitioner
who is practicing in an outpatient setting, and to wear a name
tag which includes his or her name and their license status.
The bill would have further required the MBC to post on its
website a fact sheet to educate the public about cosmetic
surgery, and the risks involved with such surgeries. Made a
number of changes regarding the approval, oversight and
inspection of outpatient settings by the MBC and accreditation
agencies approved by the MBC, and in developing a plan of
corrective action for any deficiencies found by the
accreditation agencies or the MBC during inspections, or
otherwise. SB 1454 died on the Assembly Floor.
SB 1423 (Figueroa, Chapter 873, Statutes of 2006) required the
MBC in conjunction with the Board of Registered Nursing to
promulgate regulations on or before January 1, 2009 to
implement changes relating to the use of laser or intense pulse
light devices for cosmetic procedures by physicians and
surgeons, nurses, and physician assistants.
SB 835 (Figueroa) of 1999 would have enacted the Cosmetic
Surgery Patient Disclosure Act, which would have required
physicians who perform cosmetic surgery to provide the MBC with
specified information, including training, board
certifications, and number of procedures performed, and require
the MBC to make this information available to the public upon
request and post the information on the internet. This bill
was vetoed by the Governor.
SB 836 (Figueroa, Chapter 856, Statutes of 1999) expanded and
revised the prohibition against fraudulent advertising by
health practitioners.
SB 837 (Figueroa) of 1999 would have required cosmetic surgery
procedures to be performed in a licensed acute care hospital or
in a licensed or accredited outpatient surgery setting. SB 837
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died in the Assembly Appropriations Committee. This bill died
in Assembly Appropriations Committee.
SUPPORT AND OPPOSITION:
Support:
American Society for Dermatologic Surgery (Co-Sponsor)
CalDerm-California Society of Dermatology & Dermatologic Surgery
(Co-Sponsor)
American Academy of Dermatology Association
American Academy of Facial Plastic and Reconstructive Surgery
American Academy of Otolaryngology - Head & Neck Surgery
American Medical Association
American Society of Ophthalmic Plastic & Reconstructive Surgery, Inc.
California Medical Association
Medical Board of California
Physicians Coalition for Injectable Safety
Opposition:
None received as of June 4, 2012.
Consultant:Le Ondra Clark