BILL NUMBER: AB 1098 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 3, 2000
AMENDED IN SENATE MAY 18, 2000
AMENDED IN ASSEMBLY JANUARY 3, 2000
INTRODUCED BY Assembly Member Romero
(Coauthors: Assembly Members Aroner, Firebaugh, Honda, and
Keeley)
FEBRUARY 25, 1999
An act to amend Sections 1265, 1287, 1301, and 1320 of,
and to add Sections 1281.1, 1282.1, 1282.2, 1311, and 1320.5
1241, 1265, 1287, 1301, and 1324 of, and to add
Sections 1269.5, 1281.1, 1282.1, 1282.2, 1287.1, and 1311 to,
the Business and Professions Code, and to amend Sections 14040,
14040.5, 14043.1, 14043.2, 14043.36 14043.37, 14043.65, 14043.7,
14043.75, 14100.75, 14107, 14107.11, 14115.5,
14124.1, 14124.2, 14170, 14170.8, 14171.6, and 24005 of, and to add
Sections 14040.1, 14043.34, 14043.61, 14043.62, and 14123.25 to, the
Welfare and Institutions Code, relating to health.
LEGISLATIVE COUNSEL'S DIGEST
AB 1098, as amended, Romero. Health.
Existing law contains provisions governing the licensure and
registration of clinical laboratories, which are administered by the
State Department of Health Services.
This bill would make various modifications to these requirements,
including the provision of additional grounds for denial, suspension,
or revocation of licensure or registration, as well as
and exemptions from clinical laboratory
provisions relating to the retention of records.
The bill would also provide that a violation of provisions that
constitute grounds for denial, registration suspension, or revocation
of clinical laboratory licensure or registration that results in
bodily harm to a human being or involves the taking of blood from a
minor child or dependent adult shall be a crime, punishable as
specified.
The bill would make it a crime, punishable as specified, to
engage in willful or wanton disregard of a patient's safety that
exposes the patient to a substantial risk of, or that causes, serious
bodily injury, by affecting the integrity of a biological specimen
or the clinical laboratory test or examination result, through
improper collection, handling, storage, or labeling of the specimen,
or the erroneous transcription or reporting of test or examination
results.
The bill would also make it unlawful, and subject to criminal
penalties, for any person to: (1) except where exempt provide any
form of payment or gratuity for human blood or any other
human biological specimen provided for the
purpose of clinical laboratory testing or practice, (2) solicit, or
to provide any form of payment or gratuity to, another person for the
procurement of that person's blood or any other specimen from his or
her body, unless the solicitor is serving as the agent of
either a clinical laboratory performing tests or examinations for
purposes of research or teaching or a licensed biologics producer,
or (3) perform venipuncture, skin puncture, or arterial
puncture , unless authorized by law .
Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Services, pursuant to
which medical benefits are provided to public assistance recipients
and certain other low-income persons.
Existing law defines a provider for the purposes of the Medi-Cal
program.
This bill would revise the definition of a provider for that
purpose.
Existing law provides for the State-Only Family Planning Program,
under which family planning services are provided to eligible
individuals.
Existing law also establishes the Family Planning Access, Care,
and Treatment Waiver Program, as part of the Medi-Cal program.
The bill would enact various provisions relating to billing for
Medi-Cal and family planning services, including provisions relating
to provider billing agents.
Existing law provides that any person who , with intent
to defraud, presents for allowance or payment any false or
fraudulent claim for furnishing Medi-Cal program services or
merchandise, knowingly submits false information for the purpose of
obtaining greater compensation than that to which he or she is
legally entitled, or knowingly submits false information for the
purpose of obtaining authorization of obtaining Medi-Cal program
services or merchandise is guilty of a crime.
This bill would, instead, make it a crime for any person,
including a Medi-Cal provider, an applicant for provider status, or a
billing agent, who engages in specified activities, punishable as
prescribed.
The bill would also permit, subject to specified requirements, the
forfeiture of property of persons engaging in these activities.
Because the bill creates additional crimes, the bill would
constitute a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1241 of the Business and Professions Code
is amended to read:
1241. (a) This chapter applies to all clinical laboratories in
California or receiving biological specimens originating in
California for the purpose of performing a clinical laboratory test
or examination, and to all persons performing clinical laboratory
tests or examinations or engaging in clinical laboratory practice in
California or on biological specimens originating in California,
except as provided in subdivision (b).
(b) This chapter shall not apply to any of the following clinical
laboratories, or to persons performing clinical laboratory tests or
examinations in any of the following clinical laboratories:
(1) Those owned and operated by the United States of America, or
any department, agency, or official thereof acting in his or her
official capacity to the extent that the Secretary of the federal
Department of Health and Human Services has modified the application
of CLIA requirements to those laboratories.
(2) Public health laboratories, as defined in Section 1206.
(3) Those that perform clinical laboratory tests or examinations
for forensic purposes only.
(4) Those that perform clinical laboratory tests or examinations
for research and teaching purposes only and do not report or use
patient-specific results for the diagnosis, prevention, or treatment
of any disease or impairment of, or for the assessment of the health
of, an individual.
(5) Those that perform clinical laboratory tests or examinations
certified by the National Institutes on Drug Abuse only for those
certified tests or examinations. However, all other clinical
laboratory tests or examinations conducted by the laboratory are
subject to this chapter.
(6) Those that register with the State Department of Health
Services pursuant to subdivision (c) to perform blood glucose testing
for the purposes of monitoring a minor child diagnosed with diabetes
when the person performing the test has been entrusted with the care
and control of the child by the child's parent or legal guardian and
provided that all of the following occur:
(7) Those individuals who perform clinical laboratory tests or
examinations, approved by the federal Food and Drug Administration
for home use, on their own bodies, or on their minor children or
legal wards.
(A) The blood glucose monitoring test is performed with a blood
glucose monitoring instrument that has been approved by the federal
Food and Drug Administration for sale over the counter to the public
without a prescription.
(B) The person has been provided written instructions by the child'
s health care provider or an agent of the child's health care
provider in accordance with the manufacturer's instructions on the
proper use of the monitoring instrument and the handling of any
lancets, test strips, cotton balls, or other items used during the
process of conducting a blood glucose test.
(C) The person, receiving written authorization from the minor's
parent or legal guardian, complies with written instructions from the
child's health care provider, or an agent of the child's health care
provider, regarding the performance of the test and the operation of
the blood glucose monitoring instrument, including how to determine
if the results are within the normal or therapeutic range for the
child, and any restriction on activities or diet that may be
necessary.
(D) The person complies with specific written instructions from
the child's health care provider or an agent of the child's health
care provider regarding the identification of symptoms of
hypoglycemia or hyperglycemia, and actions to be taken when results
are not within the normal or therapeutic range for the child. The
instructions shall also contain the telephone number of the child's
health care provider and the telephone number of the child's parent
or legal guardian.
(E) The person records the results of the blood glucose tests and
provides them to the child's parent or legal guardian on a daily
basis.
(F) The person complies with universal precautions when performing
the testing and posts a list of the universal precautions in a
prominent place within the proximity where the test is conducted.
(c) Any place where blood glucose testing is performed pursuant to
this section paragraph (6) of subdivision
(b) shall register by notifying the State Department of Health
Services in writing no later than 30 days after testing has
commenced. Registrants pursuant to this subdivision shall not be
required to pay any registration or renewal fees nor shall they be
subject to routine inspection by the State Department of Health
Services.
SEC. 2. Section 1265 of the Business and Professions Code is
amended to read:
1265. (a) (1) A clinical laboratory performing clinical
laboratory tests or examinations classified as of moderate or of high
complexity under CLIA shall obtain a clinical laboratory license
pursuant to this chapter. The department shall issue a clinical
laboratory license to any person who has applied for the license on
forms provided by the department and who is found to be in compliance
with this chapter and the regulations pertaining thereto. No
clinical laboratory license shall be issued by the department unless
the clinical laboratory and its personnel meet the CLIA requirements
for laboratories performing tests or examinations classified as of
moderate or high complexity, or both.
(2) A clinical laboratory performing clinical laboratory tests or
examinations subject to a certificate of waiver or a certificate of
provider-performed microscopy under CLIA, shall register with the
department. The department shall issue a clinical laboratory
registration to any person who has applied for the registration on
forms provided by the department and is found to be in compliance
with this chapter, the regulations pertaining thereto, and the CLIA
requirements for either a certificate of waiver or a certificate of
provider-performed microscopy.
(b) An application for a clinical laboratory license or
registration shall include the name or names of the owner or the
owners, the name or names of the laboratory director or directors,
the name and location of the laboratory, a list of the clinical
laboratory tests or examinations performed by the laboratory by name
and total number of test procedures and examinations performed
annually (excluding tests the laboratory may run for quality control,
quality assurance, or proficiency testing purposes). The
application shall also include a list of the tests and the test kits,
methodologies, and laboratory equipment used, and the qualifications
(educational background, training, and experience) of the personnel
directing and supervising the laboratory and performing the
laboratory examinations and test procedures, and any other relevant
information as may be required by the department. If the laboratory
is performing tests subject to a provider-performed microscopy
certificate, the name of the provider or providers performing those
tests shall be included on the application. Application shall be
made by the owners of the laboratory and the laboratory directors
prior to its opening. A license or registration to conduct a
clinical laboratory if the owners are not the laboratory directors
shall be issued jointly to the owners and the laboratory directors
and the license or registration shall include any information as may
be required by the department. The owners and laboratory directors
shall be severally and jointly responsible to the department for the
maintenance and conduct thereof or for any violations of this chapter
and regulations pertaining thereto.
(c) The department shall not issue a license or registration until
it is satisfied that the clinical laboratory will be operated within
the spirit and intent of this chapter, that the owners and
laboratory directors are each of good moral character, and that the
granting of the license will not be in conflict with the interests of
public health.
(d) A separate license or registration shall be obtained for each
laboratory location, with the following exceptions:
(1) Laboratories that are not at a fixed location, that is,
laboratories that move from one testing site to another, such as
mobile units providing laboratory testing, health screening fairs, or
other temporary testing locations, may apply for and obtain one
license or registration for the designated primary site or home base,
using the address of that primary site.
(2) Not-for-profit, or federal, state, or local government
laboratories that engage in limited (not more than a combination of
15 moderately complex or waived tests, as defined under CLIA, per
license) public health testing may apply for and obtain a single
license or registration.
(3) Laboratories within a hospital that are located at contiguous
buildings on the same campus and under common direction, may file a
single application or multiple applications for a license or
registration of laboratory locations within the same campus or street
address.
(4) Locations within a single street and city address that are
under common ownership may apply for and obtain a single license or
registration or multiple licenses or registrations, at the discretion
of the owner or owners.
(e) (1) A license or registration shall be valid for
the calendar year or remainder thereof for which it is
issued one year unless revoked or suspended. A
clinical laboratory license or registration shall be
automatically revoked if there is 30 days
from a major change of laboratory directorship or ownership
, in which case the . The clinical
laboratory shall be required to obtain submit
a completed application for a new clinical laboratory license
or registration prior to within those 30 days
or cease engaging in clinical laboratory practice.
(2) If a clinical laboratory intends to continue to engage in
clinical laboratory practice during the 30 days after a major change
in directorship occurs and before the laboratory license or
registration is automatically revoked, the laboratory owner may
appoint an interim director who meets the requirements of this
chapter and CLIA. The interim director shall be appointed within
five business days of the major change of the directorship. Written
notice shall be provided to the department of the appointment of the
laboratory director pursuant to this paragraph within five business
days of the appointment.
(f) If the department does not within 60 days after the date of
receipt of the application issue a license or registration, it shall
state the grounds and reasons for its refusal in writing, serving a
copy upon the applicant by certified mail addressed to the applicant
at his or her last known address.
(g) The department shall be notified in writing by the laboratory
owners or directors within 30 days or
delegated representatives of the owners and the laboratory directors
of any change in ownership, name, location, and by the
laboratory owners and directors, 30 days prior to any change in
laboratory directors, including any additions or deletions.
directorship, name, or location, including the addition or
deletion of laboratory owners or laboratory directors within 30 days.
However, notice of change in ownership shall be the responsibility
of both the current and new owners. Laboratory owners and
directors to whom the current license or registration is issued shall
remain jointly and severally responsible to the department for the
operation, maintenance, and conduct of the clinical laboratory and
for any violations of this chapter or the regulations adopted
thereunder, including any failure to provide the notifications
required by this subdivision , until proper notice is received
by the department . In addition, failure of the laboratory
owners or and directors to notify the
department at least 30 days prior to within
30 days of any change in laboratory directors, including any
additions or deletions, shall result in the automatic revocation of
the clinical laboratory's license or registration.
(h) The withdrawal of an application for a license or registration
or for a renewal of a license, or registration, issuable under this
chapter, shall not, after the application has been filed with the
department, deprive the department of its authority to institute or
continue a proceeding against the applicant for denial of the
license, registration, or renewal upon any ground provided by law or
to enter an order denying the license, registration, or renewal upon
any such ground, unless the department consents in writing to the
withdrawal.
(i) The suspension, expiration, or forfeiture by operation of law
of a license or registration issued under this chapter, or its
suspension, forfeiture, or cancellation by order of the department or
by order of a court of law, or its surrender without the written
consent of the department, shall not deprive the department of its
authority to institute or continue an action against a license or
registration issued under this chapter or against the laboratory
owner or laboratory director upon any ground provided by law or to
enter an order suspending or revoking the license or registration
issued under this chapter.
(j) (1) The department shall be notified within 10 days whenever a
clinical laboratory ceases operations or suspends clinical
laboratory practice for any reason.
(2) If a clinical laboratory ceases operation or suspends clinical
laboratory practice, it shall preserve all of its records for a
minimum of seven years and shall maintain an ability to provide the
results of clinical laboratory tests or examinations performed during
its operation when requested pursuant to Section 123148 of the
Health and Safety Code. The records preserved shall include all
those showing compliance during the laboratory's operation with this
chapter and the regulations adopted thereunder, including, but not
limited to, records for test performance, test reporting, personnel,
and the purchase or lease of supplies or equipment. In addition, all
records of tests or examinations classified under the specialties or
subspecialties of pathology or cytology shall be retained as
required by this chapter, the regulations adopted thereunder or the
federal Clinical Laboratory Improvement Amendments of 1988 (42 U.S.C.
Sec. 263a), whichever period is longer.
(j) (1) Whenever a clinical laboratory ceases operations, the
laboratory shall notify the department of this fact, in writing,
within 30 calendar days from the date a clinical laboratory ceases
operation. For purposes of this subdivision, a laboratory ceases
operations when it suspends the performance of all clinical
laboratory tests or examinations for 30 calendar days at the location
for which the clinical laboratory is licensed or registered.
(2) (A) Notwithstanding any other provision of law, all clinical
laboratories, including those laboratories that cease operations,
shall preserve medical records and laboratory records, as defined in
this section, for three years from the date of testing, examination,
or purchase, unless a longer retention period is required pursuant to
any other provision of law, and shall maintain an ability to provide
those records when requested by the department or any duly
authorized representative of the department.
(B) For purposes of this subdivision, "medical records" means the
test requisition or test authorization, or the patient's chart or
medical record, if used as the test requisition, the final and
preliminary test or examination result, and the name of the person
contacted if the laboratory test or examination result indicated an
imminent life-threatening result or was of panic value.
(C) For purposes of this subdivision, "laboratory records" means
records showing compliance with CLIA and this chapter during a
laboratory's operation that are actual or true copies, either
photocopies or electronically reproducible copies, of records for
patient test management, quality control, quality assurance, and all
invoices documenting the purchase or lease of laboratory equipment
and test kits, reagents, or media.
(D) Information contained in medical records and laboratory
records shall be confidential, and shall be disclosed only to
authorized persons in accordance with federal, state, and local laws.
(3) The department or any person injured as a result of a
laboratory's abandonment or failure to retain records pursuant to
this section may bring an action in a court of proper jurisdiction
for the amount of any any reasonable amount
of damages suffered as a result thereof.
(4) Failure to retain records as required by this section shall
also subject a laboratory to a civil penalty of one thousand dollars
($1,000) for each record not retained and the recovery of any
department costs.
SEC. 2.
SEC. 3. Section 1269.5 is added to the Business and Professions
Code, to read:
1269.5. The department may deny, suspend, or revoke any license,
registration, or certificate issued under this chapter for
performance by unlicensed laboratory personnel of any activity that
is not authorized by Section 1269.
SEC. 4. Section 1281.1 is added to the Business and
Professions Code, to read:
1281.1. It is unlawful for any person, including a person who
owns, operates, or directs a clinical laboratory, to provide any form
of payment or gratuity for human blood or any other human
biological specimen provided for the purpose of
clinical laboratory testing or clinical laboratory practice.
SEC. 3. practice, unless the person is serving as
an agent of a clinical laboratory or another facility legally
utilizing those specimens only for purposes of research or teaching
or for quality assurance purposes, or is an entity licensed under
Chapter 4 (commencing with Section 1600) of Division 2 of the Health
and Safety Code.
SEC. 5. Section 1282.1 is added to the Business and
Professions Code, to read:
1282.1. It is unlawful for any person to solicit, or to provide
any form of payment or gratuity to, another person for the
procurement of that person's blood, or any other specimen from his or
her body, unless the solicitor is serving as the agent of either a
clinical laboratory or another facility legally utilizing those
specimens for performing tests or examinations only
for purposes of research or teaching , only
or for quality assurance purposes , or is an entity
licensed under Chapter 4 (commencing with Section 1600) of Division 2
of the Health and Safety Code.
SEC. 4.
SEC. 6. Section 1282.2 is added to the Business and
Professions Code, to read:
1282.2. It is unlawful for any person to perform venipuncture,
skin puncture, or arterial puncture unless he or she is authorized to
do so under this chapter, the regulations adopted thereunder, or
under other provisions of law.
SEC. 5.
SEC. 7. Section 1287 of the Business and Professions Code is
amended to read:
1287. (a) Any person who violates any provision of this chapter
is guilty of a misdemeanor punishable upon conviction by imprisonment
in the county jail for a period not exceeding six months or by fine
not exceeding one thousand dollars ($1,000) or by both.
(b) Notwithstanding subdivision (a), a violation of Section
1281.1, 1282.1, or 1282.2 is a public offense and is punishable upon
a first conviction by imprisonment in the county jail for not more
than one year, or by imprisonment in the state prison, or by a fine
not exceeding ten thousand dollars ($10,000), or by both that
imprisonment and fine. A second or subsequent conviction is
punishable by imprisonment in the state prison.
SEC. 6.
SEC. 8. Section 1287.1 is added to the Business and Professions
Code, to read:
1287.1. (a) Willful or wanton disregard for a patient's safety
that exposes the patient to a substantial risk of, or that causes,
serious bodily injury, by affecting the integrity of a biological
specimen or the clinical laboratory test or examination result,
through improper collection, handling, storage, or labeling of the
specimen or through the erroneous transcription or reporting of test
or examination results, shall be punishable by imprisonment in the
county jail for not more than one year or in state prison for not
more than 10 years, or by a fine not exceeding fifty thousand dollars
($50,000) or by both imprisonment and fine.
(b) For purposes of this chapter, "serious bodily injury" means
bodily injury that involves any of the following:
(1) Substantial risk of death.
(2) Extreme physical pain.
(3) Protracted and obvious disfigurement.
(4) Protracted loss or impairment of the function of a bodily
member, organ, or mental faculty.
SEC. 9. Section 1301 of the Business and Professions Code is
amended to read:
1301. (a) The annual renewal fee for a clinical laboratory
license or registration set under this chapter shall be paid during
the 30-day period before the expiration date of the license or
registration. Failure to pay the annual fee in advance during the
time the license remains in force shall, ipso facto, work a
forfeiture of said license after a period of 60 days from the
expiration date of the license or registration.
(b) The department shall give written notice to all persons
licensed pursuant to Sections 1260, 1260.1, 1261, 1261.5, 1262, 1264,
or 1270 30 days in advance of the regular renewal date that a
renewal fee has not been paid. In addition, the department shall give
written notice to licensed clinical laboratory bioanalysts or
doctoral degree specialists and clinical laboratory scientists or
limited clinical laboratory scientists by registered or certified
mail 90 days in advance of the expiration of the fifth year that a
renewal fee has not been paid and if not paid before the expiration
of the fifth year of delinquency the licensee may be subject to
reexamination.
(c) If the renewal fee is not paid for five or more years, the
department may require an examination before reinstating the license,
except that no examination shall be required as a condition for
reinstatement if the original license was issued without an
examination. No examination shall be required for reinstatement if
the license was forfeited solely by reason of nonpayment of the
renewal fee if the nonpayment was for less than five years.
(d) If the license is not renewed within 60 days after its
expiration, the licensee, as a condition precedent to renewal, shall
pay the delinquency fee identified in subdivision (l) of Section
1300, in addition to the renewal fee in effect on the last preceding
regular renewal date. Payment of the delinquency fee will not be
necessary if within 60 days of the license expiration date the
licensee files with the department an application for inactive
status.
SEC. 7.
SEC. 10. Section 1311 is added to the Business and
Professions Code, to read:
1311. The department shall have seven
three years from the date of discovery by the
department of a violation of this chapter or of a
regulation adopted thereunder to file an action in a court of
competent jurisdiction.
SEC. 8. Section 1320 of the Business and Professions Code is
amended to read:
1320. The department may deny, suspend, or revoke any license or
registration issued under this chapter for any of the following
reasons:
(a) Conduct involving moral turpitude or dishonest reporting of
tests.
(b) Violation by the applicant, licensee, or registrant of this
chapter or any rule or regulation adopted pursuant thereto.
(c) Aiding, abetting, or permitting the violation of this chapter,
the rules or regulations adopted under this chapter or the Medical
Practice Act, Chapter 5 (commencing with Section 2000) of Division 2.
(d) Permitting a licensed trainee to perform tests or procure
specimens unless under the direct and responsible supervision of a
person duly licensed under this chapter or physician and surgeon
other than another licensed trainee.
(e) Violation of any provision of this code governing the practice
of medicine and surgery.
(f) Proof that an applicant, licensee, or registrant has made
false statements in any material regard on the application for a
license, registration, or renewal issued under this chapter.
(g) Conduct inimical to the public health, morals, welfare, or
safety of the people of the State of California in the maintenance or
operation of the premises or services for which a license or
registration is issued under this chapter.
(h) Conduct that may cause harm to a patient by affecting the
integrity of a biological specimen or the clinical laboratory test or
examination result, through improper collection, handling, storage,
or labeling of the specimen or the erroneous transcription or
reporting of test or examination results.
(i) Violation of any of the prenatal laws or regulations
pertaining thereto in Chapter 2 (commencing with Section 120675) of
Part 3 of Division 105 of the Health and Safety Code and Article 1
(commencing with Section 1125) of Group 4 of Subchapter 1 of Chapter
2 of Part 1 of Title 17 of the California Code of Regulations.
(j) Knowingly
accepting an assignment for clinical laboratory tests or specimens
from and the rendering of a report thereon to persons not authorized
by law to submit those specimens or assignments.
(k) Rendering a report on clinical laboratory work actually
performed in another clinical laboratory without designating clearly
the name and address of the laboratory in which the test was
performed.
(l) Conviction of a felony or of any misdemeanor involving moral
turpitude under the laws of any state or of the United States arising
out of or in connection with the practice of clinical laboratory
technology. The record of conviction or a certified copy thereof
shall be conclusive evidence of that conviction.
(m) Unprofessional conduct.
(n) The use of drugs or alcoholic beverages to the extent or in a
manner as to be dangerous to a person licensed under this chapter, or
any other person to the extent that that use impairs the ability of
the licensee to conduct with safety to the public the practice of
clinical laboratory technology.
(o) Misrepresentation in obtaining a license or registration.
(p) Performance of, or representation of the laboratory as
entitled to perform, a clinical laboratory test or examination or
other procedure that is not within the specialties or subspecialties,
or category of laboratory procedures authorized by the license or
registration.
(q) Refusal of a reasonable request of HCFA, a HCFA agent, the
department, or any employee, agent or contractor of the department,
for permission to inspect, pursuant to this chapter, the laboratory
and its operations and pertinent records during the hours the
laboratory is in operation.
(r) Failure to comply with reasonable requests of the department
for any information, work, or materials that the department concludes
is necessary to determine the laboratory's continued eligibility for
its license or registration, or its continued compliance with this
chapter or the regulations adopted under this chapter.
(s) Failure to comply with a sanction imposed under Section 1310.
(t) Proof that the applicant or licensee has used any degree or
certificate as a means of qualifying for licensure, if the degree or
certificate has been purchased or procured by barter or by any
unlawful means or obtained from any institution that, at the time the
degree, certificate, or title was obtained, was not recognized or
accredited by the state department of education of the state where
the institution is or was located to give training in the field of
study in which the degree, certificate, or title is claimed.
(u) Performance by unlicensed laboratory personnel of any activity
that is not authorized by Section 1269.
SEC. 9. Section 1320.5 is added to the Business and Professions
Code, to read:
1320.5. A violation of Section 1320 that results in bodily harm
to a human being or involves the taking of blood from a minor child
or dependent adult shall be punishable by imprisonment in the county
jail for not more than one year, or in a state prison for not more
than 10 years, or by a fine not exceeding fifty thousand dollars
($50,000) or by both imprisonment and fine.
SEC. 10.
SEC. 11. Section 1324 of the Business and Professions Code is
amended to read:
1324. No Except for a person or entity
whose license was revoked automatically under Section 1265, no
person or entity who has owned or operated a clinical laboratory that
had its license or registration revoked may, within two years of the
revocation of the license or registration, own or operate a
laboratory for which a license or registration has been issued under
this chapter.
SEC. 12. Section 14040 of the Welfare and Institutions Code
is amended to read:
14040. (a) Each contract for fiscal intermediary services shall
allow, to the extent practicable, providers to utilize electronic
means for transmitting claims to the fiscal intermediary contractor.
Means of transmission, and the manner and format used, shall be
approved by the director. In determining which electronic means are
acceptable, the director shall consider magnetic tape,
computer-to-computer via telephone, diskettes, and any other methods
which may become available through technological advancements.
(b) A provider, as defined in Section 14043.1, may , by
written contract do either or both of the following:
(1) Authorize a billing agent to submit claims, including
electronic claims, on behalf of the provider for reimbursement for
services, goods, supplies, or merchandise rendered or provided by the
provider to a Medi-Cal beneficiary or under the Medi-Cal program.
(2) Assign assign signature authority for
transmission of claims to the authorized billing agent
the provider's authorized representative or the
registered billing agent of the provider identified to the department
pursuant to subdivision (C) of Section 14040.5 .
(c) The department shall develop reasonable standards for
participation and continued participation by providers and
billing agents in the use of claim claims
transmission methods utilized pursuant to this section. These
standards shall be designed to ensure that providers and
billing agents submit technically complete claims and to reduce the
potential for fraud and abuse. The department shall notify
providers and billing agents of any planned changes to the claims
transmission standards prior to the implementation of the changes.
A "technically complete claim" means any billing request for
payment from a provider or the billing agent of the provider,
including an original claim, claim inquiry, or appeal, that is
submitted on the correct Medi-Cal claim form or electronic billing
format, is fully and accurately completed, and includes all
information and documentation required to be submitted on or with the
claim pursuant to Medi-Cal billing and documentation requirements.
(d) To the extent required by federal and state law, the fiscal
intermediary shall retain claim data submitted by providers or the
billing agent of the provider pursuant to this section. The
department shall, however, return to a provider or the billing agent
of the provider original tapes, diskettes, and any other similar
devices that are used by the provider or the billing agent of the
provider pursuant to this section.
(e) In order to reduce the amount of paperwork or attachments
which are required to be completed by a provider or the billing agent
of the provider submitting a claim for reimbursement under this
chapter to the fiscal intermediary, the department shall direct the
fiscal intermediary to investigate and develop the means to
incorporate as much information as possible on the electronic format.
SEC. 11.
(f) Each provider and billing agent submitting claims shall be
responsible for ensuring that each claim submitted for reimbursement
for services, goods, supplies, or merchandise rendered or supplied by
the provider to a Medi-Cal beneficiary or under the Medi-Cal program
meets the standards established by the department pursuant to this
section.
SEC. 13. Section 14040.1 is added to the Welfare and
Institutions Code, to read:
14040.1. (a) "Billing agent" or "billing agent of the provider"
means any individual, partnership, group, association, corporation,
institution, or entity, and the officers, directors, owners, managing
employees, or agents of any partnership, group, association,
corporation, institution, or entity, that submits claims on behalf of
the provider, as defined in Section 14043.1, for reimbursement for
services, goods, supplies, or merchandise rendered or provided
directly or indirectly to a Medi-Cal beneficiary or under the
Medi-Cal program. As used in this section a billing agent shall not
include a nonmanaging salaried employee of a provider.
include an employee or authorized representative of a
provider billing solely for that provider, a provider wholly owned
entity billing solely for the provider, or a clinic licensed pursuant
to subdivision (a) of Section 1204 of the Health and Safety Code or
exempt from licensure pursuant to subdivision (c) of Section 1206 of
the Health and Safety Code when preparing and submitting claims for
services provided on behalf of the clinic. For purposes of this
subdivision, an authorized representative shall be either an
individual who is an employee of the provider or an individual with a
familial relationship to the provider. For purposes of this section
and Section 14040.5, an authorized representative shall be considered
a provider.
(b) The department shall establish standards for the registration
or continued registration of each billing agent. The standards shall
establish time periods, no longer than a year from the date the
standards become effective, after which, no person or entity
billing agent shall submit a claim on behalf of
a provider, as defined in Section 14043.1, for reimbursement for
services, goods, supplies, or merchandise rendered or provided
directly or indirectly by the provider to a Medi-Cal beneficiary or
under the Medi-Cal program, unless that person or entity
billing agent has been registered with the
department as a billing agent . The department
shall establish the standards for the registration or continued
registration of billing agents pursuant to this subdivision , in
consultation with interested parties, by the adoption of
emergency regulations in accordance with the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code). The adoption of these
emergency regulations or readoption of the regulations shall be
deemed to be an emergency necessary for the immediate preservation of
the public peace, health and safety, or general welfare.
Notwithstanding Chapter 3.5 (commencing with Section 11340 of Part 1
of Division 3 of Title 2 of the Government Code, emergency
regulations adopted or readopted pursuant to this subdivision shall
be exempt from review by the Office of Administrative Law. The
emergency regulations authorized by this subdivision shall be
submitted to the Office of Administrative Law for filing with the
Secretary of State and publication in the California Code of
Regulations.
(c) The department may complete a background check on applicants
for registration or continued registration as a billing agent
and on those persons who currently act as billing agents,
billing intermediaries, authorized representatives, or any other
person or entity billing for services rendered under this chapter,
for the , for the purpose of verifying the
accuracy of information provided by an applicant for registration or
continued registration as a billing agent or in order to prevent
fraud and abuse. The background check may include, but not be
limited to, onsite inspection, review of business records, and data
searches.
(d) As a condition of registration, or continued registration, as
a billing agent, an applicant for registration as a billing agent
shall provide to the department a surety bond of not less than fifty
thousand dollars ($50,000).
(e) A billing agent's compensation for the submission of claims to
the Medi-Cal program on behalf of a provider shall be related to the
cost of processing the billing, but shall not be related on a
percentage or other basis, such as a contingency fee, to the amount
that is billed or collected. A billing agent's compensation for the
submission of claims to the Medi-Cal program on behalf of a provider
shall not be dependent upon the collection of the payment.
(f) Each billing agent shall be liable for ensuring that each
claim, for reimbursement for services, goods, supplies, or
merchandise rendered or supplied by the provider to a Medi-Cal
beneficiary or under the Medi-Cal program, is a technically complete
claim, as defined in subdivision (c) of Section 14040.
SEC. 12.
SEC. 14. Section 14040.5 of the Welfare and Institutions
Code is amended to read:
14040.5. (a) Billing agents shall register with the director and
shall obtain a unique identifier prior to submitting any claims for
reimbursement. This unique identifier shall be part of each claim
for reimbursement submitted by the billing agent.
(b) A provider may, by written contract, do either of the
following:
(1) Authorize a billing agent to submit claims, including
electronic claims, on behalf of the provider for reimbursement for
services, goods, supplies, or merchandise provided by the provider to
the Medi-Cal program.
(2) Assign signature authority for transmission of claims by the
authorized billing agent. Any
(c) If a contract, as described in subdivision (b), is entered
into, the contract shall meet the requirements of Section 447.10 of
Title 42 of the Code of Federal Regulations or shall have been
approved by the federal Health Care Financing Administration for
purposes of the Medicare program.
(d) Any provider using intending to
use a billing agent to submit claims for reimbursement to the
Medi-Cal program shall, at least 30 days prior to any claims for
reimbursement being submitted by the billing agent, provide written
notification to the director of the name, including the known
legal and any known fictitious or "doing business as"
names used by the billing agent, and address, and telephone number
of the billing agent.
(c)
(e) (1) Any Medi-Cal claim submitted by a billing agent or
provider failing to comply with the requirements of this section or
Section 14040 or 14040.1 or the regulations adopted under these
sections, shall be subject to nonpayment by the director.
(2) The director may deny, suspend, or revoke the registration or
continued registration of a billing agent based upon any of the
following:
(A) Failure of the billing agent or provider to comply with this
section, Section 14040 or 14040.1, or the
regulations adopted under these sections.
(B) Determination by the director that the billing agent has
submitted a claim claims containing
false or misleading information regarding services rendered,
or allegedly rendered, or regarding goods, supplies, or merchandise
furnished or allegedly furnished, or that the billing agent has
demonstrated a pattern of filing claims which are not technically
complete claims as defined in subdivision (c) of Section 14040.
. The director shall not make this determination when
the falsity or misleading nature of the information was the result
of the provider's actions and not those of the billing agent.
(C) The determination by the director that the billing agent is
under investigation for fraud or abuse by the department or any
federal, state, or local law enforcement agency , has been
convicted of fraud or abuse in a criminal proceeding, found liable
for fraud or abuse in a civil proceeding, or settled a
criminal or civil proceeding alleging fraud or abuse.
has entered into a settlement in lieu of conviction for fraud or
abuse in any government program, within the previous 10 years.
(3) The director shall notify in writing the billing
agent and each provider utilizing the services of the billing agent
of the denial, suspension, or revocation of the billing agent's
registration or continued registration and the effective
date thereof , which shall take effect 15 days from
the date of the notification. To the extent allowed by federal law,
the director may waive any claims submission requirement to assist a
provider in submitting or resubmitting claims to the Medi-Cal program
that were delayed because of the denial, suspension, or revocation,
of the billing agent's registration or continued registration .
Notwithstanding Section 100171 of the Health and Safety Code,
proceedings after the imposition of denial, suspension, or revocation
pursuant to this subdivision shall be in accordance with Section
14043.65, except that this subdivision shall not apply where the
denial, suspension, or revocation of a billing agent's registration
or continued registration is based upon conviction for any crime
involving fraud or abuse of the Medi-Cal program or the federal
medicaid or Medicare programs, or exclusion by the federal government
from the medicaid or Medicare programs. In those instances and
notwithstanding any other provision of law, the denial, suspension,
or revocation shall be automatic and not subject to
administrative appeal or hearing.
(d)
(f) As used in this section, "provider" has the same meaning
as defined in Section 14043.1.
SEC. 13.
SEC. 15. Section 14043.1 of the Welfare and Institutions
Code is amended to read:
14043.1. As used in this article:
(a) "Abuse" means either of the following:
(1) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the federal medicaid and
Medicare programs, the Medi-Cal program, another state's medicaid
program, or other health care programs operated, or financed in whole
or in part, by the federal government or any state or local agency
in this state or any other state.
(2) Practices that are inconsistent with sound medical practices
and result in reimbursement by the federal medicaid and Medicare
programs, the Medi-Cal program or other health care programs
operated, or financed in whole or in part, by the federal government
or any state or local agency in this state or any other state, for
services that are unnecessary or for substandard items or services
that fail to meet professionally recognized standards for health
care.
(b) "Applicant" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents thereof, that
applies to the department for enrollment as a provider in the
Medi-Cal program.
(c) "Convicted" means any of the following:
(1) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a posttrial motion or an appeal pending or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
(2) A federal, state, or local court has made a finding of guilt
against an individual or entity.
(3) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
(4) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
(d) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person. It includes any act that constitutes fraud under applicable
federal or state law.
(e) "Provider" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents of any partnership,
group association, corporation, institution, or entity, that provides
services, goods, supplies, or merchandise, directly or indirectly,
to a Medi-Cal beneficiary and that has been enrolled in the Medi-Cal
program.
(f) "Enrolled or enrollment in the Medi-Cal program" means
authorized under any and all processes by the department or its
agents or contractors to receive, directly or indirectly,
reimbursement for the provision of services, goods, supplies, or
merchandise to a Medi-Cal beneficiary.
(g) "Professionally recognized standards of health care" means
statewide or national standards of care, whether in writing or not,
that professional peers of the individual or entity whose provision
of care is an issue, recognize as applying to those peers practicing
or providing care within a state. When the United States Department
of Health and Human Services has declared a treatment modality not to
be safe and effective, practitioners that employ that treatment
modality shall be deemed not to meet professionally recognized
standards of health care. This definition shall not be construed to
mean that all other treatments meet professionally recognized
standards of care.
(h) "Unnecessary or substandard items or services" means those
that are either of the following:
(1) Substantially in excess of the provider's usual charges or
costs for the items or services.
(2) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care. The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
(A) The professional review organization for the area served by
the individual or entity.
(B) State or local licensing or certification authorities.
(C) Fiscal agents or contractors, or private insurance companies.
(D) State or local professional societies.
(E) Any other sources deemed appropriate by the department.
SEC. 14.
SEC. 16. Section 14043.2 of the Welfare and Institutions
Code is amended to read:
14043.2. (a) Whether or not regulations for certification are
adopted under Section 14043.15, in order to be enrolled as a
provider, or for enrollment as a provider to continue, an applicant
or provider may be required to sign a provider agreement and shall
disclose all information as required in federal medicaid regulations
and any other information required by the department. Applicants,
providers, and persons with an ownership or control interest, as
defined in federal medicaid regulations, shall submit their social
security number or numbers to the department, to the full extent
allowed under federal law. The director may designate the form of a
provider agreement by provider type. Failure to disclose the
required information, or the disclosure of false information, shall
result in denial of the application for enrollment or shall make the
provider subject to temporary suspension from the Medi-Cal program,
which shall include temporary deactivation of all provider numbers
used by the provider to obtain reimbursement from the Medi-Cal
program.
(b) The director shall notify the provider of the temporary
suspension and deactivation of the provider's Medi-Cal provider
number or numbers and the effective date thereof. Notwithstanding
Section 100171 of the Health and Safety Code and Section 14123,
proceedings after the imposition of sanctions provided for in
subdivision (a) shall be in accordance with Section 14043.65.
SEC. 15.
SEC. 17. Section 14043.34 is added to the Welfare and
Institutions Code, to read:
14043.34. (a) As a condition of a pharmacy's participation in the
Medi-Cal program, the pharmacy shall have in stock and regularly
dispense prescription drugs.
(b) For purposes of this section, "prescription drugs" means any
drug unsafe for self use by a person, and includes either of the
following:
(1) Any drug that bears the legend: "Rx Only" or "Caution:
federal law prohibits dispensing without prescription" or words of
similar import.
(2) Any other drug that by federal or state law can be lawfully
dispensed by the prescription of a licensed physician and surgeon.
SEC. 16.
SEC. 18. Section 14043.36 of the Welfare and Institutions
Code is amended to read:
14043.36. (a) The department shall not enroll any applicant that
has been convicted of any felony or misdemeanor involving fraud or
abuse in any government program, or related to neglect or abuse of a
patient in connection with the delivery of a health care item or
service, or in connection with the interference with or obstruction
of any investigation into health care related fraud or abuse or that
has been found liable for fraud or abuse in any civil proceeding, or
that has entered into a settlement in a civil or criminal
proceeding alleging lieu of conviction for fraud
or abuse in any government program, within the previous 10 years.
In addition, the department may deny enrollment to any applicant
that, at the time of application, is under investigation by the
department or any state, local, or federal government law
enforcement agency for fraud or abuse pursuant to Subpart A
(commencing with Section 455.12) of Part 455 of Title 42 of the Code
of Federal Regulations. Except where there has been a settlement, the
department shall not deny enrollment to an otherwise qualified
applicant whose felony or misdemeanor charges did not result in a
conviction solely on the basis of the prior charges. If it is
discovered that a provider is under investigation by the
department or any state, local, or federal government law
enforcement agency for fraud or abuse, that provider shall be
subject to temporary suspension from the Medi-Cal program, which
shall include temporary deactivation of all provider numbers used by
the provider to obtain reimbursement from the Medi-Cal program.
(b) The director shall notify in writing the provider of
the temporary suspension and deactivation of the provider's Medi-Cal
provider number or numbers and the effective date thereof
, which shall take effect 15 days from the date of the
notification . Notwithstanding Section 100171 of the Health
and Safety Code, proceedings after the imposition of sanctions
provided for in subdivision (a) shall be in accordance with Section
14043.65.
SEC. 17.
SEC. 19. Section 14043.37 of the Welfare and Institutions
Code is amended to read:
14043.37. The department may complete a background check on
applicants for the purpose of verifying the accuracy of the
information provided to the department for purposes of enrolling in
the Medi-Cal program and in order to prevent fraud and abuse. The
background check may include, but is not limited to, the following:
(a) Onsite inspection prior to enrollment.
(b) Review of business records.
(c) Data searches.
SEC. 18.
SEC. 20. Section 14043.61 is added to the Welfare and
Institutions Code, to read:
14043.61. (a) A provider shall be subject to suspension if claims
for payment are submitted under any provider number used by the
provider to obtain reimbursement from the Medi-Cal program for the
services, goods, supplies, or merchandise provided, directly or
indirectly, to a Medi-Cal beneficiary, by an individual or
entity, including a billing agent, as defined in Section 14040.1,
that has been previously suspended, individual or
entity that is suspended, excluded, or otherwise made
ineligible ineligible because of a sanction to
receive, directly or indirectly, reimbursement from the Medi-Cal
program and the individual or entity has previously been
is listed on either the Suspended and Ineligible
Provider List, published by the department, to identify suspended
and otherwise ineligible providers, or any list published by the
federal Office of Inspector General regarding the suspension or
exclusion of individuals or entities from the federal Medicare and
medicaid programs, to identify suspended, excluded, or otherwise
ineligible providers.
(b) Notwithstanding Section 100171 of the Health and Safety Code,
the imposition of the sanction provided for in subdivision (a) shall
be appealable in accordance with Section 14043.65.
SEC. 19.
SEC. 21. Section 14043.62 is added to the Welfare and
Institutions Code, to read:
14043.62. (a) The department shall deactivate, immediately and
without prior notice, the provider numbers used by a provider to
obtain reimbursement from the Medi-Cal program when warrants or
documents mailed to a provider's mailing address or its pay to
address, if any, or its service or business address, are returned by
the United States Postal Service as not deliverable or when a
provider has not submitted a claim for reimbursement from the
Medi-Cal program for one year. Prior to taking this action the
department shall attempt use due diligence in
attempting to contact the provider at its last known telephone
number and ascertain if the return by the United States Postal
Service is by mistake or shall use due diligence in attempting
to contact the provider by telephone or in writing to ascertain
whether the provider wishes to continue to participate in the
Medi-Cal program . If deactivation pursuant to this section
occurs, the provider shall meet the requirements for reapplication as
specified in this article or the regulations adopted thereunder.
(b) For purposes of this section:
(1) "Mailing address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive general program
correspondence.
(2) "Pay to address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive warrants.
(3) "Service or business address" means the address that the
provider has identified to the department in its application for
enrollment as the address at which the provider will provide services
to program beneficiaries.
SEC. 20.
SEC. 22. Section 14043.65 of the Welfare and Institutions
Code is amended to read:
14043.65. (a) Notwithstanding any other provision of law, any
applicant whose application for enrollment as a provider or whose
certification is denied; or any provider who is denied continued
enrollment or certification, who has been temporarily suspended, who
has had payments withheld, who has had one or more provider numbers
used to obtain reimbursement from the Medi-Cal program deactivated
pursuant to this article or Section 14107.11, or who has had a civil
penalty imposed pursuant to Section 14123.25; or any billing agent,
as defined in Section 14040, when the billing agent's registration or
continued registration has been denied, suspended, or revoked,
pursuant to subdivision (c) of Section 14040.5, may appeal this
action by submitting a written appeal, including any supporting
evidence, to the director or the director's designee. Where the
appeal is of a withholding of payment pursuant to Section 14107.11,
the appeal to the director or the director's designee shall be
limited to the issue of the reliability of the information
or evidence supporting the withhold and shall not encompass
fraud or abuse. The appeal procedure shall not include a formal
administrative hearing under the Administrative Procedure Act and
shall not result in reactivation of any deactivated provider numbers
during appeal. An applicant or provider that files an appeal
pursuant to this section shall submit the written appeal along with
all pertinent documents and all other relevant evidence to the
director or to the director's designee within 60 days of the date of
notification of the department's action. The director or the
director's designee shall review all of the relevant materials
submitted and shall issue a decision within 90 days of the receipt of
the appeal. The decision may provide that the action taken should
be upheld, continued, or reversed, in whole or in part. The decision
of the director or the director's designee shall be final. Any
further appeal shall be required to be filed in accordance with
Section 1085 of the Code of Civil Procedure.
(b) No applicant whose application for enrollment, as a provider,
has been denied pursuant to Section 14043.2, 14043.36, or 14043.4 may
reapply for a period of three years from the date the application is
denied or from the date of final action by the director or
the director's designee under this section if the denial is appealed.
. Where the provider has appealed the denial, the
three-year period shall commence upon the date of final action by the
director or the director's designee.
SEC. 21.
SEC. 23. Section 14043.7 of the Welfare and Institutions
Code is amended to read:
14043.7. (a) The department may make unannounced visits to any
applicant or to any provider for the purpose of determining whether
enrollment, continued enrollment, or certification is warranted, or
as necessary for the administration of the Medi-Cal program. At the
time of the visit, the applicant or provider shall be required to
demonstrate an established place of business appropriate and adequate
for the services billed or claimed to the Medi-Cal program, as
relevant to his or her scope of practice, as indicated by, but not
limited to, the following:
(1) Being open and available to the general public.
(2) Having regularly established and posted business hours.
(3) Having adequate supplies in stock on the premises.
(4) Meeting all local laws and ordinances regarding business
licensing and operations.
(5) Having the necessary equipment and facilities to carry out
day-to-day business for his or her practice.
(b) An unannounced visit pursuant to subdivision (a) shall be
prohibited with respect to clinics licensed under Section 1204 of the
Health and Safety Code, clinics exempt from licensure under Section
1206 of the Health and Safety Code, health facilities licensed under
Chapter 2 (commencing with Section 1250) of Division 2 of the Health
and Safety Code, and natural persons licensed or certified under
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, unless the department has reason to believe that the
provider will defraud or abuse the Medi-Cal program or lacks the
organizational or administrative capacity to provide services under
the program.
(c) Failure to remediate significant discrepancies in
information provided to the department or by
the provider or significant discrepancies that are discovered
as a result of an announced or unannounced visit to a provider ,
for purposes of enrollment, continued enrollment, or certification
pursuant to subdivision (a) shall make the provider subject to
temporary suspension from the Medi-Cal program, which shall include
temporary deactivation of all provider numbers used by the provider
to obtain reimbursement from the Medi-Cal program. The director
shall notify in writing the provider of the temporary
suspension and deactivation of provider numbers, and the
effective date thereof which shall take effect 15 days
from the date of the notification . Notwithstanding Section
100171 of the Health and Safety Code, proceedings after the
imposition of sanctions in this paragraph shall be in accordance with
Section 14043.65.
SEC. 22.
SEC. 24. Section 14043.75 of the Welfare and Institutions
Code is amended to read:
14043.75. The director may, in consultation with interested
parties, by regulation, adopt, readopt, repeal, or amend
additional measures to prevent or curtail fraud and abuse.
Regulations adopted, readopted, repealed, or amended pursuant to this
section shall be deemed emergency regulations in accordance with the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
These emergency regulations shall be deemed necessary for the
immediate preservation of the public peace, health and safety, or
general welfare. Emergency regulations adopted, amended, or repealed
pursuant to this section shall be exempt from review by the Office of
Administrative Law. The emergency regulations authorized by this
section shall be submitted to the Office of Administrative Law for
filing with the Secretary of State and publication in the California
Code of Regulations.
SEC. 23.
SEC. 25. Section 14100.75 of the Welfare and Institutions
Code is amended to read:
14100.75. (a) (1) Each provider and each applicant, as defined in
Section 14043.1, when applying for enrollment and continued
enrollment, shall provide, to the department, a bond, or other
security satisfactory to the department, of an amount determined by
the department, pursuant to regulations adopted by the department.
(2) The department, in determining the amount of bond or security
required by paragraph (1), shall base the determination on the level
of estimated billings, and shall not be less than twenty-five
thousand dollars ($25,000).
(b) (1) After three years of continuous operation as a provider, a
Medi-Cal provider may apply to the department for an exemption from
the requirements of subdivision (a).
(2) The department shall adopt regulations establishing conditions
for the approval or denial of applications for exemption pursuant to
paragraph (1).
(c) The department shall establish a mechanism to track rates of
participation among providers who are subject to the requirement of
subdivision (a) to determine if the requirement is a deterrent to
Medi-Cal program participation among provider applicants.
(d) Subdivisions (a) and (b) do shall
not apply to natural persons licensed or certified pursuant to
Division 2 (commencing with Section 500) of the Business and
Professions Code, the Osteopathic Initiative Act, or the Chiropractic
Initiative Act, or to any clinic licensed pursuant to subdivision
(a) of Section 1204 of the Health and Safety Code, or exempt
from licensure under subdivision (c) of Section 1206 of the Health
and Safety Code, to any health facility licensed under Chapter
2 (commencing with Section 1250) of Division 2 of the Health and
Safety Code, or to any provider that is operated by a city, county,
school district, county office of education, or state special school
, or any professional corporation practicing pursuant to the
Moscone-Knox Professional Corporation Act provided for pursuant to
Part 4 (commencing with Section 13400) of Division 3 of Title 1 of
the Corporations Code .
(e) Nothing in this section shall relieve an applicant or provider
of durable medical equipment or home health agency services from
complying with subdivisions (a) and (b) of Sections 14100.8 and
14100.9, as applicable.
SEC. 24.
SEC. 26. Section 14107 of the Welfare and Institutions Code
is amended to read:
14107. (a) (1) Any person, including any applicant or provider as
defined in Section 14043.1, or billing agent, as defined in Section
14040.1, who engages in any of the activities identified in
subdivision (b) is punishable by imprisonment not longer than 10
years, or by fine not exceeding three times the amount of the fraud
or improper reimbursement, or by both this fine and imprisonment.
(2) If the activity results in serious bodily injury to any
person, or bodily injury to a person under 18 years of age, or is a
threat to the public health, the person shall be fined in accordance
with paragraph (1) or imprisoned in the state prison for not more
than 20 years, or both. If the activity results in death, the person
shall be fined in accordance with paragraph (1), or imprisoned in
the state prison for any term of years or for life, or both.
(3) The length of imprisonment under this section shall be
determined based on the sentencing guidelines used by the federal
government for false or fraudulent claims.
(b) (1) A person, with intent to defraud, presents for allowance
or payment any false or fraudulent claim for furnishing services or
merchandise under this chapter or Chapter 8 (commencing with Section
14200).
(2) A person knowingly submits false information for the purpose
of obtaining greater compensation than that to which he or she is
legally entitled for furnishing services or merchandise under this
chapter or Chapter 8 (commencing with Section 14200).
(3) A person knowingly submits false information for the purpose
of obtaining authorization for furnishing services or merchandise
under this chapter or Chapter 8 (commencing with Section 14200).
(4) A person knowingly and willfully executes, or attempts to
execute, a scheme or artifice to do either of the following:
(A) Defraud the Medi-Cal program or any other health care program
administered by the department or its agents or contractors.
(B) Obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property owned by,
or under the custody or control of, the Medi-Cal program or any other
health care program administered by the department or its agents or
contractors, in connection with the delivery of or payment for health
care benefits, services, goods, supplies, or merchandise.
(c) For purposes of this section, the following definitions apply:
(1) "Serious bodily injury" means bodily injury that involves any
of the following:
(A) A substantial risk of death.
(B) Extreme physical pain.
(C) Protracted and obvious disfigurement.
(D) Protracted loss or impairment of the function of a bodily
member, organ, or mental faculty.
(2) "Bodily injury" means any of the following:
(A) A cut, abrasion, bruise, burn, or disfigurement.
(B) Physical pain.
(C) Illness.
(D) Impairment of the function of a bodily member, organ, or
mental faculty, no matter how temporary.
(E) Any other injury to the body, no matter how temporary.
(d) (1) Any of the following property of a person, including any
applicant or provider as defined in Section 14043.1, who has engaged
in any of the activities subject to fine or imprisonment under
subdivision (a), shall be subject to the forfeiture provisions of
subdivision (e):
(A) Any property, real or personal, involved in a transaction or
attempted transaction in violation of this chapter or Chapter 8
(commencing with Section 14200), or any health care program
administered by the department, its agents or contractors, or any
property traceable to that property.
(B) Any property, real or personal, that constitutes, is derived
from, or is traceable to, any proceeds obtained directly or
indirectly, from a violation of this chapter or Chapter 8 (commencing
with Section 14200), or any health care program administered by the
department or its agents or contractors.
(2) Property subject to forfeiture under this section includes,
but is not limited to, real property, including things growing on,
affixed to, and found in land, and personal property, including
tangible and intangible personal property, including rights,
privileges, interests, claims, and securities.
(e) All right, title, and interest in the property described in
subdivision (d), shall vest in the state upon the commission of the
act giving rise to forfeiture under this section. Any such property
that is subsequently transferred to another person shall be subject
to forfeiture, unless the transferee establishes in a hearing that he
or she is a bona fide purchaser for value of the property, who at
the time of purchase was reasonably without cause to believe that the
property was subject to forfeiture under this section.
(f) Upon application of the state, the court may enter a
restraining order or injunction, require the execution of a
satisfactory performance bond, or take any other action to preserve
the availability of property described in subdivision (d) for
forfeiture under this section. Upon the filing of information
charging a violation of this chapter or Chapter 8 (commencing with
Section 14200), or any health care program administered by the
department or its agents or contractors and alleging that the
property with respect to which the order is sought would, in the
event of a conviction, be subject to forfeiture under this section.
Prior to the filing of this information, if, after notice to persons
appearing to have an interest in the property and opportunity for a
hearing, the court determines that there is substantial probability
that the state will prevail on the issue of forfeiture and that
failure to enter the order will result in the property being
destroyed, removed from the jurisdiction of the court, or otherwise
made unavailable for forfeiture, and the need to preserve the
availability of the property through the entry of the requested order
outweighs the hardship on any party against whom the order is to be
entered.
(g) A temporary restraining order under this section may be
entered upon application of the state without notice or opportunity
for a hearing when information has not yet been filed with respect to
the property, if the state demonstrates that there is probable cause
to believe that the property with respect to which the order is
sought would, in the event of conviction or if the person enters into
a settlement in a civil or criminal proceeding, be subject to
forfeiture under this section and that provision of notice will
jeopardize the availability of the property for forfeiture. The
temporary order shall expire not more than 10 days after the date on
which it is entered, unless extended for good cause shown or unless
the party against whom it is entered consents to an extension for a
longer period. A hearing requested concerning an order entered under
this subdivision shall be held at the earliest possible time, and
prior to the expiration of the temporary order. The court may
receive and consider, at a hearing held pursuant to this subdivision,
information and evidence that would be inadmissible under the
Evidence Code.
(h) Upon conviction of a person for engaging in the activities
subject to fine or imprisonment under subdivision (a), or if the
person has entered into a settlement in a civil or criminal
proceeding alleging fraud or abuse in the Medi-Cal program or in any
other health care program administered by the department or its
agents or contractors, the court shall enter a judgment of forfeiture
of the property to the state and shall authorize the Attorney
General to seize all property ordered forfeited upon such terms and
conditions as the court shall deem proper. Following the entry of an
order declaring the property forfeited, the court may, upon
application of the state, enter appropriate restraining orders or
injunctions, require the execution of satisfactory performance bonds,
appoint receivers, conservators, appraisers, accountants, or
trustees, or take any other action to protect the interest of the
state in the property ordered forfeited. Any income accruing to, or
derived from, an enterprise or an interest in an enterprise that has
been ordered forfeited under this section may be used to offset
ordinary and necessary expenses to the enterprise, as required by
law, or as necessary to protect the interests of the state or third
parties.
(i) Following the seizure of property ordered forfeited under this
section, the Attorney General shall direct the disposition of the
property by sale or any other commercially feasible means, making due
provision for the rights of any innocent person. Any property right
or interest not exercisable by, or transferable for value to, the
state, shall expire and shall not revert to the provider, nor shall
the provider or any person acting in concert with or on behalf of the
provider be eligible to purchase forfeited property at any sale held
by the state. Upon application of a person, other than the provider
or a person acting in concert with or on behalf of the provider, the
court, may restrain or stay the sale or disposition of the property
pending the conclusion of any appeal of the case giving rise to the
forfeiture, if the applicant demonstrates that proceeding with the
sale or disposition of the property will result in irreparable
injury, harm, or loss to him or her.
(j) If the Attorney General convenes a state grand jury related to
health care fraud or abuse, the grand jury may investigate and
indict for any of the activities subject to fine, imprisonment, or
asset forfeiture under this section on a statewide basis.
(k) The enforcement remedies provided under this section are not
exclusive and shall not preclude the use of any other criminal or
civil remedy.
SEC. 25.
SEC. 27. Section 14107.11 of the Welfare and Institutions
Code is amended to read:
14107.11. (a) Upon receipt of reliable information or
evidence, including evidence that would be inadmissible under the
Evidence admissible under the administrative
adjudication provisions of Chapter 5 (commencing with Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code, of
fraud or willful misrepresentation by a provider as defined in
Section 14043.1, under the Medi-Cal program or the commencement of a
suspension under Section 14123, the department may do any of the
following:
(1) Collect any Medi-Cal program overpayment identified through an
audit or examination, or any portion thereof from any provider.
Notwithstanding Section 100171 of the Health and Safety Code, a
provider may appeal the collection of overpayments under this section
pursuant to procedures established in Article 5.3 (commencing with
Section 14170). Overpayments collected under this section shall not
be returned to the provider during the pendency of any appeal and may
be offset to satisfy audit or appeal findings if the findings are
against the provider. Overpayments will be returned to a provider
with interest if findings are in favor of the provider.
(2) Withhold payment for any goods, services, supplies, or
merchandise, or any portion thereof. The department shall notify the
provider within five days of any withholding of payment under this
section. The notice shall do all of the following:
(A) State that payments are being withheld in accordance with this
subdivision and that the withholding is for a temporary period and
will not continue after it is determined that there is
insufficient the evidence of fraud or willful
misrepresentation is insufficient or when legal
proceedings relating to the alleged fraud or willful
misrepresentation are complete.
(B) Cite the circumstances under which the withholding of the
payments will be terminated.
(C) Specify, when appropriate, the type or types of claims for
which payment is being withheld.
(D) Inform the provider of the right to submit written
information or evidence, including evidence that would be
inadmissible under the Evidence Code, for evidence
that would be admissible under the administrative adjudication
provisions of Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code, for consideration
by the department.
(3) Notwithstanding Section 100171 of the Health and Safety Code,
a provider may appeal a withholding of payment pursuant to Section
14043.65. Payments withheld under this section shall not be returned
to the provider during the pendency of any appeal and may be offset
to satisfy audit or appeal findings.
(b) The director may , in consultation with interested
parties, adopt regulations to implement this section as
necessary. These regulations may be adopted as emergency regulations
in accordance with the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) Part 1 of Division 3 of Title 2 of
the Government Code) and the adoption of the regulations shall be
deemed to be an emergency and necessary for the immediate
preservation of the public peace, health and safety, or general
welfare. The director shall transmit these emergency regulations
directly to the Secretary of State for filing and the regulations
shall become effective immediately upon filing. Upon completion of
the formal regulation adoption
process and prior to the expiration of the 120-day duration
period of emergency regulations, the director shall transmit directly
to the Secretary of State the adopted regulations, the rulemaking
file, and the certification of compliance as required by subdivision
(e) of Section 11346.1 of the Government Code.
(c) For purposes of this section, "provider" means any individual,
partnership, group, association, corporation, institution, or
entity, and the officers, directors, employees, or agents thereof,
that provide services, goods, supplies, or merchandise, directly or
indirectly, to a Medi-Cal beneficiary, and that has been enrolled in
the Medi-Cal program.
SEC. 26. Section 14115.5 of the Welfare and Institutions Code is
amended to read:
14115.5. (a) Moneys payable or rights existing under this chapter
shall be subject to any claim, lien or offset of the State of
California, and any claim of the United States of America made
pursuant to federal statute, but shall not otherwise be subject to
enforcement of a money judgment or other legal process, and no
transfer or assignment, at law or in equity, of any right of a
provider of health care to any payment shall be enforceable against
the state, a fiscal intermediary or carrier.
(b) If a provider, as defined in Section 14043.1, is under any
investigation for fraud or abuse by any state, local, or federal
government agency, the director may withhold the reimbursement of
funds due and payable to that provider from the Medi-Cal program or
any other health care program administered by the department or its
agents or contractors, as assets pending the outcome of the
investigation of fraud or abuse. The withholding of payments
authorized by this subdivision shall not be subject to Section
14107.11 and, notwithstanding Section 100171 of the Health and Safety
Code or any other provision of law, shall not be subject to appeal
or hearing.
SEC. 27.
SEC. 28. Section 14123.25 is added to the Welfare and
Institutions Code, to read:
14123.25. (a) In lieu of, or in addition to, the imposition of
any other sanction available to it, including the sanctions and
penalties authorized under Section 14123.2 or 14171.6, and as the
"single state agency" for California vested with authority to
administer the Medi-Cal program, the department shall exercise the
authority granted to it in Section 1002.2 of Title 42 of the Code of
Federal Regulations, and may also impose the mandatory and permissive
exclusions identified in Section 1128 of the federal Social Security
Act (42 U.S.C. Sec. 1320a-7), and its implementing regulations, and
impose civil penalties identified in Section 1128A of the federal
Social Security Act (42 U.S.C. Sec. 1320a-7a), and its implementing
regulations, against applicants and providers, as defined in Section
14043.1 or against billing agents, as defined in Section 14040.1.
The department may also terminate, or refuse to enter into, a
provider agreement authorized under Section 14043.2 with an applicant
or provider, as defined in Section 14043.1, upon the grounds
specified in Section 1866(b)(2) of the federal Social Security Act
(42 U.S.C. Sec. 1395cc(b)(2). Notwithstanding Section 100171 of the
Health and Safety Code or any other provision of law, any appeal by
an applicant, provider, or billing agent of the imposition of a civil
penalty, exclusion, or other sanction pursuant to this subdivision
shall be in accordance with Section 14043.65, except that where the
action is based upon conviction for any crime involving fraud or
abuse of the Medi-Cal, medicaid, or Medicare programs, or exclusion
by the federal government from the medicaid or Medicare programs the
action shall be automatic and not subject to appeal or hearing.
(b) In addition, the department may impose the intermediate
sanctions identified in Section 1846 of the Social Security Act (42
U.S.C. Sec. 1395w-2), and its implementing regulations, against any
provider that is a clinical laboratory, as defined in Section 1206 of
the Business and Professions Code. The imposition and appeal of
this intermediate sanction shall be in accordance with Article 8
(commencing with Section 1065) of Chapter 2 of Division 1 of Title 17
of the California Code of Regulations.
SEC. 28.
SEC. 29. Section 14124.1 of the Welfare and Institutions
Code is amended to read:
14124.1. Each provider, as defined in Section 14043.1, of health
care services rendered under the Medi-Cal program or any other health
care program administered by the department or its agents or
contractors, shall keep and maintain records of each such service
rendered, the beneficiary or person to whom rendered, the date the
service was rendered, and such additional information as the
department may by regulation require. Records herein required to be
kept and maintained shall be retained by the provider for a period of
three years from the date the service was rendered.
SEC. 29.
SEC. 30. Section 14124.2 of the Welfare and Institutions
Code is amended to read:
14124.2. (a) (1) During normal working hours, the department may
make any examination of the books and records of, and may visit and
inspect the premises or facilities of, those identified in paragraphs
(2) and (3), that it may deem necessary to carry out the provisions
of this chapter or Chapter 8 (commencing with Section 14200) and
regulations adopted thereunder, or the law under which the department
or its agents or contractors administer any other health care
program.
(2) Any applicant or provider, as defined in Section 14043.1,
pertaining to services, goods, supplies, or merchandise rendered or
supplied, directly or indirectly, or to be rendered or supplied,
directly or indirectly, to any beneficiary under this chapter or
Chapter 8 (commencing with Section 14200).
(3) Any person or entity that provides services, goods, supplies,
or merchandise, directly or indirectly, under, or seeks reimbursement
from, any other health care program administered by the department
or its agents or contractors.
(b) (1) Applicants, providers, or others receiving or seeking
reimbursement under the Medi-Cal program or other health care
programs administered by the department or its agents or contractors
shall provide a reasonable amount of assistance, and
furnish information or copies of records and documentation
upon request by the department. Unannounced visits to request this
information shall be reserved for those exceptional situations where
arrangement of an appointment beforehand is clearly not possible or
is clearly inappropriate to the nature of the intended visit. Only
those related books and records of each service rendered, the
beneficiary to whom rendered, the date, and additional information as
the department may by regulation require shall be subject to the
requirement of furnishing copies. This information may include
records to support and document the recipient's eligibility for
services and, to the extent necessary, records to provide proof of
the quantity and receipt of the services, and that the services were
provided by proper personnel. Providers and others subject to this
section shall be reimbursed for reasonable photocopying-related
expenses as determined by the department. Failure to comply with the
department's authority under requests for
information or records made pursuant to this section shall be
grounds for immediate suspension of the provider or others subject to
this section under subdivision (b) of Section 14123 or under the
other health care programs administered by the department or its
agents or contractors.
(2) Any copies furnished pursuant to this section shall be used
only to investigate and pursue criminal, civil, or administrative
sanctions for Medi-Cal fraud or abuse, including the provision of
dental services that are below or less than the standard of
acceptable quality as prescribed by subdivision (f) of Section 14123,
or fraud or abuse under any other health care program administered
by the department or its agents or contractors and the copies shall
be destroyed when that purpose has been satisfied. This section
shall not be construed to prohibit the referral of investigative
findings, including copies of books and records, to the appropriate
federal, state, or local licensing, certifying, regulatory, or
prosecutorial authority.
(c) For purposes of this section and Section 14124.1, "provider"
shall be defined as follows:
(1) "Provider" shall have the meaning contained in Section
14043.1.
(2) "Provider" shall also include any person or entity under
contract with the provider, as defined in paragraph (1), to assist in
the application process or eligibility determination.
SEC. 30.
SEC. 31. Section 14170 of the Welfare and Institutions Code
is amended to read:
14170. (a) (1) Amounts paid for services provided to Medi-Cal
beneficiaries shall be audited by the department in the manner and
form prescribed by the department. The department shall maintain
adequate controls to ensure responsibility and accountability for the
expenditure of federal and state funds. Cost reports and other data
submitted by providers to a state agency for the purpose of
determining reasonable costs for services or establishing rates of
payment shall be considered true and correct unless audited or
reviewed by the department within 18 months after July 1, 1969, the
close of the period covered by the report, or after the date of
submission of the original or amended report by the provider,
whichever is later. Moreover the cost reports and other data for
cost reporting periods beginning on January 1, 1972
1998 , and thereafter shall be considered true
and correct unless audited or reviewed within three years after the
close of the period covered by the report, or after the date of
submission of the original or amended report by the provider,
whichever is later.
(2) (A) Nothing in this section shall be construed to limit the
correction of cost reports or rates of payment when inaccuracies are
determined to be the result of intent to defraud, or when a delay in
the completion of an audit is the result of willful acts by the
provider or inability to reach agreement on the terms of final
settlement.
(B) Nothing in this section shall be construed to preclude the
department from further review of cost reports and other data for
cost reporting periods beginning on January 1, 1972, after the
three-year period contained in paragraph (1) of subdivision (a),
where after that time the three-year period
the department discovers information not customarily contained
in these cost reports and other data for the fiscal periods in
question that indicates the provider may have engaged in
practices that have resulted in overreimbursement.
(3) Notwithstanding any other provision of law, nursing facilities
and all categories of intermediate care facilities for the
developmentally disabled which have received and are receiving funds
for salary increases pursuant to Sections 14110.6 and 14110.7 shall
maintain payroll and personnel records for examination by auditors
from the department and the Labor Commissioner beginning March 1985
until the records have been audited, or until December 31, 1992,
whichever occurs first.
(b) Notwithstanding any other provision of law, costs reported for
reimbursement purposes relative to Medi-Cal beneficiaries in nursing
facilities that are distinct parts of acute care hospitals shall be
audited by the department at least annually. The audits may be
performed on a sample basis and, when the sample is statistically
reliable, as determined by the department, may be used for
ratesetting purposes.
SEC. 31.
SEC. 32. Section 14170.8 of the Welfare and Institutions
Code is amended to read:
14170.8. (a) Notwithstanding any other provision of law, every
primary supplier of pharmaceuticals, medical equipment, or supplies
shall maintain accounting records to demonstrate the manufacture,
assembly, purchase, or acquisition and subsequent sale, of any
pharmaceuticals, or medical equipment, or supplies to providers, as
defined in Section 14043.1. Accounting records shall include, but not
be limited to, inventory records, general ledgers, financial
statements, purchase and sales journals and invoices, prescription
records, bills of lading, and delivery records. For purposes of this
section the term "primary suppliers" shall mean any manufacturer,
principal labeler, assembler, wholesaler, or retailer.
(b) Accounting records maintained pursuant to subdivision (a)
shall be subject to audit or examination by the department or its
agents. This audit or examination may include, but is not limited
to, verification of the costs what was
claimed by providers the provider .
These accounting records shall be maintained for three years from the
date of sale or the date of service.
(c) This section shall not apply to any clinic licensed pursuant
to subdivision (a) of Section 1204 of the Health and Safety Code or
to any manufacturer of prescription drugs registered with the federal
Food and Drug Administration in accordance with Section 510 of the
Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 360).
SEC. 32.
SEC. 33. Section 14171.6 of the Welfare and Institutions
Code is amended to read:
14171.6. (a) (1) Any provider, as defined in paragraph (3), that
obtains reimbursement under this chapter to which it is not entitled
shall be subject to interest charges or penalties as specified in
this section.
(2) When it is established upon audit that the provider has not
received reimbursement to which the provider is entitled, the
department shall pay the provider interest assessed at the rate, and
in the manner, specified in subdivision (g) of Section 14171.
(3) For purposes of this section, "provider" means any provider,
as defined in Section 14043.1.
(b) When it is established upon audit that the provider has
claimed payments under this chapter to which it is not entitled, the
provider shall pay, in addition to the amount improperly received,
interest at the rate specified by subdivision (h) of Section 14171.
(c) (1) When it is established upon audit that the provider
claimed payments related to services or costs that the department had
previously notified the provider in an audit report that the costs
or services were not reimbursable, the provider shall pay, in
addition to the amount improperly claimed, a penalty of 10 percent of
the amount improperly claimed after receipt of the notice, plus the
cost of the audit.
(2) In addition to the penalty and costs specified by paragraph
(1), interest shall be assessed at the rate specified in subdivision
(h) of Section 14171.
(3) Providers that wish to preserve appeal rights or to challenge
the department's positions regarding appeal issues may claim the
costs or services and not be reimbursed therefor if they are
identified and presented separately on the cost report.
(d) (1) When it is established that the provider fraudulently
claimed and received payments under this chapter, the provider shall
pay, in addition to that portion of the claim that was improperly
claimed, a penalty of 300 percent of the amount improperly claimed,
plus the cost of the audit.
(2) In addition to the penalty and costs specified by paragraph
(1), interest shall be assessed at the rate specified by subdivision
(h) of Section 14171.
(3) For purposes of this subdivision, a fraudulent claim is a
claim upon which the provider has been convicted of fraud upon the
Medi-Cal program.
(e) Nothing in this section shall prevent the imposition of any
other civil or criminal penalties to which the provider may be
liable.
(f) Any appeal to any action taken pursuant to subdivision (b),
(c), or (d) is subject to the administrative appeals process provided
by Section 14171.
(g) As used in this section, "cost of the audit" includes actual
hourly wages, travel, and incidental expenses at rates allowable by
rules adopted by the State Board of Control and applicable overhead
costs that are incurred by employees of the state in administering
this chapter with respect to the performance of audits.
(h) This section shall not apply to any clinic licensed pursuant
to subdivision (a) of Section 1204 of the Health and Safety Code,
clinics exempt from licensure under Section 1206 of the Health and
Safety Code, health facilities licensed under Chapter 2 (commencing
with Section 1250) of Division 2 of the Health and Safety Code, or to
any provider that is operated by a city, county, or school district.
SEC. 33.
SEC. 34. Section 24005 of the Welfare and Institutions Code
is amended to read:
24005. (a) This section shall apply to the Family Planning Access
Care and Treatment Waiver program identified in subdivision (aa) of
Section 14132 and this program.
(b) Only licensed medical personnel with family planning skills,
knowledge, and competency may provide the full range of family
planning medical services covered in this program.
(c) Medi-Cal enrolled providers, as determined by the department,
shall be eligible to provide family planning services under the
program when these services are within their scope of practice and
licensure. Those clinical providers electing to participate in the
program and approved by the department shall provide the full scope
of family planning education, counseling, and medical services
specified for the program, either directly or by referral, consistent
with standards of care issued by the department.
(d) The department shall require providers to enter into clinical
agreements with the department to ensure compliance with standards
and requirements to maintain the fiscal integrity of the program.
Provider applicants, providers, and persons with an ownership or
control interest, as defined in federal medicaid regulations, shall
be required to submit to the department their social security numbers
to the full extent allowed under federal law. All state and federal
statutes and regulations pertaining to the audit or examination of
Medi-Cal providers shall apply to this program.
(e) Clinical provider agreements shall be signed by the provider
under penalty of perjury. The department may screen applicants at
the initial application and at any reapplication pursuant to
requirements developed by the department to determine provider
suitability for the program.
(f) The department may complete a background check on clinical
provider applicants for the purpose of verifying the accuracy of
information provided to the department for purposes of enrolling in
the program and in order to prevent fraud and abuse. The background
check may include, but not be limited to, unannounced onsite
inspection prior to enrollment, review of business records, and data
searches. If discrepancies are found to exist during the
preenrollment period, the department may conduct additional
inspections prior to enrollment. Failure to remediate
significant discrepancies as prescribed by the director may
result in denial of the application for enrollment. Providers that
do not provide services consistent with the standards of care or that
do not comply with the department's rules related to the fiscal
integrity of the program may be disenrolled as a provider from the
program at the sole discretion of the department.
(g) The department shall not enroll any applicant who, within the
previous 10 years:
(1) Has been convicted of any felony or misdemeanor that involves
fraud or abuse in any government program, that relates to neglect or
abuse of a patient in connection with the delivery of a health care
item or service, or that is in connection with the interference with,
or obstruction of, any investigation into health care related fraud
or abuse.
(2) Has been found liable for fraud or abuse in any civil
proceeding, or that has entered into a settlement in a civil
or criminal proceeding alleging fraud or abuse lieu
of conviction for fraud or abuse in any government program.
(h) In addition, the department may deny enrollment to any
applicant that, at the time of application, is under investigation by
the department or any local, state, or federal government
law enforcement agency for fraud or abuse. Except where
there has been a settlement, the department shall not deny enrollment
to an otherwise qualified applicant whose felony or misdemeanor
charges did not result in a conviction solely on the basis of the
prior charges. If it is discovered that a provider is under
investigation by the department or any local, state, or
federal government law enforcement agency for fraud or
abuse, that provider shall be subject to immediate disenrollment from
the program.
(i) (1) The program shall disenroll as a program provider any
individual who, or any entity that, has a license, certificate, or
other approval to provide health care, which is revoked or suspended
by a federal, California, or other state's licensing, certification,
or other approval authority, has otherwise lost that license,
certificate, or approval, or has surrendered that license,
certificate, or approval while a disciplinary hearing on the license,
certificate, or approval was pending. The disenrollment shall be
effective on the date the license, certificate, or approval is
revoked, lost, or surrendered.
(2) A provider shall be subject to disenrollment if claims for
payment are submitted under any provider number used by the provider
to obtain reimbursement from the program for the services, goods,
supplies, or merchandise provided, directly or indirectly, to a
program beneficiary, by an individual or entity that has been
previously suspended, excluded, or otherwise made ineligible to
receive, directly or indirectly, reimbursement from the program or
from the Medi-Cal program and the individual has previously been
listed on either The Suspended and Ineligible Provider List, which is
published by the department, to identify suspended and otherwise
ineligible providers or any list published by the federal Office of
Inspector General regarding the suspension or exclusion of
individuals or entities from the federal Medicare and medicaid
programs, to identify suspended, excluded, or otherwise ineligible
providers.
(3) The department shall deactivate, immediately and without prior
notice, the provider numbers used by a provider to obtain
reimbursement from the program when warrants or documents mailed to a
provider's mailing address, its pay to address, or its service
address, if any, are returned by the United States Postal Service as
not deliverable or when a provider has not submitted a claim for
reimbursement from the program for one year. Prior to taking
this action, the department shall use due diligence in attempting to
contact the provider at its last known telephone number and to
ascertain if the return by the United States Postal Service is by
mistake and shall use due diligence in attempting to contact the
provider by telephone or in writing to ascertain whether the provider
wishes to continue to participate in the Medi-Cal program. If
deactivation pursuant to this section occurs, the provider shall
meet the requirements for reapplication as specified in regulation.
(4) For purposes of this subdivision:
(A) "Mailing address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive general program
correspondence.
(B) "Pay to address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which it wishes to receive warrants.
(C) "Service address" means the address that the provider has
identified to the department in its application for enrollment as the
address at which the provider will provide services to program
beneficiaries.
(j) Subject to Article 4 (commencing with Section 19130) of
Chapter 5 of Division 5 of Title 2 of the Government Code, the
department may enter into contracts to secure consultant services or
information technology including, but not limited to, software, data,
or analytical techniques or methodologies for the purpose of fraud
or abuse detection and prevention. Contracts under this section
shall be exempt from the Public Contract Code.
(k) Enrolled providers shall attend specific orientation approved
by the department in comprehensive family planning services.
Enrolled providers who insert IUDs or contraceptive implants shall
have received prior clinical training specific to these procedures.
(l) Upon receipt of reliable information or evidence,
including evidence that would be inadmissible under the Evidence
evidence that would be admissible under the
administrative adjudication provisions of Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code, of fraud or willful misrepresentation by a provider under
the program or commencement of a suspension under Section 14123, the
department may do any of the following:
(1) Collect any State-Only Family Planning program or Family
Planning Access Care and Treatment Waiver program overpayment
identified through an audit or examination, or any portion thereof
from any provider. Notwithstanding Section 100171 of the Health and
Safety Code, a provider may appeal the collection of overpayments
under this section pursuant to procedures established in Article 5.3
(commencing with Section 14170) of Part 3 of Division 9.
Overpayments collected under this section shall not be returned to
the provider during the pendency of any appeal and may be offset to
satisfy audit or appeal findings, if the findings are against the
provider. Overpayments shall be returned to a provider with interest
if findings are in favor of the provider.
(2) Withhold payment for any goods or services, or any portion
thereof, from any State-Only Family Planning program or Family
Planning Access Care and Treatment Waiver program provider. The
department shall notify the provider within five days of any
withholding of payment under this section. The notice shall do all
of the following:
(A) State that payments are
being withheld in accordance with this paragraph and that the
withholding is for a temporary period and will not continue after it
is determined that there is insufficient information or
evidence, including evidence that would be inadmissible under the
Evidence Code, determined that the evidence of
fraud or willful misrepresentation is insufficient or when
legal proceedings relating to the alleged fraud or willful
misrepresentation are completed.
(B) Cite the circumstances under which the withholding of the
payments will be terminated.
(C) Specify, when appropriate, the type or types of claimed
payments being withheld.
(D) Inform the provider of the right to submit written
information or evidence, including evidence that would be
inadmissible under the Evidence Code, for evidence
that is evidence that would be admissible under the administrative
adjudication provisions of Chapter 5 (commencing with Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code, for
consideration by the department.
(3) Notwithstanding Section 100171 of the Health and Safety Code,
a provider may appeal a withholding of payment under this section
pursuant to Section 14043.65. Payments withheld under this section
shall not be returned to the provider during the pendency of any
appeal and may be offset to satisfy audit or appeal findings.
(m) As used in this section:
(1) "Abuse" means either of the following:
(A) Practices that are inconsistent with sound fiscal or business
practices and result in unnecessary cost to the medicaid program, the
Medicare program, the Medi-Cal program, including the Family
Planning Access Care and Treatment Waiver program, identified in
subdivision (aa) of Section 14132, another state's medicaid program,
or the State-Only Family Planning program, or other health care
programs operated, or financed in whole or in part, by the federal
government or any state or local agency in this state or any other
state.
(B) Practices that are inconsistent with sound medical practices
and result in reimbursement, by any of the programs referred to in
subparagraph (A) or other health care programs operated, or financed
in whole or in part, by the federal government or any state or local
agency in this state or any other state, for services that are
unnecessary or for substandard items or services that fail to meet
professionally recognized standards for health care.
(2) "Fraud" means an intentional deception or misrepresentation
made by a person with the knowledge that the deception could result
in some unauthorized benefit to himself or herself or some other
person. It includes any act that constitutes fraud under applicable
federal or state law.
(3) "Provider" means any individual, partnership, group,
association, corporation, institution, or entity, and the officers,
directors, owners, managing employees, or agents of any partnership,
group, association, corporation, institution, or entity, that
provides services, goods, supplies, or merchandise, directly or
indirectly, to a beneficiary and that has been enrolled in the
program.
(4) "Convicted" means any of the following:
(A) A judgment of conviction has been entered against an
individual or entity by a federal, state, or local court, regardless
of whether there is a post-trial motion or an appeal pending or the
judgment of conviction or other record relating to the criminal
conduct has been expunged or otherwise removed.
(B) A federal, state, or local court has made a finding of guilt
against an individual or entity.
(C) A federal, state, or local court has accepted a plea of guilty
or nolo contendere by an individual or entity.
(D) An individual or entity has entered into participation in a
first offender, deferred adjudication, or other program or
arrangement where judgment of conviction has been withheld.
(5) "Professionally recognized standards of health care" means
statewide or national standards of care, whether in writing or not,
that professional peers of the individual or entity whose provision
of care is an issue, recognize as applying to those peers practicing
or providing care within a state. When the United States Department
of Health and Human Services has declared a treatment modality not to
be safe and effective, practitioners that employ that treatment
modality shall be deemed not to meet professionally recognized
standards of health care. This definition shall not be construed to
mean that all other treatments meet professionally recognized
standards of care.
(6) "Unnecessary or substandard items or services" means those
that are either of the following:
(A) Substantially in excess of the provider's usual charges or
costs for the items or services.
(B) Furnished, or caused to be furnished, to patients, whether or
not covered by Medicare, medicaid, or any of the state health care
programs to which the definitions of applicant and provider apply,
and which are substantially in excess of the patient's needs, or of a
quality that fails to meet professionally recognized standards of
health care. The department's determination that the items or
services furnished were excessive or of unacceptable quality shall be
made on the basis of information, including sanction reports, from
the following sources:
(i) The professional review organization for the area served by
the individual or entity.
(ii) State or local licensing or certification authorities.
(iii) Fiscal agents or contractors, or private insurance
companies.
(iv) State or local professional societies.
(v) Any other sources deemed appropriate by the department.
(7) "Enrolled or enrollment in the program" means authorized under
any and all processes by the department or its agents or contractors
to receive, directly or indirectly, reimbursement for the provision
of services, goods, supplies, or merchandise to a program
beneficiary.
(n) In lieu of, or in addition to, the imposition of any other
sanctions available, including the imposition of a civil penalty
under Sections 14123.2 or 14171.6, the program may impose on
providers any or all of the penalties pursuant to Sections
14107 and Section 14123.25, in accordance with
the provisions of those sections that
section. In addition, program providers shall be subject to the
penalties contained in Section 14107 .
(o) (1) Notwithstanding any other provision of law, every primary
supplier of pharmaceuticals, medical equipment, or supplies shall
maintain accounting records to demonstrate the manufacture, assembly,
purchase, or acquisition and subsequent sale, of any
pharmaceuticals, medical equipment, or supplies, to providers.
Accounting records shall include, but not be limited to, inventory
records, general ledgers, financial statements, purchase and sales
journals, and invoices, prescription records, bills of lading, and
delivery records.
(2) For purposes of this subdivision, the term "primary supplier"
means any manufacturer, principal labeler, assembler, wholesaler, or
retailer.
(3) Accounting records maintained pursuant to paragraph (1) shall
be subject to audit or examination by the department or its agents.
The audit or examination may include, but is not limited to,
verification of the costs claimed by providers
what was claimed by the provider . These accounting
records shall be maintained for three years from the date of sale or
the date of service.
(p) Each provider of health care services rendered to any program
beneficiary shall keep and maintain records of each service rendered,
the beneficiary to whom rendered, the date, and such additional
information as the department may by regulation require. Records
required to be kept and maintained pursuant to this subdivision shall
be retained by the provider for a period of three years from the
date the service was rendered.
(q) A program provider applicant or a program provider shall
furnish information or copies of records and documentation requested
by the department. Failure to comply with the department's request
shall be grounds for denial of the application or automatic
disenrollment of the provider.
(r) A program provider may assign signature authority for
transmission of claims to a billing agent subject to Sections 14040,
14040.1, and 14040.5.
(s) (1) Moneys payable or rights existing under
this division shall be subject to any claim, lien, or offset of the
State of California, and any claim of the United States of America
made pursuant to federal statute, but shall not otherwise be subject
to enforcement of a money judgment or other legal process, and no
transfer or assignment, at law or in equity, of any right of a
provider of health care to any payment shall be enforceable against
the state, a fiscal intermediary, or carrier.
(2) If a provider is under any investigation for fraud or abuse by
any state, local, or federal government agency, the director may
withhold reimbursement of funds due and payable to that provider from
any other program under the administration of the department, as
assets pending the outcome of the investigation of fraud and abuse.
The withholding permitted pursuant to this section shall not be taken
pursuant to Section 14107.11 and, notwithstanding Section 100171 of
the Health and Safety Code or any other provision of law, is not
subject to appeal or hearing.
SEC. 34.
SEC. 35. No reimbursement is required by this act pursuant
to Section 6 of Article XIIIB of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIIIB of the California Constitution.