BILL ANALYSIS
SENATE COMMITTEE ON Public Safety
Senator John Vasconcellos, Chair A
1999-2000 Regular Session B
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AB 1098 (Romero) 8
As Amended August 10, 2000
Hearing date: August 18, 2000
Business & Professions, Penal, and Welfare & Institutions Codes
JM:mc
CLINICAL LABORATORY REGULATIONS AND VIOLATIONS
MEDI-CAL FRAUD PUNISHMENT AND GRAND JURY INVESTIGATIONS
HISTORY
Source: Department of Health Services
Prior Legislation: AB 784 (Romero) - Ch. 993, Sts. 1999
AB 1107 (Cedillo) - Ch. 146, Sts. 1999
AB 1982 (Polanco) - Ch. 735, Sts. 1991
Support: California School Employees Association; California
Primary Care Association; Los Angeles County Board of
Supervisors (and is requesting amendment set out in
Comment #13); State Controller; Attorney General
Opposition:California Chapter of the American Association of
Emergency Physicians (unless amended); California
Medical Billing Association (unless amended)
(Note: Many entities have previously requested amendments to
the bill in prior hearings. Many of these amendments have been
taken. Most entities requesting amendments expressed support
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for the broad outlines of the bill. Remaining issues appear to
concern restrictions and non-criminal penalties related to
Medi-Cal billing practices. At the time of the writing of this
analysis, the Department of Health Services, the bill sponsor,
is still discussing the billing provisions with provider and
billing agent representatives.
Assembly Floor Vote: No longer relevant-the Assembly Floor vote
considered a form of the bill that only broadened a single
Welfare and Institutions Code definition of a Medi-Cal "service
provider." As substantially amended on July 6, 2000 and August
10, 2000, the bill expands definitions of and penalties for
Medi-Cal and related fraud with amendments and new provisions in
the Business and Professions, Penal, and Welfare and
Institutions Codes.)
(NOTE: THIS ANALYSIS REFLECTS AUTHOR'S AMENDMENTS TO BE OFFERED
IN COMMITTEE - SEE COMMENT # 3 REGARDING THE AUTHOR'S AMENDMENT
TO REDUCE THE MAXIMUM FINE FOR UNAUTHORIZED TAKING OF BIOLOGICAL
SAMPLES.)
KEY ISSUES
SHOULD THE PRISON "TRIAD" FOR THE ALTERNATE FELONY-MISDEMEANOR
OF MEDI-CAL FRAUD BE INCREASED FROM 16 MONTHS, 2 YEARS OR 3
YEARS, TO 2, 3 OR 5 YEARS IN THE STATE PRISON?
SHOULD THE MAXIMUM INCARCERATION FOR MISDEMEANOR VIOLATIONS
RELATED TO BLOOD AND BIOLOGICAL SAMPLES, INCLUDING PAYING FOR
SUCH SAMPLES AND UNAUTHORIZED TAKING OF SAMPLES, BE INCREASED
FROM 6 MONTHS TO 1 YEAR IN THE COUNTY JAIL?
SHOULD THE MAXIMUM FINE FOR THE MISDEMEANOR OF PAYING FOR THE
GIVING OF BIOLOGICAL SAMPLES BE SET AT $10,000; AND SHOULD THE
MAXIMUM FINE FOR UNAUTHORIZED TAKING OF BIOLOGICAL SAMPLES BE
SET AT 1,000?
SHOULD A NEW ALTERNATE MISDEMEANOR/FELONY BE ENACTED FOR THE
RECKLESS HANDLING OF BIOLOGICAL SAMPLES THAT SUBJECTS OTHERS TO
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THE LIKELIHOOD OF GREAT BODILY INJURY, WITH A PENALTY OF UP TO
ONE YEAR IN THE COUNTY JAIL OR 16 MONTHS, 2, OR 3 YEARS IN STATE
PRISON AND/OR A MAXIMUM FINE OF $50,000? SHOULD A SECOND OR
SUBSEQUENT CONVICTION BE A STRAIGHT FELONY, WITH A 2, 4 OR
6-YEAR PRISON TRIAD AND/OR A $50,000 FINE?
SHOULD A 4-YEAR ENHANCEMENT BE IMPOSED ON A DEFENDANT'S SENTENCE
FOR EVERY PERSON WHO SUFFERS ACTUAL HARM IN ANY MEDI-CAL FRAUD
SCHEME IN WHICH TWO OR MORE VICTIMS HAVE BEEN SUBJECTED TO GREAT
BODILY INJURY OR SERIOUS BODILY INJURY?
CONTINUED
SHOULD THE ATTORNEY GENERAL BE ALLOWED TO PETITION THE COURT TO
CONVENE A SPECIAL COUNTY GRAND JURY TO INVESTIGATE MEDI-CAL FRAUD?
SHOULD A GRAND JURY INVESTIGATING MEDI-CAL FRAUD IN ONE COUNTY
(COUNTY A) BE ALLOWED TO SHARE INFORMATION WITH THE GRAND JURY IN
ANOTHER COUNTY (COUNTY B) ABOUT CRIMES COMMITTED IN COUNTY B?
SHOULD THE LAW GRANT GREATER AUTHORITY TO THE DEPARTMENT OF HEALTH
SERVICES TO DENY OF MEDI-CAL CLAIMS AND SUSPEND PROVIDER AND BILLING
AGENT REGISTRATION?
SHOULD ADDITIONAL, RELATED PROVISIONS BE ADDED TO LAW?
PURPOSE
The purpose of this bill is to expand penalties for Medi-Cal
fraud, particularly where patients are endangered; to expand the
use of grand juries to investigate Medi-Cal fraud; and to create
new regulations and crimes for clinical laboratory practices.
The Medi-Cal Program
Existing law establishes the California Medical Assistance
Program (Medi-Cal), a program through which the state
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compensates physicians, pharmacies and other medical providers
for giving medical services to indigent persons. (Welf. & Inst.
Code 14000 et seq.)
This bill increases penalties for violations of Medi-Cal rules
and limits by providers of Medi-Cal services and provides
additional restrictions on billing practices.
False Insurance Claims - Private Contracts and Public Benefits
Programs
Existing law defines the crimes of presenting a false insurance
or health care claim and making false statements in support of
such a claim. (Pen. Code 550.)
As illustrated below, the existing penalties in Penal Code
section 550 for presenting false insurance or health care claims
are complex:
? False claims for injury compensation, duplicate or multiple
claims for single incident, staged auto accident injuries,
fraudulent claims for auto theft or damage:
Felony with a prison term of 2, 3, or 5 years, and/or a
fine of up to $50,000. The fine may be double the value
of the fraud where the fraud exceeds $50,000.
? Submitting false claim or making false statements in support
of a false or fraudulent claim for injury or loss:
Misdemeanor with a maximum jail term of 6 months and/or
$1,000 maximum fine, if the value of the claim is no more
than $400 over a 12-month period.
Alternate felony/misdemeanor, with a prison term of
2, 3 or 5 years and/or a fine of up to $50,000 or double
the value of the fraud where the fraud exceeds $50,000,
or imprisonment in the county jail for up to 1 year
and/or a fine of up to $1,000.
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Existing law includes penalties and restrictions for Medi-Cal
patients, which include misdemeanors for giving or loaning
Medi-Cal cards, alternate felony/misdemeanors for selling or
buying Medi-Cal cards, and a felony for perjury in connection
with Medi-Cal eligibility. (Pen. Code 118, 126; Welf. &
Inst. Code 14025, 14026, 14043.25.) It appears that the
perjury provisions for false statements would also apply to
service providers. (Welf. & Inst. Code
14043.25.)
Existing law , Penal Code section 550, includes crimes for making
false claims for health care services that would appear to apply
both to Medi-Cal providers and patients. (See, infra, "Specific
Medi-Cal Offenses" for a summary of Medi-Cal penalties under
existing law for providers and billing agents.)
This bill does not, in the main, change rules and penalties for
improper conduct by Medi-Cal recipients.
Specific Medi-Cal Offenses
Existing law provides that providing kickbacks or bribes related
to Medi-Cal reimbursed services is a standard alternate
felony-misdemeanor on the first conviction (1-year maximum jail
term and/or fine of $1,000); a second or subsequent conviction
is a straight felony (16 month, 2 or 3 year prison term and/or
$10,000 fine). (Welf. & Inst. Code 14107.2.)
Existing law provides that presenting a false and fraudulent
claim for reimbursement for services provided under Medi-Cal is
an alternate felony/misdemeanor, punishable by imprisonment for
up to 1 year in county jail, or 16 months, 2 years, or 3 years
in prison, and/or a fine of up to $5,000. (Welf. & Inst. Code
14107.)
This bill would add to the basic definition of Medi-Cal fraud
the creation of any scheme or artifice to defraud the Medi-Cal
program or similar program and would increase the prison triad
and the available fines for the alternate felony-misdemeanor of
Medi-Cal fraud as follows
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Alternate felony/misdemeanor, with a county jail term of up to
1 year, or a prison term of 2, 3 or 5 years.
Fines for Medi-Cal fraud would be set at three times the
amount of the amount of fraud or loss, in addition to or in
lieu of any imprisonment.
This bill imposes an enhancement for Medi-Cal schemes that cause
or are likely to cause injury to two or more victims, as
follows:
Where a scheme to defraud is committed so as to cause, or be
likely to cause, great bodily injury or serious bodily injury
to two or more persons, a 4-year enhancement shall be imposed
for each person who actually suffers great or serious bodily
injury.
Medical Laboratories
Existing law and regulations governing clinical laboratories
sets out necessary qualification for licensure. Licenses for
clinical laboratory analysts and scientists may be granted to
those who have earned a specified bachelors' or masters' degree,
with additional clinical experience and training. Limited
licenses may be granted to cover emerging fields of laboratory
technology. (Bus. & Prof. Code 1260 et seq.) Additional
restrictions and requirements apply to gynecology related
clinical tests. (Bus. & Prof. Code 1270-1271.)
Existing law provides that unlicensed technicians may perform
laboratory functions such as taking and storing or samples if
these activities are done under the direct supervision of a
physician or a licensed analyst or scientist if other, specified
requirements and conditions are met. These requirements include
high-school diploma, and documented training and skills.
Unlicensed persons may neither analyze specimens nor record
results, although they may make certain test preparations.
(Bus. & Prof. Code 1269.)
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Existing law provides that violation of licensure and related
employment rules is a misdemeanor, punishable by up to 6 months
in the county jail and/or a maximum fine of $1,000. (Bus. &
Prof. Code 1280-1291, 1287 et seq.)
Existing law includes the California adoption of "CLIA," the
federal Clinical Laboratory Improvement Amendments of 1988 (42
U.S.C. Sec. 263a; P.L. 100-578). Regulations adopted by the
federal government must be evaluated by the California
Department of Health Services and adopted if more stringent than
California rules. Federal regulations that are less stringent
than California regulations need not be adopted. (Bus. & Prof.
Code 1202.5 and 1208.)
Existing law defines qualifications and regulations for
operation of a clinical laboratory that performs at least
moderately complex tests, and provides for penalties for
violations of regulations. (Bus. & Prof. Code 1265.)
This bill would increase license conditions and provide for
easier license revocation for clinical laboratory operators.
This bill would provide that where one person pays or solicits
another person for human blood or a specimen for purposes of
laboratory testing, it is misdemeanor on the first conviction,
punishable by imprisonment up to 1 year in the county jail
and/or a fine of up to $10,000.
This bill would provide that any person who performs
venipuncture, arterial puncture or skin puncture, unless
specifically licensed or authorized to do so by law, is guilty
upon a first conviction of a misdemeanor, punishable by
imprisonment in the county jail for up to 1 year and/or a fine
of up to $1,000. (The fine provision is the subject of an
amendment to be offered by the author in Committee - see Comment
#3, below.)
This bill would provide that where the defendant's "willful or
wanton disregard" for another person in the improper handling,
collection, etc., of biological specimens, clinical tests or
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examination results causes the victim's person to suffer, or be
exposed to a substantial risk of, great bodily injury, the
defendant is guilty of an alternate felony misdemeanor,
punishable by imprisonment in the county jail for up to 1 year,
or in the state prison for 16 months, 2 years, or 3 years,
and/or a fine of up to $50,000. A second or subsequent
conviction for this offense would be punishable as a felony with
a prison term of 2, 4, or 6 years and/or a fine of up to
$50,000.
This bill would authorize additional sanctions against
applicants, providers and billing agents as described in the
applicable federal regulations, including termination of
provider agreements.
This bill includes the exemptions in existing law for federal
laboratories, public health laboratories, forensic laboratories,
research laboratories and laboratories certified by the National
Institute on Drug Abuse for crime related testing. The bill
also clarifies rules for home testing of blood glucose and other
home tests approved by the (U. S.) Food and Drug Administration.
Asset Forfeiture and Related Provisions
Existing law provides that after conviction of the underlying
offense, a person may be subject to asset forfeiture if the
person has engaged in a pattern of criminal profiteering
activity. (Pen. Code 186.2.)
Existing law defines "criminal profiteering activity" as
engaging in at least two incidents of specified crimes,
including gang crimes and child pornography violations, within
10 years that have a similar purpose, are not isolated events,
and are committed as part of an organized effort. (Pen. Code
186.2.)
This bill would include specified Medi-Cal fraud and related
crimes within the list of crimes subject to criminal
profiteering asset forfeiture, and would define Medi-Cal fraud
schemes as "organized crime."
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Medi-Cal Billing Provisions
Existing law provides that Medi-Cal providers must sign a
provider agreement and must disclose any information required by
federal regulations or the Department of Health Services.
(Welf. & Inst. Code 14043.2.)
Existing law provides that the Medi-Cal claims may be submitted
on behalf of providers by registered intermediaries. (Welf. &
Inst. Code 14040.5.)
Existing law provides that claims submitted in violation of the
governing code section ( 14040) shall be subject to denial.
The department may suspend or withdraw the registration of a
billing intermediary for violation of the section or for
involvement in illegally submitted claims. (Welf. & Inst. Code
14040.5.)
Existing law provides that the department may withdraw or
suspend the registration of an intermediary for involvement in
false or misleading claims or where the intermediary has engaged
in a pattern of filing incomplete claims. (Welf. & Inst. Code
14040.5.)
Existing law provides for 30-days notice of suspension or
withdrawal and specifies standards for a hearing on the matter.
(Welf. & Inst. Code 14040.5.)
Existing law provides for appeal of denial of registration for a
provider. (Welf. & Inst. Code
14043.65.)
This bill would require the providers, including owners or
provider entities, to reveal their social security numbers as
allowed under federal law.
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This bill would define "billing agents" and "billing agents of
providers" as any person or entity that submits Medi-Cal claims
on behalf of a provider, other than employees, provider owned
firms or billing agents that act solely for the provider.
This bill would provide that the department shall establish
standards, as emergency regulations, for registration of billing
agents; that the department may conduct background checks on
registering agents; and that billing agents shall post a minimum
$50,000 bond.
This bill would set out particular requirements for contracts
between billing agents and providers and would require 30-days
notice to the department by a provider as to the use of a
billing agent.
This bill would provide that violation of the regulations would
be grounds for denial of a claim.
This bill would provide that the department director may suspend
or revoke the registration of a billing agent where the agent or
provider is under investigation for fraud or abuse, where the
provider or agent violates applicable regulations, where the
director determines that the agent has submitted false or
misleading information, and where the agent entered into a
settlement of a fraudulent conduct claim, in lieu of conviction,
within 10 years. Suspension or revocation would be effective 15
days following notice. The department may waive claims
requirements where a provider's billing agent has lost
registration.
This bill would provide that "each provider and billing agent .
. . shall be responsible for ensuring that each claim . . .
meets the standards set by the department . . ."
This bill would state that a provider is subject to suspension
if the provider seeks reimbursement for services obtained from
an entity that is suspended from or ineligible to participate in
the Medi-Cal program.
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This bill would provide that the department shall revoke a
person's or entity's provider number where documents mailed to
the provider are returned as undeliverable or where the provider
has not submitted a claim for one year if the department has
exercised due diligence in seeking to contact the provider.
This bill would expand the authority of the department to
perform audits and inspect the records of providers, and would
extend record inspection to applicants and entities that supply
merchandise or seek Medi-Cal reimbursement. The bill would
impose additional accounting requirements for suppliers.
Family Planning Programs Within or Related to Medi-Cal
Existing law includes specific Welfare and Institutions Code
sections creating and governing the "Family Planning Access Care
and Treatment (Family PACT) program." Pursuant to a federal
waiver, providers must be properly registered under the Medi-Cal
program , but not all patients need be Medi-Cal recipients.
This bill would make changes in the Family PACT program that
mirrors the changes in the more general Medi-Cal program.
Grand Jury Provisions
Existing law defines and regulates grand juries. Grand jury
findings are confidential, particularly criminal investigations
when the grand jury does not issue an indictment. Where a grand
jury issues an indictment, however, the transcript of the grand
jury testimony must be released. (Daily Journal v. Superior
Court (1999) 20 Cal.4th 1117; Pen. Code 924.1-924.4.)
This bill would specifically provide that the Attorney General
may, with or without the concurrence of the county district
attorney, petition the court to impanel a special grand jury to
investigate, consider, or issue indictments for Medi-Cal and
related fraud schemes.
This bill would allow grand jury in "County B" to received
confidential information from the grand jury in "County A" as to
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Medi-Cal d related crimes committed in "County B."
This bill would provide that the Attorney General shall
reimburse the county for costs incurred in convening the grand
jury for Medi-Cal fraud investigations.
Homicide Provisions
Existing law defines murder as the unlawful killing of a human
being with malice aforethought. (Pen. Code 187.) Malice is
expressed where the defendant specifically intended to kill
another person. Malice is implied when the killing resulted
from an intentional act; the natural consequences of the act are
dangerous to human life; and the act was deliberately performed
with knowledge of the danger to, and with conscious disregard
for, human life. (People v. Dellinger (1989) 49 Cal.3d 1212,
1222.)
Existing law provides that murder in the first degree
(deliberate and premeditated murder) is punished by death or
life in prison without possibility of parole where special
circumstances are shown. Otherwise, first degree murder is
punished by a prison sentence of 25 years to life. (Pen. Code
190.)
Existing law provides that second degree murder is generally
punished by a term of 15 years to life in state prison. The
minimum term for the life term is 20 years if the crime was a
drive by shooting. (Pen. Code 190, subd. (d), 190.05.)
Where the defendant has been previously convicted of murder, he
or she shall be imprisoned for life without the possibility or
parole, or by imprisonment for 15 years to life. (Pen. Code
190.05.)
Existing law provides that second degree murder in which the
defendant killed a police officer engaged in his or her duties
is punishable by a term of 25 years to life in prison, or by
life in prison without the possibility of parole if certain
circumstances are shown, including that the defendant either
intended to kill or greatly injure the officer, or if the
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defendant used a firearm or other deadly weapon. (Pen. Code
190, subds. (b)-(c).)
Existing law provides that involuntary manslaughter is a felony
punishable by imprisonment in the state prison for 2, 3, or 4
years in state prison and/or a fine of up to $10,000. (Pen. Code
193, subd. (b).)
This bill would specifically provide that homicide that occurs
during a Medi-Cal fraud scheme may be prosecuted as
second-degree murder if the elements of that crime can be shown.
Statute of Limitations for Civil Actions Related to Medi-Cal
Fraud
Existing law sets out a "statutes of limitation" for civil and
criminal cases that limit the time in which an action can be
filed against a defendant.
This bill would provide that "the department [of Health
Services] shall have three years from the date of a violation of
this chapter or of a regulation adopted thereunder to file a
civil or administrative action" as to violation of clinical
laboratory laws and regulations.
COMMENTS
1. Need for This Bill
According to the author:
For years, California has been plagued by individuals
who abuse the Medi-Cal system. Every Medi-Cal dollar
that is lost to fraud is stolen from Californians who
are in desperate need of health care. With the money
lost every year to fraud, California could provide
health care for every uninsured child in the state.
The $21 billion Medi-Cal program is the primary
governmental health care program for approximately 5.2
million Californians. Fraud diverts valuable
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resources away from legitimate program purposes, and
in some instances, endangers public health. An
estimated $1 billion is lost each year to Medi-Cal
fraud and abuse schemes.
2. Three Strikes Concerns - New Felony for Reckless Handling of
Biological Specimens
This bill creates a single new felony for criminal
negligence/recklessness with biological specimens that exposes a
patient to substantial risk of, or causes, GBI:
1st conviction - alternate felony/misdemeanor, with a
prison triad of 16 months, 2 years or 3 years. Maximum
fine of $50,000 for misdemeanor or felony.
2nd conviction - straight felony, with 2, 4, or 6-year
prison term. Maximum fine of $50,000.
The Chair of the Senate Public Safety Committee has long
followed a policy of only recommending the creation of new
felonies for truly violent conduct or its equivalent. The issue
is thus framed whether reckless conduct in handling biological
specimens that exposes a patient or other person to substantial
risk of great bodily injury is violent conduct, or its
equivalent, so as to appropriately subject the defendant to a
felony conviction.
SHOULD A NEW FELONY BE CREATED FOR RECKLESSLY HANDLING
BIOLOGICAL SPECIMENS SO AS TO SUBJECT A PATIENT OR OTHER PERSON
TO GREAT BODILY INJURY?
3. Fines for the Misdemeanors of (A) Paying and Soliciting
Patients for Giving Biological Specimens and (B) Unauthorized
Taking of Biological Specimens (Author's Amendment to be
Offered in Committee)
This bill would increase the maximum possible incarceration for
unauthorized taking of biological samples, and for paying
patients and ostensible patients for giving such samples, from
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six months to one year. As proposed to be amended in Committee
on August 18, 2000, the bill would also increase the maximum
possible fines for paying for biological samples, or soliciting
the paid giving of samples from $1,000 to $10,000. The maximum
fine for unauthorized taking of a biological sample would remain
$1,000, as in current law.
It may be argued that a defendant who is convicted of paying a
patient to provide a blood or biological sample is likely
involved in a fraudulent scheme. That is, there would appear to
be no legitimate reasons to pay a patient to give a sample,
except for research purposes. Research is exempted from the
payment prohibitions in the bill.
The same is not necessarily true for "unauthorized" taking of
blood or other biological samples. The bill is fairly broad in
defining the crime of unauthorized taking of blood or other
biological material. A person may be unauthorized because he or
she has violated one of a number of fairly complex regulations.
Yet, the unauthorized venipuncture, or related act, may not harm
the patient.
The bill formerly would have authorized a $10,000 fine for
unauthorized taking of biological samples. A high fine for a
technical violation could result in a severe financial hardship
for a non-profit community clinic. Such clinics could include
organizations that perform services, abortion for example, that
many members of the public find objectionable or controversial.
The fine provision in the bill could list factors a court should
consider in imposing a fine. Such factors could include any
danger to an individual patient or the public posed by the
violation, the level of supervision in the facility where the
violation occurred, the quality of care given by the facility or
individual defendant in the past and any previous violations of
law or regulations.
SHOULD THE LAW PROVIDE A MAXIMUM FINE OF $1,000 FOR UNAUTHORIZED
TAKING OF BIOLOGICAL SAMPLES, WHILE LEAVING AT $10,000 THE
MAXIMUM FINE FOR PAYING PATIENTS FOR GIVING BIOLOGICAL SAMPLES?
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4. Department of Health Services Position on the Increased
Penalties Imposed by This Bill
Sponsor Department of Health Services has noted that Medi-Cal
fraud schemes and laboratory violations may subject patients to
serious harm, or the risk of serious harm. For example, the
department notes that some particularly unscrupulous persons
have taken blood and other specimens from needy persons to such
an extent that the paid donors have suffered serious health
problems, including emergency transfusions. Further, the crime
of improper handling of a biological specimen that would be
created by this bill includes an element that the victim was
subjected to the likelihood of great bodily injury. The results
of such conduct, the department effectively argues, is
equivalent to a violent assault.
5. Enhancement for Convictions of Medi-Cal Fraud Schemes in Which
Multiple Victims are Subjected to Harm
The bill was recently amended to provide for a single
enhancement of four years where a person suffers great bodily
injury or serious injury in a case where two or more people are
subjected to a likelihood of great bodily injury. The bill
previously would have imposed a 3-year enhancement for serious
bodily injury and a 5-year enhancement for great bodily injury.
In most circumstances, serious bodily injury and great bodily
injury are not different concepts. The major difference between
great bodily injury and serious bodily injury allegations is the
crimes in which the allegations arise or are charged. Serious
bodily injury is an element of a form of battery. (Pen. Code
243.) Great bodily injury is an enhancement allegation that may
be alleged in virtually any felony, except where great bodily
injury is an element of the crime. (Pen. Code 12022.7.) The
jury must determine whether a victim has suffered great bodily
injury. In simplest terms, great bodily injury is not
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transitory or trivial injury. In similarly simple terms,
serious bodily injury is a "serious impairment of physical
condition," including concussion, bone fracture, extensive
suturing, etc. (Pen. Code 243, subds. (d) and (f)(4).) These
injuries could also serve as a thumbnail description of typical
great bodily injuries.
SHOULD THE LAW INCLUDE A 4-YEAR ENHANCEMENT FOR EVERY PERSON WHO
SUFFERS ACTUAL HARM IN ANY MEDI-CAL FRAUD SCHEME IN WHICH TWO OR
MORE VICTIMS HAVE BEEN SUBJECTED TO GREAT BODILY INJURY OR
SERIOUS BODILY INJURY?
6. Concerns as to Expanded Registration and Billing
Requirements and Rules
The Medi-Cal rules are complex. Providers often rely upon
billing agents to file claims for compensation. Where a
provider's patient load includes a high percentage of indigent
persons, prompt billing and payment may be essential to allow the
survival of the provider. Rejection of claims and
disqualification of a billing agent could work a hardship for
such a provider and the provider's patients. Some providers have
expressed concern that wrongs and errors of billing agents will
be visited upon innocent providers through denial of legitimate
claims. The Department of Health Services has replied that the
new provisions are written so as to assist providers to find
legitimate billing agents. Department sources are aware that
changes in Medi-Cal program rules have raised some concerns in
the minds of providers. The intention of the department is to
weed out and punish fraudulent or incompetent providers and to
thereby improve the system.
This bill would allow the Department of Health Services to
immediately remove from eligibility any provider whose claims
are returned by the postal service as undeliverable. In
response to objections about this provision, the bill has been
amended to require the department to exercise due diligence in
attempting contact the provider or to determine if the return
was made in error.
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Provider and billing agent representatives have also expressed
concerns that a single telephone complaint or comment could
prompt an investigation. The department would perhaps be remiss
in ignoring such a call. However, under the terms of this bill,
the resulting investigation, even an informal investigation,
could result in denials or delays of the payment of claims.
Similar concerns were expressed about a provision that would
allow the department director to suspend or revoke the
registration of a billing agent if the director determines that
the billing agent is under investigation by any agency, or if
the agent has settled a claim for fraud or abuse in lieu of
criminal conviction within the previous 10 years. Providers and
agents asserted that this provision denied due process and
opened the door to arbitrary decisions.
The department has indicated that it has met with provider and
billing representatives and will attempt to address these
concerns.
SHOULD BILLING AND REGISTRATION LANGUAGE IN THE BILL BE AMENDED
TO PROVIDE MORE DUE PROCESS AND TO LIMIT ARBITRARY ACTIONS?
7. Grand Jury Provisions
a. Authority of the Attorney General to Direct a Court to
Convene a Special Grand Jury; Suggestion to Allow a
Petition to Convene a Grand Jury
The bill previously provided that that the Attorney General
has the authority to "direct" the presiding judge of the court
to convene a grand jury to investigate Medi-Cal and related
fraud. As this provision appeared to likely violate the
separation of powers doctrines of the California and United
States Constitutions, the bill was amended to provide that the
Attorney General can petition the court to convene a special
grand jury.
b. Information Sharing Between Grand Juries in Different
Counties where Grand Jury in one County uncovers Crimes
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Committed in Another County
This bill previously provided that the grand jury in one
county to issue an indictment that would be filed in another
county. This raised a number of serious concerns about
prosecutorial jurisdiction, court supervision of the grand
jury and the proper forum for hearing a criminal case. To
address those concerns, the bill was amended to allow grand
juries in different counties to share information, while still
held to a requirement of public confidentiality. Existing law
provides that criminal investigations conducted before a grand
jury must remain secret, unless an indictment is filed. Where
an indictment is filed, the grand jury proceedings must be
transcribed and released to the district attorney, defendant
and the public, unless such release would deny the defendant a
fair trial. (Pen. Code
938.1.) Under existing law the requirement of grand jury
secrecy is by no means absolute.
The rule of grand jury secrecy developed in England in large
part to limit the ability of the Crown to improperly influence
the grand jury process. It appears that the reason for
secrecy of grand jury proceedings in California, particularly
in criminal matters, is to limit public and political
pressures from influencing the deliberations and decisions of
the grand jury. (McClathchy Newspapers v. Superior Court,
supra, 44 Cal.3d 1173.) However, no similar, powerful single
force, such as the Crown, dominates power in California.
Since the diminution of the power of the Monarch in England,
the grand jury has been abolished because of prosecutorial
abuses. (1948 Criminal Justice Act.) Similar claims have
been made in California in recent years.
This bill thus raises the issue of what interest would be
threatened if the secrecy rules for grand juries were relaxed
so as to allow the sharing of information among grand juries
in different counties. The sponsor of the bill explains that
Medi-Cal schemes often involve crimes committed in different
counties. Perpetrators of fraud may be connected with such
person in other counties, although not so as to allow a joint
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indictment in a single county. Where information is developed
in a grand jury investigation in one county that shows the
commission of crimes in another county, state and county
resources could be saved by allowing the grand jury in another
county to have access to such information. Current law allows
a successor grand jury in one county to receive information
from an earlier grand jury in that same county.
SHOULD THE LAW ALLOW GRAND JURIES IN DIFFERENT COUNTIES TO SHARE
INFORMATION UNDER SPECIFIED CIRCUMSTANCES?
8. Federal DOJ Studies and ABA Recommendations for General Grand
Jury Reform
The American Bar Association (ABA), in connection with a 1983
study conducted by the United States Department of Justice (US
DOJ), considered widespread concern about the grand jury system.
The ABA noted that the grand jury "possesses awesome powers." The
grand jury was originally designed in 12th Century England as a
citizens' body to guard against abuses of power by the Crown.
Consistent with English tradition, the grand jury process was
included in the 5th Amendment to the United States Constitution.
However, because of a lack of procedural safeguards for subjects
of grand jury investigations, the grand jury was abolished in
England in 1933. Similar concerns have prompted calls for reforms
in the United States. In particular, the prohibition of counsel
while a witness testifies and the lack of ability of a subject to
present any exculpatory evidence to the grand jury, has been
criticized. The report indicated that states who now allow
counsel to be present during grand jury hearings did not
experience significant disruption of the process. In particular,
the ABA report found "no record of negative results" in states
which
allowed counsel to be present during political corruption or
organized crime investigations.
9. Second Degree Murder Provisions
Medi-Cal related murders would appear to not involve an
intentional killing, but rather a form of criminal recklessness
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that establishes implied malice-the conscious disregard of a
substantial likelihood that one's acts will result in the death
of another person.
One of the most basic elements of virtually every crime is "mens
rea"-an evil mind. While a person who intentionally commits a
crime is generally more culpable than a person whose crime was
unintended, the concept of mens rea has expanded to cover
conduct in which a defendant proceeds with dangerous conduct
despite the risk his or her conduct poses to others.
a. Basic Concepts of Criminal Negligence and Implied Malice
i.Criminal Negligence, per se
Criminal negligence is something beyond the absence of due
care, which is the standard for negligence that would
render someone civilly liable. Criminal negligence is that
which indicates "indifference to the consequences of
[one's] acts." (Sea Horse Ranch v. Superior Court (1994)
24 Cal.App.4th 454.) Criminal negligence is determined by
an objective standard-what a reasonable person would find
to be indifference to the consequences of a person's acts.
ii. Implied Malice
A person acts with implied malice where he or she
deliberately proceeds with conduct that is dangerous to
human life, despite subjective awareness of the inherent
risks, and a homicide results. (People v. Albright (1985)
173 Cal.App.3d 883, 887.) The jury determines whether or
not a person is guilty of murder, involuntary manslaughter
or accidental death where a person's negligence results in
another's death.
b. Application to This Bill
The sponsor, the Department of Health Services, is not aware
of any cases in which a person has been convicted of
second-degree murder which occurred in connection with a
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Medi-Cal fraud or similar scheme. The department does wish to
specifically state that it will aggressively pursue
prosecution of any killing that occurs during the commission
of Medi-Cal fraud scheme. The cross-reference in this bill
will not create a substantive change in the law.
10. Criminal Profiteering Asset Forfeiture Provisions-Punishment
Provision that Requires Conviction and Allows Taking of the
Proceeds of Criminal Profiteering
Asset forfeiture schemes can be generally described as criminal
or civil. Criminal asset forfeiture is a form of punishment in
addition to imprisonment and fines. California's criminal
profiteering forfeiture law (Pen. Code 186.2) allows the
taking of criminal profits, but not generally the assets used to
produce such profits.
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Civil asset forfeiture is intended to be remedial, that is, to
repay the state and the public for the harm caused by the
defendant's activities. Restitution orders may perform that
function in criminal cases. Because civil forfeiture does not
involve a criminal punishment, a conviction is generally not
required. Civil asset forfeiture can include protracted civil
discovery-written questions under oath, depositions, complex
court proceedings, just as with any civil action.
This bill extends the California criminal profiteering
forfeiture law to Medi-Cal fraud. Where criminal profiteering
forfeiture is used, a conviction is required and the forfeiture
proceeding would be conducted in conjunction with the criminal
trial. The proceedings would generally be much quicker and less
intrusive for the defendant than civil asset forfeiture.
In previous hearings, concerns have been raised about how the
proceeds of asset forfeiture may be used. In particular, asset
forfeiture schemes in which the proceeds of the forfeiture are
given to the seizing agency have been criticized as a form of
bounty hunting. Law enforcement agencies may have an incentive
to pursue cases because of the assets available for seizure, not
primarily to protect the public. In criminal profiteering asset
forfeiture, the proceeds are largely placed in the general fund
of the county or the state that seized the assets. It has been
argued that county prosecutors may have such sway in boards of
supervisors' appropriations decisions that even depositing
forfeiture proceeds in the general fund could create a bounty
system. However, according to the Department of Justice, 99% of
Medi-Cal fraud forfeiture proceeds taken under the general
health care criminal profiteering provisions (Pen. Code 186.2
and 550) is placed into the general fund of the state.
SHOULD ASSET FORFEITURE PROCEEDS BE DISTRIBUTED SO AS TO
DISCOURAGE ANY "BOUNTY HUNTING" FOR SUCH ASSETS?
11. Amendments Requested by Los Angeles County Department of
Health Services-Response of Sponsor, California Department of
Health Services
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Page 24
Los Angeles County Health Services requests that the bill be
amended so as to provide for a "pay for performance" for county
agencies that investigate and prosecute Medi-Cal fraud. Los
Angeles County has created the Health Authority Law Enforcement
Task Force (HALT). The County argues that aggressive enforcement
of Medi-Cal fraud by county agents directly saves the State of
California substantial amounts of money. The state is further
spared the costs of investigation violations of a state program.
Essentially, the county is handling, or sharing in, the state's
responsibility for prosecuting Medi-Cal fraud.
Los Angeles, and other counties, have very limited resources for
enforcement of health care fraud. Where the state receives the
benefits of the county's fraud investigation, it is only fair and
reasonable that the state share the savings occasioned by the
county's efforts. The county proposes that the law should provide
that the local agency that secured conviction or settlement of a
Medi-Cal fraud claim shall receive "an amount equal to fifty
percent of the twelve months of fraudulent billing preceding
the date in which the investigation was initiated by the eligible
local lead investigative authority."
The California Department of Health Services opposes the
amendment. HALT teams are joint local-state enterprises. State
investigators are fully involved with the HALT teams and assist
local agencies in solving local crimes. The County of Los
Angeles is not simply carrying the responsibilities of the
state. Further, the department believes that the determination
of any savings would be speculative, at best.
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