BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1098|
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THIRD READING
Bill No: AB 1098
Author: Romero (D), et al
Amended: 8/25/00 in Senate
Vote: 21
SENATE HEALTH & HUMAN SERV. COMMITTEE : 5-0, 7/5/00
AYES: Escutia, Figueroa, Mountjoy, Polanco, Solis
SENATE PUBLIC SAFETY COMMITTEE : 5-0, 8/18/00
AYES: Vasconcellos, Burton, Johnston, McPherson, Rainey
SENATE APPROPRIATIONS COMMITTEE : 13-0, 8/29/00
AYES: Johnston, Alpert, Bowen, Burton, Escutia, Johnson,
Karnette, Kelley, Leslie, McPherson, Mountjoy, Perata,
Vasconcellos
ASSEMBLY FLOOR VOTE : Not Relevant
SUBJECT : Clinical laboratory regulations and
violations: Medi-Cal fraud punishment and
grand jury investigations
SOURCE : State Department of Health Services
DIGEST : This bill:
1. Increases the prison "triad" for the alternate
felony-misdemeanor of Medi-Cal fraud from 16 months,
two years or three years, to two, three or five years
in the state prison.
CONTINUED
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2. Increases the maximum incarceration for misdemeanor
violations related to blood and biological samples,
including paying for such samples and unauthorized
taking of samples, from six months to one year in the
county jail.
3. Sets the maximum fine for the misdemeanor of paying
for the giving of biological samples at $10,000, and
sets the maximum fine for unauthorized taking of
biological samples at $1,000.
4. Enacts a new alternate misdemeanor/felony for the
reckless handling of biological samples that subjects
others to the likelihood of great bodily injury, with a
penalty of up to one year in the county jail or 16
months, two, or three years in state prison and/or a
maximum fine of $50,000. Makes a second or subsequent
conviction be a straight felony, with a two, four or
six-year prison triad and/or a $50,000 fine.
5. Imposes a four-year enhancement 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.
6. Permits the State Attorney General to petition the
court to convene a special county grand jury to
investigate Medi-Cal fraud.
7. Permits a grand jury investigating Medi-Cal fraud in
one county (County A) to share information with the
grand jury in another county (County B) about crimes
committed in County B.
8. Grants greater authority to the State Department of
Health Services to deny Medi-Cal claims and suspend
provider and billing agent registration.
ANALYSIS :
The Medi-Cal Program
Existing law establishes the California Medical Assistance
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Program (Medi-Cal), a program through which the State
compensates physicians, pharmacies and other medical
providers for giving medical services to indigent persons.
(Welfare & Institutions 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. (Penal Code 550.)
As illustrated below, the existing penalties in Penal Code
Section 550 for presenting false insurance or health care
claims are complex:
1. False claims for injury compensation, duplicate or
multiple claims for single-incident, staged auto
accident injuries, fraudulent claims for auto theft or
damage:
A. Felony with a prison term of two, three, or five
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.
B. Submitting false claim or making false
statements in support of a false or fraudulent claim
for injury or loss.
(1) Misdemeanor with a maximum jail term of
six months and/or $1,000 maximum fine, if the
value of the claim is no more than $400 over a
12-month period.
(2) Alternate felony/misdemeanor, with a
prison term of two, three or five 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 one
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year and/or a fine of up to $1,000.
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. (Penal Code
118, 126; Welfare & Institutions Code 14025, 14026,
14043.25.) It appears that the perjury provisions for
false statements would also apply to service providers.
(Welfare & Institutions 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
(one-year maximum jail term and/or fine of $1,000); a
second or subsequent conviction is a straight felony
(16-month, two- or three-year prison term and/or $10,000
fine). (Welfare & Institutions 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 one year in county
jail, or 16 months, two years, or three years in prison,
and/or a fine of up to $5,000. (Welfare & Institutions
Code 14107.)
This bill adds 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 increases the
prison triad and the available fines for the alternate
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felony-misdemeanor of Medi-Cal fraud as follows:
1.Alternate felony/misdemeanor, with a county jail term of
up to one year, or a prison term of two, three or five
years.
2.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:
1.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 four-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.
(Business & Professions Code 1260, et seq.) Additional
restrictions and requirements apply to gynecology related
clinical tests. (Business & Professions 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. (Business &
Professions Code 1269.)
Existing law provides that violation of licensure and
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related employment rules is a misdemeanor, punishable by up
to six months in the county jail and/or a maximum fine of
$1,000. (Business & Professions 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. (Business & Professions 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. (Business & Professions Code
1265.)
This bill increases license conditions and provides for
easier license revocation for clinical laboratory
operators.
This bill provides 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 one year in
the county jail and/or a fine of up to $10,000.
This bill provides 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 one year
and/or a fine of up to $1,000.
This bill provides that where the defendant's "willful or
wanton disregard" for another person in the improper
handling, collection, etc., of biological specimens,
clinical tests or 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
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alternate felony misdemeanor, punishable by imprisonment in
the county jail for up to one year, or in the state prison
for 16 months, two years, or three 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 two, four, or six years and/or a fine of up to $50,000.
This bill authorizes 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 United States 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. (Penal 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. (Penal Code 186.2.)
This bill includes specified Medi-Cal fraud and related
crimes within the list of crimes subject to criminal
profiteering asset forfeiture, and defines Medi-Cal fraud
schemes as "organized crime."
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 State Department of
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Health Services. (Welfare & Institutions Code 14043.2.).
Existing law provides that the Medi-Cal claims may be
submitted on behalf of providers by registered
intermediaries. (Welfare & Institutions 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.
(Welfare & Institutions 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. (Welfare
& Institutions Code 14040.5.)
Existing law provides for 30-days notice of suspension or
withdrawal and specifies standards for a hearing on the
matter. (Welfare & Institutions Code 14040.5.)
Existing law provides for appeal of denial of registration
for a provider. (Welfare & Institutions Code 14043.65.)
This bill requires the providers, including owners or
provider entities, to reveal their Social Security numbers
as allowed under federal law.
This bill defines "billing agents" and "billing agents of
providers" as any person or entity that submits Medi-Cal
claims on behalf of a provider, other than provider-owned
firms or billing agents that act solely for the provider.
This bill provides 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, as specified.
This bill sets out particular requirements for contracts
between billing agents and providers and requires 30 days
notice to the department by a provider as to the use of a
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billing agent.
This bill provides that violation of the regulations would
be grounds for denial of a claim.
This bill provides 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 provides that "each provider and billing agent .
. . shall be responsible for ensuring that each claim . .
. meets the standards set by the department . . ."
This bill states 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.
This bill provides 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 expands the authority of the department to
perform audits and inspect the records of providers, and
extends record inspection to applicants and entities that
supply merchandise or seek Medi-Cal reimbursement. The
bill imposes 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
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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 makes 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 specifically provides that the State 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 allows a grand jury in "County B" to receive
confidential information from the grand jury in "County A"
as to Medi-Cal d related crimes committed in "County B."
This bill provides 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. (Penal 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.)
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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. (Penal 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. (Penal 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. (Penal 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 defendant used a firearm or other deadly
weapon. (Penal Code 190, subds. (b)-(c).)
Existing law provides that involuntary manslaughter is a
felony punishable by imprisonment in the state prison for
two, three, or four years in state prison and/or a fine of
up to $10,000. (Penal Code 193, subd. (b).)
This bill specifically provides that homicide which 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 provides that "the department [of Health
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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.
Comment
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2000-01 2001-02 2002-03 Fund
Enforcement DHS 6,215 12,430 12,430
General
Enforcement DHS 9,228 18,456 18,456
General
Enforcement DOJ 1,000 2,000 2,000
General
Enforcement DOJ 3,000 6,000 6,000
Federal
Funding fo the provisions contained in AB 1098 has already
been included in the budget for the current year.
The bil is the Administration's major Medi-Cal fraud bill.
SUPPORT : (Verified 8/18/00)
State Department of Health Services (source)
California School Employees Association
California Primary Care Association
Los Angeles County Board of Supervisors
State Controller
Attorney General
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OPPOSITION : (Verified 8/18/00)
California Chapter of the American Association of Emergency
Physicians (unless amended)
California Medical Billing Association (unless amended)
ARGUMENTS IN SUPPORT : According to the author:
1. 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.
2. The $21 billion Medi-Cal program is the primary
governmental health care program for approximately 5.2
million Californians. Fraud diverts valuable 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.
ARGUMENTS IN OPPOSITION : According to the Senate Public
Safety Committee, 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 State Department of Health Services is still
discussing the billing provisions with provider and billing
agent representatives.
CP:kb 8/31/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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