Bill Text: CA SB642 | 2021-2022 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Health care: facilities: medical privileges.

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Failed) 2022-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB642 Detail]

Download: California-2021-SB642-Amended.html

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Amended  IN  Senate  April 12, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill

No. 642

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Introduced by Senator Pan Kamlager
(Coauthors: Assembly Members Boerner Horvath, Cristina Garcia, Kalra, Rodriguez, Stone, and Ting)

February 19, 2021

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An act to add Section 48.6 to the Civil Code, relating to business. An act to amend Section 2282.5 of, and to add Sections 2057 and 2408.5 to, the Business and Professions Code, and to amend Sections 5917 and 5923 of the Corporations Code, relating to health care.

LEGISLATIVE COUNSEL'S DIGEST

SB 642, as amended, Pan Kamlager. False, misleading, deceptive, or unlawful advertising: goods or services: digital platforms: civil liability. Health care: facilities: medical privileges.

(1) Existing law prohibits health care service plans and their contracting entities from including provisions in their contracts that interfere with the ability of a physician and surgeon or other licensed health care provider to communicate with a patient regarding their health care.

This bill would prohibit a health facility from requiring a physician or surgeon, as a condition of obtaining or maintaining clinical privileges, to agree to comply with criteria, rules, regulations, or other policies or procedures that are not knowingly and explicitly ratified, issued, or promulgated by the medical staff, that directly or indirectly prohibit, limit, or restrict the ability of the physician or surgeon to provide a particular medical treatment or service that falls within the scope of their privileges, or from requiring a physician or surgeon to obtain permission from a nonphysician or nonsurgeon to perform a particular medical treatment or service for which consent has been obtained from the patient or the patient’s representative, except as provided. The bill would prohibit a health facility from limiting or otherwise exercising control over the independent professional judgment of a physician or surgeon concerning the practice of medicine or the diagnosis or treatment of disease, if the physician or surgeon, exercising their independent professional judgment, determines that a particular medical service or treatment is medically appropriate, unless specified circumstances apply.

This bill would authorize a superior court, upon application by a health facility’s medical staff or an individual member of a facility’s medical staff, to issue an injunction or other appropriate order restraining any acts or practices that could constitute a violation of these provisions. The bill would specify that its provisions cannot be construed to prohibit a health facility from establishing criteria, rules, regulations, policies, or procedures that are required by federal or state law or regulation as a condition of licensure, receipt of federal or state funds, or participation in Medicare, Medi-Cal, or other federal or state health care programs, or limit a medical staff’s authority to take corrective action against medical staff members in accordance with the medical staff bylaws, except in specified circumstances. The bill would also prohibit health facility corporate bylaws, policies, rules, contracts, or other institutional requirements that conflict with these provisions from being applied to directly or indirectly affect a physician’s clinical privileges or rights, or privileges of membership on the medical staff, except as required by federal or state law.

(2) Existing law requires each shareholder, director, and officer of a medical or podiatry corporation, except as provided, to be a licensed person, as defined.

This bill would require the shareholders, directors, and officers of a medical corporation to manage and have ultimate control, as defined, over the assets and business operations of the medical corporation and not be replaced, removed, or otherwise controlled by any lay entity or individual, as specified.

(3) Existing law requires any nonprofit corporation that operates or controls a health facility or operates or controls a facility that provides similar health care, as specified, to provide written notice to, and to obtain the written consent of, the Attorney General prior to entering into any agreement or transaction to sell, transfer, lease, or exchange its assets to a for-profit corporation or entity or to a mutual benefit corporation or entity when a material amount of the assets of the nonprofit corporation are involved in the agreement or transaction, or to transfer control, responsibility, or governance of a material amount of the assets or operations of the nonprofit corporation to any for-profit corporation or entity or to any mutual benefit corporation or entity, as specified.

Existing law requires any nonprofit corporation that operates or controls a health care facility, or that or operates or controls a facility that provides similar health care to provide written notice to, and to obtain the written consent of, the Attorney General prior to entering into any agreement or transaction to sell, transfer, lease, or exchange its assets to another nonprofit corporation or entity when a material amount of the assets of the nonprofit corporation are involved in the agreement or transaction, or to transfer control, responsibility, or governance of a material amount of the assets or operations of the nonprofit corporation to another nonprofit corporation or entity. Existing law gives the Attorney General discretion to consent to, give conditional consent to, or not to consent to these agreements or transactions considering any factor they determine to be relevant.

This bill would include among those factors that, if applicable, may be relevant to the Attorney General in determining whether to consent whether the agreement or transaction may create a reduction of or limitation on the availability of the full range of health care services to any group of individuals based on their membership in a protected class. The bill would, in the case of an agreement or transaction to sell, transfer, lease, or exchange its assets to another nonprofit corporation or entity, also include among those factors whether the agreement or transaction may result in undue interference in patients’ access to medical care due to improper or unlawful motives.

(4) This bill would state that its provisions are severable.

Existing law, the Consumer Legal Remedies Act, makes unlawful specified unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer.

This bill would provide that a platform, as defined, is not liable for monetary relief, including attorney’s fees and costs, for the distribution of false, misleading, deceptive, or unlawful material in any civil action arising from the distribution of that material if the platform meets specified conditions, including a requirement that the platform respond expeditiously to remove or disable access to that material upon written notification from a complaining party, as defined. The bill would prescribe requirements for the service and contents of the written notification. The bill would provide that a person who knowingly and materially misrepresents that material is false, misleading, deceptive, or unlawful to a platform is liable for damages, including attorney’s fees and costs, incurred by the user that posted the material and incurred by the platform in relation to a civil action arising from the platform’s reliance on that misrepresentation in removing or disabling access to the material. For purposes of these provisions, the bill would define “material” as an advertisement for goods or services for which the platform receives a financial benefit in exchange for the distribution of that material.

This bill would additionally exempt a platform from liability in any action arising from the platform’s decision to disable access to or remove material if the decision is based on the platform’s good faith belief that the material is false, misleading, deceptive, or unlawful, or is based on facts or circumstances from which the false, misleading, deceptive, or unlawful nature of the material is apparent. The bill would provide that this protection is applicable regardless of a court’s determination on whether the material is false, misleading, deceptive, or unlawful. The bill, however, would extend this protection only if the platform fulfills certain conditions regarding the platform’s notification to the user about the removal or disabling of access to that material. The bill would establish requirements for a counter notification from a user regarding the removal of material or disabling of access, including a requirement for a user to provide a specified statement under penalty of perjury. By expanding the scope of the crime of perjury the bill would impose a state-mandated local program.

This bill would make its provisions applicable to a platform only if it adopts and implements, and informs its users of, a policy that provides for the termination of user accounts that repeatedly distribute false, misleading, deceptive, or unlawful material.

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.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YESNO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 The Legislature finds and declares both of the following:

(a) This act shall be known, and may be cited, as the Patient Medical Care Protection Act. This act is intended to protect patients’ medical decisions by preventing corporations and any other entity that is not licensed to practice medicine from interfering, controlling, or otherwise limiting a patient’s medical care based on nonmedical reasons.

(b) This act additionally seeks to prevent undue interference in the practice of medicine due to improper motives, including discrimination, profit or cost control, business or competition, or any other nonmedical motives.

SEC. 2.

 Section 2057 is added to the Business and Professions Code, to read:

2057.

 (a) A health facility licensed pursuant to Section 1265 of the Health and Safety Code is prohibited from requiring a physician or surgeon licensed pursuant to this chapter, as a condition of obtaining or maintaining clinical privileges, to agree to comply with criteria, rules, regulations, or other policies or procedures that are not knowingly and explicitly ratified, issued, or promulgated by the medical staff, that directly or indirectly prohibit, limit, or restrict the ability of the physician or surgeon to provide a particular medical treatment or service that falls within the scope of their privileges, or from requiring a physician or surgeon to obtain permission from a nonphysician or nonsurgeon to perform a particular medical treatment or service for which consent has been obtained from the patient or the patient’s representative, except as provided in paragraph (b) or (c).

(b) If a physician or surgeon, exercising their independent professional judgment, determines that a particular medical service or treatment is medically appropriate, a health facility shall not limit or otherwise exercise control over their independent professional judgment concerning the practice of medicine or the diagnosis or treatment of disease unless either of the following applies:

(1) The health facility lacks the equipment to provide the service or treatment.

(2) A full review of the medical evidence by members of the medical staff pursuant to subdivision (a) of Section 2282.5 determines that the care is not medically appropriate.

(c) Nothing in this section shall be construed to prohibit a health facility from establishing criteria, rules, regulations, policies, or procedures that are required by federal or state law or regulation as a condition of licensure, receipt of federal or state funds, or participation in Medicare, Medi-Cal, or other federal or state health care programs.

(d) If a person engages in any acts or practices that could constitute a violation of this section, the superior court may, upon application by the health facility’s medical staff or an individual member of the facility’s medical staff, issue an injunction or other appropriate order restraining the conduct. Proceedings under this section shall be governed by Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure.

(e) Nothing in this section shall be construed to limit a medical staff’s authority to take corrective action against medical staff members in accordance with the medical staff bylaws, except in those circumstances described in Section 809.05.

SEC. 3.

 Section 2282.5 of the Business and Professions Code, as added by Section 2 of Chapter 699 of the Statutes of 2004, is amended to read:

2282.5.

 (a) The medical staff’s right of self-governance shall include, but not be limited to, all of the following:

(1) Establishing, in medical staff bylaws, rules, or regulations, criteria and standards, consistent with Article 11 (commencing with Section 800) of Chapter 1 of Division 2, for medical staff membership and privileges, and enforcing those criteria and standards.

(2) Establishing, in medical staff bylaws, rules, or regulations, clinical criteria and standards to oversee and manage quality assurance, utilization review, and other medical staff activities including, but not limited to, periodic meetings of the medical staff and its committees and departments and review and analysis of patient medical records.

(3) Selecting and removing medical staff officers.

(4) Assessing medical staff dues and utilizing the medical staff dues as appropriate for the purposes of the medical staff.

(5) The ability to retain and be represented by independent legal counsel at the expense of the medical staff.

(6) Initiating, developing, and adopting medical staff bylaws, rules, and regulations, and amendments thereto, subject to the approval of the hospital governing board, which approval shall not be unreasonably withheld.

(b) The medical staff bylaws shall not interfere with the independent rights of the medical staff to do any of the following, but shall set forth the procedures for:

(1) Selecting and removing medical staff officers.

(2) Assessing medical staff dues and utilizing the medical staff dues as appropriate for the purposes of the medical staff.

(3) The ability to retain and be represented by independent legal counsel at the expense of the medical staff.

(c) Health facility corporate bylaws, policies, rules, contracts, or other institutional requirements that conflict with Section 2057 shall not be applied to directly or indirectly affect a physician’s clinical privileges or rights, or privileges of membership on the medical staff, except as required by federal or state law.

(c)

(d) With respect to any dispute arising under this section, the medical staff and the hospital health facility governing board body shall meet and confer in good faith to resolve the dispute. Whenever any person or entity has engaged in or is about to engage in any acts or practices that hinder, restrict, or otherwise obstruct the ability of the medical staff to exercise its rights, obligations, or responsibilities under this section, the superior court of any county, on application of the medical staff, and after determining that reasonable efforts, including reasonable administrative remedies provided in the medical staff bylaws, rules, or regulations, have failed to resolve the dispute, may issue an injunction, writ of mandate, or other appropriate order. Proceedings under this section shall be governed by Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure.

SEC. 4.

 Section 2408.5 is added to the Business and Professions Code, to read:

2408.5.

 (a) The shareholders, directors, and officers of a medical corporation as set forth in Section 2408 shall manage and have ultimate control over the assets and business operations of the medical corporation and shall not be replaced, removed, or otherwise controlled by any lay entity or individual, including, without limitation, through stock transfer restriction agreements or other contractual agreements and arrangements.

(b) For purposes of this section “ultimate control” shall mean and be consistent with the definition provided by generally accepted accounting principles.

SEC. 5.

 Section 5917 of the Corporations Code is amended to read:

5917.

 The Attorney General shall have discretion to consent to, give conditional consent to, or not consent to any agreement or transaction described in subdivision (a) of Section 5914. In making the determination, the Attorney General shall consider any factors that the Attorney General deems relevant, including, but not limited to, whether any of the following apply:

(a) The terms and conditions of the agreement or transaction are fair and reasonable to the nonprofit corporation.

(b) The agreement or transaction will result in inurement to any private person or entity.

(c) Any agreement or transaction that is subject to this article is at fair market value. In this regard, “fair market value” means the most likely price that the assets being sold would bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably knowledgeably, and in their own best interest, and a reasonable time being allowed for exposure in the open market.

(d) The market value has been manipulated by the actions of the parties in a manner that causes the value of the assets to decrease.

(e) The proposed use of the proceeds from the agreement or transaction is consistent with the charitable trust on which the assets are held by the health facility or by the affiliated nonprofit health system.

(f) The agreement or transaction involves or constitutes any breach of trust.

(g) The Attorney General has been provided, pursuant to Section 5250, with sufficient information and data by the nonprofit corporation to evaluate adequately the agreement or transaction or the effects thereof on the public.

(h) The agreement or transaction may create a significant effect on the availability or accessibility of health care services to the affected community.

(i) The proposed agreement or transaction is in the public interest.

(j) The agreement or transaction may create a significant effect on the availability and accessibility of cultural interests provided by the facility in the affected community.

(k) The agreement or transaction may create a reduction of or limitation on the availability of the full range of health care services to any group of individuals based on their membership in a class of persons protected by Section 51 of the Civil Code.

SEC. 6.

 Section 5923 of the Corporations Code is amended to read:

5923.

 The Attorney General shall have discretion to consent to, give conditional consent to, or not consent to any agreement or transaction described in subdivision (a) of Section 5920. In making the determination, the Attorney General shall consider any factors that the Attorney General deems relevant, including, but not limited to, whether any of the following apply:

(a) The terms and conditions of the agreement or transaction are fair and reasonable to the nonprofit corporation.

(b) The agreement or transaction will result in inurement to any private person or entity.

(c) Fair market value of the agreement or transaction, meaning the most likely price that the assets being sold would bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and in their own best interest, and a reasonable time being allowed for exposure in the open market.

(d) The market value has been manipulated by the actions of the parties in a manner that causes the value of the assets to decrease.

(e) The proposed use of the proceeds from the agreement or transaction is consistent with the charitable trust on which the assets are held by the health facility or by the affiliated nonprofit health system.

(f) The agreement or transaction involves or constitutes any breach of trust.

(g) The Attorney General has been provided, pursuant to Section 5250, with sufficient information and data by the nonprofit public benefit corporation to evaluate adequately the agreement or transaction or the effects thereof on the public.

(h) The agreement or transaction may create a significant effect on the availability or accessibility of health care services to the affected community.

(i) The proposed agreement or transaction is in the public interest.

(j) The agreement or transaction may create a significant effect on the availability and accessibility of cultural interests provided by the facility in the affected community.

(k) The agreement or transaction may reduce the availability or accessibility of the full range of health care services to any group of individuals based upon their membership in a class of persons protected by Section 51 of the Civil Code, or result in undue interference in patients’ access to medical care due to improper or unlawful motives, including, but not limited to, discrimination, profit or cost control, or unlawful or unfair competitive motives.

SEC. 7.

 The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SECTION 1.

The Legislature finds and declares all of the following:

(a)As more Americans turn to social media as their primary news source, and as social media companies obtain larger profits from advertising dollars, social media companies should be held to the same truth in advertising liability standards that traditional media outlets must adhere to and be held accountable for the content that social media companies recommend to users through their algorithms.

(b)It is the intent of the Legislature to provide a process for the correction and removal of false, misleading, deceptive, or unlawful material distributed by online social media sites and other digital platforms.

SEC. 2.Section 48.6 is added to the Civil Code, to read:

48.6.

(a)In any civil action arising from the distribution of false, misleading, deceptive, or unlawful material by a platform, a platform shall not be liable for monetary relief, including attorney’s fees and costs, for the distribution of false, misleading, deceptive, or unlawful material, if the platform meets all of the following conditions:

(1)Does not have actual knowledge that the material is false, misleading, deceptive, or unlawful.

(2)Is unaware of facts or circumstances that would make the false, misleading, deceptive, or unlawful nature of the material apparent to the platform.

(3)Upon obtaining actual knowledge or awareness, acts expeditiously to remove, or disable access to, the material.

(4)Upon written notification of a claim that the platform is distributing false, misleading, deceptive, or unlawful material, the platform responds expeditiously to remove or disable access to that material.

(b)(1)The written notification described in paragraph (4) of subdivision (a) shall be served on the social media internet website’s designated agent and shall substantially include all of the following:

(A)A physical or electronic signature of the complaining party, or the person authorized to act on behalf of the complaining party.

(B)Identification of the material the complaining party claims is false, misleading, deceptive, or unlawful.

(C)Information reasonably sufficient to permit the platform to locate the material.

(D)Information reasonably sufficient to permit the platform to contact the complaining party, including the complaining party’s name, address, telephone number, and electronic mail address.

(E)A statement that the complaining party has a good faith belief that the material complained about is false, misleading, deceptive, or unlawful, and facts supporting the complaining party’s good faith belief.

(2)A person who knowingly and materially misrepresents that material is false, misleading, deceptive, or unlawful to a platform pursuant to this subdivision shall be liable for damages, including attorney’s fees and costs, incurred by the user that posted the material and incurred by the platform in relation to a civil action arising from the platform’s reliance on that misrepresentation in removing or disabling access to the material.

(c)(1)Subject to paragraph (2), a platform shall not be liable in any action arising from the platform’s decision to disable access to or remove material if the decision is based on the platform’s good faith belief that the material is false, misleading, deceptive, or unlawful, or is based on facts or circumstances from which the false, misleading, deceptive, or unlawful nature of the material is apparent. The protections of this paragraph apply regardless of a court’s determination on whether the material is false, misleading, deceptive, or unlawful.

(2)The protections of paragraph (1) shall not apply to material that is the subject of any notification provided pursuant to paragraph (1) of subdivision (b) unless the platform fulfills all of the following conditions:

(A)Takes reasonable steps to promptly notify the user that posted the material that the platform has removed or disabled access to the material.

(B)Upon receipt of a counter notification, as described in paragraph (3), from a user that posted the material, promptly provides the complaining party with a copy of the counter notification and, if the social media internet website determines the complaining party knowingly misrepresented the material to be false, misleading, deceptive, or unlawful, informs the complaining party that the platform will repost the removed material or reenable access to the material within seven business days.

(C)Reposts the removed material or reenables access to it within seven business days following receipt of the counter notification, unless the platform’s designated agent first receives notice from the complaining party that the complaining party has filed a civil action alleging the material is false, misleading, deceptive, or unlawful.

(3)A counter notification shall be a written communication that is served on the platform’s designated agent and that substantially includes all of the following:

(A)A physical or electronic signature of the user that posted the material at issue.

(B)Identification of the material that has been removed or to which access has been disabled.

(C)The location where the material appeared prior to the platform removing or disabling access to the material.

(D)A statement under penalty of perjury that the user has a good faith belief that the material was removed or disabled as a result of a complaining party who knowingly misrepresented the material as false, misleading, deceptive, or unlawful, and facts supporting the user’s good faith belief.

(E)The user’s name, address, telephone number, and electronic mail address.

(d)This section shall not apply to a platform unless it adopts and implements, and informs its users of, a policy that provides for the termination of user accounts that repeatedly distribute false, misleading, deceptive, or unlawful material.

(e)For purposes of this section, all of the following definitions apply:

(1)“Complaining party” means a person making a claim pursuant to subdivision (b) that material is false, misleading, deceptive, or unlawful.

(2)“Material,” when used as a noun, means an advertisement for goods or services for which the platform receives a financial benefit in exchange for the distribution of that material.

(3)“Platform” means any internet website or electronic or digital networking service or account that provides for the posting, display, or exchange of information, including, but not limited to, social media internet websites or other internet websites featuring videos or still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or internet website profiles or locations.

(4)“User” means an individual, corporation, organization, association, business trust, partnership, limited liability company, or any affiliate thereof, that resides or conducts business in the state and that has a unique profile on a social media internet website subject to this section.

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B 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 XIII B of the California Constitution.