Today's Law As Amended


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SB-642 Health care: facilities: medical privileges.(2021-2022)



As Amends the Law Today


SECTION 1.
 The Legislature finds and declares both of the following:
(a) 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 reduce or limit the availability or accessibility of the full range of health care services to any group of individuals based on any characteristic listed or defined in 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 at the cost of patient care, or unlawful or unfair competitive motives.

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 or limit the availability or accessibility of the full range of health care services to any group of individuals based on any characteristic listed or defined in 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 at the cost of patient care, 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.