California Bill AB2398 Ready to Shut Down 100’s of MedSpas

California Assembly Bill AB 2398 was reviewed & approved by the Senate Appropriations Committee. The bill now goes to the Senate floor for vote of the full Senate. If passed, this bill will effectively shut down a loop hole many business owners have been using to operate medical spas in California.  The bill is requiring medical spas to be treated as medical facilities and requiring physician ownership. The bill is meant to ensure safety comes before profits for 100’s of California medspa’s.

Here is the bill as it stands….

NUMBER: AB 2398 AMENDED
BILL TEXT

AMENDED IN SENATE  AUGUST 14, 2008
AMENDED IN SENATE  JUNE 30, 2008
AMENDED IN ASSEMBLY  MAY 1, 2008
AMENDED IN ASSEMBLY  APRIL 22, 2008
AMENDED IN ASSEMBLY  APRIL 10, 2008
AMENDED IN ASSEMBLY  APRIL 1, 2008

INTRODUCED BY   Assembly Member Nakanishi

                        FEBRUARY 21, 2008

   An act to amend Section 2417 of the Business and Professions Code,
relating to the practice of medicine.

LEGISLATIVE COUNSEL’S DIGEST

   AB 2398, as amended, Nakanishi. Practice of medicine: cosmetic
surgery: employment of physicians and surgeons.
   Existing law, the Medical Practice Act, establishes the Medical
Board of California under the Department of Consumer Affairs, which
licenses physicians and surgeons and regulates their practice.
   The Medical Practice Act restricts the employment of licensed
physicians and surgeons and podiatrists by a corporation or other
artificial legal entity, subject to specified exemptions. Existing
law makes it unlawful to knowingly make, or cause to be made, any
false or fraudulent claim for payment of a health care benefit, or to
aid, abet, solicit, or conspire with any person to do so, and makes
a violation of this prohibition a public offense.
   This bill would authorize the revocation of the license of a
physician and surgeon who practices medicine with, or serves or is
employed as the medical director of, a business organization that
provides outpatient elective cosmetic medical procedures or
treatments, as defined, knowing that it is owned or operated in
violation of the prohibition against employment of licensed
physicians and surgeons and podiatrists. The bill would also make a
business organization that provides outpatient elective cosmetic
medical procedures or treatments, that is owned and operated in
violation of the prohibition, and that contracts with or employs a
physician and surgeon to facilitate the offer or provision of those
procedures or treatments that may only be provided by a licensed
physician and surgeon, guilty of a violation of the prohibition
against knowingly making or causing to be made any false or
fraudulent claim for payment of a health care benefit. Because the
bill would expand a public offense, it would impose a state-mandated
local program.
   The bill would state that its provisions are declaratory of
existing law.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares that the Medical
Practice Act restricts the employment of physicians and surgeons by a
corporation or other artificial legal entity, as described in
Article 18 (commencing with Section 2400) of Chapter 5 of Division 2
of the Business and Professions Code, and that the prohibited conduct
described in subdivisions (c) and (d) of Section 2417 of the
Business and Professions Code, as amended by this act, is declaratory
of existing law.
  SEC. 2.  Section 2417 of the Business and Professions Code is
amended to read:
   2417.  (a) If the Department of Insurance has evidence that a
business is being operated in violation of this chapter, Part 4
(commencing with Section 13400) of Division 3 of the Corporations
Code, or Chapter 1 (commencing with Section 1200) of Division 2 of
the Health and Safety Code, and that the business may be in violation
of Section 1871.4 of the Insurance Code or Section 549 or 550 of the
Penal Code, then the department shall report the business, and any
physician and surgeon suspected of knowingly providing medical
services for that business relative to a violation of Section 1871.4
of the Insurance Code or Section 549 or 550 of the Penal Code, to the
appropriate regulatory agency. Upon receiving a report from the
Department of Insurance of a suspected violation, the regulatory
agency shall conduct an investigation. The requirement in subdivision
(a) of Section 1872.95 of the Insurance Code for investigations to
be conducted within existing resources does not apply to
investigations required by this subdivision. The Department of
Insurance may consult with the appropriate regulatory department or
agency prior to making its report to that department or agency, and
this consultation shall not be deemed to require the department or
agency to conduct an investigation.
   (b) A physician and surgeon who practices medicine with a business
organization knowing that it is owned or operated in violation of
Section 1871.4 of the Insurance Code, Section 14107 or 14107.2 of the
Welfare and Institutions Code, or Section 549 or 550 of the Penal
Code shall have his or her license to practice permanently revoked.
   (c) A In addition to any other
remedies for a violation of Section 2400 involving any other types of
medical procedures, a physician and surgeon who practices
medicine with a business organization that offers to provide, or
provides, outpatient elective cosmetic medical procedures or
treatments, knowing that it is owned or operated in violation of
Section 2400, may have his or her license to practice revoked. A
physician and surgeon who contracts to serve as, or otherwise allows
himself or herself to be employed as, the medical director of a
business organization that he or she does not own and that offers to
provide or provides outpatient elective cosmetic medical procedures
or treatments that may only be provided by the holder of a valid
physician’s and surgeon’s certificate under this chapter shall be
deemed to have knowledge that the business organization is in
violation of Section 2400.
   (d) A business organization that offers to provide, or provides,
outpatient elective cosmetic medical procedures or treatments, that
is owned or operated in violation of Section 2400, and that contracts
with, or otherwise employs, a physician and surgeon to facilitate
its offers to provide, or the provision of, outpatient elective
cosmetic medical procedures or treatments that may only be provided
by the holder of a valid physician’s and surgeon’s certificate is
guilty of violating paragraph (6) of subdivision (a) of Section 550
of the Penal Code.
   (e) For purposes of this section, “outpatient elective cosmetic
medical procedures or treatments” means a medical procedure or
treatment that is performed to alter or reshape normal structures of
the body solely in order to improve appearance.
  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.
               
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