BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  May 7, 2015


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                Susan Bonilla, Chair


          AB 684  
          (Bonilla) - As Amended April 30, 2015


          NOTE: This bill adds an urgency clause.  


          SUBJECT:  Healing arts: licensees: disciplinary actions.


          SUMMARY:  Until January 1, 2017, prohibits a registered  
          dispensing optician (RDO) or optometrist from any disciplinary  
          action from the Medical Board of California (MBC), the Board of  
          Optometry or any other state agency with enforcement authority  
          when both an optometrist and optician practice in the same  
          location.  


          EXISTING LAW:


          1)Establishes the MBC, within the Department of Consumer  
            Affairs, to license RDOs and regulate their practice.   
            (Business and Professions Code (BPC)  2000 et seq.)


          2)Establishes the Board of Optometry, within the Department of  
            Consumer Affairs, to license optometrists and regulate the  
            practice of optometry.  (BPC  3000 et seq.)









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          3)Prohibits optometrists and RDOs from having any membership,  
            proprietary interest, co-ownership, landlord-tenant  
            relationship or any profit-sharing agreement with each other.   
            (BPC  655)

          4)Prohibits optometrists from having any membership, proprietary  
            interest, coownership, landlord-tenant relationship or any  
            profit-sharing arrangement in any form, directly or  
            indirectly, either by stock ownership, interlocking directors,  
            trusteeship, mortgage, trust deed or otherwise with those who  
            manufacture, sell, or distribute lenses, frames, optical  
            supplies, optometric appliances or devices or kindred products  
            to physicians and surgeons, optometrists, or dispensing  
            opticians.  (BPC  655)

          5)Provides that it is unlawful for RDOs to:  (BPC  2556)

             a)   Advertise the furnishing of, or to furnish, the services  
               of a refractionist, an optometrist or a physician and  
               surgeon; 

             b)   Directly or indirectly employ or maintain on or near the  
               premises used for optical dispensing, a refractionist, and  
               optometrist, a physician and surgeon or a practitioner of  
               any other profession for the purpose of any examination or  
               treatment of the eyes; or,

             c)   Duplicate or change lenses without a prescription or  
               order from a person duly licensed to issue the same.

          THIS BILL:


          1)Specifies that on or after January 1, 2016, and until January  
            1, 2017, no dispensing optician or optometrist shall be  
            subject to discipline by the MBC, Board of Optometry or any  
            other state agency with enforcement authority, for engaging in  
            any business relationship prohibited by BPC  655 and 2556.








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          2)Declares that this is an urgency measure necessary for the  
            immediate preservation of the public peace, health or safety  
            and is needed in order to protect various businesses,  
            opticians and optometrists who engage in a business  
            relationship prohibited by BPC  655.


          FISCAL EFFECT:  Unknown.  This bill is keyed fiscal by the  
          Legislative Counsel.


          COMMENTS:


          Purpose.  This bill is author sponsored.  According to the  
            author, "Co-located vision models have existed in California  
            for nearly three decades. They serve millions of patients  
            annually and employ thousands of optometrists and opticians.   
            With the conclusion of legal suits over the last few years,  
            the state is compelled to enforce a decades old law.  AB 684  
            will provide a safe harbor as the Legislature, stakeholders  
            and the Administration work toward statutory solutions that  
            will maintain patient access to these models and ensure  
            clinical independence for Optometrists." 


          Background.  In California, there are two eye care service  
            models: an optometrist's private office and a "co-location"  
            office, where an optical retail store is co-located with a  
            Department of Managed Health Care (DMHC)-regulated health  
            plan, also called a Knox-Keene plan, that provides optometry  
            care.  At co-location sites, patients receive an eye exam and  
            can fill their prescription for corrective eyewear during the  
            same visit at the co-located optical retail store [e.g.  
            Walmart, LensCrafters].  At private optometrist offices,  
            patients receive an eye exam and can take a prescription  
            elsewhere or have the optometrist send it out for them.   
            California law provides that prescriptions are mobile, so the  
            patient is not required in either setting to have the  








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            prescription filled on site.  


          Under BPC  655 and 2556, optometrists and RDOs cannot have any  
            membership, proprietary interest, co-ownership,  
            landlord-tenant relationship or any profit-sharing agreement  
            with each other.  Optometrists also cannot have any  
            membership, proprietary interest, co-ownership,  
            landlord-tenant relationship or any profit-sharing arrangement  
            in any form with those who manufacture, sell, or distribute  
            lenses, frames, optical supplies, optometric appliances or  
            devices or kindred products to physicians and surgeons,  
            optometrists or RDOs.


          Under these code sections, it is also unlawful for RDOs to do  
            any of the following:


                 Advertise the furnishing of, or to furnish, the services  
               of a refractionist, an optometrist or a physician and  
               surgeon; 
                 Directly or indirectly employ or maintain on or near the  
               premises used for optical dispensing, a refractionist, and  
               optometrist, a physician and surgeon or a practitioner of  
               any other profession for the purpose of any examination or  
               treatment of the eyes; or,


                 Duplicate or change lenses without a prescription or  
               order from a person duly licensed to issue the same.


          The Pearle Case.  In February of 2002, Attorney General (AG)  
            Bill Lockyer brought suit against Pearle Vision, arguing that  
            the company had violated the Optometry Practice Act.  The AG   
            challenged the business relationship between the Knox-Keene  
            plan, Pearle VisionCare, and the optical sister company,  
            Pearle Vision, as well as the ownership of the Knox-Keene plan  








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            by an optical company, claiming that such relationships  
            violated BPC  655 and 2556.  


          The Snow Case.  In March 2002, a private plaintiff brought suit  
            against LensCrafters (the Snow case), raising some of the same  
            business relationship issues as those raised in the Pearle  
            case.  LensCrafters and others subsequently filed a case in  
            federal district court to defend their business operations in  
            California, challenging the constitutionality of BPC  655  
            and 2556.


          California Supreme Court Decision.  On appeal, the Pearle case  
            reached the California Supreme Court, which declared that the  
            Knox-Keene Act does not create an exemption from restrictions  
            that BPC  655and 2556 impose on relationships between  
            optometrists and optical companies for Knox-Keene plans that  
            employ optometrists and affiliate with optical companies.  The  
            Supreme Court remanded the case to trial court for  
            determination of whether relationships involved in Pearle  
            Vision's Knox-Keene arrangement violate BPC  655 and 2556.   
            The Pearle case ultimately settled, with no determination on  
            the Knox-Keene/optical company co-location issue.  The Snow  
            case also settled, without a determination on the  
            Knox-Keene/optical company co-location issue.  


          Federal Court Decision.  The federal court, in December 2006,  
            struck down BPC  655 and 2556 as unconstitutional,  
            interpreting the California Supreme Court's ruling in the  
            Pearle case as a bar to LensCrafters' Knox-Keene plan  
            arrangement (National Association of Optometrists & Opticians  
            v. Lockyer, 463 F.Supp.2d 1116 (E.D.Cal.2006).  The federal  
            court determined, "the challenged laws substantially effect  
            and discriminate against interstate commerce."  The Court also  
            held that "[a]lthough California has legitimate interests in  
            regulating the provision of health services, defendants have  
            failed to meet its burden of showing that it has no other  








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            means to advance its legitimate interests."  The Court noted  
            that the Knox-Keene plan arrangement, if permitted by law,  
            would be a viable means for the State to achieve its  
            legitimate interests with less impact on interstate commerce.   



          Ninth Circuit Court of Appeals Decision.  On June 13, 2012, BPC  
             655 was  upheld as constitutional by the Ninth Circuit Court  
            of Appeals in National Association of Optometrists & Opticians  
            v. Harris, 682 F.3d 1144 (9th Cir.2012).  The optical industry  
            plaintiffs then petitioned the Supreme Court of the United  
            States for certiorari review, but on February 19, 2013, the  
            U.S. Supreme Court declined to hear the case, and the Ninth  
            Circuit decision upholding the law became final.


          Other States.  There are 14 U.S. jurisdictions that allow direct  
            employment of optometrists by optical companies.  Direct  
            landlord-tenant relationships are permitted in 47 states.   
            Additionally, 49 states allow optical companies to franchise  
            to optometrists.


          Need for This Legislation.  Given the complexities of the issue  
            and the multiple regulatory bodies involved including the  
            Board of Optometry, the MBC, the AG and other interested  
            stakeholders, additional time is necessary to develop a  
            comprehensive legislative solution that includes statutory  
            language to provide clarity to all parties, including  
            regulatory bodies.   


          Without the safe harbor provisions proposed in this bill, the  
            state may be compelled to take enforcement action against  
            licensed optometrists who practice in co-located models which  
            serve to expand patient choice.  These locations also offer  
            choices for optometrists who may seek to serve patients who  
            may not traditionally have access to care.  Additionally,  








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            according to the Board of Optometry, "Retail optical practices  
            are becoming increasingly popular for both new graduates and  
            established Optometrists due to the level of income they  
            provide, low risk, flexibility they can offer, and the ability  
            to focus more on the clinical side of the practice rather than  
            the business operations" (Business Models of Optometry, Agenda  
            Item 11, California Board of Optometry Memo, June 21, 2011).


          According to the author, the evolution of healthcare, evidenced  
            by the rise of health maintenance organizations, proliferation  
            of convenient care and co-located healthcare clinics and  
            changing provider relationships, requires that California law  
            and policy also evolve to effectuate the state's goals of  
            increased access to quality affordable care.  This bill  
            proposes a safe harbor provision until January 1, 2017, that  
            will allow for constructive dialogue between stakeholders and  
            regulatory entities.  The goal is to create a comprehensive  
            legislative solution that protects patient access to care,  
            respects optometrists' clinical judgment and professional  
            choice and provides regulatory entities with clear direction.


          Current Related Legislation.  AB 595 (Alejo) of the current  
          legislative session, prohibits a licensed registered dispensing  
          optician or a manufacturer or distributor of optical goods that  
          is renting or leasing office space to or from, sharing office  
          space with, or receiving space from an optometrist from engaging  
          in conduct that would influence or interfere with the clinical  
          decisions, as defined, of that optometrist, as specified.   
          STATUS: This bill is in the Assembly Committee on Business and  
          Professions.


          Prior Related Legislation.  AB 778 (Atkins) of 2011, would have  
          specifically permitted a licensed vision health plan, who is  
          owned by an optical manufacturer, to locate next to a registered  
          dispensing optician.  NOTE: This bill was never set for hearing  
          in the Senate Committee on Business, Professions and Economic  








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          Development.


          ARGUMENTS IN SUPPORT: 


          The  National Association of Optometrists and Opticians  support  
          the bill and write in their letter, "Ambiguity in current law  
          has created confusion about whether vision care centers can  
          continue to operate in California; years of past litigation have  
          not resolved this ambiguity?It is critically important that the  
          state guarantees uninterrupted vision care for the working  
          families that depend on optometrists who work at vision care  
          centers."


           Sears Optical  also supports the bill.  They write, "Sears  
          Optical is pleased to write in support of AB 684, which will  
          protect vision care access for working Californians while the  
          state deliberates the best way to bring clarity to outdated laws  
          governing how and where optometrists can provide eye care  
          services in the state."


           Walmart Inc., on behalf of Walmart Vision Centers and Sam's Club  
          Opticals  , U.S. Vision, owner of JCPenney Optical,  National  
          Vision Inc.  ,  LensCrafters  ,  Eyexam  and  For Eyes Opticals,  
           supports the bill and writes, "[We] have been a part of a  
          stakeholder process that includes out industry partners, the  
          Attorney General's office and the Governor's office designed to  
          put this issue to rest once and for all.  As we continue these  
          productive conversations, it critically important that  
          Californians continue to have access to the high-quality care  
          provided by optometrists and support employees who work at these  
          locations. AB 684 guarantees uninterrupted vision care for the  
          patients that depend on the Doctors practicing at our Walmart  
          and Sam's Club locations.  This bill provides the Doctors and  
          patients assurance that they can continue providing and  
          receiving high quality care as the state continues working  








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          toward a collaborative, comprehensive eye care solution."


          ARGUMENTS IN OPPOSITION:


          None on file.


          AMENDMENTS:


          Assemblymember Alejo carried legislation (AB 595, of the current  
          legislation session) that sought to provide a solution for the  
          issues as outlined in this analysis.  As such, Assemblymember  
          Bonilla desires to add Assemblymember Alejo as a joint author to  
          this measure.


          Since this is an urgency measure, the following amendments  
          should be made to ensure the legislation goes into effect  
          immediately:


          On page 2, line 4, strike:  January 1, 2016  


          On page 3, line 8, strike:  and on and after  


          On page 3, line 9, strike:  January1, 2016  


          REGISTERED SUPPORT:  


          EYEXAM of California










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          For Eyes Optical Company


          LensCrafters


          National Association of Optometrists and Opticians


          National Vision, Inc.


          Sam's Club Opticals


          Sears Optical


          U.S. Vision, JCPenny Optical


          Walmart Stores Inc. 


          2 individuals




          REGISTERED OPPOSITION:  
          None on file.




          Analysis Prepared by:Le Ondra Clark Harvey, Ph.D. / B. & P. /  
          (916) 319-3301










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