BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON
          BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 684          Hearing Date:    July 6,  
          2015
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          |Author:   |Alejo and Bonilla                                     |
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          |Version:  |June 30, 2015                                         |
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          |Urgency:  |Yes                    |Fiscal:    |Yes              |
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          |Consultant|Sarah Huchel                                          |
          |:         |                                                      |
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              Subject:  Healing arts: licensees: disciplinary actions.


          SUMMARY:  Prohibits the Medical Board of California (MBC) and the  
          California Board of Optometry (CBO) from enforcing provisions  
          related to business relationships between registered dispensing  
          opticians (RDOs) and optometrists. 

          Existing law:
          
          1)Defines individuals, corporations, and firms engaged in the  
            business of filling prescriptions lenses and related products  
            and performing allied services as "dispensing opticians" and  
            states that they are prohibited from engaging in that business  
            unless registered with the MBC.  (Business and Professions  
            Code (BPC)  2550)


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







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            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:  

             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, an  
               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.  (BPC  
                2556)

          6)Establishes the Knox-Keene Health Care Service Plan Act of  
            1975 which establishes rules for mandatory basic services,  
            financial stability, availability and accessibility of  
            providers, and other standards for patient care.  (Health and  
            Safety Code (HSC)  1340 et seq.)

          7)Declares Legislative intent and purpose to promote the  
            delivery and the quality of health and medical care to the  
            people of the State of California who participate in a health  
            care service plan by:

             a)   Ensuring the continued role of the professional as the  
               determiner of the patient's health needs which fosters the  
               traditional relationship of trust and confidence between  
               the patient and the professional. 

             b)   Prosecuting malefactors who make fraudulent  
               solicitations or who use deceptive methods,  
               misrepresentations, or practices which are inimical to the  
               general purpose of enabling a rational choice for the  
               consumer public.  








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             c)   Ensuring that subscribers and enrollees receive  
               available and accessible health and medical services  
               rendered in a manner providing continuity of care. (HSC   
               1342)

          This bill:

          1) Prohibits an individual, corporation, or firm operating as a  
             RDO before the effective date of this bill, or an employee of  
             such an entity, or an optometrist licensed before the  
             effective date of this bill, from being subject to any action  
             by the MBC, the CBO, another state agency, or a district  
             attorney for engaging in any prohibited business relationship  
             between optometrists and RDOs, as specified.

          2) Prohibits this bill from being construed to imply or suggest  
             that a RDO or optometrist engaging in any business  
             relationship is in violation of or in compliance with the  
             law.

          3) Prohibits this bill from applying to any business  
             relationships prohibited by specified law that are registered  
             and operating on or after the effective date of this bill.

          4) States that nothing in this bill shall prohibit an  
             individual, corporation, or firm operating as a RDO from  
             engaging in a business relationship with a licensed  
             optometrist before the effective date of this bill at  
             locations registered with the MBC before the effective date  
             of this bill.

          5) Prohibits any individual, corporation, or firm, or an  
             employee of such an entity, operating as a RDO before the  
             effective date of this bill, from being subject to any action  
             for advertising the furnishing of, or furnishing, the  
             services of a refractionist, an optometrist, or a physician  
             and surgeon; or directly or indirectly employing or  
             maintaining on or near the premises used for optical  
             dispensing, a refractionist, an optometrist, a physician and  
             surgeon or a practitioner of any other profession for the  
             purpose of any examination or treatment of the eyes.

          6) Prohibits this bill from being construed to imply or suggest  








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             that a RDO is in violation of or in compliance with the law.

          7) Prohibits this bill from applying to any business  
             relationships prohibited by specified law that are registered  
             and operating on or after the effective date of this bill.

          8) States that nothing in this bill shall prohibit an  
             individual, corporation, or firm operating as a RDO from  
             engaging in a business relationship with a licensed  
             optometrist before the effective date of this bill at  
             locations registered with the MBC before the effective date  
             of this section.

          9) Sunsets the above provisions of this bill on January 1, 2017.

          10)Tolls the limitations period during the time this bill is in  
             effect for any actions taken against an individual or  
             entity's license or registration in regards to a violation  
             discussed in this bill. 

          11)States that this bill is an urgency statute necessary for the  
             immediate preservation of the public peace, health, or safety  
             within the meaning of Article IV of the Constitution and  
             shall go into immediate effect.  The facts constituting the  
             necessity are:  In order to protect various businesses,  
             opticians, and optometrists who engage in a business  
             relationship that is prohibited by specified law from  
             discipline by the MBC, the CBO, or other state agency with  
             enforcement authority while the Legislature, with the  
             assistance of appropriate regulatory agencies, develops a  
             model that will allow California businesses to provide  
             services to patients and also protect the interests of  
             practitioners.

          
          FISCAL  
          EFFECT:  This bill is keyed "fiscal" by the Legislative Counsel.  
           According to the analysis by the Assembly Appropriations  
          Committee dated May 20, 2015, this bill will have negligible  
          state fiscal effect.

          
          COMMENTS:
          








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          1.Purpose.  This bill is sponsored by the  Author  .  According to  
            the Author's office,   "Current state law governing the  
            relationship between optometrists and opticians, co-located  
            sellers of eyewear has not been updated for many years. The  
            result is that these laws no longer reflect today's realities  
            and needs as the health care landscape has evolved  
            significantly. This evolution, evidenced by the rise of HMO's,  
            proliferation of convenient care and co-located healthcare  
            clinics, changing provider relationships, and now the  
            Affordable Care Act, requires that California law and policy  
            also evolve to effectuate the state's goals of increased  
            access to quality, affordable care?.
            
            "AB 684 will temporarily allow [vision care centers] to  
            continue to operate in the state by suspending any new  
            disciplinary action against optometrists and opticians by the  
            Board of Optometry and the Medical Board of California until  
            January 1, 2017, while negotiations continue on a permanent  
            fix [to California law restricting certain business  
            arrangements affecting optometrists and opticians]." 

          2.Background. This bill is a result of over a decade of  
            litigation debating the legitimacy of current law prohibiting  
            certain business relationships between an optometrist and a  
            registered dispensing optician. The final case, National  
            Association of Optometrists & Opticians v. Harris, 682 F.3d  
            1144 (9th Cir.2012) affirmed California statutes.  
            
            The plaintiffs in the case, the National Association of  
            Optometrists and Opticians, LensCrafters, Inc., and Eye Care  
            Centers of America, Inc., argued that the laws  prohibiting   
            licensed opticians from offering prescription eyewear at the  
            same location in which eye examinations are provided and the  
            advertising that eyewear and eye examinations are available in  
            the same location, violate the dormant Commerce Clause.  The  
            plaintiffs argued it was unfair that optometrists and  
            ophthalmologists may set up a practice where patients may  
            receive both eye examinations and prescription eyewear, but  
            opticians may offer only the sale of eyewear, not eye  
            examinations, and therefore are unable to offer the  
            convenience of "one-stop shopping" in California.  

            The Court upheld the California law as constitutional, stating  
            that the law was not discriminatory and did not place a  








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            significant burden on interstate commerce "just because it  
            precludes a preferred, more profitable method of operating in  
            a retail market."  

            While the decision placed a final affirmation on existing law,  
            determining its impact on California's optical market has not  
            been concluded.  The law did not anticipate the myriad  
            leasing, co-locating, and employment relationships that sprung  
            up during its debated legality.  

          3.Practice Models.  There are several basic ways in which  
            California consumers obtain eye exams and prescription  
            eyewear:

              a.   Private practice  .  An optometrist owns his or her own  
               location in which the optometrist provides eye examinations  
               and sells prescription eyewear.

              b.   Co-located optician and optometrist  .  Many department  
               stores, warehouse stores, and retail stores have a  
               full-service optical department that offer an eye exam and  
               prescription eyewear in one place.  The business  
               arrangements governing these entities vary, but there is  
               usually a lease of space involved, with varying contract  
               terms.    
           
             c.   Full Service HMO  : Kaiser Permanente offers eye  
               examination services and optical dispensing services at  
               same location.
           
             d.   Optician-Owned Dispensary  : A RDO offers prescription  
               eyewear but does not offer or provide access to  
               optometrist/eye examination services. 




            It is currently unsettled as to the legality of co-located  
            optometrists and opticians, and hundreds of jobs and access to  
            eye care are at stake until there is agreement as to the  
            appropriate nature of the business types.  

            This bill will provide a safe harbor to individuals involved  
            in business relationships that may be subject to current  








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            prohibitions until January 1, 2017, at which time an agreement  
            among stakeholders is anticipated.  

          1.Related Legislation.  AB 595  (Alejo) of 2015 would have  
            specifically authorized in statute vision care models that  
            currently exist in California where a registered dispensing  
            optician is located next to an optometrist.  (  Status  :  This  
            bill is currently pending in the Assembly Business and  
            Professions Committee.)   

          2.Arguments in Support.   Wal-Mart Stores, Inc.  , on behalf of  
            Walmart Vision Centers and Sam's Club Opticals ? is pleased to  
            write in supp9ort of AB 684, which will protect vision care  
            access for Californians while the state deliberates the best  
            way to bring clarity to outdated laws governing how and where  
            optometrists may provide vision care services in the state."

             LensCrafters  writes in support, "Optometrists associated with  
            EYEXAM of California, our sister company, and a Knox-Keene  
            licensed vision care plan have been providing quality vision  
            care to patients at LensCrafters locations for 28 years.   
            These optometrists are closely regulated by the state, and  
            patients value the convenience, accessibility and flexibility  
            of being able to receive comprehensive eye care at a location  
            where they do other shopping and where they can receive  
            services during the evenings and on weekends.  However, years  
            of litigation relating to a 1960s law have caused ambiguity  
            about whether doctors can continue seeing patients at vision  
            care centers like ours.

            "LensCrafters has been part of a robust stakeholder process  
            that includes our 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 is critically important that the more than 2  
            million Californians who receive eye care at one of  
            California's more than 600 vision care centers continue to  
            have access to the high-quality care provided by the nearly  
            2,000 optometrists and support employees who work at these  
            locations." 

             EYEXAM of California, For Eyes Optical Company, National  
            Association of Optometrists and Opticians, National Vision,  
            Inc.  and its subsidiaries  , Sears Optical, The California  








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            Chamber of Commerce, U.S. Vision , and numerous individuals  
            express the same sentiment.   

          3.Arguments in Opposition.  The  California Optometric  
            Association  (COA) writes in opposition, "As amended, this  
            measure would prohibit enforcement of Business and Professions  
            Code Section 655 and 2556 until January 2017, and allow large  
            corporate optical chains to put undue influence on an  
            optometrist's business practices, potentially impacting their  
            clinical judgment about what is best for their patients. ?

            "COA has fought for more than a decade to see these two laws  
            enforced.  The problems that have occurred have been severe  
            and patient care has suffered. LensCrafters alone has paid  
            more than $20 million in class action awards and has silenced  
            critics with confidential settlements.  The AG has official  
            court examples of real harm that have happened when a patient  
            believes they are getting a comprehensive eye exam that in a  
            traditional setting would detect eye disease and end up  
            receiving a cursory exam that is given to only sell eyeglasses  
            and other product. In fact, the AG first initiated litigation  
            because they found that the poor quality eye exam at Pearle  
            Vision (owned by Luxottica, which is the same parent company  
            as LensCrafters) was responsible for a patient's blindness.  
            These laws are in place for a good reason and they have been  
            affirmed by the courts. 

            "If a tweak to California law is necessary to modernize the  
            statute and ensure retail optometry businesses like Costco  
            that do not employ eye doctors can continue to operate, COA is  
            more than willing to address those legitimate concerns this  
            year. We can do that now without the need for a moratorium.   
            COA cannot support a proposal that prevents the optometry and  
            medical board from enforcing the law against all bad actors in  
            the marketplace."

             California Association of Dispensing Opticians  "believes that  
            [AB 684]'s proponents should not be rewarded for years of  
            violation of California patient protection laws by a 'get out  
            of jail free card' embodied in [this bill]."
             
            VSP Vision Care  writes, "The sponsors and proponents of the  
            bill failed in years of federal litigation to invalidate state  
            patient protection laws.  Those laws bar the specific business  








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            model established in California by the multinational corporate  
            sponsors of the bill, and operated without regard to existing  
            law during the sustained period of that unsuccessful  
            litigation.  ?

            "Now, after over two-years of advertised meetings and  
            discussions with the Department of Justice, ostensibly on how  
            to come into compliance with California law, AB 684 is simply  
            the latest bill sponsored by proponents to prolong operations  
            in California while not complying with California law. "
             
           
          SUPPORT AND OPPOSITION:
          
           Support:  

          EYEXAM of California 
          For Eyes Optical Company 
          LensCrafters
          National Association of Optometrists and Opticians
          National Vision, Inc. and its subsidiaries
          Sears Optical
          The California Chamber of Commerce
          U.S. Vision
          Wal-Mart Stores, Inc.
          Numerous individuals

           Opposition:  

          California Association of Dispensing Opticians
          The California Optometric Association
          VSP Vision Care

                                      -- END --