On June 6, 2008, Governor Schwarzenegger signed California Assembly Bill 1922 (AB 1922) into law expanding the definition of “licentiate” in California Business and Professions Code Section 809 (Section 809) to include marriage and family therapists (MFTs) and clinical social workers (CSWs). Peer review professionals should not expect AB 1922 to cause noticeable changes in the way peer review bodies around the state do business.  Health plans and disability insurers with MFTs and CSWs on their provider panels may well feel the greatest impact. The principal aim of AB 1922 was to address disparities in the way various practitioners are treated by certain peer review statutes.  It did not, however, resolve many inconsistencies in the way current law treats various licentiates. 

Section 809 et seq describes the peer review process and hearing rights that licentiates are entitled to receive when subject to a final proposed action, such as restrictions on practice or termination, by a peer review body that would require the filing of a report pursuant to Business and Professions Code Section 805 (often referred to as a “Section 805 Report”).  Prior to AB 1922’s passage, the narrow definition of licentiate meant that only physicians, podiatrists, dentists and clinical psychologists were eligible to the notice and hearing rights provided by Section 809. MFTs and CSWs generally are not members of those professional staffs or subject to adverse actions by them or their committees.  Rather, in general acute care hospitals, such professions usually are employees and therefore are not disciplined by a “peer review body.”

So, what does this change in the law mean? In addition to the above issues, we discuss below some notable inconsistencies remaining in the law, which may result in disparate treatment of licentiates in these statutorily defined reporting and hearing procedures. 

Background

AB 1922 addressed a longstanding legal disconnect between Sections 805 and 809.  In 1999, Assembly Bill 352 (AB 352) amended Section 805 expanding its definition of licentiate to include MFTs and CSWs. Thereafter, peer review bodies were required to file Section 805 reports on MFTs or CSWs who were subjected to adverse actions, such as the denial of staff privileges, employment or membership. AB 352 did not, however, amend the definition of “licentiate” in Section 809. So, MFTs and CSWs were suddenly vulnerable to the 805 Reporting requirements without any statutory right to challenge such reports through the notice and hearing processes provided to similarly situated physicians, podiatrists, dentists and clinical psychologists. 

The California MFT Association took exception to this disparate treatment and sponsored AB 1922 to ensure MFTs subjected to adverse action have the same hearing rights as other professionals who are also subject to Section 805 Reports. Subsequently, CSWs were added to the proposed amendment to ensure consistency between the two statutes.

What Constitutes a “Peer Review Body” for Purposes of Section 809? 

The notice and hearing rights afforded a licentiate under Section 809 are triggered when a “peer review body,” as that term is defined in Section 805, takes or recommends adverse action against a licentiate. Section 805 defines all of the following as “peer review bodies” that must comply with its reporting requirements:

• A medical or professional staff of any health care facility or clinic licensed under Division 2 (commencing with Section 1200) of the Health and Safety Code or of a facility certified to participate in the federal Medicare Program as an ambulatory surgical center.

• A health care service plan registered under Chapter 2.2 (commencing with Health and Safety Code Section 1340) or a disability insurer that contracts with licentiates to provide services at alternative rates of payment pursuant to Insurance Code Section 10133.

• Any medical, psychological, marriage and family therapy, social work, dental, or podiatric professional society having as members at least 25 percent of the eligible licentiates in the area in which it functions (which must include at least one county), which is not organized for profit and which has been determined to be exempt from taxes pursuant to Revenue and Taxation Code Section 23701.

• A committee organized by any entity consisting of or employing more than 25 licentiates of the same class that functions for the purpose of reviewing the quality of professional care provided by members or employees of that entity.

If your organization falls into one or more of the categories described above and takes adverse action against an MFT or CSW whom it employs, privileges or otherwise grants service authorizations or membership, and that action is based on a “medical disciplinary cause or reason”1, then the affected licentiate now has the right to a hearing under Section 809.  As discussed more thoroughly below, most health care facilities will not be affected by this expansion, as it is rare that a medical or professional staff (versus the facility as the employer) will take adverse action against an MFT or CSW.  

What Are the Basic Procedural Rights Section 809 Guarantees to Licentiates and Peer Review Bodies?

The legislature intended Section 809 as a guarantee of fair process for all of the parties involved in a peer review action. It requires the peer review body to provide the licentiate with written notice of the final proposed action and the procedures and time frames for requesting a hearing. And, the licentiate and the peer review body have the right to: inspect and copy all of the relevant records pertaining to the final proposed action; have a hearing in front of a neutral trier of fact; voir dire and challenge the impartiality of the trier of fact; call, examine, and cross-examine witnesses; present and rebut evidence determined by the arbitrator or presiding officer to be relevant; and submit a written statement at the close of the hearing; and appellate review. 

How Will the Requirement to Provide MFTs and CSWs Section 809 Notice and Hearing Rights Impact Peer Review Bodies?

• Hospitals, Skilled Nursing Facilities, Medical Groups, Outpatient Clinics and Surgery Centers

Because hospitals, skilled nursing facilities (SNF) medical groups, clinics and ambulatory surgery centers2 (ASC) usually employ MFTs and CSWs and do not appoint them to their medical of professional staffs, they should experience little or no change as a result of AB 1922. Instead, employment laws and union bargaining agreements will continue to govern the conduct of employers and their MFT/CSW employees with little, if any, overlap with Section 809.  According to an enforcement agent at the California Board of Behavioral Sciences (BSS), the board receives only about 25 Section 805 Reports per year on MFTs and CSWs. This further supports the contention that the impact of AB 1922 will be limited because Section 805 Reports on these practitioners is a generally low occurrence event.

These organizations should be aware, however, that MFTs and CSWs they employ may be subject to Section 805 reports. If they are not doing so already, human resources departments will benefit from adopting prospective employee vetting and due diligence procedures that require querying the California Board of Behavioral Sciences for Section 805 Reports filed against prospective MFT and CSW employees3. Such practices will alert health facilities to problems in a clinician’s past and provide an opportunity to evaluate more thoroughly the applicant’s qualifications.  Just as medical and professional staff application and attestation forms query an applicant about his/her current and prior adverse actions, so too should applications used for purposes of employing MFTs and CSWs. 

• Health Care Service Plans and Disability Insurers

AB 1922 is expected to have the greatest impact on health care service plans and disability insurers who contract with MFTs and CSWs for the provision of clinical services to their respective insureds, or privilege and appoint these professionals to provider panels.  Such plans are required to conduct ongoing utilization and quality of care reviews of the services provided by practitioners with whom they contract. Under AB 1922, final or recommended adverse action based on incompetence or professional misconduct for which a Section 805 Report4 must be filed will trigger Section 809 notices and hearings. 

All entities that fall within the definition of a “peer review body” should have legal counsel review the organization’s professional staff bylaws and rules and regulations or hearing and appeals policies and make any revisions necessary to ensure compliance with the expanded Section 809 requirements. If an entity must file a Section 805 Report on a MFT or CSW, forms can be downloaded from the BSS Web site.

AB 1922 Has Not Addressed All the Inconsistencies That Exist in Sections 805 and 809 Regarding the Treatment of Licentiates

• What About Querying Professional Boards?

The querying requirements set forth in Section 805.5 provide that certain health facilities, health care service plans, medical care foundations, and medical staffs must query the “Medical Board of California, the Board of Psychology, the Osteopathic Medical Board of California, or the Dental Board of California” prior to granting or renewing staff privileges for “any physician and surgeon, psychologist, podiatrist, or dentist.” Failing to query properly the respective board prior to granting membership or privileges is a misdemeanor and can result in a fine of not less than $200 nor more than $1,200.  

Notably, Section 805.5 does not include the BBS or a querying requirement for MFTs or CSWs.  That has not stopped the BBS from including in its Health Facility Reporting Form “ENF-805 (Rev. 12/05)” a statement that failure of a facility to query the BBS prior to granting an MFT or CSW privileges will subject the facility to the same fines discussed in Section 805.5. The BBS cites Section 805.5 as its authority for requiring such a query, despite the fact that Section 805.5 has no such requirement. Notwithstanding this ambiguity, peer review organizations should develop robust querying practice for all of the licentiates they privilege, employ or to whom it offers membership.

What About Compulsory Disclosure to A Board of the Hearing Record Created by the Entity?

Section 805.1 mandates that the California Medical, Osteopathic, and Dental Boards are entitled to inspect and copy the following documents in the record of any disciplinary proceeding resulting in action that is required to be reported pursuant to Section 805: (1) statement of charges; (2) document, medical chart, or exhibits in evidence; and (3) opinion, findings, or conclusions. Such documents are deemed confidential and entitled to certain limited, but ongoing, protections. AB 1922 does not address Section 805.1 with respect to Section 809 hearings on MFTs and CSWs. It remains silent regarding the BBS’s statutory entitlement to any of the foregoing documents in the record of a disciplinary proceeding against an MFT or CSW. It also does not address any confidentiality protections. Therefore, prior to providing access to such records to the BBS, an organization confronted with a request for such documents should consult their legal counsel. Absent a subpoena or court order for such records, such disclosure could jeopardize confidentiality, potentially making the records available to subsequent plaintiffs.

Conclusion

Although AB 1922 may usher in significant changes for health plans, disability insurers and membership organizations, it is not likely to affect the day-to-day operations of medical staff service providers around the state. If you have any questions about the legal impact of AB 1922 on your specific organization, please contact:

Patricia M. Kosich
kosich.patricia@arentfox.com
213.443.7521

Lowell C. Brown
brown.lowell@arentfox.com
213.443.7516

Sarah G. Benator
benator.sarah@arentfox.com
213.443.7518

1 Section 805 defines the term “medical disciplinary cause or reason” as that aspect of the licentiate’s competence or professional conduct that is reasonably likely to be detrimental to patient safety or to the delivery of patient care.

2 ASCs do not generally use the services of MFTs or CSWs.

3 The California Board of Behavioral Sciences Web site address is www.bbs.ca.gov

4 Failure to file a Section 805 Report when one is statutorily required can result in serious per violation fines ranging between $50,000 and $100,000 and criminal prosecution.  (see Section 805(k) and (l).)