This initiative measure is submitted to the people in accordance with the provisions of Article II, Section 8 of the Constitution.

This initiative measure adds sections to the Health and Safety Code; therefore, new provisions proposed to be added are printed in italic type to indicate that they are new.

PROPOSED LAW

Division 2.4 (commencing with Section 1796.01) is added to the Health and Safety Code to read:

Division 2.4. The Patient Protection Act

Chapter 1. Purpose and Intent

   1796.01. This division shall be known as the ''Patient Protection Act." The people of California find and declare all of the following:
   (a) No health maintenance organization (HMO) or other health care business should be able to prevent doctors, registered nurses, and other health care professionals from informing patients of any information that is relevant to their health care.
   (b) Doctors, registered nurses, and other health care professionals should be able to advocate for patients without fear of retaliation from HMOs and other health care businesses.
   (c) Health care businesses should not create conflicts of interest that force doctors to choose between increasing their pay or giving their patients medically appropriate care.
   (d) Patients should not be denied the medical care their doctor recommends just because their HMO or health insurer thinks it will cost too much.
   (e) HMOs and other health insurers should establish publicly available criteria for authorizing or denying care that are determined by appropriately qualified health professionals.
   (f) No HMO or other health insurer should be able to deny a treatment recommended by a patient's physician unless the decision to deny is made by an appropriately qualified health professional who has physically examined the patient.
   (g) All doctors and health care professionals who are responsible for determining in any way the medical care that a health plan provides to patients should be subject to the same professional standards and disciplinary procedures as similarly licensed health professionals who provide direct care for patients.
   (h) No hospital, nursing home, or other health facility should be allowed to operate unless it maintains minimum levels of safe staffing by doctors, registered nurses, and other health professionals.
   (i) The quality of health care available to California consumers will suffer if health care becomes a big business that cares more about making money than it cares about taking good care of patients.
   (j) It is not fair to consumers when health care executives are paid millions of dollars in salaries and bonuses while consumers are being forced to accept more and more restrictions on their health care coverage.
   (k) The premiums paid to health insurers should be spent on health care services for patients, not on big corporate salaries, expensive advertising, and other excessive administrative overhead.
   (l) The people of California should not be forced to rely on politicians and their political appointees to enforce this division. The people themselves should have standing with administrative agencies and the courts to make sure that the provisions, purposes, and intent of this division are carried out.
   (m) Health care businesses have a responsibility to provide consumers with a prompt, fair, and understandable means of resolving disputes.
   (n) When decisions are made affecting their health care, patients and consumers' interests need to be better represented.
   (o) A high quality, safe, and adequately funded public health care system is needed in California to maintain vital emergency and preventive services, to provide a safety net for seniors, and to protect against the threat and taxpayer costs of contagious diseases and other health dangers. This division contains reforms based upon these findings. It is the purpose and intent of each section of this division to protect the health, safety, and welfare of the people of California by ensuring the quality of health services provided to consumers and patients and by requiring health care businesses to provide the services to which consumers and patients are entitled in a safe and appropriate manner.

Chapter 2. Full Disclosure of Medical Information to Patients

   1796.02. No health care business shall attempt to prevent or discourage a physician, nurse, or other licensed or certified caregiver from disclosing to a patient any information that the caregiver determines to be relevant to the patient's health care.

Chapter 3. Doctors and Nurses Must Be Able to Advocate for Their Patients

   1796.03. No health care business shall discharge, demote, terminate a contract with, deny privileges to, or otherwise sanction, a physician, nurse, or other licensed or certified caregiver for providing safe, adequate, and appropriate care, for advocating in private or in public on behalf of patients, or for reporting any violation of law to appropriate authorities.

Chapter 4. Ban on Financial Conflicts of Interest

   1796.04. No health care business shall offer or pay bonuses, incentives, or other financial compensation directly or indirectly to any physician, nurse, or other licensed or certified caregiver for the denial, withholding, or delay of safe, adequate, and appropriate care to which patients are entitled. This section shall not prohibit a health care business from using capitated rates.

Chapter 5. Written Criteria for the Denial of Care

   1796.05. Health care businesses shall establish criteria for denying payment for care and for assuring quality of care. The criteria shall comply with all of the following:
   (a) Be determined by physicians, registered nurses, or other appropriately licensed health professionals, acting within their existing scope of practice and actively providing direct care to patients.
   (b) Use sound clinical principles and processes.
   (c) Be updated at least annually.
   (d) Be publicly available.

Chapter 6. Patients Must Be Examined Before Care is Denied

   1796.06. In arranging for medical care and in providing direct care to patients, no health care business shall refuse to authorize the health care services recommended by a patient's physician, registered nurse, or other appropriately licensed caregiver to which that patient is entitled unless the employee or contractor who authorizes the denial on behalf of the health care business has physically examined the patient in a timely manner, and unless that employee or contractor is an appropriately licensed health care professional with the education, training, and relevant expertise that is appropriate for evaluating the specific clinical issues involved in the denial. Any denial and the reasons for it shall be communicated in a timely manner in writing to the patient and to the caregiver whose recommendation is being denied.

Chapter 7. Doctors and Nurses Determine Medical Care

   1796.07. A physician, registered nurse, or other licensed caregiver who is an employee or contractor of a health care business and who is responsible for establishing procedures for assuring quality of care or in any way determining what care will be provided to patients shall be subject to the same standards and disciplinary procedures as all other physicians, registered nurses, or other licensed caregivers providing direct patient care in California.

Chapter 8. Safe Physician and Nursing Levels in Health Facilities

   1796.08. (a) All health care facilities shall provide safe and adequate staffing of physicians, registered nurses, and other licensed and certified caregivers. The skill, experience, and preparatory educational levels of those caregivers shall be in conformity with all requirements of professional, licensing, and certification standards adopted by regulatory and accreditation agencies.
   (b) The State Department of Health Services shall issue emergency regulations within six months of the effective date of this division establishing standards to determine the numbers and classifications of licensed or certified direct caregivers necessary to ensure safe and adequate staffing at all health care facilities. The standards shall be based upon: (1) the severity of illness of each patient; (2) factors affecting the period and quality of recovery of each patient; and (3) any other factor substantially related to the condition and health care needs of each patient.
   (c) All health care facilities shall be required as a condition of a license to file annually with the Department a statement of compliance certifying that the facility is maintaining safe and adequate staffing levels, and has adopted and is maintaining uniform methods for assuring safe staffing levels in accordance with this section.
   (d) A written explanation of the current method for applying the standards in determining safe staffing levels, and daily reports of the staffing patterns utilized by the facility, shall be available for public inspection at the facility.
   (e) Safe and adequate staffing levels shall be considered by courts as an element of the standard of reasonable care, skill, and diligence ordinarily used by health care facilities generally in the same or similar locality and under similar circumstances.

Chapter 9. Public Disclosure of Financial and Quality Reports

   1796.09. All health care businesses and their affiliated enterprises shall file annually with the State Department of Health Services the following information:
   (a) All quality health care indicators, criteria, data, or studies used to evaluate, assess, or determine the nature, scope, quality, and staffing of health care services, and for reductions in or modifications of the provision of health care services.
   (b) With respect to private health care businesses with more than one hundred and fifty employees in the aggregate, both of the following:
   (1) All financial reports and returns required by federal and state tax and securities laws, and statements of any financial interest greater than 5 percent or five thousand dollars ($5,000), whichever is lower, in any other health care business or ancillary health care service supplier.
   (2) A description of the subject and outcome of all complaints, lawsuits, arbitrations, or other legal proceedings brought against the business or any affiliated enterprise, unless disclosure is prohibited by court order or applicable law.
   (c) The filings required by this section shall also be available for public inspection after filing, and provided at the actual cost of reproduction and postage to the Health Care Consumer Association.

Chapter 10. Protection of Patient Privacy

   1796.10. The confidentiality of patients' medical records shall be fully protected as provided by law. No section of this division shall be interpreted as changing those protections, except that no health care business shall sell a patient's medical records to any third parties without the express written authorization of the patient.

Chapter 11. Resolution of Disputes over Quality of Care

   1796.11. When there is a dispute between a patient and a private health care business over the quality of care that the consumer has received, and the patient has been harmed in any way, the patient may not be required to give up the right to go directly to court to resolve the dispute unless the consumer has agreed to do so and the agreement for alternative resolution of disputes: (1) is written in a manner understandable by a lay person; (2) is not made a condition of the patient's coverage or entitlement to health care services; (3) provides the patient with at least twenty-one days in which to review the agreement; (4) allows the patient to revoke the agreement for a period of seven days after signing it, during which the agreement is unenforceable; and (5) informs the consumer of the protections provided by this section. Nothing in this section shall be construed to prohibit or limit the health care consumer's right to voluntarily utilize alternative dispute resolution options in accordance with this section.

Chapter 12. Health Care Consumer Association

   1796.12. (a) No later than six months after the passage of this division, a consumer-based, not-for-profit, tax-exempt public corporation known as the Health Care Consumer Association (HCCA) shall be established to serve the essential public and governmental purposes of protecting and advocating the interests of health care consumers, including their interest in the quality and delivery of care, and to operate as a necessary element of California's regulation of the provision of health care services in order to ensure through education and advocacy safe and adequate care for the people of California.
   (b) The duties of the HCCA shall include evaluating and issuing reports on the quality of health care services provided by health care businesses; advising other state agencies in their adoption of any standards and regulations related to this division, and advocating legislation to protect and promote the interests of health care consumers; and by initiating or intervening by right in any administrative or legal proceeding to implement or enforce this division, on behalf of the public interest. The HCCA shall not sponsor, endorse, or oppose any candidate for any elected office.
   (c) The HCCA shall be governed by a board of directors composed of public members, six of whom are appointed by the Governor and confirmed by the Senate for two year terms, and seven public members, elected by the members of the HCCA, who shall serve two year terms, the first election occurring within one year of the establishment of the HCCA. The board shall hire officers and establish procedures governing board elections. No member of the board may vote on any matter in which the member has a conflict of interest, and members may be removed by a vote of the board for malfeasance or inability to fulfill their duties. All meetings of the board shall be open to the public.
   (d) Membership in the organization shall be free to any California consumer who wishes to join. The organization shall be funded exclusively by voluntary membership contributions, which shall be kept confidential, grants, or donations. All the monies shall be deposited in the ''Health Care Consumer Protection Fund" which shall be maintained as a trust by the State Treasurer. Monies in this fund shall be automatically and continuously appropriated for expenditure by the HCCA's board in the fulfillment of the duties set forth in this section. The Legislature shall make no other appropriation for this section, nor shall it have any right to appropriate the trust funds monies for other purposes.
   (e) Every private health care business with more than fifty employees in the aggregate shall enclose a notice in every insurance policy, contract, renewal, bill, or explanation of benefits or services informing health care consumers of the opportunity to become a member of the HCCA and to make a voluntary contribution to the organization. The State Director of Health Services shall review the content of the notice and ensure that it is content-neutral and neither false nor misleading. The HCCA shall proportionately reimburse the health care business for any costs incurred by inclusion of the enclosure.
   (f) The HCCA shall file an annual report of its activities and finances with the State Department of Health Services, which shall have the right to reasonable, periodic audits of its records. No law restricting or prescribing a mode of procedure for the exercise of the powers of state bodies or state agencies shall be applicable to the HCCA unless the Legislature expressly so declares pursuant to Section 1796.19.

Chapter 13. Protection of Public Health and Safety Fund

   1796.13. (a) A ''Public Health and Preventive Services Fund" is hereby created in the State Treasury. Notwithstanding Section 13340 of the Government Code, the monies in the fund are continuously appropriated to the State Department of Health Services for expenditure, without regard to fiscal years, which shall administer them solely for the purposes of this division.
   (b) All monies collected and deposited into the fund shall first be used to pay any costs associated with implementation of this division. Any remaining monies in the fund shall be distributed by the State Department of Health Services and used for purposes of: (1) assisting in the maintenance of essential community public health services, including trauma care, communicable disease control, and preventive services; (2) assuring the maintenance of health services for seniors whose access to safe and adequate care is jeopardized by cuts in Medicare and other benefits; and (3) ensuring adequate access to public health services and facilities, including access by individuals and families who suffer loss of health benefits due to job loss or their employer's decision to curtail or discontinue health benefits.
   (c) The Board of Equalization shall assess and collect the following fees for deposit to the fund:
   (1) The following quality care and public health fees are imposed on private health care businesses and ancillary health care service suppliers that have one hundred and fifty or more employees in the aggregate:
   (A) Community Health Service Disinvestment Fee. An annual fee is imposed for any action involving the reorganization, restructuring, downsizing, or closing of health care facilities in a community undertaken by the private health care business or in concert with any other person or entity, or both, that results in a reduction of health care services for the community. The annual health service disinvestment fee shall be assessed on the basis of the following:
   (i) For each inpatient care facility at which a reduction of licensed patient care beds occurs, the fee shall be determined according to the following formula: the bed reduction percentage (divide the number of licensed beds eliminated during the year by the total number of licensed beds at beginning of year), multiplied by the facility gross patient revenue for the year, multiplied by one percent. The disinvestment fee shall be applicable to the elimination of licensed inpatient care beds from health care facilities of any kind, including but not limited to, acute care, sub-acute care, and long-term nursing care facilities.
   (ii) The fee determined by subparagraph (A) above shall be assessed for each of five consecutive years beginning with the year in which the elimination of licensed patient care beds occurs. A separate fee shall be assessed in each year in which additional licensed patient care beds are eliminated from any inpatient facility. Any health facility that restores patient-care beds that were eliminated and subject to fees under this section shall be entitled to a proportionate offset of fees based on the number of beds restored.
   (B) Fee on Conversion to For Profit Health Care. A conversion fee shall be imposed on each of the following transactions:
   (i) Any change in status of a private health care business or ancillary health care service supplier from a California Public Benefit Corporation to any other form of business entity.
   (ii) Any sale, lease, conveyance, exchange, transfer, or encumbrance of the assets of a private health care business or ancillary health care service supplier that is a California Public Benefit Corporation to any person or entity that is not a California Public Benefit Corporation which constitutes ten percent or more of the corporation's assets.
   (iii) Any sale, lease, conveyance, exchange, transfer, or encumbrance of the assets of health facilities owned by any governmental or public entity including any hospital district to any private person or entity.
   (iv) The conversion fee under clauses (i) and (ii) shall be assessed on the resulting entity after a change in status under clause (i) and on the transferee of assets under clause (ii), and shall be in the amount of ten percent of the total value of all assets involved in the transaction and shall constitute a dedication of assets to charitable purposes within the meaning of applicable law. The conversion fee under clause (iii) shall be assessed on the transferee of assets in the amount of one percent of the total value of all assets involved in the transaction.
   (C) Excessive Compensation Fee. Every officer, director, executive, management official, employee, agent, or consultant for a private health care business or ancillary health care service supplier who personally, or together with family members, holds stock or securities of any kind in the health care business or supplier, and/or its affiliated enterprises, valued at more than two million dollars ($2,000,000) shall be assessed a fee in the amount of 2.5 percent on the value of any new stock or securities received as compensation for services. This fee shall be assessed in the year the stock or securities are received, or in the year the compensation is otherwise taxable under applicable provisions of the California Revenue and Taxation Code and the United States Internal Revenue Code.
   (D) Merger, Acquisition, and Monopolization Fee. A merger, acquisition, and monopolization fee shall be imposed in each of the following transactions:
   (i) On the surviving entity in any merger of a private health care business with any other private health care business, or with any person or entity engaging in any business of any kind.
   (ii) On the acquiring entity in any acquisition of any health care business by any private health care business, or by any person or entity engaging in any business of any kind.
   (iii) On the participating entities in the establishment of any multiprovider network(s) by private health care businesses that jointly market or provide, or both, their health care services to purchasers of health care services with respect to the revenue obtained by each from the network.
   (iv) The fee imposed by clauses (i) and (ii) shall be assessed in the amount of one percent of all assets within the State of California involved in the transaction. No private health care business that is required to pay a conversion fee for a transaction subject to subparagraph (B) shall be required to pay a fee under this clause for the same transaction.
   (v) The fee imposed by clause (iii) shall be an annual fee assessed for each of five consecutive years in which the multiprovider network operates in the amount of three percent of the gross annual revenue derived from services provided by the network in the State of California.
   (2) For purposes of this section, ''ancillary health care service supplier" includes, but is not limited to, health facilities, health care businesses, as well as suppliers of pharmaceutical, laboratory, optometry, prosthetic, or orthopedic supplies or services, suppliers of durable medical equipment, and those businesses that supply care or treatment models, staffing methodologies, quality assurance, or measurement systems and methodologies.
   (3) This section does not apply to governmental entities, hospital districts, or other public entities. However, this section shall apply to any joint venture, partnership, affiliated entities, or any other arrangement or enterprise involving a private entity or person in combination or alliance, or both, with a public entity to the extent assets are received or revenues are earned and reported to any governmental entity as assets or revenues of the joint venture or private entity. Notwithstanding Sections 213 to 214, inclusive, and Section 23701 of the Revenue and Taxation Code, this section shall apply to all private health care businesses regardless of whether the business was organized and operates as a nonprofit or tax-exempt enterprise. No provision of this section is intended to impose any fee on insurers that is not permitted by Section 28 of Article XIII of the California Constitution. The Board of Equalization shall adopt all necessary regulations to implement this section.

Chapter 14. No Unnecessary Increases in Premiums, Co-Payments, Deductibles or Charges

   1796.14. After the effective date of this division, no private health care business shall increase premiums, co-payments, deductibles, or charges for health services unless it first files a statement with the State Department of Health Services that certifies under penalty of perjury that the increases are necessary and that discloses for public inspection the following information: (1) total amounts of additional annual revenue that will result from the increases; (2) a description of the anticipated uses of the revenue; and (3) the amounts of total revenue and total expenses of the health care business for each of the previous three years.

Chapter 15. Definitions

   1796.15. The following definitions shall apply to this division:
   (a) ''Affiliated enterprise" means any entity of any form that is wholly owned, controlled, or managed by a health care business, or in which a health care business holds a beneficial interest of at least twenty-five percent either through ownership of shares or control of memberships.
   (b) ''Available for public inspection" means available at the facility during regular business hours to any person for inspection or copying, or both, at a charge for the reasonable costs of reproduction.
   (c) ''Caregiver" or ''licensed or certified caregiver" means a person licensed under, or licensed under any initiative act referred to in, Division 2 (commencing with Section 500) of the Business and Professions Code.
   (d) ''Health care business" means any health facility, organization, or institution of any kind, with more than 25 employees in the aggregate, that provides or arranges for the provision of health services, including any ''health facility" as defined herein, any ''health care service plan" as defined in Section 1345, any health care insurer or nonprofit hospital service plan as defined in the Insurance Code that issues or administers individual or group insurance policies providing health services, and any medical groups, preferred provider organizations, or independent practice organizations, regardless of business form, and whether or not organized and operating as a profit or nonprofit, tax-exempt, or non-exempt enterprise.
   (e) ''Health care consumer" or ''patient" means any person who is an actual or potential recipient of health services.
   (f) ''Health care services" or ''health services" means health care services of any kind, including, but not limited to, diagnostic tests or procedures, medical or surgical treatments, nursing care, and other health care services as defined in subdivision (b) of Section 1345.
   (g) ''Health facility" means any facility of any kind at which health services are provided, including, but not limited to, those facilities defined in Sections 1200, 1200.1, 1204, 1250, clinics, and home health agencies as defined in Section 1374.10, regardless of business form, and whether or not organized and operating as a profit or nonprofit, tax-exempt or non-exempt enterprise, and including facilities owned, operated, or controlled by governmental entities, hospital districts, or other public entities.
   (h) ''Private health care business" means any ''health care business" as defined herein except governmental entities, hospital districts, or other public entities. ''Private health care business" shall include any joint venture, partnership, or any other arrangement or enterprise involving a private entity or person in combination or alliance, or both, with a public entity.

Chapter 16. Interpretation

   1796.16. This division is written in plain language so that people who are not lawyers can read and understand it. When any question of interpretation arises it is the intent of the people that this division shall be interpreted in a manner that is consistent with its purpose, findings, and intent and, to the greatest extent possible, advances and safeguards the rights of patients, enhances the quality of health care services to which consumers and patients are entitled, and furthers the application of the reforms contained in this division. If any provision of this division conflicts with any other provision of statute or legal precedent, this division shall prevail.

Chapter 17. Implementation and Enforcement

   1796.17. (a) The provisions of this division shall be administered and enforced by the appropriate state agencies, which shall issue regulations, hold hearings, and take any other administrative actions that are necessary to carry out the purposes and enforce the provisions of this division. Health care consumers shall have standing to intervene in any proceeding arising from this division. Any person may also go directly to court to enforce any provision of this division, individually, or on behalf of the public interest. In any successful action by health care consumers to enforce this division on behalf of the public interest, a substantial benefit will be conferred upon the general public. Conduct in violation of this division is wrongful and in violation of public policy. These remedies are in addition and cumulative to any other remedies provided by statute or common law.
   (b) Any private health care business found by a court in either a private or governmental enforcement action to have engaged in a pattern and practice of deliberate or willful violation of this division shall, for a period of five years, be prohibited from asserting as a defense, or otherwise relying on, in any civil or criminal action against it for restraint of trade, unfair trade practices, unfair competition or other violations of Part 2 (commencing with Section 16600) of Division 7 of the Business and Professions Code, any of the antitrust law exemptions contained in Section 16770 of the Business and Professions Code, Section 1342.6 of the Health and Safety Code, or Section 10133.6 of the Insurance Code.

Chapter 18. Severability

   1796.18. If any provision, sentence, phrase, word, or group of words in this division, or their application to any person or circumstance, is held to be invalid, that invalidity shall not affect other provisions, sentences, phrases, words, groups of words or applications of this division. To this end, the provisions, sentences, phrases, words, and groups of words in this division are severable.

Chapter 19. Amendment