139.32
. (a) For the purpose of this section, the following
definitions apply:
(1) "Financial interest in another entity" means, subject to
subdivision (h), either of the following:
(A) Any type of ownership, interest, debt, loan, lease,
compensation, remuneration, discount, rebate, refund, dividend,
distribution, subsidy, or other form of direct or indirect payment,
whether in money or otherwise, between the interested party and the
other entity to which the employee is referred for services.
(B) An agreement, debt instrument, or lease or rental agreement
between the interested party and the other entity that provides
compensation based upon, in whole or in part, the volume or value of
the services provided as a result of referrals.
(2) "Interested party" means any of the following:
(A) An injured employee.
(B) The employer of an injured employee, and, if the employer is
insured, its insurer.
(C) A claims administrator, which includes, but is not limited to,
a self-administered workers' compensation insurer, a
self-administered self-insured employer, a self-administered joint
powers authority, a self-administered legally uninsured employer, a
third-party claims administrator for an insurer, a self-insured
employer, a joint powers authority, or a legally uninsured employer
or a subsidiary of a claims administrator.
(D) An attorney-at-law or law firm that is representing or
advising an employee regarding a claim for compensation under
Division 4 (commencing with Section 3200).
(E) A representative or agent of an interested party, including
either of the following:
(i) An employee of an interested party.
(ii) Any individual acting on behalf of an interested party,
including the immediate family of the interested party or of an
employee of the interested party. For purposes of this clause,
immediate family includes spouses, children, parents, and spouses of
children.
(F) A provider of any medical services or products.
(3) "Services" means, but is not limited to, any of the following:
(A) A determination regarding an employee's eligibility for
compensation under Division 4 (commencing with Section 3200), that
includes both of the following:
(i) A determination of a permanent disability rating under Section
4660.
(ii) An evaluation of an employee's future earnings capacity
resulting from an occupational injury or illness.
(B) Services to review the itemization of medical services set
forth on a medical bill submitted under Section 4603.2.
(C) Copy and document reproduction services.
(D) Interpreter services.
(E) Medical services, including the provision of any medical
products such as surgical hardware or durable medical equipment.
(F) Transportation services.
(G) Services in connection with utilization review pursuant to
Section 4610.
(b) All interested parties shall disclose any financial interest
in any entity providing services.
(c) Except as otherwise permitted by law, it is unlawful for an
interested party other than a claims administrator or a network
service provider to refer a person for services provided by another
entity, or to use services provided by another entity, if the other
entity will be paid for those services pursuant to Division 4
(commencing with Section 3200) and the interested party has a
financial interest in the other entity.
(d) (1) It is unlawful for an interested party to enter into an
arrangement or scheme, such as a cross-referral arrangement, that the
interested party knows, or should know, has a purpose of ensuring
referrals by the interested party to a particular entity that, if the
interested party directly made referrals to that other entity, would
be in violation of this section.
(2) It is unlawful for an interested party to offer, deliver,
receive, or accept any rebate, refund, commission, preference,
patronage, dividend, discount, or other consideration, whether in the
form of money or otherwise, as compensation or inducement to refer a
person for services.
(e) A claim for payment shall not be presented by an entity to any
interested party, individual, third-party payer, or other entity for
any services furnished pursuant to a referral prohibited under this
section.
(f) An insurer, self-insurer, or other payer shall not knowingly
pay a charge or lien for any services resulting from a referral for
services or use of services in violation of this section.
(g) (1) A violation of this section shall be misdemeanor. If an
interested party is a corporation, any director or officer of the
corporation who knowingly concurs in a violation of this section
shall be guilty of a misdemeanor. The appropriate licensing authority
for any person subject to this section shall review the facts and
circumstances of any conviction pursuant to this section and take
appropriate disciplinary action if the licensee has committed
unprofessional conduct, provided that the appropriate licensing
authority may act on its own discretion independent of the initiation
or completion of a criminal prosecution. Violations of this section
are also subject to civil penalties of up to fifteen thousand dollars
($15,000) for each offense, which may be enforced by the Insurance
Commissioner, Attorney General, or a district attorney.
(2) For an interested party, a practice of violating this section
shall constitute a general business practice that discharges or
administers compensation obligations in a dishonest manner, which
shall be subject to a civil penalty under subdivision (e) of Section
129.5.
(3) For an interested party who is an attorney, a violation of
subdivision (b) or (c) shall be referred to the Board of Governors of
the State Bar of California, which shall review the facts and
circumstances of any violation pursuant to subdivision (b) or (c) and
take appropriate disciplinary action if the licensee has committed
unprofessional conduct.
(4) Any determination regarding an employee's eligibility for
compensation shall be void if that service was provided in violation
of this section.
(h) The following arrangements between an interested party and
another entity do not constitute a "financial interest in another
entity" for purposes of this section:
(1) A loan between an interested party and another entity, if the
loan has commercially reasonable terms, bears interest at the prime
rate or a higher rate that does not constitute usury, and is
adequately secured, and the loan terms are not affected by either the
interested party's referral of any employee or the volume of
services provided by the entity that receives the referral.
(2) A lease of space or equipment between an interested party and
another entity, if the lease is written, has commercially reasonable
terms, has a fixed periodic rent payment, has a term of one year or
more, and the lease payments are not affected by either the
interested party's referral of any person or the volume of services
provided by the entity that receives the referral.
(3) An interested party's ownership of the corporate investment
securities of another entity, including shares, bonds, or other debt
instruments that were purchased on terms that are available to the
general public through a licensed securities exchange or NASDAQ.
(i) The prohibitions described in this section do not apply to any
of the following:
(1) Services performed by, or determinations of compensation
issues made by, employees of an interested party in the course of
that employment.
(2) A referral for legal services if that referral is not
prohibited by the Rules of Professional Conduct of the State Bar.
(3) A physician's referral that is exempted by Section 139.31 from
the prohibitions prescribed by Section 139.3.