4600.6
. Any workers' compensation insurer, third-party
administrator, or other entity seeking certification as a health care
organization under subdivision (e) of Section 4600.5 shall be
subject to the following rules and procedures:
(a) Each application for authorization as an organization under
subdivision (e) of Section 4600.5 shall be verified by an authorized
representative of the applicant and shall be in a form prescribed by
the administrative director. The application shall be accompanied by
the prescribed fee and shall set forth or be accompanied by each and
all of the following:
(1) The basic organizational documents of the applicant, such as
the articles of incorporation, articles of association, partnership
agreement, trust agreement, or other applicable documents and all
amendments thereto.
(2) A copy of the bylaws, rules, and regulations, or similar
documents regulating the conduct of the internal affairs of the
applicant.
(3) A list of the names, addresses, and official positions of the
persons who are to be responsible for the conduct of the affairs of
the applicant, which shall include, among others, all members of the
board of directors, board of trustees, executive committee, or other
governing board or committee, the principal officers, each
shareholder with over 5 percent interest in the case of a
corporation, and all partners or members in the case of a partnership
or association, and each person who has loaned funds to the
applicant for the operation of its business.
(4) A copy of any contract made, or to be made, between the
applicant and any provider of health care, or persons listed in
paragraph (3), or any other person or organization agreeing to
perform an administrative function or service for the plan. The
administrative director by rule may identify contracts excluded from
this requirement and make provision for the submission of form
contracts. The payment rendered or to be rendered to the provider of
health care services shall be deemed confidential information that
shall not be divulged by the administrative director, except that the
payment may be disclosed and become a public record in any
legislative, administrative, or judicial proceeding or inquiry. The
organization shall also submit the name and address of each provider
employed by, or contracting with, the organization, together with his
or her license number.
(5) A statement describing the organization, its method of
providing for health services, and its physical facilities. If
applicable, this statement shall include the health care delivery
capabilities of the organization, including the number of full-time
and part-time physicians under Section 3209.3, the numbers and types
of licensed or state-certified health care support staff, the number
of hospital beds contracted for, and the arrangements and the methods
by which health care will be provided, as defined by the
administrative director under Sections 4600.3 and 4600.5.
(6) A copy of the disclosure forms or materials that are to be
issued to employees.
(7) A copy of the form of the contract that is to be issued to any
employer, insurer of an employer, or a group of self-insured
employers.
(8) Financial statements accompanied by a report, certificate, or
opinion of an independent certified public accountant. However, the
financial statements from public entities or political subdivisions
of the state need not include a report, certificate, or opinion by an
independent certified public accountant if the financial statement
complies with any requirements that may be established by regulation
of the administrative director.
(9) A description of the proposed method of marketing the
organization and a copy of any contract made with any person to
solicit on behalf of the organization or a copy of the form of
agreement used and a list of the contracting parties.
(10) A statement describing the service area or areas to be
served, including the service location for each provider rendering
professional services on behalf of the organization and the location
of any other organization facilities where required by the
administrative director.
(11) A description of organization grievance procedures to be
utilized as required by this part, and a copy of the form specified
by paragraph (3) of subdivision (j).
(12) A description of the procedures and programs for internal
review of the quality of health care pursuant to the requirements set
forth in this part.
(13) Evidence of adequate insurance coverage or self-insurance to
respond to claims for damages arising out of the furnishing of
workers' compensation health care.
(14) Evidence of adequate insurance coverage or self-insurance to
protect against losses of facilities where required by the
administrative director.
(15) Evidence of adequate workers' compensation coverage to
protect against claims arising out of work-related injuries that
might be brought by the employees and staff of an organization
against the organization.
(16) Evidence of fidelity bonds in such amount as the
administrative director prescribes by regulation.
(17) Other information that the administrative director may
reasonably require.
(b) (1) An organization, solicitor, solicitor firm, or
representative may not use or permit the use of any advertising or
solicitation that is untrue or misleading, or any form of disclosure
that is deceptive. For purposes of this chapter:
(A) A written or printed statement or item of information shall be
deemed untrue if it does not conform to fact in any respect that is
or may be significant to an employer or employee, or potential
employer or employee.
(B) A written or printed statement or item of information shall be
deemed misleading whether or not it may be literally true, if, in
the total context in which the statement is made or the item of
information is communicated, the statement or item of information may
be understood by a person not possessing special knowledge regarding
health care coverage, as indicating any benefit or advantage, or the
absence of any exclusion, limitation, or disadvantage of possible
significance to an employer or employee, or potential employer or
employee.
(C) A disclosure form shall be deemed to be deceptive if the
disclosure form taken as a whole and with consideration given to
typography and format, as well as language, shall be such as to cause
a reasonable person, not possessing special knowledge of workers'
compensation health care, and the disclosure form therefor, to expect
benefits, service charges, or other advantages that the disclosure
form does not provide or that the organization issuing that
disclosure form does not regularly make available to employees.
(2) An organization, solicitor, or representative may not use or
permit the use of any verbal statement that is untrue, misleading, or
deceptive or make any representations about health care offered by
the organization or its cost that does not conform to fact. All
verbal statements are to be held to the same standards as those for
printed matter provided in paragraph (1).
(c) It is unlawful for any person, including an organization,
subject to this part, to represent or imply in any manner that the
person or organization has been sponsored, recommended, or approved,
or that the person's or organization's abilities or qualifications
have in any respect been passed upon, by the administrative director.
(d) (1) An organization may not publish or distribute, or allow to
be published or distributed on its behalf, any advertisement unless
(A) a true copy thereof has first been filed with the administrative
director, at least 30 days prior to any such use, or any shorter
period as the administrative director by rule or order may allow, and
(B) the administrative director by notice has not found the
advertisement, wholly or in part, to be untrue, misleading,
deceptive, or otherwise not in compliance with this part or the rules
thereunder, and specified the deficiencies, within the 30 days or
any shorter time as the administrative director by rule or order may
allow.
(2) If the administrative director finds that any advertisement of
an organization has materially failed to comply with this part or
the rules thereunder, the administrative director may, by order,
require the organization to publish in the same or similar medium, an
approved correction or retraction of any untrue, misleading, or
deceptive statement contained in the advertising.
(3) The administrative director by rule or order may classify
organizations and advertisements and exempt certain classes, wholly
or in part, either unconditionally or upon specified terms and
conditions or for specified periods, from the application of
subdivision (a).
(e) (1) The administrative director shall require the use by each
organization of disclosure forms or materials containing any
information regarding the health care and terms of the workers'
compensation health care contract that the administrative director
may require, so as to afford the public, employers, and employees
with a full and fair disclosure of the provisions of the contract in
readily understood language and in a clearly organized manner. The
administrative director may require that the materials be presented
in a reasonably uniform manner so as to facilitate comparisons
between contracts of the same or other types of organizations. The
disclosure form shall describe the health care that is required by
the administrative director under Sections 4600.3 and 4600.5, and
shall provide that all information be in concise and specific terms,
relative to the contract, together with any additional information as
may be required by the administrative director, in connection with
the organization or contract.
(2) All organizations, solicitors, and representatives of a
workers' compensation health care provider organization shall, when
presenting any contract for examination or sale to a prospective
employee, provide the employee with a properly completed disclosure
form, as prescribed by the administrative director pursuant to this
section for each contract so examined or sold.
(3) In addition to the other disclosures required by this section,
every organization and any agent or employee of the organization
shall, when representing an organization for examination or sale to
any individual purchaser or the representative of a group consisting
of 25 or fewer individuals, disclose in writing the ratio of premium
cost to health care paid for contracts with individuals and with
groups of the same or similar size for the organization's preceding
fiscal year. An organization may report that information by
geographic area, provided the organization identifies the geographic
area and reports information applicable to that geographic area.
(4) Where the administrative director finds it necessary in the
interest of full and fair disclosure, all advertising and other
consumer information disseminated by an organization for the purpose
of influencing persons to become members of an organization shall
contain any supplemental disclosure information that the
administrative director may require.
(f) When the administrative director finds it necessary in the
interest of full and fair disclosure, all advertising and other
consumer information disseminated by an organization for the purpose
of influencing persons to become members of an organization shall
contain any supplemental disclosure information that the
administrative director may require.
(g) (1) An organization may not refuse to enter into any contract,
or may not cancel or decline to renew or reinstate any contract,
because of the age or any characteristic listed or defined in
subdivision (b) or (e) of Section 51 of the Civil Code of any
contracting party, prospective contracting party, or person
reasonably expected to benefit from that contract as an employee or
otherwise.
(2) The terms of any contract shall not be modified, and the
benefits or coverage of any contract shall not be subject to any
limitations, exceptions, exclusions, reductions, copayments,
coinsurance, deductibles, reservations, or premium, price, or charge
differentials, or other modifications because of the age or any
characteristic listed or defined in subdivision (b) or (e) of Section
51 of the Civil Code of any contracting party, potential contracting
party, or person reasonably expected to benefit from that contract
as an employee or otherwise; except that premium, price, or charge
differentials because of the sex or age of any individual when based
on objective, valid, and up-to-date statistical and actuarial data
are not prohibited. Nothing in this section shall be construed to
permit an organization to charge different rates to individual
employees within the same group solely on the basis of the employee's
sex.
(3) It shall be deemed a violation of subdivision (a) for any
organization to utilize marital status, living arrangements,
occupation, gender, beneficiary designation, ZIP Codes or other
territorial classification, or any combination thereof for the
purpose of establishing sexual orientation. Nothing in this section
shall be construed to alter in any manner the existing law
prohibiting organizations from conducting tests for the presence of
human immunodeficiency virus or evidence thereof.
(4) This section shall not be construed to limit the authority of
the administrative director to adopt or enforce regulations
prohibiting discrimination because of sex, marital status, or sexual
orientation.
(h) (1) An organization may not use in its name any of the words
"insurance," "casualty," "health care service plan," "health plan,"
"surety," "mutual," or any other words descriptive of the health
plan, insurance, casualty, or surety business or use any name similar
to the name or description of any health care service plan,
insurance, or surety corporation doing business in this state unless
that organization controls or is controlled by an entity licensed as
a health care service plan or insurer pursuant to the Health and
Safety Code or the Insurance Code and the organization employs a name
related to that of the controlled or controlling entity.
(2) Section 2415 of the Business and Professions Code, pertaining
to fictitious names, does not apply to organizations certified under
this section.
(3) An organization or solicitor firm may not adopt a name style
that is deceptive, or one that could cause the public to believe the
organization is affiliated with or recommended by any governmental or
private entity unless this affiliation or endorsement exists.
(i) Each organization shall meet the following requirements:
(1) All facilities located in this state, including, but not
limited to, clinics, hospitals, and skilled nursing facilities, to be
utilized by the organization shall be licensed by the State
Department of Health Services, if that licensure is required by law.
Facilities not located in this state shall conform to all licensing
and other requirements of the jurisdiction in which they are located.
(2) All personnel employed by or under contract to the
organization shall be licensed or certified by their respective board
or agency, where that licensure or certification is required by law.
(3) All equipment required to be licensed or registered by law
shall be so licensed or registered and the operating personnel for
that equipment shall be licensed or certified as required by law.
(4) The organization shall furnish services in a manner providing
continuity of care and ready referral of patients to other providers
at any time as may be appropriate and consistent with good
professional practice.
(5) All health care shall be readily available at reasonable times
to all employees. To the extent feasible, the organization shall
make all health care readily accessible to all employees.
(6) The organization shall employ and utilize allied health
manpower for the furnishing of health care to the extent permitted by
law and consistent with good health care practice.
(7) The organization shall have the organizational and
administrative capacity to provide services to employees. The
organization shall be able to demonstrate to the department that
health care decisions are rendered by qualified providers, unhindered
by fiscal and administrative management.
(8) All contracts with employers, insurers of employers, and
self-insured employers and all contracts with providers, and other
persons furnishing services, equipment, or facilities to or in
connection with the workers' compensation health care organization,
shall be fair, reasonable, and consistent with the objectives of this
part.
(9) Each organization shall provide to employees all workers'
compensation health care required by this code. The administrative
director shall not determine the scope of workers' compensation
health care to be offered by an organization.
(j) (1) Every organization shall establish and maintain a
grievance system approved by the administrative director under which
employees may submit their grievances to the organization. Each
system shall provide reasonable procedures in accordance with
regulations adopted by the administrative director that shall ensure
adequate consideration of employee grievances and rectification when
appropriate.
(2) Every organization shall inform employees upon enrollment and
annually thereafter of the procedures for processing and resolving
grievances. The information shall include the location and telephone
number where grievances may be submitted.
(3) Every organization shall provide forms for complaints to be
given to employees who wish to register written complaints. The forms
used by organizations shall be approved by the administrative
director in advance as to format.
(4) The organization shall keep in its files all copies of
complaints, and the responses thereto, for a period of five years.
(k) Every organization shall establish procedures in accordance
with regulations of the administrative director for continuously
reviewing the quality of care, performance of medical personnel,
utilization of services and facilities, and costs. Notwithstanding
any other provision of law, there shall be no monetary liability on
the part of, and no cause of action for damages shall arise against,
any person who participates in quality of care or utilization reviews
by peer review committees that are composed chiefly of physicians,
as defined by Section 3209.3, for any act performed during the
reviews if the person acts without malice, has made a reasonable
effort to obtain the facts of the matter, and believes that the
action taken is warranted by the facts, and neither the proceedings
nor the records of the reviews shall be subject to discovery, nor
shall any person in attendance at the reviews be required to testify
as to what transpired thereat. Disclosure of the proceedings or
records to the governing body of an organization or to any person or
entity designated by the organization to review activities of the
committees shall not alter the status of the records or of the
proceedings as privileged communications.
The above prohibition relating to discovery or testimony does not
apply to the statements made by any person in attendance at a review
who is a party to an action or proceeding the subject matter of which
was reviewed, or to any person requesting hospital staff privileges,
or in any action against an insurance carrier alleging bad faith by
the carrier in refusing to accept a settlement offer within the
policy limits, or to the administrative director in conducting
surveys pursuant to subdivision (o).
This section shall not be construed to confer immunity from
liability on any workers' compensation health care organization. In
any case in which, but for the enactment of the preceding provisions
of this section, a cause of action would arise against an
organization, the cause of action shall exist notwithstanding the
provisions of this section.
(l) Nothing in this chapter shall be construed to prevent an
organization from utilizing subcommittees to participate in peer
review activities, nor to prevent an organization from delegating the
responsibilities required by subdivision (i) as it determines to be
appropriate, to subcommittees including subcommittees composed of a
majority of nonphysician health care providers licensed pursuant to
the Business and Professions Code, as long as the organization
controls the scope of authority delegated and may revoke all or part
of this authority at any time. Persons who participate in the
subcommittees shall be entitled to the same immunity from monetary
liability and actions for civil damages as persons who participate in
organization or provider peer review committees pursuant to
subdivision (i).
(m) Every organization shall have and shall demonstrate to the
administrative director that it has all of the following:
(1) Adequate provision for continuity of care.
(2) A procedure for prompt payment and denial of provider claims.
(n) Every contract between an organization and an employer or
insurer of an employer, and every contract between any organization
and a provider of health care, shall be in writing.
(o) (1) The administrative director shall conduct periodically an
onsite medical survey of the health care delivery system of each
organization. The survey shall include a review of the procedures for
obtaining health care, the procedures for regulating utilization,
peer review mechanisms, internal procedures for assuring quality of
care, and the overall performance of the organization in providing
health care and meeting the health needs of employees.
(2) The survey shall be conducted by a panel of qualified health
professionals experienced in evaluating the delivery of workers'
compensation health care. The administrative director shall be
authorized to contract with professional organizations or outside
personnel to conduct medical surveys. These organizations or
personnel shall have demonstrated the ability to objectively evaluate
the delivery of this health care.
(3) Surveys performed pursuant to this section shall be conducted
as often as deemed necessary by the administrative director to assure
the protection of employees, but not less frequently than once every
three years. Nothing in this section shall be construed to require
the survey team to visit each clinic, hospital, office, or facility
of the organization.
(4) Nothing in this section shall be construed to require the
medical survey team to review peer review proceedings and records
conducted and compiled under this section or in medical records.
However, the administrative director shall be authorized to require
onsite review of these peer review proceedings and records or medical
records where necessary to determine that quality health care is
being delivered to employees. Where medical record review is
authorized, the survey team shall ensure that the confidentiality of
the physician-patient relationship is safeguarded in accordance with
existing law and neither the survey team nor the administrative
director or the administrative director's staff may be compelled to
disclose this information except in accordance with the
physician-patient relationship. The administrative director shall
ensure that the confidentiality of the peer review proceedings and
records is maintained. The disclosure of the peer review proceedings
and records to the administrative director or the medical survey team
shall not alter the status of the proceedings or records as
privileged and confidential communications.
(5) The procedures and standards utilized by the survey team shall
be made available to the organizations prior to the conducting of
medical surveys.
(6) During the survey, the members of the survey team shall offer
such advice and assistance to the organization as deemed appropriate.
(7) The administrative director shall notify the organization of
deficiencies found by the survey team. The administrative director
shall give the organization a reasonable time to correct the
deficiencies, and failure on the part of the organization to comply
to the administrative director's satisfaction shall constitute cause
for disciplinary action against the organization.
(8) Reports of all surveys, deficiencies, and correction plans
shall be open to public inspection, except that no surveys,
deficiencies or correction plans shall be made public unless the
organization has had an opportunity to review the survey and file a
statement of response within 30 days, to be attached to the report.
(p) (1) All records, books, and papers of an organization,
management company, solicitor, solicitor firm, and any provider or
subcontractor providing medical or other services to an organization,
management company, solicitor, or solicitor firm shall be open to
inspection during normal business hours by the administrative
director.
(2) To the extent feasible, all the records, books, and papers
described in paragraph (1) shall be located in this state. In
examining those records outside this state, the administrative
director shall consider the cost to the organization, consistent with
the effectiveness of the administrative director's examination, and
may upon reasonable notice require that these records, books, and
papers, or a specified portion thereof, be made available for
examination in this state, or that a true and accurate copy of these
records, books, and papers, or a specified portion thereof, be
furnished to the administrative director.
(q) (1) The administrative director shall conduct an examination
of the administrative affairs of any organization, and each person
with whom the organization has made arrangements for administrative,
or management services, as often as deemed necessary to protect the
interest of employees, but not less frequently than once every five
years.
(2) The expense of conducting any additional or nonroutine
examinations pursuant to this section, and the expense of conducting
any additional or nonroutine medical surveys pursuant to subdivision
(o) shall be charged against the organization being examined or
surveyed. The amount shall include the actual salaries or
compensation paid to the persons making the examination or survey,
the expenses incurred in the course thereof, and overhead costs in
connection therewith as fixed by the administrative director. In
determining the cost of examinations or surveys, the administrative
director may use the estimated average hourly cost for all persons
performing examinations or surveys of workers' compensation health
care organizations for the fiscal year. The amount charged shall be
remitted by the organization to the administrative director.
(3) Reports of all examinations shall be open to public
inspection, except that no examination shall be made public, unless
the organization has had an opportunity to review the examination
report and file a statement or response within 30 days, to be
attached to the report.