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SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 655 (Hayashi)
As Amended June 1, 2011
Hearing Date: June 28, 2011
Fiscal: No
Urgency: No
RD
SUBJECT
Healing Arts: Peer Review
DESCRIPTION
This bill would mandate the sharing of relevant peer review information, as specified,
between peer review bodies if specified requirements are met. The bill would add to
existing peer review due process provisions the following requirements with respect to
the sharing of peer review information:
 information produced by a peer review body shall be used solely for peer review
purposes and shall not be subject to discovery to the extent provided in existing law;
 the responding peer review body acting in good faith is not subject to civil or
criminal liability for providing information to the requesting peer review body;
 the responding peer review body shall be entitled to all confidentiality protections
and privileges provided by law as to the information disclosed pursuant to the bill;
 prior to any release of information, the requesting peer review body must, upon
request, sign a mutually agreeable agreement with the responding peer review
body, and indemnify the responding peer review body, as specified; and
 the responding peer review body is not obligated to produce the relevant peer
review information unless (1) the licentiate provides a release, as described, which is
acceptable to the responding peer review body and (2) the requesting peer review
body signs a mutually agreeable peer review sharing agreement, as specified above.
BACKGROUND
California’s Medical Injury Compensation Reform Act (MICRA), governs the medical
peer review and mandatory reporting to the Medical Board of California (MBC) for
“licentiates” (a physician and surgeon, podiatrist, clinical psychologist, marriage and
family therapist, clinical social worker, or dentist). (Bus. & Prof. Code Sec. 800 et seq.)
Peer review is a process by which a committee of licensed medical personnel evaluates
the qualifications of physicians applying for staff privileges, establishes the standards
(more)
AB 655 (Hayashi)
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and procedures for patient care, evaluates medical outcomes, assesses the performance
of physicians on staff, and reviews other matters critical to the hospital’s functioning.
California law recognizes that “[p]eer review, fairly conducted, is essential to
preserving the highest standards of medical practice” and that peer review, not fairly
conducted, can cause harm to both patients and practitioners by limiting access to care
(Bus. & Prof. Code Sec. 809(a)(3)-(4)).
In 1986, Congress passed the federal Health Care Quality Improvement Act (HCQIA) in
effort to provide peer review bodies qualified immunity for peer review participation
and to prevent incompetent practitioners from moving from state to state without
disclosure or discovery of previous damaging or incompetent performance. HCQIA
established the National Practitioner Data Bank (NPDB), a national repository for
reporting information about physicians or other health practitioners’ whose
competency has been questioned or had adverse actions taken involving their staff
privileges or memberships, in order to help hospitals make more informed hiring
decisions and better monitor their current medical staff. As such, the NPDB is made
available to state licensing boards, hospitals, and other physician employers in the state;
the database, however, contains only limited information.
In California, if a peer review body takes specified actions for a medical disciplinary
cause or reason, such as terminating or revoking staff privileges or employment, or if a
physician takes certain action, such as resigning or taking a leave of absence, upon
notice of a denial of staff privileges or notice of a pending investigation initiated for
medical disciplinary cause or reason, a written report (known as an “805 report”) must
be filed within 15 days after the effective date of that action. (Bus. & Prof. Code Sec.
805.) Those 805 reports are filed with the MBC and ultimately provided to the NPDB.
California also affords due process rights to licentiates facing peer review proceedings,
to which this bill would be adding. To facilitate peer review, existing state law provides
for immunity, confidentiality, and limited discovery of peer review related proceedings.
As a result of the peer review system created by HCQIA and MICRA, a hospital that
wishes to hire a physician may find after checking the NPDB that the physician has had
an 805 report filed against him or her and need to find further information to help
determine if they still wish to hire that physician. Still, current laws surrounding peer
review, however, do nothing to encourage the sharing of this information and peer
review groups would face confidentiality and liability type issues for doing so.
AB 1235 (Hayashi, 2010) contained various revisions relating to the due process
requirements of the medical peer review process, including provisions relating to the
production of peer review information that were similar to this measure. Governor
Schwarzenegger ultimately vetoed AB 1235 for not having reached a consensus among
the stakeholders, finding that the bill would have resulted in litigation and protracted
contract disputes. In contrast, this bill is the result of a compromise between the
sponsor, the California Medical Association (CMA), and the California Hospital
Association (CHA).
AB 655 (Hayashi)
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To enhance the effectiveness of peer review organizations and facilitate their intent
under both California law and federal HCQIA law, this bill would require a peer review
group to share relevant information, as defined by the bill, about a licentiate subject to
their peer review with any requesting peer review body, unless specified requirements
are not met. This bill would also add provisions regarding peer review immunity,
confidentiality, and discovery. Lastly, this bill would provide for indemnity of the peer
review party providing information by the requesting peer review body.
CHANGES TO EXISTING LAW
1. Existing federal law, the Health Care Quality Improvement Act (HCQIA), requires
specified information to be reported by various entities including, among other
things, any instances of revocation or suspension or other restriction of a physician’s
license, relating to the physician’s professional conduct or competence. (42 U.S.C.
Secs. 11131-11134.)
Existing federal law, HCQIA and the Medicare and Medicaid Patient and Program
Protection Act of 1987, establishes the NPDB, as a database of information relating to
healthcare professional’s professional competence and conduct. This information is
collected and disseminated through the NPDB, including reports on all licensure
actions taken against all healthcare practitioners. Peer review bodies must report
any negative actions or findings taken against healthcare practitioners or
organizations. (42 U.S.C. Sec. 1396r–2, “Section 1921.”)
Existing law provides that peer review is a process by which a peer review body
reviews the basic qualifications, staff privileges, employment, medical outcomes, or
professional conduct of licentiates to make recommendations for quality
improvement and education, if necessary, in order to do either or both of the
following:
 determine whether a licentiate may practice or continue to practice, and, if so, to
determine the parameters of that practice; or
 assess and improve the quality of care rendered in a health care facility, clinic, or
other setting providing medical services. (Bus. & Prof. Code Sec. 805(a)(1).)
Existing law provides that “peer review body” includes:
 a medical or professional staff of any health care facility or clinic as specified;
 a health care service plan licensed as specified, or a disability insurer as specified;
 any medical, psychological, marriage and family therapy, social work, dental or
podiatric professional society, as specified; and
 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.
(Bus. & Prof. Code Sec. 805(a)(1)(B).)
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Existing law defines “805 report” as a written report that must be filed by a chief of
staff of a medical director, or administrator of any peer review body and the chief
executive officer or administrator of any licensed health care facility or clinic within
15 days after the effective date of any of the following occurs as a result of a peer
review body action:
 a licentiate’s application for staff privileges or membership is denied or rejected
for a medical disciplinary cause or reason;
 a licentiate’s membership, staff privileges, or employment is terminated or
revoked for a medical disciplinary cause or reason; or
 restrictions are imposed or voluntarily accepted, on staff privileges, membership,
or employment for a cumulative total of 30 days or more for any 12-month
period, for a medical disciplinary cause or reason. (Bus. & Prof. Code Sec.
805(a)(7).)
Existing law requires the filing of an 805 report by a reporter, as specified, within 15
days after a licentiate takes any of the following actions upon receiving notice of a
pending investigation for a medical disciplinary cause or action or that his or her
application for membership or staff privileges is denied or will be denied for a
medical disciplinary cause or action:
 resigns or takes leave of absence;
 withdraws or abandons the application for staff privileges or membership; or
 withdraws or abandons his or her request for renewal of staff privileges or
membership. (Bus. & Prof. Code Sec. 805(a)(8).)
This bill, upon receipt of reasonable processing costs, would require a peer review
body to respond to the request made by another peer review body and produce
relevant peer review information about a licentiate who was subject to its peer
review for a medical disciplinary cause or reason.
This bill would require the responding peer review body to determine the manner
by which to produce the information specified and may do so through: (1) a written
summary of relevant peer review information, or (2) a relevant peer review record.
This bill would provide that relevant peer review information or peer review record
includes, but is not limited to, allegations and findings, explanatory or exculpatory
information submitted by a licentiate, any conclusions made, or actions taken, and
the reasons for those actions, to the extent not prohibited by state or federal law.
2. Existing federal law, the Privacy Act, protects the contents of federal systems of
records on individuals, like those contained in the NPDB, from disclosure without
the individual’s consent, except as specified. The published routine uses of NPDB
information do not allow disclosure to the general public, but does permit the
limited release of information as the HCQIA provisions allow. (5 U.S.C. Sec. 552(a).)
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Existing law requires the MBC to maintain a central file regarding each licensee,
including specified information, such as disciplinary information reported pursuant
to Section 805. (Bus. & Prof. Code Sec. 800(a)(4).)
Existing law requires any contents of a central file that are not public records under
any other provision of law be kept confidential, as specified. (Bus. & Prof. Code Sec.
800(c).)
This bill would prohibit the identification of any person except the licentiate in the
information shared.
This bill would grant the responding peer review body all confidentiality
protections and privileges provided by law as to the information disclosed.
3. Existing law provides that no person shall incur any civil or criminal liability as the
result of making any report required by this section. (Bus. & Prof. Code Sec. 805(j).)
Existing law provides that there shall be no monetary liability on the part of, and no
cause of action or damages other than economic or pecuniary damages against a
hospital for any action taken upon the recommendation of its medical staff, or
against any other person or organization for any action taken, or restriction
imposed, and required to be reported pursuant to Business and Professions Code
Section 805, if it is reported in accordance with that section. (Civ. Code Sec. 43.97.)
This bill would provide that a responding peer review body acting in good faith is
not subject to civil or criminal liability for providing information pursuant to the bill.
This bill would require the following prior to the release of any information:
 the requesting peer review body shall, upon request, sign a mutually agreeable
peer review sharing agreement with the responding peer review body. That
agreement shall indemnify the responding peer review body for any and all
claims, damages, costs, and expenses, including reasonable attorney’s fees,
resulting in any manner, directly or indirectly, from the receiving peer review
body’s improper release or disclosure of shared information; and
 the licentiate under review by the peer review body requesting information
pursuant to this section shall, upon request, release the responding peer review
body, its members, and the health care entity for which the responding peer
review body conducts peer reviews, from liability for the disclosure of
information.
This bill would provide that the responding peer review body is not obligated to
produce the relevant peer review information unless:
 the licentiate provides a release, as specified above that is acceptable to the
responding peer review body; and
AB 655 (Hayashi)
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
the requesting peer review body signs a mutually agreeable peer review sharing
agreement, as specified in above with the responding peer review body.
4. Existing law provides specific due process rights to licentiates subject to peer review
proceedings. (Bus. & Prof. Code Sec. 809 et. seq.)
Existing law provides that nothing in Sections 809 to 809.7, inclusive, shall affect the
availability of judicial review, as specified, nor provisions relating to discovery and
testimony, as specified. (Bus. & Prof. Code Sec. 809.8.)
Existing law provides that the written records of interviews, reports, statements, or
memoranda of such committees relating to such medical or psychiatric studies are
subject to the Civil Discovery Act but shall not be admitted as evidence in any action
or before any administrative body, agency, or person. Existing law also provides
that the disclosure, with or without the consent of the patient, of information
concerning him or her to such committee does not make unprivileged any
information that would otherwise be privileged under specified existing law
provisions. However, notwithstanding those referenced sections, such information
is subject to discovery except that the identity of any patient may not be discovered
unless the patient consents to such disclosure. (Evid. Code Sec. 1156.1.)
Existing law provides, among other things, that neither the proceedings nor the
records of a peer review body shall be subject to discovery. Existing law also
provides that no person in attendance at a meeting of any of those committees shall
be required to testify as to what transpired at that meeting. The prohibition relating
to discovery or testimony does not apply, however to the statements made by any
person who is a party to an action or proceeding the subject matter of which was
reviewed at that meeting, 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. (Evid. Code Sec. 1157.)
This bill would mandate that the information produced by a peer review body be
used solely for peer review purposes and not be subject to discovery, as specified.
This bill would contain various findings and declarations.
COMMENT
1. Stated need for the bill
According to the author:
Nearly all peer review in California is done efficiently, timely, and in a manner that
protects patients from quality of care deficiencies. However, the current peer review
system has certain weaknesses. Physicians are often reluctant to serve on peer
AB 655 (Hayashi)
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review committees due to the risk of involvement in related future litigation,
including medical malpractice lawsuits against a physician under review. In
addition, there has been rising concern relating to “sham peer review,” the use of the
peer review system to discredit, harass, discipline, or otherwise negatively affect a
physician’s ability to practice medicine or exercise professional judgment for a nonmedical or patient safety related reason. Sharing information between peer review
bodies will both increase consumer protection and protect physicians.
The CMA, the sponsor of this bill, states:
This bill reflects the mutual agreement reached between the CMA and the California
Hospital Association toward improving the peer review system. Currently, the peer
review system works very well in most facilities, but it can be open to manipulation
and unreasonably delay in others. AB 655 seeks to improve the peer review system
in California and ensure that quality health care is being provided to patients. This
bill helps to create an environment more conducive to peer review through
increased transparency which, ultimately, improves the quality of care provided to
patients. AB 655 limits the ability of physicians from moving to the next hospital
and avoiding the peer review process.
2. This bill extends existing immunity from liability for peer review bodies that share
information as required by this bill
This bill seeks to promote the sharing of information between peer review committees
to further assist hospitals to have the information they need before hiring a physician
who may have had adverse action taken against him or her, either voluntarily or not,
for medical disciplinary reason or cause. To that end, this bill would provide that a
peer review body responding to the request for information by another peer review
body is not subject to civil or criminal liability if they acted in good faith in providing
that information. This bill would also provide that a responding peer review body
would not be obligated to provide any information requested unless the licentiate
releases the peer review body, its members, and the health care entity from liability for
the disclosure of information in compliance with that section.
a. Extending limited immunity to the sharing of relevant peer review information
Although immunity provisions are never preferable because they, by their nature,
prevent an injured party from seeking a particular type of recovery, the immunity
provisions proposed by this bill may arguably be appropriate due to the nature of
peer review bodies and the associated benefits to patients.
As background, courts in the 1960s began to impose liability on hospitals and health
corporations for negligence in the selection and supervision of medical staff, based
on a hospital’s duty to the patient which was premised upon patients’ necessary
reliance on hospitals to monitor the quality of care rendered in their facilities. (The
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Health Care Quality Improvement Act of 1986: Its History, Provisions, Applications, and
Implications (1990) 16 Am. J. L. and Med. 455, 458-459.) As a result, hospital boards
delegated physician review responsibilities to peer review committees to shield
themselves from corporate liability. Physicians, however, would retaliate against
action taken against them by peer review groups by filing suit against the hospital’s
board directors, trustees, and individual physicians on peer review committees. (Id.
at 461.) In response to these suits and to support the ability of peer review
committees to carry out their intended functions, states began to pass legislation to
provide some measure of immunity to peer review members. (Id.)
California’s existing law provides limited immunity for peer review groups, and this
bill would extend similar immunity to peer review groups who share information
with another peer review group.1 By requiring sharing of peer review information,
however, this bill would potentially open the possibility of new claims against
hospitals and their peer review staff. While, as noted above, immunity provisions
are generally not preferable, the benefits to patients as a result of the proposed
sharing of information potentially outweigh the inherent costs in immunizing the
good faith sharing of information regarding licentiates.
Committee staff also notes the similarity between the immunity provided in existing
law, requiring that there be no action knowingly and intentionally taken for the
purpose of injury or infringing upon a person’s rights, and the first provision of
immunity from civil and criminal liability under this bill, which is expressly
qualified by the statement “acting in good faith,” thereby limiting the scenarios
under which that immunity from civil or criminal liability could be claimed.
In addition, the second immunity provision, providing that the licentiate must
release the responding peer review body, its members, and the health care entity
from liability for the disclosure of information in compliance with this section, while
not expressly limiting the immunity to actions in good faith, arguably still would be
limited as such in practice on the basis that the section does not authorize the release
of non-relevant information or provide for immunity from bad faith acts.
Committee staff also notes the importance of the licentiate providing a release from
liability, as the information contained in those records can be confidential and
personal to the licentiate. If he or she decides not to do so, and thereby prevents
1
For example, Civil Code Section 43.97 specifically provides that there shall be no monetary liability
on the part of, and no cause of action or damages other than economic or pecuniary damages, shall
rise against a hospital for any action taken upon the recommendation of its medical staff, or against
any other person or organization for any action taken, or restriction imposed, and required to be
reported pursuant to Section 805 of the Business and Professions Code, if it is reported in accordance
with that section. This immunity from monetary liability, however, does not apply to an action
knowingly and intentionally taken for the purpose of injury a person affected by the action or
infringing upon a person’s rights. Existing law also already provides that no person shall incur any
civil or criminal liability as the result of making any report required by Section 805. (Bus. & Prof.
Code Sec. 805(j).)
AB 655 (Hayashi)
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release of those records, it is foreseeable that a hospital otherwise wishing to hire
that physician will refrain from doing so. However, these decisions are within the
rights of both the physician and the hospital, and the function of peer review would
arguably still be served by allowing for hospitals to make more informed choices
where a physician does in fact allow for the release of records.
b. Potential release of patient information within peer review documents
By providing that a responding peer review body is immune from any civil or
criminal liability that may arise from providing information to the requesting peer
review body acting if the responding peer review body acts in good faith, this bill
would protect a peer review body and its members from liability that might arise
from the accidental release of a patient’s information.
Peer review documents, having to do in part with the review of a licentiate’s
treatment of a patient, may contain information about the patient, his or her
condition, and as his or her treatment, as that information (absent the patient’s name
or other identifying information) would be pertinent to the outcome of the peer
review proceedings. Such information is confidential.
Addressing this sensitivity, this bill defines “relevant peer review information” to
limit the scope of what can be shared, limits what can be shared with the protections
of immunity from liability, and requires identifiable information of anyone not the
licentiate to be removed from the shared information. To otherwise require further
restrictions, such as requiring all patient information to be redacted within peer
review documents, would arguably defeat the purpose of this bill, which is to give
hospitals necessary information to better decide whether to hire a physician whose
professional conduct or competence was the subject of an 805 report. To be able to
properly assess whether the conduct or competence at hand rises is such that
warrants refusing to hire the physician, whether it perhaps simply warrants limiting
staff privileges, or whether a second chance is justified under the circumstances—
the facts of the case as determined by the peer review are necessarily relevant.
3. This bill requires the requesting peer review body to indemnify the peer review
body providing it with information as required by this bill
This bill would provide that before a responding party releases any information as
otherwise required by the bill, the peer review body requesting the release of that
information must, upon request, sign a mutually agreeable peer review sharing
agreement with the peer review body, and must indemnify the responding peer review
body for any and all claims, demands, liabilities, losses, damages, costs, and expenses,
including any reasonable attorney’s fees, that result, directly or indirectly, from the
receiving body’s improper release or disclosure of the shared information.
AB 655 (Hayashi)
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The result of this provision would be an operative immunity for the peer review body
providing that information to them (the responding peer review body). At the same
time, the bill would not controvert a licentiate’s or other injured party’s ability to seek
legal redress against the peer review body who had requested that information be
shared with them and then improperly released or disclosed that information. Given
that the responding peer review body could not control the actions of the requesting
peer review, and that the information would not have been released by the responding
peer review body but for the request made and the legal requirement to produce that
information requested, this indemnity provision does not appear unreasonable.
Public policy would arguably support placing the onus of defending litigation or claims
for injuries and the responsibility of associated costs from that litigation or claim which
arose out of the improper release or disclosure of peer review information by the
requesting peer review body, on the requesting peer review body. Such an
indemnification provision would arguably also prevent any delays of settlements or
judgments being paid to the injured party because of cross-complaints or lengthy
litigation between the peer review bodies involved.
4. This bill ensures any information that is shared as a result of the bill remains
confidential and nondiscoverable as otherwise provided for under existing law
This bill would grant to the responding peer review body all the confidentiality
protections and privileges provided by law as to the information provided to another
peer review body pursuant to this bill. Separately, this bill would also mandate that
information produced by a peer review body pursuant to the requirements of the bill be
used solely for peer review purposes by the requesting peer review body. Additionally,
it would prohibit the discovery of that information to the extent provided for in
specified Evidence Code sections or other applicable provisions of law.
Existing law relating to peer review already provides for the confidentiality of peer
review information (see Bus. & Prof. Code Sec. 800(c) and 5 U.S.C. Sec. 552(a)) and
provides that, generally, information contained in written records of interviews,
reports, statements or committee memoranda are not admissible even if discoverable,
and that the records of a peer review body are immune from discovery (see Evid. Code
Secs. 1156.1 and 1157). Evidence Code Section 1157, specifically, represents a legislative
choice between competing public concerns and embraces the goal of medical staff
candor in appraising their peers at the cost of impairing a plaintiff’s access to evidence
revealing the competency of the hospital’s staff. That section, with several exceptions,
bars discovery of reports and other documents generated during peer review of care
rendered by certain health care professionals in an effort to encourage candor by
ensuring a measure of confidentiality. (See Deering’s Ann. (2010) Evid. Code Sec. 1157.)
Committee staff notes the importance of ensuring the continued confidentiality and
immunity from discovery in making the sharing of such records between peer review
bodies practicable and advantageous. From a public policy standpoint, if a party can
AB 655 (Hayashi)
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simply discover the records of a responding peer review body or get access to those
records from the receiving peer review body, existing provisions that seek to protect
these records from discovery and to ensure their confidentiality would be undermined.
Without these types of assurances, any candor of the peer review process would quickly
dissipate due to fear that a later request for peer review information pursuant to this bill
would provide an alternate route to obtaining information that would otherwise be
confidential and not discoverable. In order to ensure that the production of these peer
review documents is not deemed a waiver of confidentiality or otherwise controvert the
immunity from discovery by allowing for the sharing of peer review information
between peer review bodies, this bill applies confidentiality and discovery provisions to
shared information as well.
5. AB 1235 veto message
Governor Schwarzenegger vetoed a similar bill, AB 1235, last year. In his veto message,
the governor stated:
It is with sincere disappointment that I am unable to sign this [bill]. I vetoed two
bills on this subject last year, with a clear message for the interested stakeholders to
work together . . . on this extremely complicated and complex issue. Unfortunately,
this consensus did not occur. As California stands ready to implement health
reform, we need hospitals and physicians to work in new and more efficient ways. . .
. Litigation and protracted contract disputes are not going to be mechanisms to
achieve this common goal. I would encourage the author to keep working with
these parties in the coming year[,] as this problem must be addressed. I believe that
a final consensus product that first, and most importantly, protects patients while
also allowing hospitals and physicians to work together can be reached.
The CHA supports this version of the bill based on compromise reached with the CMA.
Support: California Hospital Association (CHA)
Opposition: None Known
HISTORY
Source: California Medical Association (CMA)
Related Pending Legislation: SB 146 (Wyland), among other things, include
professional clinical counselors in the definition of “licentiates.” This bill is the
Assembly Judiciary Committee.
Prior Legislation:
AB 1235 (Hayashi, 2010), See Background.
AB 655 (Hayashi)
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SB 700 (Negrete McLeod, Ch. 505, Stats. 2010), made various changes relating to peer
review and the 805 process, including requiring the chief of staff of a medical or
professional staff or other chief executive officer, medical director, or administrator of
any peer review body and the chief executive officer or administrator of any licensed
health care facility or clinic to file a confidential report with the relevant agency within
15 days after completion of a formal investigation of a licentiate for specified actions.
SB 58 (Aanestad, 2009), in part, would have required a peer review body to annually
report its activities to the MBC; defined external peer review and required it in specific
circumstances; and established an early detection and resolution program in lieu of an
805 report. SB 58 was held in the Senate Appropriations Committee suspense file.
SB 820 (Negrete McLeod, 2009), contained many of the same provisions of SB 700
(Negrete McLeod, Ch. 505, Stats. 2010). SB 820 was vetoed.
AB 120 (Hayashi, 2009), was identical to AB 1235 but was made contingent on SB 820’s
enactment, which was vetoed.
Prior Vote:
Senate Committee on Business, Professions & Economic Development (Ayes 9, Noes 0)
Assembly Floor (Ayes 70, Noes 0)
Assembly Committee on Business, Professions & Consumer Protection (Ayes 9, Noes 0)
**************
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