Corporate optical battles ODs on pending CA bill

August 25, 2015

After years of operating in violation of California law, corporate opticial companies are fighting to pass a bill that would prevent the state from coming after them.

Sacramento, CA-After years of operating in violation of California law, corporate opticial companies are fighting to pass a bill that would prevent the state from coming after them.

AB 684 essentially hits the pause button on the enforcement of the California laws that companies like LensCrafters, Walmart, Costco, and others are breaking regarding the landlord-tenant relationships these companies have with their optometrists. It has been suggested that this pause in enforcement would then give the companies time to get the laws changed.

The California Senate Appropriations Committee is expected to take a vote on the bill on Thursday, August 27.

The California Optometric Association (COA) is firmly against AB 684 and is urging its members to contact the state legislature. The bill, it says, would be bad for doctors, consumers, and patient care.

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“The bill was placed in the ‘suspense’ file. On Thursday when the suspense file is taken up, AB 684 may or may not be amended with COA’s language we have worked out with every major stakeholder except LensCrafters,” says David Redman, OD, legislation and regulation committee chair of the COA.  “LensCrafters continues to insist on maintaining its ability to employ doctors.

“If you watch the hearing, several lawmakers on the committee had concerns with AB 684 in its current form,” Dr. Redman says. “I do not think AB 684 has the votes currently to pass out of Appropriations. However, LensCrafters has hired two new lobbying firms just this week, just for this issue. They are pushing for AB 684 to pass as is.”

The hearing can be viewed HERE-fast forward to 1:23:03.

Dr. Redman says that the COA has another lawmaker willing to introduce its compromise language if the proposed amendments are not accepted.

“It would be a ‘gut and amend’ on the Assembly side, where we amend a bill that has passed the Senate with our new language and move it thought the legislative process,” he says. “This all has to happen quickly. The last day of the legislative session is September 11. Anything that doesn’t pass by then becomes a two-year bill.”

Next: Governing the relationship between ODs and opticians

 

Governing the relationship between ODs and opticians

Dr. Redman says that there is a complex history leading up to AB 684. While there are laws in place outlining the relationship between an optometrist and an optician, there has been no real enforcement of those laws.

“For us, we have doctors who are members who are working for these places, and we don’t want to put them out of business-but at the same time, they have to be compliant with the law,” says Dr. Redman.

Craig Steinberg, OD, JD, explains that California has two laws that govern the relationships between optometrists and opticians-Business and Professions Codes 655 and Section 2556.

“There can be no relationship between an optician and an optometrist other than the optician as employee of an optometrist. That has been the law that has kept large opticals from being able to lease space to an optometrist,” says Dr. Steinberg. “For a number of years, LensCrafters and some others have attempted to get around those restrictions by becoming a health service plan-with the idea that under the CA law relating to HMOs and health service plans they weren’t subject to those restrictions.”

But the California Supreme Court ruled that even HMOs are subject to Section 655.

“That effectively made the LensCrafters model illegal,” says Dr. Steinberg. “A number of groups challenged the constitutionality of that ruling. A legal challenge was brought to federal court claiming the laws were unconstitutional. The 9th Circuit Court upheld the laws.

“At the point, LensCrafters and other entities had nowhere to go other than to try to change the law,” he says.

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At the same time, he says, Costco was employing a different method, utilizing a third-party intermediary. The big box store leased to a middleman who would lease to an optometrist. But this model also appeared to violate the law because it was an indirect tenant relationship.

“During the pendency of all that litigation, the Attorney General’s office apparently directed the medical board and the Board of Optometry not to take any enforcement action against optometrists or opticians who were working in these situations,” says Dr. Steinberg. “But the lawsuits ended a couple years ago. Earlier this year, the Attorney General’s office pulled down the moratorium and gave the boards the go-ahead to enforce the laws.”

 

The next step: AB 684

So, the next step for these companies was to try to change the law. The first attempt was AB 595-but the California Optometric Association effectively killed it in committee, says Dr. Steinberg. The next step for these companies was AB 684.

“AB 684 effectively extends the moratorium against taking any enforcement action against through the end of 2016 to create a safe harbor and a window of opportunity to create modifications in the law to allow them to continue to do legally what they’ve been doing illegally for many years,” says Dr. Steinberg.

The reason California ODs are fighting to maintain the current laws is to protect optometrist practicing at these corporate locations.

“The optical wants optometry not because it wants to provide eye exams, but tit wants to provide glasses. One solution would be that the only way for an optometrist to be there is if he has a full dispensing practice, but you can’t make an optometrist sell glasses,” says Dr. Steinberg. “Opticals bring pressure, however unspoken it might be, to work long hours and see many patients. They create an incentive for the optometrist to cut corners in care. Treating glaucoma creates no revenue for the optical. We’re talking about subtle influences.”

While Section 655 has not been enforced against large optical companies, the state board has been enforcing it against smaller opticals, according to Dr. Steinberg.

“I’ve had several optometrist clients get disciplined by the California Board of Optometry for having an illegal relationship with an optician,” he says. “The Board will go after a small business, but not LensCrafters or Costco. There has, in my opinion, been an embarrassing and very unfair practice of selective enforcement by the Board. The ODs who are thriving working illegally in a Costco, they turn their heads and allow, but the OD who is just trying to make a living by ‘partnering up’ with an optical location gets hammered by the Board like he’s a criminal.

California State Board of Optometry Acting Executive Officer Jessica Sieferman says that while the Board has no official position on AB 684, she refutes Dr. Steinberg's claim. 

“The California State Board of Optometry does not go after ‘big guys’ or ‘little guys’; we investigate every complaint received and take action against licensees who violate the law, regardless of size,” she says. 

Next: Corporate-affiliated ODs weigh in 

 

Corporate-affiliated ODs weigh in

Optometry Times contacted Energeyes to see what corporate-affiliated ODs thought about the fight in California and whether they had experienced any of this pressure.  

Past president of Energeyes Mark Uhler, OD, has leased next to a Walmart Vision Center for nearly two decades.

“Never have my clinical decisions ever been affected or compromised by the landlord-tenant relationship. I’m able to be more focused on the clinical side of my practice,” he says. “When I reflect on this antiquated law in CA, it’s disparaging that they‘re questioning the doctor’s clinical care. I’m glad they are revising it.”

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Energeyes Executive Director Michael Porat says he doesn’t think any optician or retailer will change its relationship in the timeframe set by the law.

“No one is going to sign anything for 18 months,” he says. “They’re questioning it, and questioning it hard. People have discovered tons of workarounds to get around this law.”

But Porat agrees with Dr. Uhler-he doesn’t see retailers having an influence over the doctor’s decisions. In fact, he argues that corporate-affiliated doctors are actually better able to focus on clinical decisions compared to their independent peers. 

“Because here is a separate retailer, the doctor doesn’t worry about selling a second pair or AR coating or other retailer things,” he says. “The doctor makes pure clinical decisions. I think this is a perfect move if what you’re trying to achieve is better outcomes, better care, and better access for the citizens of California.

“It’s true except the greater undue influence when I am both the doctor and the owner of the retailer. Doctors are definitely making decisions based on the retail outcome,” says Porat.

He points to the increased focus on maximizing revenue with your patients within the profession.

“There’s enormous value in the model that corporate optometry puts forward,” says Porat. “You be the doctor and don’t worry about anything else. I’ll be a great retailer and provide product at the lowest cost available, and that’s a great model.”