California Labor Codes 139.31 114

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§ Exceptions to 139.3



The prohibition of Section 139.3 shall not apply to or restrict any of the following:

(a) A physician may refer a patient for a good or service otherwise prohibited by subdivision (a) of Section 139.3 if the physician's regular practice is where there is no alternative provider of the service within either 25 miles or 40 minutes traveling time, via the shortest route on a paved road. A physician who refers to, or seeks consultation from, an organization in which the physician has a financial interest under this subdivision shall disclose this interest to the patient or the patient's parents or legal guardian in writing at the time of referral.

(b) A physician who has one or more of the following arrangements with another physician, a person, or an entity, is not prohibited from referring a patient to the physician, person, or entity because of the arrangement: (1) A loan between a physician and the recipient of the referral, if the loan has commercially reasonable terms, bears interest at the prime rate or a higher rate that does not constitute usury, is adequately secured, and the loan terms are not affected by either party's referral of any person or the volume of services provided by either party. (2) A lease of space or equipment between a physician and the recipient of the referral, 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 party's referral of any person or the volume of services provided by either party. (3) A physician's ownership of corporate investment securities, 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, do not base profit distributions or other transfers of value on the physician's referral of persons to the corporation, do not have a separate class or accounting for any persons or for any physicians who may refer persons to the corporation, and are in a corporation that had, at the end of the corporation's most recent fiscal year, total gross assets exceeding one hundred million dollars ($100,000,000).

(c) (1) A physician may refer a person to a health facility as defined in Section 1250 of the Health and Safety Code, or to any facility owned or leased by a health facility, if the recipient of the referral does not compensate the physician for the patient referral, and any equipment lease arrangement between the physician and the referral recipient complies with the requirements of paragraph (2) of subdivision (b). (2) Nothing shall preclude this subdivision from applying to a physician solely because the physician has an ownership or leasehold interest in an entire health facility or an entity that owns or leases an entire health facility. (3) A physician may refer a person to a health facility for any service classified as an emergency under subdivision (a) or (b) of Section 1317.1 of the Health and Safety Code. For nonemergency outpatient diagnostic imaging services performed with equipment for which, when new, has a commercial retail price of four hundred thousand dollars ($400,000) or more, the referring physician shall obtain a service preauthorization from the insurer, or self-insured employer. Any oral authorization shall be memorialized in writing within five business days.

(d) A physician compensated or employed by a university may refer a person to any facility owned or operated by the university, or for a physician service, to another physician employed by the university, provided that the facility or university does not compensate the referring physician for the patient referral. For nonemergency diagnostic imaging services performed with equipment that, when new, has a commercial retail price of four hundred thousand dollars ($400,000) or more, the referring physician shall obtain a service preauthorization from the insurer or self-insured employer. An oral authorization shall be memorialized in writing within five business days. In the case of a facility which is totally or partially owned by an entity other than the university, but which is staffed by university physicians, such physicians may not refer patients to the facility if the facility compensates the referring physician for such referrals.

(e) The prohibition of Section 139.3 shall not apply to any service for a specific patient that is performed within, or goods that are supplied by, a physician's office, or the office of a group practice. Further, the provisions of Section 139.3 shall not alter, limit, or expand a physician's ability to deliver, or to direct or supervise the delivery of, in-office goods or services according to the laws, rules, and regulations governing his or her scope of practice. With respect to diagnostic imaging services performed with�equipment that, when new, had a commercial retail price of four�hundred thousand dollars ($400,000) or more, or for physical therapy�services, or for psychometric testing which exceeds the routine�screening battery protocols, with a time limit of two to five hours,�established by the Industrial Medical Council, the referring�physician obtains a service preauthorization from the insurer or�self-insured employer. Any oral authorization shall be memorialized�in writing within five business days.��

(f) The prohibition of Section 139.3 shall not apply where the�physician is in a group practice as defined in Section 139.3 and�refers a person for services specified in Section 139.3 to a�multispecialty clinic, as defined in subdivision (l) of Section 1206�of the Health and Safety Code. For diagnostic imaging services�performed with equipment that, when new, had a commercial retail�price of four hundred thousand dollars ($400,000) or more, or�physical therapy services, or psychometric testing which exceeds the�routine screening battery protocols, with a time limit of two to five�hours, established by the Industrial Medical Council, performed at�the multispecialty facility, the referring physician shall obtain a�service preauthorization from the insurer or self-insured employer.�Any oral authorization shall be memorialized in writing within five�business days.��

(g) The requirement for preauthorization in sections (c), (e), and�(f) shall not apply to a patient for which the physician or group�accepts payment on a capitated risk basis.

(h) The prohibition of Section 139.3 shall not apply to any�facility when used to provide health care services to an enrollee of�a health care service plan licensed pursuant to the Knox-Keene Health�Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section�1340) of Division 2 of the Health and Safety Code).