The American Med Spa Association Offers Insights into Expanded California Medical Board Enforcement Focus on Med Spas and Recent Unannounced Audits of California Med Spas By Harry Nelson,Founding & Managing Partner, Nelson Hardiman, LLP In response to persistent concerns over medical spas operating outside the bounds of California law, the Medical Board of California, in coordination with the Board of Barbering and Cosmetology of California, has expanded the enforcement focus on med spas, with a task force expanding unannounced audits. The Medical Board is focusing on organizational structure, governance, and scope of practice concerns, with particular attention to the unlicensed practice of medicine, as well as inappropriately autonomous allied health professionals exceeding their scope of practice. These audits highlight the need for physician control, appropriate business ownership and supervision structures, limitations on the role of unlicensed persons, and attention in ensuring clearer separation between the performance of non-medical esthetician services and medical procedures by appropriate licensed personnel under physician supervision to ensure the health and safety of patients. California based members of the American Med Spa Association (AmSpa) have requested guidance about a new wave of unannounced audits of medical spas led by the Medical Board of California, in many cases coordinated with the Board of Barbering and Cosmetology. Medical spas across Southern California have received unannounced visits from Medical Board investigators, demanding to see corporate records. In many cases, investigators from the Board of Barbering and Cosmetology have followed soon after, seeking operational records and demanding greater separation of medical and aesthetic personnel and operations. Although medical spa compliance with laws and regulations has been a longstanding subject of concern in California, the unannounced audits reflect a renewed and expanded focus. In July 2012, Governor Jerry Brown signed into law Assembly Bill (AB) 1548, which increased penalties for illegally owning and operating medical spas. According to Harry Nelson of Nelson Hardiman, LLP, who advised AmSpa on the law’s enactment, AB1548 was a response to concerns that preexisting penalties were insufficient to dissuade illegal operations and repeat offenders. Under the preexisting law, a person found guilty of operating an illegal business faced a maximum penalty of $1,200 and six months incarceration. AB 1548 increased the potential penalties to up to$500,000 and five years incarceration for cases exceeding $950 in patient charges. Despite this increase in penalties in 2012, reports of problems with medical spas have continued to surface. In August 2013, an Encino cosmetic surgeon was charged with involuntary manslaughter after a patient died during liposuction. . The Medical Board is currently investigating several pending cases involving patient injuries following medical spa procedures. In its 2012-2013 Annual Report, the Medical Board noted as a major enforcement accomplishment that it referred 122 cases for criminal prosecution, an increase of nearly 40% over the referrals in the previous year. Medical spa prosecutions investigated by Operation Safe Medicine, the Board’s unlicensed practice unit, constituted a significant component of this increase. As a result of these reports, in recent months, the Medical Board has renewed its focus on medical spas in numerous respects. The Board’s Committee on Physician Supervisory Responsibility has been focused on ways to tighten regulation of medical spas. One example of the Committee’s work was Title 16, California Code of Regulations (CCR), Section 1364.50, which established requirements, effective July 1, 2013 for physician availability during the performance of elective cosmetic procedures involving the use of a laser or intense pulse light device. Another example is the proposed amendment of Title 16 CCR Section 1399.541 to increase physician supervision requirements to "immediate availability”. This and other contemplated regulations will tighten the oversight of medical spa operations. The launch of unannounced audits focuses on identifying California medical spas that are merely "renting” physicians as medical directors, when the businesses are in fact owned and controlled by either unlicensed persons or allied health professionals, such as physician assistants or nurses. By demanding to review corporate records, Medical Board investigators hope to identify medical spas that are not structured as professional medical corporations, which are the only artificial entities that are permitted to hire physicians and perform medical procedures. In addition to looking for organizational defects, the Medical Board is also demanding copies of delegation of services (for physician assistants) and standardized procedures (for registered nurses), as well as attempting to identify any procedures being performed by unlicensed medical assistants, in violation of their limited scope of practice to perform "technical support services”. The unannounced audits also appear to focus on addressing practices that create confusion as to who is responsible for different aspects of the services rendered in medical spas. The concern seems to extend beyond the issue of whether physician functions are being delegated only to appropriately supervised, allied health professionals (e.g. registered nurses or physician assistants) to a broader concern with differentiating and identifying cosmetologists and estheticians from physician-supervised personnel. Reports from medical spas that have received unannounced visits describe demands that esthetician certifications from the Board of Barbering and Cosmetology be posted in a different office from medical personnel licenses, and that different rooms be designated for aesthetic and medical procedures. According to Harry Nelson of Nelson Hardiman, "the guidance from investigators regarding the need for formal separation of medical and aesthetic practitioners and procedures exceed any regulation promulgated by either the Medical Board or Board of Barbering and Cosmetology. The Boards are free to suggest their preferences, but these should not be mistaken as descriptions of legal requirements.” In light of these latest enforcement efforts, medical spas in California should prepare by reviewing their business structure, documentation, and all aspects of their business operations. "It is much simpler to address compliance issues proactively before the government shows up,” observed Nelson, "than to do so in the aftermath of an investigation identifying deficiencies.” Harry Nelson is a partner at Nelson Hardiman, LLP, in Los Angeles, California, where he counsels health care companies on business and regulatory issues, including licensing, operations, and reimbursement. Nelson Hardiman represents healthcare providers and other businesses in litigation, transactions, and regulatory compliance matters related to federal and state healthcare laws and regulations. It is the only boutique firm in California to receive a Top Tier ranking from U.S. News/Best Lawyers in the areas of healthcare law and administrative law in every year of the U.S. News/Best Lawyers survey. For additional information, Harry can be reached at (310) 469-7160 or go to: www.nelsonhardiman.com