Assembly Standing Committee on Business and Professions

Good morning, everyone. Welcome to this morning's meeting of the Assembly Business and Professions Committee. Today, we'll be hearing eight bills on our agenda with the following five bills proposed for consent: SB 291 by Senator Grayson, SB 387 by Senator Rubio, SB 517 by Senator Niello, SB 602 by Senator Cortese, and SB 773 by Senator Ashby.

Before we begin with today's agenda, I'd like to once again remind everyone that the Assembly has rules to ensure we maintain order and run an efficient and fair hearing.

We apply these rules consistently to all people who participate in our proceedings, regardless of the viewpoint they express. In order to facilitate the goal of hearing as much from the public, within the limits of our time, we will not permit conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of legislative proceedings.

For each measure being presented today, we'll be allowing primary witnesses here in the room to speak for up to two minutes each, with up to two primary witnesses per side. Any additional witnesses will be limited to name, position on the Bill, and the organization they represent, if any.

For those wishing to provide further comments, we are accepting written testimony through the position letter portal on the Committee's website. With that, we will begin today's hearing, but to really begin today's hearing, we need authors. So, if you are staff for Senator Umberg, Senator Cabaldon, or Senator Niello, please go find your Boss. Find your Boss, bring them to room 1100.

On the Senate side, we should have a quick hearing. If we get some more Committee Members here, we'll get a quorum. I assure folks, you'll get motions and seconds. And you have "Aye" recos from me. Two of you have "Aye" recos from the Republican Caucus, so I feel good about your chances, but not if you're not here.

So, go get your Senator. Bring him on down. I will not have a ton of patience for absent Senators. So, if Senators are absent for too long, I will present your Bill for you. I assure you, I will do a worse job than you will.

So, it is 9:05. I hope we get a sender in here by 9:10, or else I'm going to start freelancing.

Senator Niello wins the prize. Thank you, sir. Take your time until another sender. Come on up. We're ready when you are. Yeah. Just one of these—is this your first?

I was gonna say this isn't your first rodeo. Is it? Well, try not to be too intimidating. The better house. I'm sorry. I was putting words in your mouth.

There we go. When I was a member of your institution, the Younger House, we were over in the Capitol. This building didn't exist.

Yeah, yeah. Even I had a couple of years of those good days. So, before you start, Senator Niello, I apologize for interrupting, w're going to capture the quorum while we can. Madam Secretary, please call the roll.

[Roll Call]

Thank you, folks, for being here on time. There was better artwork in the Capitol, Senator Niello.

Yes.

Yeah, it's a little sterile here. We digress. Ready when you are, sir.

I'm sure we will return to the Capitol sometime before the turn of the century, and my only hope is that it's during the term that I'll be here. I have my doubts. We'll see.

You and me both.

So, thank you.

I'm here to present SB 788, which clarifies that CPAs and CPA firms, including their employees, are not subject to the requirements under the Tax Preparation Act but, instead, are licensed and regulated by the California Board of Accountancy.

Current law requires tax preparers to register with the California Tax Education Council, but exempts Certified Public Accountants (CPAs), active State Bar members, and financial institutions and their employees.

There's a gray area in the law for out-of-state CPAs and CPA firms that are currently under the oversight of the Board of Accountancy but licensed under another state or jurisdiction.

SB 788 clarifies that all CPAs and CPA firms, including their employees, are not subject to the requirements under the California Tax Education Council but, instead, are licensed and regulated by the California Board of Accountancy. Staff at the Board of Accountancy has worked with both our staff and Committee staff and did not raise any concerns.

It has clear and sufficient authority over the licensees and those authorized to practice in the state to ensure consumer protection. I have with me today Jason Fox with Cal CPA to testify in support of the bill.

Great—thank you. You've got two minutes.

Good morning, Jason Fox of the California Society of CPAs, and thank you to the Center for bringing this bill forward. SB 788, as the Center outlined, aims to resolve confusion and address duplicative regulation by clarifying the overlap between two areas of law. With respect to CPAs, the Tax Preparation Act only exempts CPAs for license in California.

However, under the Accountancy Act, CPAs licensed in other states are authorized to practice in California under existing interstate practice mobility provisions. So, this creates confusion and potential duplication of regulation, especially for CPAs licensed in other states, as well as professionals working in a CPA firm licensed and regulated by the CBA.

These individuals are already under CBA oversight, as the Center noted. Yet, the overlapping provisions of the Tax Preparation Act introduce unnecessary complexity and compliance burdens for CPAs and firms working to serve consumer needs effectively and efficiently.

To address this, SB 788 updates the CPA exemption—the existing CPA exemption under the Tax Preparation Act—to clarify that a CPA is holding a current, valid license issued by the California Board of Accountancy.

CPAs authorized to practice public counseling in California under existing interstate practice rules, and those working under a licensed CPA firm engaged by a consumer, are all exempt from the CTAC registration requirements because their activities are already subject to a comprehensive regulatory framework under the California Board of Accountancy.

Clarify, this will go a long way to reduce some regulatory uncertainty and extra burdens for those out there providing services for consumers. We respect the urge, and I vote for SB 788. Thank you.

Thank you very much. Any primary witnesses in opposition to the bill? Seeing none—anyone who wants to add on in support of the bill? Seeing none—anyone who wants to add on in opposition? Looking for motions and seconds. Got a motion and a second. Any questions or comments from colleagues? Senator Niello, you did such a great job.

You answered every question anyone had. Would you like to close?

Let me take my allowed half an hour for my closing statement.

Thankfully, Senator Cabaldon is here, so you no longer. We're no longer filibustering in full time.

I don't want to keep my good friend waiting. I respectfully request an aye vote.

Thank you, Senator Niello. It's my pleasure to provide that I vote. Happy to support the Bill today. Madam Secretary, please call the vote.

On SB 788—Niello—the motion is due. Passed to the Committee on Appropriations.

[Roll Call]

Haney. How do you feel about Senator Niello's good Bill? Did I buy reco for?

Haney? Haney. Aye.

Congratulations, senator. That bill is out.

Thank you very much.

Thank you. Appreciate it. Senator Cabaldon, thank you for being here. Ready when you are, sir. With agenda item 3, SB 351 and hit the little button, right.

The one that says Mike.

Yeah, It's a good one.

Wow. We don't have that. I've never been in this room.

Yes, yes.

Thank you for that. Alright. Thank you. Mr. Chair, members, I'm here to present SB 351, which is a targeted bill to assure that California's corporate bar on the practice of medicine isn't infringed upon by the acquisitions from private equity and hedge funds.

I want to make clear the bill is not an attack on private equity generally in health care. There are plenty of examples where private equity plays an important role in capital investments to expand access and scale innovation.

But as private equity and healthcare has been growing in the health and dental sectors by five fold, it's the fastest and largest growing sector of- of- of healthcare acquisitions. What we're seeing is challenges in accountability because the turnaround times are so quick.

And this is what makes private equity different from any other corporate form that in California and nationwide, private equity transactions with respect to health and dental, medical and dental support organizations turn around in now less than two years. And so the normal process for either reputational accountability or for regulatory accountability is tougher.

That's why this bill applies specifically to private equity.

All the bill does is takes the existing guidance from the medical board that is guidance around how to avoid infringing upon the corporate practice and put it into statute with respect to private equity and hedge funds and adds one additional provision around non compete agreements in that practice as well.

And it authorizes the Attorney General to enforce which currently there is no enforcement mechanism for the medical board guidance. It does not. And I want to emphasize last year's legislation that many of you are aware of.

I was not as a freshman, but it does not require prior approval or any other of the reasons why the Governor vetoed the woods legislation from last year in the same topic area.

So it is a more narrowly crafted Bill and it's intended to make sure that we're putting the interests of patients and putting the key decisions in the hands of healthcare providers and not in private equity firms. So I'm joined today by. By our support witnesses and let me turn it over to them. Thank you.

And I'd ask for an aye vote.

Great, thanks. And you have two minutes each.

Thank you, senator. Thank you, Mr. Chair and the members of the committee. My name is Dr. Stephen Abelowicz and I've been working as a practicing pediatric physician for almost 30 years.

During this time I've cared for thousands of children, including generations of families I feel it's my responsibility and my ethical duty to testify today to advocate for those families and and to share my story of what happens when we fail to adequately enforce the ban on the corporate practice of medicine.

Years ago, I partnered with private equity investors in my pediatric practice, thinking that it would help me grow my practice to reach more patients and provide better care.

While the investors agreed to not interfere with the clinical practice and just provide administrative services, they began interfering with clinical decisions in the pursuit of profits that were compromising the care of my young patients. Their actions included limiting access and time for patients needing ongoing care, particularly for mental health. Canceling COVID vaccine clinics during the pandemic.

Coercing physicians to prescribe a specific brand or formula they had financial ties to regardless of the infant's nutritional needs. Making hiring decisions favoring less competent and less costlier medical staff for profits. Attempting to dictate which medical equipment should be used for delivering care and treatment.

These actions breached the prohibition on the corporate practice of medicine and endangered my young patients health. Eventually, I left that practice and opened a new clinic where I could provide quality care without interference. While some families have found me in my new practice, others suffered from substandard care under private equity influence.

One concerning case involved an 8 year old who received inappropriate vaccines meant for teenagers. This mistake was hidden from the parents, only coming to light when I resumed their child's care. This situation underscores the need for physicians to oversee medical decisions and why it's critical to ensure that physicians and physicians alone oversee medical care and clinical decisions.

Absent true enforcement, the interest to increase profits and lower operating costs will come at the cost of patient safety and quality of care. I urge your support on SB 351 to protect patients by creating a new enforcement tool to enforce the prohibition on the corporate practice of medicine in our state. Thank you for your time.

Thank you.

Good morning. Sheirin Ghoddoucy, Senior Legal Counsel and Director of Legal Advocacy at CMA California Medical Association. I'm just here to answer any technical questions.

Great. Thanks so much. Let's have primary witnesses in opposition to the bill. Please come on up. Former Assemblymember Mayes, always good to see you.

Good to see you, Mr. Chair. By the way, I do also appreciate the chair. I do appreciate the chair. Assembly is much more hospitable. Good morning, Chair Berman and members of the committee. Chad Mayes with Capital Advocacy appearing today on behalf of the American Investment Council in respectful opposition to SB 351 unless amended.

Let me begin by sincerely thanking the author and the sponsors of this bill, we are grateful for the thoughtful engagement over the past several weeks and for the amendments that have already been made to strengthen the measure. The intent behind this bill to preserve the independence of medical decision making is critically important and we share that commitment.

The American Investment Council represents private equity and private credit firms that invest and help grow businesses across the country, including services organizations that assist medical and dental practices serving communities here in California.

These partnerships have helped expand access to care, especially for families and children, by supporting local clinics and providers with the tools, systems and resources they need to thrive. We advocate for fairness, but that does not extend to defending those who intentionally abuse the system or violate the corporate practice of medicine or dentistry.

As such, we believe that the bill has currently drafted risks sweeping in legitimate business practices that protect innovation and access to care.

To that end, we respectfully request one additional narrow amendment, a clarification in Section 1191, to ensure that physician practices may be subject to customary and reasonably confidentiality provisions, such as those protecting proprietary marketing strategies or customized electronic health record tools, so long as the provisions do not interfere with legal disclosure obligations, including court orders or government investigations.

We truly appreciate the collaborative process the author's office has led and remain fully committed to working toward language that protects patients, preserves clinical Independence and supports sustainable care models across California. Thank you for the opportunity to testify today.

Thank you very much. Any witnesses want to add on in support of the bill?

Good morning, Mr. Chair. Members Dylan Elliott, on behalf of the California State Association of Psychiatrists, in support. Thank you.

Thank you.

Ellie Fenton-Sutliff, intern at Stone Advocacy, on behalf of the California Orthopedic Association, in support.

Thank you.

Hi. Tiffany Brokaw here on behalf of Attorney General Rob Bonta, in support.

Thank you.

Good morning, chair and members. Jennifer Tannehill with Aaron Reed and Associates on behalf of the California Dental Hygienists Association, also in support.

Thank you.

On behalf of the California Association of Orthodontists, also in support.

Thank you.

Tim Madden representing the California chapter of the American College of Emergency Physicians, in support.

Thank you.

Good morning, Mr. Chair and members. Angela Hill, California Medical Association, proud co sponsor. Thank you.

Thank you.

Good morning, chair and members. Lawrence Gaydon with the California Dental Association, proud co sponsor.

Thank you.

Thank you. Vanessa Kahina on behalf of the California Academy of Family Physicians here in support.

Thank you.

Brian Spencer on behalf of the American College of OBGYN's District 9 and the California Podiatric Medical Association, both in support. Thank you.

Thank you.

Good morning, chair and committee meetings. Mohammed on behalf of myself as a practicing EMT and a future physician in support.

Thank you. Any additional witnesses who want to add on in opposition to the bill? Seeing none. Going to bring it back to colleagues for questions, comments, motion, seconds. Got a motion and a second. Any questions or comments? Seeing none. Senator Cabaldon, would you like to close?

Just ask for an aye vote. Thank you, Mr. Chair and members.

Thank you. I want to thank the author. I know there are still some outstanding concerns raised by opposition regarding provisions that are within the jurisdiction of the Judiciary Committee, which is where this bill is headed next. In the meantime, I'm happy to support the bill committee today. Madam Secretary, please call the vote.

On SB 351, Cabaldon, the motion is due pass to the Committee on Judiciary. [roll call].

That Bill is out. Thank you very much. So I was remiss earlier not to welcome Assemblymember Ellis to the Committee today for filling in for Assemblymember Macedo. Thank you for being here and given that you were one of the few people who were here on time, you're welcome any day. Any day, so, to Minority Leader Gallagher.

Assembly Member Ellis is a wonderful addition to the Committee. We'd also, can I get a motion and a second on the consent calendar?

Move approval.

Got a motion in a second. Madam Secretary, please call the vote on the consent calendar.

On the consent calendar, file item 1, SB291 Grayson, the motion is do pass to the Committee on Insurance. File Item 4, SB387. Rubio, the motion is do pass to the Committee on Appropriations. File Item 5. SB 517 Niello, the motion is do pass to the Committee on Judiciary. File Item 6, SB602 Cortese, the motion is do

pass to the Committee on Appropriations. And file item 7, SB773 Ashby, the motion is do pass to the Committee on Appropriations. Berman. Berman, aye. Flora. Flora aye. Ahrens. Ahrens, aye. Alanis. Alanis aye. Bains. Bauer-Kahan. Caloza. Caloza, aye. Chen. Chen, aye. Ellis. Ellis aye. Elhawary. Hadwick. Hadwick, aye. Haney. Haney, aye. Irwin. Irwin, aye. Jackson. Jackson, aye.

Krell. Krell aye. Lowenthal. Gwen aye. Pellerin. Pellerin, aye.

Great. Consent calendar is out. I believe that Senator Umberg is on his way. So we'll sit tight and hope that he gets here soon.

Mr. Chair. Yes, sir. It's assemblymember Pellerin's birthday today. It is. And I just feel like while we're waiting, I just think it's, it's right to recognize that motion.

Yes. Should we. Would you like to lead the way, Assemblember Ahren?

I defer to my senior Assembly Member in Silicon Valley.

Don't you dare. Don't you. This isn't the hot potato that you throw in my lap. All right. I'm a terrible singer, so I'm going to turn my mic button off. We're going to sing Happy Birthday. Everyone needs a little happiness in their life. We're going to do happy. We don't want everyone to turn their mic on.

That could be bad. All right, we're going to do this like we do the pledge. I'm going to get us started and then I'm going to turn my mic off. Okay. All right. On 1, 2, 3.

I'm not going to say that on the mic. Happy birthday, Gail.

Yeah, yeah, yeah, yeah. Now I learned my lesson. I learned my lesson from before. I don't need to go viral on social media anymore. As well deserved. Hey, while we're waiting, we're gonna. We're gonna call for add ons for folks who, who missed earlier votes. One would take it from the top.

On SB 351, Cabaldon. Alanis. Alanis, aye. On SB 788, Niello. Flora. Flora, aye. Alanis. Alanis, aye. Erwin. Erwin, aye. Jackson. Jackson. aye.

It's Senator Umberg. I have never been more excited to see you in my life. That is, until I present all my bills at your Committee. So we'll keep this clean. Thank you for being here to present agenda item number two as WE312. Ready when you are, sir.

And I think you might just need to hit the mic button.

I'm newly arrived here in the Legislature, so this is hard to figure out.

You got potential.

All right, thank you very much, Mr. Chair. Thank you, Chair and Eddie Franco, for your work on this Bill. In 2017, California banned the sale of puppies at retail stores.

However, it's apparent that as a result, other clandestine sales channels were created, often preying on uninformed consumers. Tens of thousands of puppies are currently being bred out of state, typically in so called "puppy mills," and then sold, often online, and shipped to Californians, sometimes directly, other times through brokers.

California State law has never required shippers of dogs to send health certificate forms to CDFA. And what this Bill does is it requires those forms to be sent to CDFA. It's part of a package of three bills with Assemblymember Bennett and Assemblymember Berman.

With me here to testify in support is Brittany Benesi on behalf of ASPCA and Julianna Tetlow on behalf of the San Diego Humane Society. Thank you very much for being here.

Thank you, and you have two minutes each.

Thank you so much. Good morning, Chair Berman, Members of the Committee. My name is Julianna Tetlow and I'm speaking on behalf of San Diego Humane Society, a municipal animal care and control agency serving 13 cities in San Diego County.

We are proud co-sponsors of Senate Bill 312, and we thank Senator Umberg for his leadership and as well as the Chair. As an agency responsible for public safety, animal welfare, and enforcing state and local animal laws, we are on the front lines of a crisis created by the unregulated influx of out of state puppies.

These animals are often bred in large scale out of state facilities with minimal oversight, shipped into California through online or third party brokers with no meaningful transparency about where they come from, what conditions they're raised in, or even whether they are healthy. When problems arrive, and they often do, it's local animal control officers who get the calls.

We're expected to investigate the sales of sick puppies and suspected fraud, but we're operating in the dark. California currently has no centralized record of where these puppies are coming from, making enforcement nearly impossible and allowing bad actors to continue operating unchecked.

SB 312 changes that. By requiring importers to submit health certificates to CDFA as well as the buyer and making those certificates publicly accessible, this Bill gives law enforcement and regulatory agencies tools we have never had—real, accessible data. Data that allows us to trace origins, identify patterns of abuse and fraud, and hold unethical breeders and brokers accountable.

The Bill also relieves local agencies of paper-based, largely ignored reporting systems and replaces it with a centralized, accessible system. Animal shelters across California are over capacity. We are seeing more strays, more surrenders, and unfortunately, more puppies that appear to be the byproduct of this unregulated import system. SB 312 is a critical step in turning the tide.

It promotes transparency, consumer protection, and more effective public oversight. Bottom line, we want California to have easier access to the information, that the LA Times was able to compile independently through a few years of investigative research, for the health and safety of animals in our communities. We respectfully urge your "Aye" vote. Thank you.

Thank you.

Morning, Chair Berman, Members of the Committee. Brittany Benesi, on behalf of the ASPCA. At its core, this Bill is about protecting California consumers—people who are doing their best to make thoughtful, loving choices when bringing a new pet into their home. Unfortunately, many are being misled.

Every year, thousands of puppies are imported to California from out of state breeding operations, often through online ads that present them as local, reputable, and healthy. But behind the polished websites, admittedly adorable pictures, and carefully worded listings is often a very different story—animals bred in large scale commercial breeding operations with questionable conditions, conditions, inadequate veterinary care and no meaningful accountability.

Consumers have no way to verify the origin of the animals. And when something goes wrong, when the puppy arrives sick, or the breeder disappears, these families are left with emotional distress, unexpected vet bills, and no recourse.

SB 312 offers a simple, common-sense solution. It requires that health certificates for dogs imported into this—for sale into California—be submitted electronically to CDFA, as well as to the buyer and made publicly available online.

This gives consumers access to clear, factual information about where a puppy came from and whether it was healthy at the time of shipment. This kind of transparency is already the norm in most other states. In California, a state that prides itself on being both leading in consumer protection and animal welfare is unfortunately behind the Curve.

SB 312 ensures that buyers aren't left in the dark, that bad actors can't hide behind false identities, and that families can make informed, safe choices when bringing a new pet into their lives. We'd like to thank Senator Umberg for his leadership and the Chair, as well as Assemblymember Bennett, and respectfully urge your "Aye" vote. Thank you.

Thank you very much. Anybody—we're going to switch it up because I got it wrong last time—anyone who wants to add on in support of the Bill?

Thank you.

Chair and Members, Austin Webster with W Strategies, on behalf of the Animal Legal Defense Fund, in support.

Morning. Dylan Elliot on behalf of Cal Animals as well as Humane World, both in support. Thank you.

Thank you. Any primary witnesses in opposition to the Bill? Seeing none. Anyone who wants to add on in opposition to the Bill? Still seeing none. Bringing it back to colleagues for motions and seconds and questions and comments. Got a motion and a second. Any questions or comments? Seeing none. Senator Umberg, would you like to close?

Thank you, Mr. Chair and Members. And I appreciate the witness testimony, as is illustrated by Ms. Tetlow, this is also a testament to free, independent, and credible journalism because this was really brought to light by the Los Angeles Times. So, shout out to them and I urge an "Aye" vote.

Very true. Very true. Senator Umberg, thank you so much. It's been an honor to work with you and Assemblymember Bennett on this and our sponsors, San Diego Humane Society and ASPCA, on the Stop the Puppy Mill Pipeline Bill Package. Your Bill will provide the transparency that California dog owners deserve and a tool to hold bad actors accountable.

So, I'm happy to support the Bill, which I think I might be a joint author of already, or coauthor, or something else, today.

Yes, I think you are.

Yeah. Madam Secretary, please call the vote.

[Roll Call]

Great. That Bill is out.

Thank you, Mr. Chair and Members.

Thank you. Thanks, everybody. I think everybody who's here is done. So, appreciate y'all. I'll hang out for a little bit.

Madam Secretary, please open the roll. Is that the terminology? We'll go with that. Start from the top, call the bills. Take it from the top, call for add ons.

Do all the things on the consent calendar. [roll call]. On SB 312, Umberg. [roll call]. On SB 35, Cabaldon. [roll call]. On SB 788, Niello. [roll call].

Madam Secretary, please take it from the top.

On the consent calendar. [roll call]. On SB 312, Umberg. [roll call]. On SB 351, Cabaldon. [roll call]. On SB 788, Niello. [roll call].

Meetings adjourned.