text:
(a) A pharmacy benefit manager required to register with the department pursuant to Section 1385.004 shall complete an application for registration with the department that shall include, but not be limited to, all of the information required by subdivision (c).

(b) A pharmacy benefit manager registration obtained pursuant to this section is not transferable.

(c) The department shall develop an application form for pharmacy benefit manager registration. The application form for a pharmacy benefit manager registration shall require the pharmacy benefit manager to submit the following information to the department:

(1) The name of the pharmacy benefit manager.

(2) The address and contact telephone number for the pharmacy benefit manager.

(3) The name and address of the pharmacy benefit manager’s agent for service of process in the state.

(4) The name and address of each person beneficially interested in the pharmacy benefit manager.

(5) The name and address of each person with management or control over the pharmacy benefit manager.

(d) If the applicant is a partnership or other unincorporated association, a limited liability company, or a corporation, and the number of partners, members, or stockholders, as the case may be, exceeds five, the application shall so state, and shall further state the name, address, usual occupation, and professional qualifications of each of the five partners, members, or stockholders who own the five largest interests in the applicant entity. Upon request by the department, the applicant shall furnish the department with the name, address, usual occupation, and professional qualifications of partners, members, or stockholders not named in the application, or shall refer the department to an appropriate source for that information.

(e) The application shall contain a statement to the effect that the applicant has not been convicted of a felony and has not violated any of the provisions of this article. If the applicant cannot make this statement, the application shall contain a statement of the violation, if any, or shall describe the reasons that prevent the applicant from being able to comply with the requirements with respect to the statement.

(f) The department may set a fee for a registration required by this article. The application fee shall not exceed the reasonable costs of the department in carrying out its duties under this article.

(g) Within 30 days of a change in any of the information disclosed to the department on an application for a registration, the pharmacy benefit manager shall notify the department of that change in writing.

(h) For purposes of this section, “person beneficially interested” with respect to a pharmacy benefit manager means and includes the following:

(1) If the applicant is a partnership or other unincorporated association, each partner or member.

(2) If the applicant is a corporation, each of its officers, directors, and stockholders, provided that a natural person shall not be deemed to be beneficially interested in a nonprofit corporation.

(3) If the applicant is a limited liability company, each officer, manager, or member.

(i) This section shall become inoperative on January 1, 2027, or the date on which the department has established the licensure process pursuant to Section 1385.009, whichever is later and, as of the following January 1 is repealed.

history: (History: Amended by Stats. 2025, Ch. 21, Sec. 14. (AB 116) Effective June 30, 2025. Conditionally inoperative on or after January 1, 2027, by its own provisions. Repealed conditionally by its own provisions.)

article: 6.1. Pharmacy Benefit Managers


kind: section

code: HSC

text: Notwithstanding any provision in a contract between a health care service plan and a provider, the department may request from a health care service plan any information required under this article or PPACA.

history: (History: Added by Stats. 2010, Ch. 661, Sec. 4. (SB 1163) Effective January 1, 2011.)

division: 2. LICENSING PROVISIONS

chapter: 2.2. Health Care Service Plans

article: 6.2. Review of Rate Increases

path: 2. LICENSING PROVISIONS > 2.2. Health Care Service Plans > 6.2. Review of Rate Increases


text: The failure by a health care service plan to comply with the contractual requirements and to maintain appropriate oversight of a contracted pharmacy benefit manager to ensure the pharmacy benefit manager’s compliance pursuant to this article shall constitute grounds for disciplinary action. The director shall, as appropriate, investigate and take enforcement action against a health care service plan that fails to comply with these requirements and shall periodically evaluate contracts between health care service plans and pharmacy benefit managers to determine if any audit, evaluation, or enforcement actions should be undertaken by the department.

history: (History: Amended by Stats. 2025, Ch. 21, Sec. 15. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers

path: 2. LICENSING PROVISIONS > 2.2. Health Care Service Plans > 6.1. Pharmacy Benefit Managers


text:
(a) A filing submitted under this article shall be actuarially sound.

(b) (1) The plan shall contract with an independent actuary or actuaries consistent with this section.

(2) A filing submitted under this article shall include a certification by an independent actuary or actuarial firm that the rate increase is reasonable or unreasonable and, if unreasonable, that the justification for the increase is based on accurate and sound actuarial assumptions and methodologies. Unless PPACA requires a certification of actuarial soundness for each large group contract, a filing submitted under Section 1385.04 shall include a certification by an independent actuary, as described in this section, that the aggregate or average rate increase is based on accurate and sound actuarial assumptions and methodologies.

(3) The actuary or actuarial firm acting under paragraph (2) shall not be an affiliate or a subsidiary of, nor in any way owned or controlled by, a health care service plan or a trade association of health care service plans. A board member, director, officer, or employee of the actuary or actuarial firm shall not serve as a board member, director, or employee of a health care service plan. A board member, director, or officer of a health care service plan or a trade association of health care service plans shall not serve as a board member, director, officer, or employee of the actuary or actuarial firm.

(c) Nothing in this article shall be construed to permit the director to establish the rates charged subscribers and enrollees for covered health care services.

article: 6.2. Review of Rate Increases


text:
(a) Notwithstanding Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code, all information submitted under this article shall be made publicly available by the department except as provided in subdivision (b).

(b) (1) The contracted rates between a health care service plan and a provider shall be deemed confidential information that shall not be made public by the department and are exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code). The contracted rates between a health care service plan and a provider shall not be disclosed by a health care service plan to a large group purchaser that receives information pursuant to Section 1385.10.

(2) The contracted rates between a health care service plan, including those submitted to the department pursuant to Section 1385.046, and a large group shall be deemed confidential information that shall not be made public by the department and are exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code). Information provided to a large group purchaser pursuant to Section 1385.10 shall be deemed confidential information that shall not be made public by the department and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).

(c) All information submitted to the department under this article shall be submitted electronically in order to facilitate review by the department and the public.

(d) In addition, the department and the health care service plan shall, at a minimum, make the following information readily available to the public on their internet websites in plain language and in a manner and format specified by the department, except as provided in subdivision (b). For individual and small group health care service plan contracts, the information shall be made public for 120 days prior to the implementation of the rate increase. For large group health care service plan contracts, the information shall be made public for 60 days prior to the implementation of the rate increase. The information shall include:

(1) Justifications for any unreasonable rate increases, including all information and supporting documentation as to why the rate increase is justified.

(2) A plan’s overall annual medical trend factor assumptions in each rate filing for all benefits.

(3) A health care service plan’s actual costs, by aggregate benefit category to include hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology.

(4) The amount of the projected trend attributable to the use of services, price inflation, or fees and risk for annual plan contract trends by aggregate benefit category, such as hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology.

history: (History: Amended by Stats. 2021, Ch. 615, Sec. 228. (AB 474) Effective January 1, 2022. Operative January 1, 2023, pursuant to Sec. 463 of Stats. 2021, Ch. 615.)

article: 6.2. Review of Rate Increases


text: On or after January 1, 2027, or the date on which the department has established the licensure process pursuant to Section 1385.009, whichever is later, a person shall not engage in business as a pharmacy benefit manager for a payer in this state unless that person has first secured a license from the director. A license issued pursuant to this article is not transferable without the express and specific permission of the director.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 16. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) On or before July 1, 2012, the director may issue guidance to health care service plans regarding compliance with this article. This guidance shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(b) The department shall consult with the Department of Insurance in issuing guidance under subdivision (a), in adopting necessary regulations, in posting information on its Internet Web site under this article, and in taking any other action for the purpose of implementing this article.

article: 6.2. Review of Rate Increases


text:
An application for licensure as a pharmacy benefit manager under this article shall be verified by an authorized representative of the applicant and shall be in a form prescribed by the department. To the extent applicable, the department may direct licensure applicants to use the forms and processes available to and required of health care service plan licensure applicants and licensees created pursuant to this chapter and its implementing regulations, including Section 1351 and the forms and exhibits described in regulations, as amended, implementing that section. The application for licensure as a pharmacy benefit manager shall be accompanied by the fee prescribed by Section 1385.0016 and shall set forth or be accompanied by all of the following:

(a) The basic organizational documents of the applicant, such as the articles of incorporation, articles of association, partnership agreement, trust agreement, or other applicable documents, and all amendments to those documents.

(b) A copy of the bylaws, rules and regulations, or similar documents regulating the conduct of the internal affairs of the applicant.

(c) A list of the names, addresses, and official positions of the persons who are to be responsible for the conduct of the affairs of the applicant, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers, each shareholder with more than 5 percent interest in the case of a corporation, all partners or members in the case of a partnership or association, and each person who has loaned funds to the applicant for the operation of its business.

(d) A statement of whether, within the preceding 10 years, the applicant, its management company, an affiliate of the applicant, a controlling person, officer, director, or other person occupying a principal management or supervisory position in the pharmacy benefit manager, management company, or affiliate, or a person intended to hold that relationship or position, has been convicted of or pleaded nolo contendere to a felony, been held to have committed an act involving dishonesty, fraud, or deceit in a judicial or administrative proceeding to which the person was a party, or has had a license or certificate to operate as a pharmacy benefit manager denied or revoked in another jurisdiction.

(e) For an applicant not domiciled in this state, a power of attorney duly executed appointing the director the true and lawful attorney in fact of the applicant for the purposes of service of all lawful process in a legal action or proceeding against the pharmacy benefit manager on a cause of action arising in this state.

(f) Financial statements accompanied by a report, certificate, or opinion of an independent certified public accountant that demonstrates the financial viability of the applicant. Submission of financial statements may, at the direction of the department, be completed using the same forms and processes as required for health care service plans licensed pursuant to this chapter.

(g) An affirmation that the applicant’s business practices and contracts comply with the applicable provisions of this chapter, including the requirements of pharmacy benefit manager contracts and business practices set forth in this article.

(h) An affirmation that the applicant shall comply with all requirements for reporting data to the Department of Health Care Access and Information in accordance with this article and Chapter 8.5 (commencing with Section 127671) of Part 2 of Division 107.

(i) A description of the business operations of the applicant, including descriptions of its services, facilities, and personnel.

(j) A list of all jurisdictions in which the applicant operates as a pharmacy benefit manager, including those in which the applicant holds a license, registration, or certification as a pharmacy benefit manager.

(k) The applicant’s organization chart or charts that show the lines of responsibility and authority in the administration of the applicant’s business as a pharmacy benefit manager. The applicant shall include a narrative explanation of the organization chart, including the responsibility and authority of each entity, board, committee, and position, and identify the persons who serve on the boards and committees and in those positions.

(l) A list of all pharmaceutical supply chain entities, including drug manufacturers, wholesalers, and distributors, that are contracted or affiliated with the applicant.

(m) A list of all health care providers, including pharmacies and pharmacists, that are contracted or affiliated with the applicant.

(n) A list of each payer with which the applicant is affiliated or has a contract for the provision of pharmacy benefit manager services, including a description of all services provided and the number of individual enrollees covered under the contract or contracts with each payer.

(o) A statement describing how the applicant shall provide for separation of medical and clinical decisionmaking from fiscal and administrative management to ensure that medical and clinical decisions shall not be unduly influenced by fiscal and administrative management, including a description of what controls will be put into place to assure compliance with this requirement.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 17. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text: A health care service plan contract subject to Section 1385.03 or 1385.04 shall file a separate schedule documenting the cost savings associated with Section 1367.016 and the impact on rates.

history: (History: Added by Stats. 2019, Ch. 862, Sec. 4. (AB 290) Effective January 1, 2020.)

article: 6.2. Review of Rate Increases


text: In addition to the requirements of Section 1385.009, and upon request of the director, an application shall be accompanied by authorization for disclosure to the director of financial records of each pharmacy benefit manager licensed under this chapter, pursuant to Section 7473 of the Government Code. For purposes of this chapter, the authorization for disclosure shall also include the financial records of an association, partnership, or corporation controlling, controlled by, or otherwise affiliated with the pharmacy benefit manager.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 18. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) (1) A health care service plan shall annually provide claims data at no charge to a large group purchaser if the large group purchaser requests the information and otherwise meets the requirements of this section.

(2) The health care service plan shall provide claims data that a qualified statistician has determined are deidentified so that the claims data do not identify or do not provide a reasonable basis from which to identify an individual. If the statistician is unable to determine that the data has been deidentified, then the data that cannot be deidentified shall not be provided by the health care service plan to the large group purchaser. A health care service plan may provide the claims data in an aggregated form as necessary to comply with subdivisions (e) and (f).

(b) (1) As an alternative to providing claims data required pursuant to subdivision (a), the plan shall provide, at no charge to a large group purchaser, all of the following:

(A) Deidentified data sufficient for the large group purchaser to calculate the cost of obtaining similar services from other health plans and evaluate cost-effectiveness by service and disease category.

(B) Deidentified aggregated patient-level data on demographics, prescribing, encounters, inpatient services, outpatient services, and any other data that is comparable to what is required of the health plan to comply with risk adjustment, reinsurance, or risk corridors pursuant to the federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), and any rules, regulations, or guidance issued thereunder.

(C) Deidentified aggregated patient-level data used to experience rate the large group, including diagnostic and procedure coding and costs assigned to each service that the plan has available.

(2) The health care service plan shall obtain a formal determination from a qualified statistician that the data provided pursuant to this subdivision have been deidentified so that the data do not identify or do not provide a reasonable basis from which to identify an individual. If the statistician is unable to determine that the data has been deidentified, the health care service plan shall not provide the data that cannot be deidentified to the large group purchaser. The statistician shall document the formal determination in writing and shall, upon request, provide the protocol used for deidentification to the department.

(c) Data provided pursuant to this section shall only be provided to a large group purchaser that meets both of the following conditions:

(1) Is able to demonstrate its ability to comply with state and federal privacy laws.

(2) Is a large group purchaser that is either an employer with an enrollment of greater than 1,000 covered lives and at least 500 covered lives enrolled with the health care service plan providing the information or a multiemployer trust with an enrollment of greater than 500 covered lives and at least 250 covered lives enrolled with the health care service plan providing the information.

(d) Nothing in this section shall be construed to prohibit a plan and purchaser from negotiating the release of additional information not described in this section.

(e) All disclosures of data to the large group purchaser made pursuant to this section shall comply with the federal Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191) and the federal Health Information Technology for Economic and Clinical Health Act, Title XIII of the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5), and implementing regulations.

(f) All disclosures of data to the large group purchaser made pursuant to this section shall comply with the Confidentiality of Medical Information Act (Chapter 1 (commencing with Section 56) of Part 2.6 of Division 1 of the Civil Code).

history: (History: Added by Stats. 2014, Ch. 577, Sec. 3. (SB 1182) Effective January 1, 2015.)

article: 6.2. Review of Rate Increases


text:
(a) A pharmacy benefit manager shall submit to the department financial statements prepared as of the close of its fiscal year within 120 days after the close of the fiscal year. These financial statements shall be accompanied by a report, certificate, or opinion of an independent certified public accountant or independent public accountant. An audit shall be conducted in accordance with generally accepted auditing standards and the rules and regulations of the director.

(b) Within 45 days after the close of each quarter of its fiscal year, a pharmacy benefit manager shall submit its quarterly unaudited financial statement, prepared in accordance with generally accepted accounting principles and consisting of at least a balance sheet, statement of income, statement of cash flows, statement of changes in equity, and notes to financial statements as of the date and for the period specified by the director. The director may require the submission of these reports on a monthly or other periodic basis.

(c) A pharmacy benefit manager shall make special reports to the director as the director may require.

(d) For good cause and upon written request, the director may extend the time for compliance with subdivisions (a) to (c), inclusive.

(e) If the report, certificate, or opinion of the independent accountant required pursuant to subdivision (a) is qualified, the director may require the pharmacy benefit manager to take action that the director deems appropriate to permit an independent accountant to remove the qualification from the report, certificate, or opinion.

(f) The director may reject a financial statement, report, certificate, or opinion filed pursuant to this section by notifying the pharmacy benefit manager of the rejection and its cause. Within 30 days after the receipt of the notice, the pharmacy benefit manager shall correct the deficiency, and the failure so to do shall be deemed a violation of this chapter. The director shall retain a copy of all rejected filings.

(g) The director may make rules and regulations specifying the form and content of the reports and financial statements required by this section, and may require that these reports and financial statements be verified by the pharmacy benefit manager in a manner as the director may prescribe. Revenue reported by pharmacy benefit managers shall include revenue from manufacturers, payers, and other sources, including from affiliates. Types of revenue reported shall be inclusive of rebates of any type or form. Expenses reported by pharmacy benefit managers shall include payments to pharmacies, claims processing, special programs, administrative costs, and all other expenses. The director may require the reporting of any additional revenue, expenses, or related information that the department requires to assist in determining the overall impact of pharmacy benefit manager business practices on the cost of drugs in this state.

(h) To the extent applicable, the department may direct licensure applicants to use the forms and processes available to and required of health care service plans and other entities reporting financial data created pursuant to this chapter and their implementing regulations, including Section 1384 and the forms and exhibits described in regulations, as amended, implementing that section.

(i) Financial and other records produced, disclosed, or otherwise made available by an organization pursuant to this section shall be received and maintained on a confidential basis and protected from public disclosure as provided in Section 1385.0021.

history: (History: Amended by Stats. 2025, Ch. 605, Sec. 4. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) Whenever it appears to the department that any person has engaged, or is about to engage, in any act or practice constituting a violation of this article, including the filing of inaccurate or unjustified rates or inaccurate or unjustified rate information, the department may review the rate filing to ensure compliance with the law.

(b) The department may review other filings.

(c) The department shall accept and post to its Internet Web site any public comment on a rate increase submitted to the department during the applicable period described in subdivision (d) of Section 1385.07.

(d) The department shall report to the Legislature at least quarterly on all unreasonable rate filings.

(e) The department shall post on its Internet Web site any changes submitted by the plan to the proposed rate increase, including any documentation submitted by the plan supporting those changes.

(f) If the director makes a decision that an unreasonable rate increase is not justified or that a rate filing contains inaccurate information, the department shall post that decision on its Internet Web site.

(g) Nothing in this article shall be construed to impair or impede the department’s authority to administer or enforce any other provision of this chapter.

history: (History: Amended by Stats. 2016, Ch. 498, Sec. 4. (SB 908) Effective January 1, 2017.)

article: 6.2. Review of Rate Increases


text:
(a) A pharmacy benefit manager licensed pursuant to this article shall submit to the Department of Health Care Access and Information all information required to be reported pursuant to Chapter 8.5 (commencing with Section 127671) of Part 2 of Division 107.

(b) The obligation of a pharmacy benefit manager to comply with this section shall not be waived if the pharmacy benefit manager delegates any of its services or business operations to another entity via a contractual relationship or otherwise.

(c) Failure by a pharmacy benefit manager to timely or completely submit required reporting to the Department of Health Care Access and Information shall be grounds for enforcement action by the department pursuant to this chapter.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 20. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) (1) A licensed pharmacy benefit manager shall, within 30 days after a change in the information contained in its application, other than financial or statistical information, file an amendment to the application in the manner prescribed by rule by the director.

(2) Notwithstanding paragraph (1), if an association, partnership, or corporation is added in a controlling, controlled, or affiliated status relative to the pharmacy benefit manager, the pharmacy benefit manager shall file within 30 days an authorization for disclosure to the director of financial records of the person pursuant to Section 7473 of the Government Code.

(b) Before a material modification of its operations, a pharmacy benefit manager shall give notice of the change to the director, who shall approve, disapprove, suspend, or postpone the effectiveness of the change by order, within 20 business days or within additional time specified by the pharmacy benefit manager, subject to Section 1385.0014.

(c) A pharmacy benefit manager shall, within five days, give written notice to the director, in the form prescribed by rule by the director, of a change in the officers, directors, partners, controlling shareholders, principal creditors, or persons occupying similar positions or performing similar functions, of the pharmacy benefit manager, any parent company of the pharmacy benefit manager, or a management company of the pharmacy benefit manager or its parent company. The director may define by rule the positions, duties, and relationships that shall be reported pursuant to this subdivision.

(d) The fee for filing a notice of material modification pursuant to subdivision (b) shall be the actual cost to the director of processing the notice, including overhead, but shall not exceed seven hundred fifty dollars ($750).

(e) Rules and regulations promulgated and amended by the department pursuant to this chapter relating to health care service plan license amendments and material modifications, including those promulgated to implement and make specific Section 1352, shall, to the extent applicable, apply to pharmacy benefit managers licensed pursuant to this article.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 21. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
The department shall do all of the following in a manner consistent with applicable federal laws, rules, and regulations:

(a) Provide data to the United States Secretary of Health and Human Services on health care service plan rate trends in premium rating areas.

(b) Commencing with the creation of the Exchange, provide to the Exchange such information as may be necessary to allow compliance with federal law, rules, regulations, and guidance.

article: 6.2. Review of Rate Increases


text: Upon denial of an application for licensure, or the issuance of an order pursuant to Section 1385.0013 disapproving, suspending, or postponing a material modification, the director shall notify the applicant in writing, stating the reason for the denial and that the applicant has the right to a hearing if the applicant makes a written request within 30 days after the date of mailing of the notice of denial. Service of the notice required by this section may be made by certified mail addressed to the applicant at the latest address filed by the applicant in writing with the department.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 22. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) This section shall apply only to a health care service plan covering dental services and a specialized health care service plan covering dental services, as defined in Section 1374.194.

(b) On or after January 1, 2025, and at least annually thereafter, a plan shall file with the department the information required by this article, as applicable, including, but not limited to, all of the following:

(1) Type of plan involved, such as for profit or not for profit.

(2) Product type, such as a preferred provider organization or health maintenance organization.

(3) Whether the products are opened or closed.

(4) Annual rate.

(5) Total earned premiums in each plan contract form.

(6) Total incurred claims in each plan contract form.

(7) Review category: initial filing for new product, filing for existing product, or resubmission.

(8) Average rate of increase.

(9) Effective date of rate increase.

(10) Number of subscribers or enrollees affected by each plan contract form.

(11) A comparison of claims cost and rate changes over time.

(12) Any changes in enrollee cost sharing over the prior year associated with the submitted rate filing.

(13) Any changes in enrollee benefits over the prior year associated with the submitted rate filing.

(14) Any changes in administrative costs.

(15) Variation in trend, by geographic region, if the plan serves more than one geographic region.

(16) The loss ratio for the plan contract as described in Section 1367.004.

(17) Proposed and effective rates for all products.

(18) A rating manual that outlines the methodology used in the development of the premium rates, along with a description of how rates were determined.

(19) The base rate or rates and the factors used to determine the base rate or rates.

(20) Trend, including overall average, and by-product, if different.

(21) Any other factors affecting dental premium rates.

(22) An actuarial certification signed by a qualified actuary.

(23) Any other information required for the department to make its determination.

(c) (1) The plan shall file with the department the required information at least 120 days before any change in the methodology, factors, or assumptions that would affect rates.

(2) A plan shall respond to the department’s request for any additional information necessary for the department to complete its review of the plan’s rate filing for individual and group plan contracts within five business days of the department’s request or as otherwise required by the department.

(3) If a plan fails to provide all the information the department requires in order for the department to make its determination, the department may determine that a plan’s rate change is unreasonable or not justified.

(4) If the department determines that a plan’s rate change for individual or group plan contracts is unreasonable or not justified consistent with this article, the plan shall provide notice of that determination to an individual or group applicant or subscriber.

(5) The department may contract with a consultant or consultants with expertise to assist the department in its review. Contracts entered into pursuant to the authority in this article shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Article 4 (commencing with Section 19130) of Chapter 5 of Part 2 of Division 5 of Title 2 of the Government Code, and the State Contract Act (Chapter 1 (commencing with Section 10100) of Part 2 of Division 2 of the Public Contract Code).

(d) For all plans covering dental services, the department shall issue a determination that the plan’s rate change is unreasonable or not justified no later than 60 days following receipt of all the information the department requires to make its determination. The determination by the department shall also apply to the methodology, factors, and assumptions used to determine rates.

(e) The department may review the rate filings to ensure compliance with the law, as described in Section 1385.11, excluding subdivision (c).

(f) The department may require all health care service plans to submit all rate filings to the National Association of Insurance Commissioners’ System for Electronic Rate and Form Filing (SERFF). Submission of the required rate filings to SERFF shall be deemed to be filing with the department for purposes of compliance with this section.

(g) (1) The department may adopt emergency regulations implementing this section. The initial adoption of emergency regulations implementing this section and the readoption of emergency regulations authorized by this subdivision shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare.

(2) On or before July 1, 2024, the director may issue guidance to plans regarding compliance with this section. This guidance shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(3) The department shall consult with the Department of Insurance when issuing guidance on adopting necessary regulations pursuant to this subdivision.

history: (History: Added by Stats. 2023, Ch. 557, Sec. 3. (AB 1048) Effective January 1, 2024.)

article: 6.2. Review of Rate Increases


text: A pharmacy benefit manager license issued under this article shall remain in effect until revoked or suspended by the director.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 23. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) A pharmacy benefit manager applying for licensure under this article shall reimburse the director for the actual cost of processing the application, including overhead, up to an amount not to exceed twenty-five thousand dollars ($25,000). The cost shall be billed not more frequently than monthly and shall be remitted by the applicant to the director within 30 days of the date of billing. The director shall not issue a license to an applicant before receiving payment in full from that applicant for all amounts charged pursuant to this subdivision.

(b) (1) In addition to other fees, fines, penalties, and reimbursements required to be paid under this article, a licensed pharmacy benefit manager shall pay to the director an amount estimated by the director, in consultation with the Department of Health Care Access and Information, to be necessary to fund the actual and reasonably necessary expenses of the department to implement this article and the actual and reasonably necessary expenses of the Department of Health Care Access and Information pertaining to data reporting by pharmacy benefit managers, including for any portion of the Health Care Payments Data Program established by Section 127671.1 that is necessary to implement the provisions of this article, for the ensuing fiscal year. The amount may be paid in two equal installments. The first installment shall be paid on or before August 1 of each year, and the second installment shall be paid on or before December 15 of each year.

(2) The total assessment cost for all licensed pharmacy benefit managers determined by the director pursuant to paragraph (1) shall be divided pro rata among licensees based upon each licensee’s share of the aggregate number of claims adjudicated in this state by licensed pharmacy benefit managers. The aggregate number of claims adjudicated in this state and each licensee’s share of that number shall be calculated based on the report that licensees are required to submit pursuant to paragraph (3).

(3) A licensed pharmacy benefit manager shall, by January 31 of each year, file with the director a report stating the total number of claims it adjudicated for drugs in this state for the preceding calendar year. For purposes of this paragraph, adjudicated claims are claims for reimbursement for drugs dispensed by a provider to a beneficiary under the drug benefit administered by the pharmacy benefit manager for which payment was authorized and made by the pharmacy benefit manager. Reports submitted shall be in the form and manner directed by the department. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may issue instructions on reporting without taking regulatory action.

(4) The amount paid by each pharmacy benefit manager shall be fixed by the director by notice to all licensed pharmacy benefit managers on or before June 15 of each year. A pharmacy benefit manager that is unable to report the number of adjudicated claims shall provide the director with an estimate of the number and the method used for determining the estimate. The director may, upon giving written notice to the pharmacy benefit manager, revise the estimate if the director determines that the method used for determining the estimate was not reasonable.

(5) In determining the amount assessed, the director shall consider all appropriations from the Pharmacy Benefit Manager Fund for the support of the administration of this article and other relevant reimbursements provided for in this chapter.

(6) A refund or reduction of the amount assessed shall not be provided if a miscalculated assessment is based on a pharmacy benefit manager’s overestimate of adjudicated claims.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 24. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) To support the department in the administration of this article and the effective regulation of pharmacy benefit managers under this chapter, and to support the Department of Health Care Access and Information as it pertains to data regarding pharmacy benefit managers and the cost of drugs in this state, the Pharmacy Benefit Manager Fund, administered by the Department of Managed Health Care, is hereby established in the State Treasury.

(b) All revenues of the department received pursuant to this article, including fees, fines, penalties, and reimbursements, except those collected pursuant to Section 1385.0018, shall be deposited in the Pharmacy Benefit Manager Fund and subject to an appropriation by the Legislature.

(c) The department may transfer any revenues deposited into the Pharmacy Benefit Manager Fund to the Health Care Payments Data Fund, established pursuant to Section 127674, for use by the Department of Health Care Access and Information, upon appropriation by the Legislature, for the administration of the Health Care Payments Data System.

(d) In any fiscal year, the Pharmacy Benefit Manager Fund shall maintain not more than a prudent 5-percent reserve unless otherwise determined by the Department of Finance.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 25. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) The director may, after appropriate notice and opportunity for a hearing, by order suspend or revoke a license issued under this article to a pharmacy benefit manager or assess administrative penalties if the director determines that the licensee has committed an act or omission constituting grounds for disciplinary action.

(b) All of the following acts or omissions constitute grounds for disciplinary action by the director:

(1) The pharmacy benefit manager is operating at variance with basic organizational documents as filed pursuant to Section 1385.009, or with its published plan, or in a manner contrary to that described in, and reasonably inferred from, the plan as contained in its application for licensure and annual report, or any modification thereof, unless amendments allowing the variation have been submitted to, and approved by, the director.

(2) The continued operation of the pharmacy benefit manager shall constitute a substantial risk to its subscribers and enrollees.

(3) The pharmacy benefit manager has violated, attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate a provision of this chapter, a rule or regulation adopted by the director pursuant to this chapter, or an order issued by the director pursuant to this chapter.

(4) The pharmacy benefit manager has engaged in conduct that constitutes fraud, dishonest dealing, or unfair competition, as defined by Section 17200 of the Business and Professions Code.

(5) The pharmacy benefit manager has permitted, aided, or abetted a violation by an employee or contractor who is a holder of a certificate, license, permit, registration, or exemption issued pursuant to the Business and Professions Code or this code that would constitute grounds for discipline against the certificate, license, permit, registration, or exemption.

(6) The pharmacy benefit manager has permitted, aided, or abetted the commission of an illegal act.

(7) The pharmacy benefit manager, its management company, another affiliate of the pharmacy benefit manager, or a controlling person, officer, director, or other person occupying a principal management or supervisory position in the pharmacy benefit manager, management company, or affiliate, has been convicted of or pleaded nolo contendere to a crime, or committed an act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this chapter. The director may revoke or deny a license hereunder irrespective of a subsequent order under Section 1203.4 of the Penal Code.

(8) The pharmacy benefit manager has been subject to a final disciplinary action taken by this state, another state, an agency of the federal government, or another country for an act or omission that would constitute a violation of this chapter.

(9) The pharmacy benefit manager violated the Confidentiality of Medical Information Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil Code).

(10) The pharmacy benefit manager violated Chapter 8.5 (commencing with Section 127671) of Part 2 of Division 107, including the data submission requirements of that chapter.

(c) The assessment of administrative penalties against a pharmacy benefit manager shall use the same factors described in subdivision (d) of Section 1386 for health care service plans.

(d) A pharmacy benefit manager shall be subject, if applicable, to all enforcement authority of the department set forth in Article 8 (commencing with Section 1390), and civil penalties for violation of the licensure requirement of Section 1385.009.

(e) Fines and administrative penalties collected pursuant to this section shall be deposited into the Pharmacy Benefit Manager Administrative Fines and Penalties Fund established pursuant to Section 1385.0024. These fines and administrative penalties shall not be used to reduce the assessments imposed on pharmacy benefit managers pursuant to Section 1385.0016.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 26. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) A pharmacy benefit manager whose license has been revoked, or suspended for more than one year, may petition the director to reinstate the license as provided by Section 11522 of the Government Code. A petition shall not be considered if the petitioner is under criminal sentence for a violation of this chapter, or an offense that would constitute grounds for discipline or denial of licensure under this chapter, including any period of probation or parole.

(b) The petition for restoration shall be in the form prescribed by the director. The director may condition the granting of the petition upon additional information and undertakings as the director requires to determine if the person, if restored, would engage in business in full compliance with this chapter and the rules and regulations adopted by the director pursuant to this chapter.

(c) The director may prescribe a fee not to exceed five hundred dollars ($500) for the filing of a petition for restoration pursuant to this section, which shall be the actual cost to the director of processing the petition. In addition, the director may condition the granting of a petition to a pharmacy benefit manager upon payment of the assessment due and unpaid pursuant to subdivision (b) of Section 1385.0016 as of December 15 in the preceding 12 calendar months and, if the pharmacy benefit manager’s suspension or revocation was in effect for more than 12 months, upon the filing of a new pharmacy benefit manager licensure application and the payment of the fee prescribed by subdivision (a) of Section 1385.0016.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 27. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) Surrender of a pharmacy benefit manager license shall become effective 30 days after receipt of an application to surrender the license or within a shorter period of time as the director may determine to be in the public interest and not detrimental to the protection of subscribers, enrollees, or persons regulated under this chapter, unless a revocation or suspension proceeding is pending when the application is filed or a proceeding to revoke or suspend or to impose conditions upon the surrender is instituted within 30 days after the application is filed. If this proceeding is pending or instituted, surrender becomes effective at the time and upon the conditions as the director determines by order.

(b) If the director finds that a pharmacy benefit manager is no longer in existence, has ceased to do business, has failed to initiate business activity as a licensee within six months after licensure, or cannot be located after reasonable search, the director may, by order, summarily revoke the license of the pharmacy benefit manager.

(c) The director may summarily suspend or revoke the license of a pharmacy benefit manager upon failure to pay a fee required by this chapter within 15 days after notice by the director that the fee is due and unpaid or failure to file an amendment or report required under this article within 15 days after notice by the director that the report is due.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 28. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) Notwithstanding the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), the director is not required to disclose any of the following records, or any portion thereof, that are filed by a pharmacy benefit manager with the director in compliance with the requirements of this article, that have not previously been made public:

(1) Corporate financial records, including trade secrets, the information has been confidentially maintained by the business entity, and the release of the information would be damaging or prejudicial to the business concern.

(2) Any application, including an application for an interpretive opinion, including all records that are submitted with the application that are necessary for purposes of the application.

(3) Any record the disclosure of which is exempt under express provisions of the California Public Records Act, the disclosure of which is exempt or prohibited pursuant to federal or state law, including, but not limited to, provisions of the Evidence Code relating to privilege, or that, on the facts of the particular case, the public interest served by not disclosing the record clearly outweighs the public interest served by disclosure of the record.

(b) Notwithstanding any request for confidentiality of information submitted to and processed by the department consistent with regulations adopted and amended pursuant to this chapter relating to the request for confidentiality of information, the disclosure of records, or any portion thereof, is governed by this section.

(c) Notwithstanding any other provision of this article, the director shall disclose information or records submitted to the director in compliance with this article to the Attorney General, upon request, in order to investigate, prosecute, or defend any legal claim or cause or action related to this article, or to use the reports in any court or proceeding related to this article.

history: (History: Amended by Stats. 2025, Ch. 605, Sec. 5. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text: A pharmacy benefit manager has a fiduciary duty to its payer client that includes a duty to be fair and truthful toward the payer, to act in the payer’s best interests, to avoid conflicts of interest, and to perform its duties with care, skill, prudence, and diligence. This section does not limit a payer’s obligations under applicable law with respect to the administration of health care coverage for plan participants.

history: (History: Amended by Stats. 2025, Ch. 605, Sec. 6. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) The department may conduct periodic routine and nonroutine surveys of a pharmacy benefit manager. These surveys shall be conducted in accordance with Section 1380, as applicable.

(b) The department may conduct periodic routine and nonroutine examinations of the fiscal and administrative affairs of a pharmacy benefit manager. These examinations shall be conducted in accordance with Section 1382, as applicable.

(c) A complaint made by an enrollee that includes potential violations by a pharmacy benefit manager of the terms of this article shall be considered by the department to be a complaint against the health care service plan. A complaint made by an insured that includes potential violations by a pharmacy benefit manager of the terms of this article may be considered by the Department of Insurance to be a complaint against the insurer.

history: (History: Amended by Stats. 2025, Ch. 605, Sec. 7. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) The Pharmacy Benefit Manager Administrative Fines and Penalties Fund is hereby created in the State Treasury.

(b) On and after July 1, 2025, the fines and administrative penalties collected pursuant to Section 1385.0018 shall be deposited into the Pharmacy Benefit Manager Administrative Fines and Penalties Fund.

(c) Fines and administrative penalties deposited into the Pharmacy Benefit Manager Administrative Fines and Penalties Fund may be transferred into the Health Care Payments Data Fund, established pursuant to Section 127674, for use by the Department of Health Care Access and Information, upon appropriation by the Legislature, for the administration of the Health Care Payments Data System.

(d) Fines and administrative penalties deposited into the Pharmacy Benefit Manager Administrative Fines and Penalties Fund may be transferred, subject to the annual budget process, to the Health Care Services Plan Fines and Penalties Fund, established pursuant to Section 15893 of the Welfare and Institutions Code.

(e) Fines and administrative penalties deposited into the Pharmacy Benefit Manager Administrative Fines and Penalties Fund shall not be used to reduce the assessments imposed on pharmacy benefit managers pursuant to Section 1385.0016.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 32. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text: The provisions of this article are severable. If any provision of this article or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 33. (AB 116) Effective June 30, 2025.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) A pharmacy benefit manager shall not impose any requirements, conditions, or exclusions that discriminate against a nonaffiliated pharmacy in connection with dispensing drugs.

(b) Discrimination prohibited pursuant to subdivision (a) includes all of the following:

(1) Terms or conditions applied to nonaffiliated pharmacies based on their status as a nonaffiliated pharmacy.

(2) Refusing to contract with or terminating a contract with a nonaffiliated pharmacy on the basis that the pharmacy is a nonaffiliated pharmacy or for reasons other than those that apply equally to affiliated pharmacies.

(3) Retaliation against a nonaffiliated pharmacy based on its exercise of any right or remedy under this article.

(4) Engaging in an unlawful action against a covered entity, including a violation of Section 127471.

(5) Reimbursing a nonaffiliated pharmacy less for a pharmacist service than the pharmacy benefit manager would reimburse an affiliated pharmacy for the same pharmacist service.

(c) This article does not preclude a pharmacy benefit manager or a purchaser of pharmacy benefit manager services from establishing a network of contracting pharmacies.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 8. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
The Legislature finds and declares that Sections 19 and 29 of this act, which add Sections 1385.0011 and 1385.0021, respectively, to the Health and Safety Code, impose a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

To balance the public’s right to access records with the need to protect proprietary information received from pharmacy benefit managers, it is necessary that the information be kept confidential.

history: (History: Added by Stats. 2025, Ch. 21, Sec. 34. (AB 116) Effective June 30, 2025.)

article: 6.2. Review of Rate Increases


text:
A pharmacy benefit manager shall not do any of the following:

(a) Require a plan participant to use only an affiliated pharmacy if there are nonaffiliated pharmacies in the network.

(b) Financially induce a plan participant to transfer a prescription only to an affiliated pharmacy if there are nonaffiliated pharmacies in the network.

(c) Require a nonaffiliated pharmacy to transfer a prescription to an affiliated pharmacy if there are nonaffiliated pharmacies in the network. This section does not prevent a purchaser or pharmacy benefit manager from offering to plan participants financial incentives to use a particular pharmacy, such as lower copays, coinsurance, or any other cost sharing for a prescription when the prescription is dispensed.

(d) Unreasonably restrict a plan participant from using a particular contracted pharmacy for the purpose of receiving pharmacist services covered by the plan participant’s contract or policy.

(e) Communicate to or mislead a plan participant, in any manner, that the plan participant is required to have a prescription dispensed at, or pharmacy services provided by, a particular affiliated pharmacy or pharmacies if there are other nonaffiliated pharmacies that have the ability to dispense the medication or provide the services and are also in network.

(f) Deny a nonaffiliated contract pharmacy the opportunity to participate in a pharmacy benefit manager network as preferred participation status if the pharmacy is willing to accept the same terms and conditions that the pharmacy benefit manager has established for affiliated pharmacies as a condition of preferred network participation status.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 9. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) A contract issued, amended, or renewed on or after January 1, 2026, between a nonaffiliated pharmacy and a pharmacy benefit manager shall not prohibit the pharmacy from offering either of the following as an ancillary service of the pharmacy:

(1) The delivery of a prescription drug by mail or common carrier to a patient or personal representative on request of the patient or personal representative if the request is made before the drug is delivered.

(2) The delivery of a prescription to a patient or personal representative by an employee or contractor of the pharmacy.

(b) Except as otherwise provided in a contract described in subdivision (a), the pharmacy shall not charge a pharmacy benefit manager for the delivery service described in subdivision (a). This section does not prohibit the use of remote pharmacies, secure locker systems, or other types of pickup stations if those services are otherwise permitted by law.

(c) Contracts entered into pursuant to this section shall be open for inspection by the department.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 10. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) A pharmacy benefit manager shall not derive income from pharmacy benefit management services provided to a payer in this state except for income derived from a pharmacy benefit management fee for pharmacy benefit management services provided. The amount of any pharmacy benefit management fee shall be set forth in the agreement between the pharmacy benefit manager and the payer. The pharmacy benefit manager shall disclose the amount and types of the pharmacy benefit management fees to the payer.

(b) A pharmacy benefit manager shall use a passthrough pricing model.

(c) A pharmacy benefit manager, group purchasing organization, and affiliated entity shall direct 100 percent of all prescription drug manufacturer rebates received to the payer or program, if the contractual arrangement delegates the negotiation of rebates to the pharmacy benefit manager, group purchasing organization, or affiliated entity, for the sole purpose of offsetting defined cost sharing, deductibles, and coinsurance contributions and reducing premiums of plan participants.

(d) (1) This section does not preclude a payer from paying performance bonuses to a pharmacy benefit manager based on savings to the payer that decrease premiums paid by the plan participant or that result in plan participants paying the lowest level of cost sharing, deductibles, and coinsurance for a drug, as long as the performance bonus is not based or contingent on any of the following:

(A) The acquisition or ingredient cost of a drug.

(B) The amount of savings, rebates, or other fees charged, realized, or collected by, or generated based on the activity of, the pharmacy benefit manager or its affiliated entities that is retained by the pharmacy benefit manager.

(C) The amount of premiums, deductibles, or other cost sharing or fees charged, realized, or collected by the pharmacy benefit manager or its affiliated entities from patients or other persons on behalf of a patient, except for performance bonuses that are based or contingent on a decrease in premiums, deductibles, or other cost sharing.

(2) Compensation arrangements governed by this section shall be open for inspection by the department.

(e) A pharmacy benefit manager shall not make or permit any reduction of payment for pharmacist services by a pharmacy benefit manager or a payer directly or indirectly to a pharmacy under a reconciliation process to an effective rate of reimbursement, including without limitation generic effective rates, brand effective rates, direct and indirect remuneration fees, or any other reduction or aggregate reduction of payment.

(f) A claim or aggregate of claims for pharmacist services shall not be directly or indirectly retroactively denied or reduced after adjudication of the claim or aggregate of claims unless any of the following have occurred:

(1) The original claim was submitted fraudulently.

(2) The original claim payment was incorrect because the pharmacy or pharmacist had already been paid for the pharmacist services.

(3) The pharmacist services were not properly rendered by the pharmacy or pharmacist.

(g) A pharmacy benefit manager shall not reverse and resubmit the claim of a contract pharmacy under any of the following circumstances:

(1) Without prior written notification to the contract pharmacy.

(2) Without just cause or attempt to first reconcile the claim with the pharmacy.

(3) More than 90 days after the claim was first affirmatively adjudicated.

(h) A pharmacy benefit manager shall not charge a pharmacy or pharmacist a fee to process a claim electronically.

(i) The termination of a contract with a nonaffiliated pharmacy by a pharmacy benefit manager shall not release the pharmacy benefit manager from the obligation to make a payment due to the pharmacy for an affirmatively adjudicated claim unless payments are withheld because of an investigation relating to insurance fraud.

(j) A pharmacy benefit manager shall not retaliate against a pharmacist or pharmacy based on the pharmacist’s or pharmacy’s exercise of a right or remedy under this chapter. Prohibited retaliation includes any of the following:

(1) Terminating or refusing to renew a contract with the pharmacist or pharmacy.

(2) Subjecting the pharmacist or pharmacy to increased audits without cause.

(3) Failing to promptly pay the pharmacist or pharmacy money owed by the pharmacy benefit manager to the pharmacist or pharmacy.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 11. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text: Commencing January 1, 2026, a pharmacy benefit manager shall not conduct spread pricing in this state. If a preexisting contract between a pharmacy benefit manager and a payer authorizes spread pricing, a subsequent amendment or renewal of that contract shall not contain that authorization. Spread pricing contract terms shall be void on and after January 1, 2029.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 12. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) Notwithstanding any other law, a pharmacy benefit manager shall not enter into, amend, enforce, or renew a contract on or after January 1, 2026, with manufacturers that do business in California that implement implicit or express exclusivity for those manufacturers’ drugs, unless the pharmacy benefit manager can demonstrate the extent to which exclusivity results in the lowest cost to the payer, and the lowest cost sharing for the plan participant.

(b) Notwithstanding any other law, a pharmacy benefit manager shall not enter into, amend, enforce, or renew a contract on or after January 1, 2026, with pharmacies or pharmacy services administration organizations that do business in California that expressly or implicitly restrict, or impose implicit or express exclusivity on, nonaffiliated pharmacies’ ability to contract with employers and payers.

(c) Contracts entered into pursuant to this section shall be open for inspection and audit by the department.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 13. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) A person that violates this article shall be subject to an injunction and liable for a civil penalty of not less than one thousand dollars ($1,000) or more than seven thousand five hundred dollars ($7,500) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General.

(b) Notwithstanding any other law, the Attorney General shall be entitled to specific performance, injunctive relief, and other equitable remedies a court deems appropriate for enforcement of this article and shall be entitled to recover attorney’s fees and costs incurred in remedying each violation.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 14. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text: This article does not apply to a collectively bargained Taft-Hartley self-insured prescription drug plan offered pursuant to the federal Employee Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1001 et seq.) or to a pharmacy benefit manager’s provision of pharmacy benefit management services pursuant to that Taft-Hartley plan. To the extent a pharmacy benefit manager is providing services for other payers in addition to a collectively bargained self-insured plan that provides prescription drug plans governed by federal law, this article shall apply to the pharmacy benefit manager in its performance of pharmacy benefit management services pursuant to those other payers.

history: (History: Added by Stats. 2025, Ch. 605, Sec. 15. (SB 41) Effective January 1, 2026.)

article: 6.1. Pharmacy Benefit Managers


text:
(a) It is the intent of the Legislature in enacting this section to ensure that enrollees and subscribers benefit from reductions in the rate of growth in health care costs as a result of the establishment of the Office of Health Care Affordability.

(b) In submitting rates for review consistent with this article, a health care service plan shall demonstrate the impact of any changes in the rate of growth in health care costs resulting from the health care cost targets set pursuant to Chapter 2.6 (commencing with Section 127500) of Part 2 of Division 107.

(c) In determining whether a rate is unreasonable or not justified, the director shall consider the impact on changes in health care costs as a result of the health care cost targets set pursuant to Chapter 2.6 (commencing with Section 127500) of Part 2 of Division 107.

history: (History: Added by Stats. 2022, Ch. 47, Sec. 7. (SB 184) Effective June 30, 2022.)

article: 6.2. Review of Rate Increases


text:
(a) A health care service plan, not including a specialized health care service plan, shall annually report to the department the information described in subdivision (c) for all grandfathered and nongrandfathered products that the plan offers and sells in the individual market, including both on-exchange and off-exchange enrollment, for rates effective during the 12-month period ending January 1 of the following year.

(b) A health care service plan, not including a specialized health care service plan, shall annually report to the department the information described in subdivision (c) for all grandfathered and nongrandfathered products that the plan offers and sells in the small group market, including both on-exchange and off-exchange enrollment, for products with rates effective during that 12-month period ending January 1 of the following year.

(c) (1) Information on premiums, including share of premium, if applicable, average premium weighted by enrollment, and weighted average rate change.

(2) Cost sharing, including deductibles, maximum out-of-pocket limit, copayments, coinsurance, and any other cost sharing for covered benefits as well as high deductible health plans.

(3) (A) For nongrandfathered plans, benefits, including essential health benefits or basic health care services.

(B) For grandfathered plans, basic health care services and mandates.

(4) Standard and nonstandard benefit designs, including on-exchange and off-exchange nonstandard benefit designs.

(5) Enrollment by actuarial value tier, product, benefit design and premiums, including both of the following:

(A) Enrollment in products with zero deductibles, high deductibles as defined in this section, and deductibles between zero and high.

(B) (i) Enrollment by premium.

(ii) For small group products, enrollment by share of premium.

(6) Trend factors as reported in individual and small group rate filings for the health care service plan, including both price and utilization, as required in Section 1385.03.

(d) By October 1, 2021, and annually thereafter, a health care service plan shall submit the annual report, as described under subdivision (a), to the department in a form and manner determined by the department.

(e) Beginning in 2022, the department shall annually present the information reported under this section in the meeting specified in Section 1385.045, a meeting of the Financial Solvency Standards Board, or at any other public meeting the department deems appropriate. The department also shall post the information reported under this section on its internet website no later than December 15 of each year.

(f) The following definitions apply for purposes of this section:

(1) “Average premium weighted by enrollment” means the following:

(A) For the individual market, the average premium shall be weighted by the number of individual enrollees in the plan’s individual market during the 12-month period.

(B) For the small group market, the average premium shall be weighted by the number of enrollees in each small group benefit design in the plan’s small group market during the 12-month period.

(2) “Benefit design” means the cost sharing for covered benefits.

(3) “High deductible” has the same meaning as defined in Section 223(c)(2)(A) of Title 26 of the United States Code.

(4) “Nonstandard benefit design” means a benefit design other than the standard benefit design.

(5) “Share of premium” means the share of premium paid by the enrollee on behalf of the enrollee and any dependents, not the subscriber.

(6) “Standard benefit design” means the standardized products approved by the executive board of the California Health Benefit Exchange pursuant to subdivision (c) of Section 100504 of the Government Code.

(g) Until January 1, 2023, a health care service plan shall not be required to report either of the following information:

(1) Share of premium paid by enrollee.

(2) Enrollment by benefit design, deductible, or share of premium.

(h) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section by means of all-plan letters, forms, or similar instructions, without taking regulatory action until January 1, 2024.

history: (History: Added by Stats. 2020, Ch. 277, Sec. 1. (AB 2118) Effective January 1, 2021.)

article: 6.2. Review of Rate Increases


text:
(a) For large group health care service plan contracts, a health care service plan shall file with the department the weighted average rate increase for all large group benefit designs during the 12-month period ending January 1 of the following calendar year. The average shall be weighted by the number of enrollees in each large group benefit design in the plan’s large group market and adjusted to the most commonly sold large group benefit design by enrollment during the 12-month period. For the purposes of this section, the large group benefit design includes, but is not limited to, benefits such as basic health care services and prescription drugs. The large group benefit design shall not include cost sharing, including, but not limited to, deductibles, copays, and coinsurance.

(b) (1) A plan shall also submit any other information required pursuant to any regulation adopted by the department to comply with this article.

(2) The department shall conduct a public meeting in every even-numbered year regarding large group rates within four months of posting the aggregate information described in this section in order to permit a public discussion of the reasons for the changes in the rates, benefits, and cost sharing in the large group market. The meeting shall be held in either the Los Angeles area or the San Francisco Bay area.

(c) A health care service plan subject to subdivision (a) shall also disclose the following for the aggregate rate information for the large group market submitted under this section:

(1) For rates effective during the 12-month period ending January 1 of the following year, number and percentage of rate changes reviewed by the following:

(A) Plan year.

(B) Segment type, including whether the rate is community rated, in whole or in part.

(C) Product type.

(D) Number of enrollees.

(E) The number of products sold that have materially different benefits, cost sharing, or other elements of benefit design.

(2) For rates effective during the 12-month period ending January 1 of the following year, any factors affecting the base rate, and the actuarial basis for those factors, including all of the following:

(A) Geographic region.

(B) Age, including age rating factors.

(C) Occupation.

(D) Industry.

(E) Health status factors, including, but not limited to, experience and utilization.

(F) Employee, and employee and dependents, including a description of the family composition used.

(G) Enrollees’ share of premiums.

(H) Enrollees’ cost sharing, including cost sharing for prescription drugs.

(I) Covered benefits in addition to basic health care services, as defined in Section 1345, and other benefits mandated under this article.

(J) Which market segment, if any, is fully experience rated and which market segment, if any, is in part experience rated and in part community rated.

(K) Any other factor that affects the rate that is not otherwise specified.

(3) (A) The plan’s overall annual medical trend factor assumptions for all benefits and by aggregate benefit category, including hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology for the applicable 12-month period ending January 1 of the following year.

(B) The amount of the projected trend separately attributable to the use of services, price inflation, and fees and risk for annual plan contract trends by aggregate benefit category, including hospital inpatient, hospital outpatient, physician services, prescription drugs and other ancillary services, laboratory, and radiology.

(C) A comparison of the aggregate per-enrollee, per-month costs and rate of changes over the last five years for each of the following:

(i) Premiums.

(ii) Claims costs, if any.

(iii) Administrative expenses.

(iv) Taxes and fees.

(D) Any changes in enrollee cost sharing over the prior year associated with the submitted rate information, including both of the following:

(i) Actual copays, coinsurance, deductibles, annual out of pocket maximums, and any other cost sharing by the benefit categories determined by the department.

(ii) Any aggregate changes in enrollee cost sharing over the prior years as measured by the weighted average actuarial value, weighted by the number of enrollees.

(E) Any changes in enrollee benefits over the prior year, including a description of benefits added or eliminated, as well as any aggregate changes, as measured as a percentage of the aggregate claims costs, listed by the categories determined by the department.

(F) Any cost containment and quality improvement efforts since the plan’s prior year’s information pursuant to this section for the same category of health benefit plan. To the extent possible, the plan shall describe any significant new health care cost containment and quality improvement efforts and provide an estimate of potential savings together with an estimated cost or savings for the projection period.

(G) The number of products covered by the information that incurred the excise tax paid by the health care service plan.

(4) (A) For covered prescription generic drugs excluding specialty generic drugs, prescription brand name drugs excluding specialty drugs, and prescription brand name and generic specialty drugs dispensed at a plan pharmacy, network pharmacy, or mail order pharmacy for outpatient use, all of the following shall be disclosed:

(i) The percentage of the premium attributable to prescription drug costs for the prior year for each category of prescription drugs as defined in this subparagraph.

(ii) The year-over-year increase, as a percentage, in per-member, per-month total health care service plan spending for each category of prescription drugs as defined in this subparagraph.

(iii) The year-over-year increase in per-member, per-month costs for drug prices compared to other components of the health care premium.

(iv) The specialty tier formulary list.

(B) The plan shall include the percentage of the premium attributable to prescription drugs administered in a doctor’s office that are covered under the medical benefit as separate from the pharmacy benefit, if available.

(C) (i) The plan shall include information on its use of a pharmacy benefit manager, if any, including which components of the prescription drug coverage described in subparagraphs (A) and (B) are managed by the pharmacy benefit manager.

(ii) The plan shall also include the name or names of the pharmacy benefit manager, or managers if the plan uses more than one.

(d) The information required pursuant to this section shall be submitted to the department on or before October 1, 2018, and on or before October 1 annually thereafter. Information submitted pursuant to this section is subject to Section 1385.07.

(e) For the purposes of this section, a “specialty drug” is one that exceeds the threshold for a specialty drug under the Medicare Part D program (Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173)).

history: (History: Amended by Stats. 2020, Ch. 370, Sec. 195. (SB 1371) Effective January 1, 2021.)

article: 6.2. Review of Rate Increases


text:
(a) Upon receiving notice of a rate change, a large group contractholder that has coverage that is experience rated in whole or blended and that meets the criteria in subdivision (e) may apply within 60 days to have the department review the rate change to determine whether the rate change is unreasonable or not justified, consistent with this article.

(b) Upon receiving an application, the department shall notify the health care service plan of the application, and the plan shall provide the information required by the department to complete the department’s review of the proposed rate within five business days of the department’s request or as otherwise required by the department.

(c) The department shall use all reasonable efforts to complete its review of the rate change within 60 days of receiving all the information the department requires to make its determination, and shall notify the health care service plan and the large group contractholder of its determination.

(d) A rate change under review by the department shall not be imposed before a determination is made by the department pursuant to subdivision (c) or within 60 days following receipt by the department of all information the department requires to make its determination, whichever occurs earlier.

(e) To apply for a review of a rate change for a particular group, at least one of the following shall apply:

(1) The contractholder has more than 2,000 total enrollees.

(2) The plan failed to provide the information required by this article or Section 1385.10.

(f) To facilitate review, the department may group appeals that apply to the same health care service plan and that raise similar questions about rates, methodology, assumptions, or factors.

(g) The department may contract with a consultant or consultants with expertise to assist the department in its review. Contracts entered into pursuant to the authority in this article shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Article 4 (commencing with Section 19130) of Chapter 5 of Part 2 of Division 5 of Title 2 of the Government Code, and the State Contract Act (Chapter 1 (commencing with Section 10100) of Part 2 of Division 2 of the Public Contract Code).

(h) This section shall become operative on July 1, 2021.

history: (History: Added by Stats. 2019, Ch. 807, Sec. 7. (AB 731) Effective January 1, 2020. Operative July 1, 2021, by its own provisions.)

article: 6.2. Review of Rate Increases


citation: HSC § 1386

text:
(a) The director may, after appropriate notice and opportunity for a hearing, by order suspend or revoke any license issued under this chapter to a health care service plan or assess administrative penalties if the director determines that the licensee has committed any of the acts or omissions constituting grounds for disciplinary action.

(b) The following acts or omissions constitute grounds for disciplinary action by the director:

(1) The plan is operating at variance with the basic organizational documents as filed pursuant to Section 1351 or 1352, or with its published plan, or in any manner contrary to that described in, and reasonably inferred from, the plan as contained in its application for licensure and annual report, or any modification thereof, unless amendments allowing the variation have been submitted to, and approved by, the director.

(2) The plan has issued, or permits others to use, evidence of coverage or uses a schedule of charges for health care services that do not comply with those published in the latest evidence of coverage found unobjectionable by the director.

(3) The plan does not provide basic health care services to its enrollees and subscribers as set forth in the evidence of coverage. This subdivision shall not apply to specialized health care service plan contracts.

(4) The plan is no longer able to meet the standards set forth in Article 5 (commencing with Section 1367).

(5) The continued operation of the plan will constitute a substantial risk to its subscribers and enrollees.

(6) The plan has violated or attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate any provision of this chapter, any rule or regulation adopted by the director pursuant to this chapter, or any order issued by the director pursuant to this chapter.

(7) The plan has engaged in any conduct that constitutes fraud or dishonest dealing or unfair competition, as defined by Section 17200 of the Business and Professions Code.

(8) The plan has permitted, or aided or abetted any violation by an employee or contractor who is a holder of any certificate, license, permit, registration, or exemption issued pursuant to the Business and Professions Code or this code that would constitute grounds for discipline against the certificate, license, permit, registration, or exemption.

(9) The plan has aided or abetted or permitted the commission of any illegal act.

(10) The engagement of a person as an officer, director, employee, associate, or provider of the plan contrary to the provisions of an order issued by the director pursuant to subdivision (e) of this section or subdivision (d) of Section 1388.

(11) The engagement of a person as a solicitor or supervisor of solicitation contrary to the provisions of an order issued by the director pursuant to Section 1388.

(12) The plan, its management company, or any other affiliate of the plan, or any controlling person, officer, director, or other person occupying a principal management or supervisory position in the plan, management company, or affiliate, has been convicted of or pleaded nolo contendere to a crime, or committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this chapter. The director may revoke or deny a license hereunder irrespective of a subsequent order under the provisions of Section 1203.4 of the Penal Code.

(13) The plan violates Section 510, 2056, or 2056.1 of the Business and Professions Code or Section 1375.7.

(14) The plan has been subject to a final disciplinary action taken by this state, another state, an agency of the federal government, or another country for any act or omission that would constitute a violation of this chapter.

(15) The plan violates the Confidentiality of Medical Information Act (Part 2.6 (commencing with Section 56) of Division 1 of the Civil Code).

(16) The plan violates Section 806 of the Military and Veterans Code.

(17) The plan violates Section 1262.8.

(18) The plan violates Chapter 8.5 (commencing with Section 127671) of Part 2 of Division 107, including the data submission requirements of that chapter.

(19) The plan fails to comply with a corrective action plan in a timely manner, consistent with Section 1380, this section, or other provisions of this chapter.

(20) The plan fails to respond fully or timely, or both, to a duly authorized request for production of records.

(c) In addition to the authority to conduct an onsite medical survey and prepare a corrective plan pursuant to Section 1380 and to conduct an assessment of the health care service plan’s financial health, including, but not limited to, identification of the plan’s available reserves, the director may impose a corrective action plan to require future compliance by the health care service plan with any other provision of this chapter. Failure by the health care service plan to comply with a corrective action plan imposed pursuant to this subdivision in a timely manner appropriate for rectifying noncompliance shall be monitored by the department through medical surveys, financial examinations, or other means necessary to assure timely compliance.

(d) (1) When assessing administrative penalties against a health plan, or civil penalties pursuant to Section 1387, the director shall determine the appropriate amount of the penalty for each violation of this chapter based upon one or more factors, as applicable, including, but not limited to, the following:

(A) The nature, scope, and gravity of the violation.

(B) The good or bad faith of the plan.

(C) The plan’s history of violations.

(D) The willfulness of the violation.

(E) The nature and extent to which the plan cooperated with the department’s investigation.

(F) The nature and extent to which the plan aggravated or mitigated any injury or damage caused by the violation.

(G) The nature and extent to which the plan has taken corrective action to ensure the violation will not recur.

(H) The financial status of the plan, including reserves, financial solvency, revenues in excess of expenditures and other factors relating to the financial status of the domestic corporation and any parent company, subsidiary, affiliate, or other financially connected entity, if any.

(I) The financial cost of the health care service that was denied, delayed, or modified, including whether the penalty is commensurate with or exceeds the avoided cost based on the number of enrollees estimated to be affected.

(J) Whether the violation is an isolated incident.

(2) The amount of the penalty shall also take into account one or more of the following:

(A) The number of enrollees estimated to be affected.

(B) The frequency of the violation based on the number of days for a continuous violation or the estimated number of incidents with potential harm to enrollees.

(C) The severity of the potential harm in terms of loss of life, loss of health, or financial harm to the enrollee.

(D) The amount of the penalty necessary to deter similar violations in the future.

(e) (1) The director may prohibit any person from serving as an officer, director, employee, associate, or provider of any plan or solicitor firm, or of any management company of any plan, or as a solicitor, if either of the following applies:

(A) The prohibition is in the public interest and the person has committed, caused, participated in, or had knowledge of a violation of this chapter by a plan, management company, or solicitor firm.

(B) The person was an officer, director, employee, associate, or provider of a plan or of a management company or solicitor firm of any plan whose license has been suspended or revoked pursuant to this section and the person had knowledge of, or participated in, any of the prohibited acts for which the license was suspended or revoked.

(2) A proceeding for the issuance of an order under this subdivision may be included with a proceeding against a plan under this section or may constitute a separate proceeding, subject in either case to subdivision (f).

(f) A proceeding under this section shall be subject to appropriate notice to, and the opportunity for a hearing with regard to, the person affected in accordance with subdivision (a) of Section 1397.

history: (History: Amended by Stats. 2024, Ch. 760, Sec. 3. (AB 3221) Effective January 1, 2025.)

article: 7. Discipline

path: 2. LICENSING PROVISIONS > 2.2. Health Care Service Plans > 7. Discipline


citation: HSC § 1387

text:
(a) (1) A person who violates a provision of this chapter, or who violates a rule or order adopted or issued pursuant to this chapter, shall be liable for a civil penalty of not more than twenty-five thousand dollars ($25,000) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the director in any court of competent jurisdiction.

(2) In assessing a civil penalty, the director shall determine the appropriate amount after considering one or more factors enumerated in subdivision (d) of Section 1386, as applicable.

(b) As applied to the civil penalties for acts in violation of this chapter, the remedies provided by this section and by other sections of this chapter are not exclusive, and may be sought and employed in any combination to enforce this chapter.

(c) An action shall not be maintained to enforce any liability created under subdivision (a), unless brought before the expiration of four years after the act or transaction constituting the violation.

(d) Commencing January 1, 2028, and every five years thereafter, the penalty amount specified in this section shall be adjusted based on the average rate of change in premium rates for the individual and small group markets, and weighted by enrollment, since the previous adjustment.

history: (History: Amended by Stats. 2022, Ch. 985, Sec. 5. (SB 858) Effective January 1, 2023.)

article: 7. Discipline


citation: HSC § 1388

text:
(a) The director may, after appropriate notice and opportunity for hearing, by order, censure a person acting as a solicitor or solicitor firm, or suspend for a period not exceeding 24 months or bar a person from operating as a solicitor or solicitor firm, or assess administrative penalties against a person acting as a solicitor or solicitor firm if the director determines that the person has committed any of the acts or omissions constituting grounds for disciplinary action.

(b) The following acts or omissions constitute grounds for disciplinary action by the director:

(1) The continued operation of the solicitor or solicitor firm in a manner that may constitute a substantial risk to a plan or subscribers and enrollees.

(2) The solicitor or solicitor firm has violated or attempted to violate, or conspired to violate, directly or indirectly, or assisted in or abetted a violation or conspiracy to violate any provision of this chapter, any rule or regulation adopted by the director pursuant to the chapter, or any order issued by the director pursuant to this chapter.

(3) The solicitor or solicitor firm has engaged in any conduct that constitutes fraud or dishonest dealing or unfair competition, as defined by Section 17200 of the Business and Professions Code.

(4) The engagement of a person as an officer, director, employee, or associate of the solicitor firm contrary to the provisions of an order issued by the director pursuant to subdivision (d) of this section or subdivision (c) of Section 1386.

(5) The solicitor or solicitor firm, or its management company, or any other affiliate of the solicitor firm, or any controlling person, officer, director, or other person occupying a principal management or supervisory position in that solicitor firm, management company, or affiliate, has been convicted or pleaded nolo contendere to a crime, or committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with the provisions of this chapter. The director may issue an order hereunder irrespective of a subsequent order under the provisions of Section 1203.4 of the Penal Code.

(c) The director shall notify plans of any order issued pursuant to subdivision (a) which suspends or bars a person from engaging in operations as a solicitor or solicitor firm. It shall be unlawful for any plan, after receipt of notice of the order, to receive any new subscribers or enrollees through that person or to otherwise utilize any solicitation services of that person in violation thereof.

(d) (1) The director may prohibit any person from serving as an officer, director, employee, or associate of any plan or solicitor firm, or as a solicitor, if that person was an officer, director, employee, or associate of a solicitor firm that has been the subject of an order of suspension or bar from engaging in operations as a solicitor firm pursuant to this section and that person had knowledge of, or participated in, any of the prohibited acts for which the order was issued.

(2) A proceeding for the issuance of an order under this subdivision may be included with a proceeding against a solicitor firm under this section or may constitute a separate proceeding, subject in either case to subdivision (e).

(e) A proceeding for the issuance of an order under this section shall be subject to appropriate notice to, and the opportunity for a hearing with regard to, the person affected in accordance with subdivision (a) of Section 1397.

history: (History: Amended by Stats. 1999, Ch. 525, Sec. 134. Effective January 1, 2000. Operative July 1, 2000, or sooner, by Sec. 214 of Ch. 525.)

article: 7. Discipline