Cal. Bus. & Prof. Code § 654.3

Current through the 2024 Legislative Session.

Section 654.3 - Prohibition against use of open-end credit

(a) For purposes of this section, the following definitions shall apply:

(1) "Arrange for" and "establish" mean the act of a licensee, or an employee or agent of that licensee, receiving application information from the applicant and submitting it to the lender for approval or rejection.

(2) "Deferred interest provision" means a contractual provision that allows for interest to be charged on portions of the original balance that have already been paid off.

(3) "Licensee" means an individual, firm, partnership, association, corporation, limited liability company, or cooperative association licensed under this division or under any initiative act or division referred to in this division.

(4) "Licensee's office" means either of the following:

(A) An office of a licensee in solo practice.

(B) An office in which services or goods are personally provided by the licensee or by employees in that office, or personally by independent contractors in that office, in accordance with law. Employees and independent contractors shall be licensed or certified when licensure or certification is required by law.

(5) "Open-end credit" means credit extended by a creditor under a plan in which the creditor reasonably contemplates repeated transactions, the creditor may impose a finance charge from time to time on an outstanding unpaid balance, and the amount of credit that may be extended to the debtor during the term of the plan, up to any limit set by the creditor, is generally made available to the extent that any outstanding balance is repaid.

(6)

(A) "Patient" includes, but is not limited to, the patient's parent or other legal representative.

(B) In veterinary medical settings, "patient" means one of the following, as indicated by context:

(i) If the patient is receiving the services, the owned animal of a client.

(ii) If the patient is agreeing to or paying for services, the client owner of an animal patient.

(b)

(1) It is unlawful for a licensee, or employee or agent of that licensee, to arrange for or establish an open-end credit or loan that contains a deferred interest provision.

(2) This subdivision shall not be construed as prohibiting a licensee, or employee or agent of a licensee, from doing any of the following:

(A) Charging treatment or costs to an open-end credit or loan that is lawfully extended by a third party, including those that contain deferred interest provisions.

(B) Arranging for or establishing an open-end credit or loan that does any of the following:

(i) Offers a promotional period during which a debtor may avoid the payment of interest in connection with an open-end credit plan.

(ii) At the end of a promotional period, charges interest on any unpaid balance remaining at that time.

(iii) Imposes a late fee on a debtor who fails to pay the minimum amount due during any payment period.

(c)

(1) It is unlawful for a licensee, or employee or agent of that licensee, to charge treatment or costs to an open-end credit or loan, that is extended by a third party and that is arranged for, or established in, that licensee's office, more than 30 days before the date upon which the treatment is rendered or costs are incurred.

(2) This subdivision does not apply to orthodontic treatment provided by a licensed dentist who may charge incremental fees throughout the course of treatment.

(d) It is unlawful for a licensee, or employee or agent of that licensee, to charge treatment or costs to an open-end credit or loan that is extended by a third party and that is arranged for, or established in, that licensee's office without first providing the patient with a treatment plan, as required by subdivision (h), and a list of which treatment and services are being charged in advance of rendering treatment or incurring costs.

(e) It is unlawful for a licensee, or employee or agent of a licensee, to complete any portion of an application for credit or a loan extended by a third party for the patient or otherwise arrange for or establish an application that is not completely filled out by the patient.

(f) A licensee shall, within 15 business days of a patient's request, refund to the lender any payment received through credit or a loan extended by a third party that is arranged for, or established in, that licensee's office for treatment that has not been rendered or costs that have not been incurred.

(g) A licensee, or an employee or agent of that licensee, shall not arrange for or establish credit or a loan extended by a third party for a patient without first providing the following written or electronic notice, on one page or screen, respectively, in at least 14-point type, and obtaining a signature from the patient:

"Credit or Loan for Health Care Services

The attached application and information is for a credit card or loan to help you pay for your health care treatment. You should know that:

You are applying for a ____ credit card or a ____ loan for $____.

You do not have to apply for the credit card or the loan. You may request a different place and additional time to review, fill out, and sign the application. You may pay your health care provider for treatment in another manner.

This credit card or loan is not a payment plan with the provider's office. It is credit with, or a loan made by, [name of company issuing the credit card or loan]. Your health care provider does not work for this company.

Before applying for this credit card or loan, you have the right to a written treatment plan from your health care provider. This plan must include the expected treatment to be provided and the estimated costs of each service. If you have insurance, the treatment plan must tell you how much your insurance is expected to cover. If you are a Medi-Cal patient seeking services from a Medi-Cal provider, your treatment plan must tell you if Medi-Cal will cover a different service to treat your condition. If you only want services covered by Medi-Cal, you should not sign up for this credit card or loan.

Your health care provider cannot charge your credit card or loan account before you start treatment.

You have the right to have your credit card or loan account refunded for any charges for treatment you did not get. However, your provider does not have to refund the amount they spent to prepare for your treatment. Your health care provider must refund the amount of the charges to the lender within 15 business days of your request. The lender must take refunded charges off your account.

Please read carefully the terms and conditions of this credit card or loan.

You may be required to pay interest rates on the amount charged to the credit card or the amount of the loan. If you pay late, you may have to pay a penalty and a higher interest rate.

You may use this credit card or loan to pay for future health care services.

If you do not pay the money that you owe on the credit card or loan, your missed payments can be reported and could hurt your credit rating. You could also be sued.

[Patient's Signature]"

(h) Before arranging for or establishing credit or a loan extended by a third party, a licensee shall give a patient a written treatment plan that complies with all of the following:

(1) The treatment plan shall include each anticipated service to be provided and the estimated cost of each service.

(2) If a patient is covered by a private or government medical benefit plan or medical insurance from which the licensee takes assignment of benefits, the treatment plan shall indicate the patient's private or government-estimated share of cost for each service.

(3) If the licensee accepts Medi-Cal, the treatment plan for a Medi-Cal patient shall indicate if Medi-Cal would cover an alternate, medically necessary service as defined in Section 14059.5 of the Welfare and Institutions Code. The treatment plan shall indicate that the Medi-Cal patient has a right to ask for only services covered by Medi-Cal and that the licensee agrees to follow Medi-Cal rules to secure Medi-Cal covered services before treatment.

(4) If the licensee does not take assignment of benefits from a patient's medical benefit plan or insurance, the treatment plan shall indicate that the treatment may or may not be covered by a patient's medical benefit or insurance plan, and that the patient has the right to confirm medical benefit or insurance information from the patient's plan, insurer, or employer before beginning treatment.

(i) A licensee, or an employee or agent of that licensee, shall not arrange for or establish credit or a loan extended by a third party for a patient with whom the licensee, or an employee or agent of that licensee, communicates primarily in a language other than English that is one of the Medi-Cal threshold languages, unless the written notice information required by subdivision (g) is also provided in that language.

(j)

(1) A licensee, or an employee or agent of that licensee, shall not arrange for or establish credit or a loan that is extended by a third party for a patient under either of the following circumstances:

(A) The patient has been administered or is under the influence of general anesthesia, conscious sedation, or nitrous oxide.

(B) The patient is in a treatment area, including, but not limited to, an exam room, surgical room, or other area where medical treatment is administered, unless the patient agrees to fill out and sign the application to arrange for or establish credit or a loan in the treatment area.

(2) Paragraph (1) shall not apply to veterinary medicine. Any credit or loan application offered to an owner of an animal shall be filled out by the owner.

(k) A patient who suffers any damage as a result of the use or employment by any person of a method, act, or practice that willfully violates this section may seek the relief provided by Chapter 4 (commencing with Section 1780) of Title 1.5 of Part 4 of Division 3 of the Civil Code.

(l) The rights, remedies, and penalties set forth in this article are cumulative, and shall not supersede the rights, remedies, or penalties established under other laws.

(m) This section shall become operative on July 1, 2020.

Ca. Bus. and Prof'l. Code § 654.3

Added by Stats 2019 ch 856 (SB 639),s 2, eff. 1/1/2020.