SECTIONS 14475-14482 - California Statutes

WELFARE AND INSTITUTIONS CODE

SECTION 14475-14482

14475. (a) No prepaid health plan or pilot program contract shall
be approved or renewed by the department pursuant to this chapter if
any state officer or state employee or his spouse or minor child has
a substantial financial interest, as defined by Section 14478, in any
of the following:
(1) The contract or the contracting organization.
(2) Any contract with the contracting organization.
(3) Procurement of a contract for the contracting organization.
(b) As used in subdivision (a), "state officer or state employee"
means any person included in Section 14477 and includes any employee
in the department who has a direct responsibility for the
negotiation, development, or management of a prepaid health plan
contracted under the provisions of this chapter. The director shall
publish regulations determining the class of employees covered by
this subdivision.

14476. The chief executive, sole proprietor, or managing partner of
each prepaid health plan shall file with the department an annual
statement disclosing any purchases or leases of services, equipment,
supplies or real property by the plan from any entity in which any of
the following persons have a substantial financial interest as
defined by Section 14478:
(a) Any person also having a substantial financial interest in the
plan.
(b) Any director, officer, partner, trustee or employee of the
plan.
(c) Any member of the immediate family of any person designated in
(a) or (b).

14477. (a) For purposes of this article, "state officer" means a
United States Senator or Member of Congress representing California,
the Governor, Lieutenant Governor, Secretary of State, Controller,
Treasurer, Attorney General, State Superintendent of Public
Instruction, a Member of the Legislature, or a secretary of a state
agency.
(b) For purposes of this article, "state employee" means any staff
member of a state agency secretary who holds a policymaking
position, any member of the Governor's staff who holds a policymaking
position, or any administrative aide or committee consultant of the
Legislature. "State employee" includes the appointive or civil
service employee of the highest class or grade in each department,
system, program, section, or other administrative subdivision of the
State Department of Health Services as defined in regulations adopted
by the department.

14478. (a) As used in this chapter, "substantial financial interest"
means the ownership of common stock, preferred stock, warrants,
options, loans, partnership interests, debt instruments, or other
ownership interest, if consisting of, or convertible to, equity
investments in an entity contracting with the department under the
provisions of this chapter or an entity contracting with a current or
proposed contractor doing business with the department under the
provisions of this chapter, and such ownership interest in terms of
fair market value is not less than the greater of the following:
(1) One thousand dollars ($1,000).
(2) Five percent or more of the total fair market value of all
equity investments in the entity, including ownership interests
convertible to such investments.
A convertible debt includes bonds, notes, debentures, and
mortgages.
(b) As used in this chapter, "immediate family" means an
individual's spouse and minor dependent children and any other person
over which the individual has legal control.

14479. (a) No prepaid health plan or pilot program contract shall
be approved, renewed or continued by the department if a state
officer or state employee is employed in a management or consultant
position by the contractor or a subcontractor to the contractor
within one year after the state officer or state employee terminated
state employment.
(b) For purposes of this section, "state employee" means any
appointive or civil service employee of the department or of the
Health and Welfare Agency who, within two years prior to leaving
state employment, was responsible for development, negotiation,
contract management, or supervision of a prepaid health plan or
prepaid health plan contract.
For purposes of this section, employees of the department who are
assigned as contract managers shall not be subject to the provisions
of this section unless they are employed by a prepaid health plan or
a subcontractor of a prepaid health plan for which, within two years
prior to leaving state employment, they were responsible for the
development, negotiation, contract management, or direct supervision
over the prepaid health plan contract. This section shall not apply
to any employee, appointee, or person on contract with the department
who is employed, appointed, or contracted with by the department
either:
(1) To fulfill the purposes of a federal grant, provided that such
person does not supervise, develop, manage, or negotiate a prepaid
health plan contract; or
(2) To fulfill on a temporary basis, not to exceed 120 days, a
specific function for the department which does not include
supervising, developing, managing, or negotiating a prepaid health
plan contract.
(c) The requirements of this section shall apply to any contract
entered into on or after the operative date of this section and to
any state officer or state employee who is employed by such
contractor or subcontractor thereof on or after such operative date.
This section shall not apply to any state officer or employee who
terminated state employment prior to such operative date.

14480. No prepaid health plan or pilot program contract with an
existing or proposed contractor shall be approved or renewed if a
state officer or state employee provides legal or management services
to the contracting organization. For the purposes of this section no
state officer or state employee shall share in the income or any
remuneration derived from the providing of legal or management
services to a contracting organization.

14481. No prepaid health plan or pilot program contract shall be
approved or renewed if any state officer or state employee receives
anything of value for the purpose of influencing or attempting to
influence the negotiations for approval or renewal of the contract.

14482. No prepaid health plan shall contract with any subcontractor
other than the plan's subsidiary corporation, its parent
corporation, or another subsidiary of its parent corporation, or an
affiliate of the prepaid health plan whose financial statements are
consolidated with that of the prepaid health plan at the time of the
annual audit by the independent auditors of the plan and when the
quarterly and annual financial statements are filed with the Director
of the Department of Managed Health Care, if any of the following
persons connected with the plan have a substantial financial
interest, as defined by Section 14478, in such subcontractor:
(a) Any person also having a substantial financial interest in the
plan.
(b) Any director, officer, partner, trustee, or employee of the
plan.
(c) Any member of the immediate family of any person designated in
(a) or (b).