The Weekly Articles

Introduced by Assemblymember Mia Bonta, AB 489 seeks to prohibit AI and generative AI (GenAI) systems from misrepresenting themselves as licensed or certified healthcare professionals. The legislation comes in response to growing concerns about the integration of AI technologies into clinical settings, particularly the rise of AI-powered therapy chatbots that may appear to patients as offering professional medical advice.

Under AB 489, AI and GenAI systems would be barred from using any terms, letters, or phrases—whether in advertising or functionality—that suggest the advice, care, reports, or assessments they provide are coming from a licensed human healthcare provider. This includes titles such as “M.D.” or “Dr.”, which are already protected under California law against improper use by unlicensed individuals.  The bill clarifies that these existing prohibitions now explicitly extend to individuals or entities that develop or deploy AI technologies.

As proposed, each violation of the law would be treated as a separate offense, enforceable by the appropriate state professional licensing board. The legislation would also authorize these boards to seek injunctions or restraining orders against violators.

The California Office of Health Care Affordability (“OHCA”) has, for the first time, required a Cost and Market Impact Review (“CMIR”) under SB 184, which requires certain health care entities to provide OHCA with prior notice of certain “Material Change Transactions” closing after April 1, 2024. OHCA assesses these transactions for their possible negative impacts on health care access, quality, affordability, and competition. OHCA can conduct a CMIR when it determines a transaction may negatively impact health care access, costs, competition (including competition for labor), or quality. The CMIR process can further delay the closing of the transaction, and a negative CMIR can imperil the transaction altogether.

Since OHCA’s final SB 184 regulations went into effect, OHCA has received 23 pre-transaction notices and had, until June of this year, never determined that a CMIR was necessary. Now, however, OHCA has determined that a subset of a proposed transfer of the assets and operations of 22 skilled nursing facilities from Covenant Care LLC to affiliates of The Ensign Group, Inc., Links Healthcare Group, International Equity Partners, and Spyglass Healthcare warrants a CMIR. The CMIR will relate only to the transfer of operations of three Southern California SNFs to Ensign; OHCA waived the CMIR as to the remaining 19 SNFs. Covenant Care appealed the decision to the Director of the California Department of Health Care Access and Information, but the Director upheld OHCA’s determination eight days later. OHCA anticipates releasing a preliminary CMIR on September 22, 2025, after which the parties and the public will have ten days to comment before OHCA issues its final CMIR. The parties will then have to wait an additional 60 days to close, though proceeding with the transaction in the face of a negative CMIR could prompt regulatory action.

On July 29, 2025, Attorney General Rob Bonta filed a lawsuit, joined by 21 other states, to challenge a provision in the recently enacted federal budget reconciliation bill, H.R. 1, better known as the “One Big Beautiful Bill,” which prohibits Medicaid reimbursements for any health care services provided by certain health centers that provide abortions. The prohibition is effectively targeted at Planned Parenthood. In California, Planned Parenthood clinics have lost $300 million in federal funding, already leading five clinics to close their doors as of the end of July 2025.

The lawsuit seeks declaratory and injunctive relief to prevent implementation of the Defund Provision, arguing the provision is impermissibly ambiguous and violates Congress’ Spending Clause power.

This is the second lawsuit of its kind filed in federal district court in Massachusetts. It follows a lawsuit filed by Planned Parenthood Federation of America in the same court three weeks earlier, challenging the Defund Provision on the basis that the targeted funding prohibition violates the First Amendment, Equal Protection Clause and Bill of Attainder Clause of the Constitution.

Additional details and a copy of the complaint are available at https://oag.ca.gov/news/press-releases/fighting-stop-congress’-and-trump-administration’s-illegal-crusade-against.

On August 1, SEIU United Healthcare Workers West submitted paperwork to place two statewide ballot initiatives on the November 2026 ballot. The first, would place a cap on the total annual salary compensation for executives, administrators, and managers at hospitals and medical groups at $450,000 per year. The salary cap would not apply to medical or health care professionals whose primary duties are providing medical services, research, or direct patient care. The Attorney General or any state taxpayer may bring an action to enforce the cap, although a taxpayer must give notice to the Attorney General of their intent to bring a suit and would be barred from bringing suit if the Attorney General files an action for the same alleged violation. Further, failure to comply with the salary cap could be grounds for the revocation of an organization’s tax-exempt status. The language of the “Health Care Executive Compensation Act of 2026” can be found here.  

The second initiative would create a spending cap on administrative costs for federally qualified health centers by requiring federally qualified health centers (FQHCs) and FQHC look-alikes to spend at least 90% of its total revenue on patient care and mission-related services. It would also mandate FQHCs to publicly report their financials and spending priorities. This initiative is similar to AB 1113 sponsored by SEIU California that did not move forward this year and became a two-year bill in May. The language for the “Clinic Funding Accountability and Transparency Act” can be found here.

The two measures will now go through an amendment period of 35 days and the Attorney General will issue a Title and Summary within 65 days. The proponents of the ballot initiative must then collect enough signatures for the initiatives to qualify for the November 2026 ballot. More information on ballot initiatives, including the status of these and other active measures, can be found on the Attorney General’s website.

California Attorney General Rob Bonta announced on July 24, 2025 that his office secured a $1.53 million settlement with HCA Healthcare, Inc. and its staffing subsidiary, resolving claims brought by California, Colorado, Nevada, and the federal Consumer Financial Protection Bureau. The case involved allegations that HCA used Training Repayment Agreement Provisions (TRAPs) to unlawfully require entry-level nurses to repay training costs if they left their jobs within two years—effectively trapping them in their positions. Attorney General Bonta said in part: “All too often, employer‑driven debt forces workers to remain in jobs that they would otherwise leave. That’s not just wrong; it’s illegal under state and federal law. Workers must be able to pursue better pay and better working conditions — not be trapped by debt that their employer makes them take out.” The settlement includes financial restitution for affected nurses, civil penalties, and strong injunctive terms to prevent future misconduct. Read the full announcement here.

Regulations implementing the California Mental Health Parity Act (Senate Bill 855) as well as the Miles Hall Lifeline and Suicide Prevention Act (Assembly Bill 988) went into effect June 26, 2025. Among other things, under the new regulations, health insurers are required to:

• maintain sufficient provider networks to meet geographic and timely access standards and, if no in-network provider is available, arrange and pay for out-of-network care, with patients only responsible for in-network cost sharing.
• in compliance with Assembly Bill 988, cover mobile crisis teams, crisis stabilization units, and other services mandated by Assembly Bill 988 as medically necessary care.
• use criteria from nonprofit professional associations (e.g., APA) to determine medical necessity.
• explain any denials in writing, including the criteria used and clinical rationale.
• sponsor training programs for staff on accepted standards of care every three years.
• submit documentation showing compliance with Senate Bill 855 requirements. The regulations also establish a process under which patients can file complaints if care is denied or delayed.

Health insurers will be regularly audited to ensure they are meeting the applicable coverage and access standards. Failure to meet the statutory and regulatory requirements can result in a citation for corrective action as well as fines of up to $10,000 per violation for willful noncompliance.

The new regulations can be found at Title 10, CCR Sections 2562, 2562.01 – 2562.12, and 2562.4.  (See Press Release here)

Healthcare payors that fall within the oversight of the California Department of Insurance may want to closely watch the Legislature over the next few days to see the fate of SB 354 and whether they will be covered by its ambitious goals. Introduced by Senator Limón in February, SB 354 proposes to update consumer privacy laws for entities regulated by the Department of Insurance.

Employers of workers covered by California's health care worker minimum wage are reminded that effective July 1, 2025, the rate increased, as set forth below.  Information on the minimum wage can be found in the California Department of Industrial Relations website FAQs at https://www.dir.ca.gov/dlse/Health-Care-Worker-Minimum-Wage-FAQ.htm.

• Hospitals or integrated health systems with 10,000 employees - Rate increased to $24
• Dialysis clinics - Rate increased to $24
• Safety net hospitals - Rate increased to $18.63
• Intermittent, community, rural health or related urgent care clinics - Rate remains $21
• All other covered facilities not listed above and not run by Counties - Rate remains $21
• Covered Health Care Facilities run by Large Counties (more than 5 million people) - Rate increased to $24
• Covered Health Care Facilities run by Medium Counties (250,000-5 million people) - Rate is $21
• Covered Health Care Facilities run by Small Counties (less than 250,000) - Rate is $18 

Senate Bill No. 69 (“SB 69”) would require the California Attorney General to establish and maintain a program to build internal expertise in artificial intelligence (AI).

The Summer 2025 issue of the California Health Law News is now here! This latest issue features timely and thought-provoking articles, including:

• Navigating Abortion Training for Resident Physicians in a Post-Dobbs Era
• Rulemaking Without Notice: The Legal and Policy Implications of HHS’s Waiver Withdrawal
• Navigating California Evidence Code Section 1157's Complexities in Hospital Litigation
• Tips and Pitfalls in Primary Care Clinic Licensing

Plus, don’t miss our regular features and updates!