Optometry in Retail Settings

Following more than a decade of uncertainty, California Governor Jerry Brown signed AB 684 (Alejo) in 2015, which addresses the practice of optometry in retail settings. The bill establishes new, enforceable rules for business relationships between optometrists and opticians, optical companies and health plans, including the outlawing of employment by health plans of optometrists. 

Q: What does the law do?

A: AB 684 has three main components:

1. Designates leasing as the authorized business arrangement. It allows optometrists to lease space from an optician, optical company or health plan. It also specifies how these leases must be structured. [California Business and Professions Code (B&P) Section 655 (d)]

2. Adds protections for doctors. The bill adds protections to ensure the doctor will be able to maintain exclusive control over his or her practice and professional judgement. [B&P Sections 655(c)(2), 655(d)(1)(A)]

3. Provides enforcement mechanisms. It consolidates enforcement under the State Board of Optometry (SBO) and authorizes the SBO to issue citations and fine companies that violate the law.

Q: What provisions are intended to protect doctors’ independence?

A: The new law has the following built-in and enforceable protections to safeguard the independence of a doctor who has a lease:

• Lease term cannot be less than one year. [B&P Section 655(d)(10)]
• Lease terms cannot be terminated for “reasons that constitute interference with the practice of optometry.” [B&P Section 655(d)(11)]
• Lease payments cannot be based on number of eye exams performed, prescriptions written, patient referrals or the sale or promotion of the products of an optician, optical company or health plan. [B&P Section 655(d)(12)]
• The selection and supervision of optometric staff is under the optometrist’s control. [B&P Section 655(d)(1)(A)]
• The scheduling of patients and the amount of time the optometrist spends with patients is under the optometrist’s control. [B&P Section 655(d)(1)(A)]
• Fees charged for optometric products and services are under the optometrist’s control. [B&P Section 655(d)(1)(A)]
• The examination procedures and treatment provided to patients is under the optometrist’s control. [B&P Section 655(d)(1)(A)]
• The optometrist’s contracting with managed care organizations is under the optometrist’s control. [B&P Section 655(d)(1)(A)]

Q: Who owns the patient records?

A: The optometrist’s records shall be the sole property of the optometrist. Only the optometrist and those persons with written authorization from the optometrist shall have access to the patient records and the examination room, except as otherwise provided by law. [B&P Section 655(d)(2)]

Q: Can I set my own fees?

A: The optometrist has exclusive control over the fees charged for products and services, examination procedures and treatments provided. [B&P Section 655(d)(1)(A)]

An exception is if the optometrist has contracted with a health plan as part of the lease, then the optometrist may only collect fees for services that are not included in a health plan's products and services. [B&P Section 655(d)(9)]

Q: Do I have to refer my patients to the leaseholder RDO or optician to fill their prescription or make any other eye-related purchase?

A: No.

Q: What new restrictions are on health plans?

A: Health plans will no longer be allowed to employ doctors of optometry to provide services. [B&P Section 655(c)(1)]

Q: What rules on joint signage are in the new law?

A: All signs and displays shall be separate and distinct from that of the other occupants and shall have the optometrist's name and the word “optometrist” prominently displayed. If a health plan is involved, this provision does not prevent a health plan from advertising its affiliations. [B&P Section 655(d)(4)]

The optometrist may advertise the optometrist’s practice location with reference to other occupants. [B&P Section 655(d)(4)]

The optometrist or registered dispensing optician may advertise their participation in any health plan’s network or the health plan’s products in which the optometrist or registered dispensing optician participates. [B&P Section 655(d)(4)]

There shall be no signs displayed on any part of the premises or in any advertising indicating that the optometrist is employed or controlled by the registered dispensing optician, health plan or optical company. [B&P Section 655(d)(5)]

Except for a statement that an independent doctor of optometry is located in the leased space, in-store pricing signs and as otherwise permitted, the registered dispensing optician or optical company shall not link its advertising with the optometrist's name, practice, or fees. If a health plan is involved, this provision does not prevent a health plan from advertising its affiliations. [B&P Section 655(d)(6)]

A health plan shall not advertise the optometrist’s fees for products and services that are not included in the health plan’s contract with the optometrist. [B&P Section 655(d)(8)]

Q: Am I free to contract with other health plans?

A: Yes. [B&P Section 655(d)(10)]

Q: What rights do leaseholders still have?

A: B&P Section 655(d)(1)(B) allows a lease to include commercially reasonable terms that:

1. Require the provision of optometric services at the leased space during certain days and hours.

2. Restrict the leased space from being used for the sale or offer for sale of spectacles, frames, lenses, contact lenses, or other ophthalmic products, except that the optometrist shall be permitted to sell therapeutic ophthalmic products if the registered dispensing optician, health plan, or optical company located on or adjacent to the optometrist’s leased space does not offer any substantially similar therapeutic ophthalmic products for sale.

3. Require the optometrist to contract with a health plan network, health plan, or health insurer.

4. Permit the landlord to directly or indirectly provide furnishings and equipment in the leased space.

Q: Under what circumstances can a landlord terminate my lease?

A: The optometrist’s failure to maintain a license to practice optometry or the imposition of restrictions, suspension or revocation of the optometrist’s license or if the optometrist or the optometrist’s employee is or becomes ineligible to participate in state or federal government-funded programs. [B&P Section 655(d)(10)(A)]

Termination of any underlying lease where the optometrist has subleased space, or the optometrist’s failure to comply with the underlying lease provisions that are made applicable to the optometrist. [B&P Section 655(d)(10)(B)]

If the health plan is the landlord, the termination of the provider agreement between the health plan and the optometrist. [B&P Section 655(d)(10)(C)]

Other reasons pursuant to the terms of the lease or permitted under the Civil Code. [B&P Section 655(d)(10)(D)]

Q: Under what circumstances is a landlord prohibited from terminating my lease?

A: In no case shall the landlord terminate the lease for reasons that constitute interference with the practice of optometry. [B&P Section 655(d)(11)]

The landlord shall not terminate the lease solely because of a report, complaint, or allegation filed by the optometrist against the landlord, a registered dispensing optician or a health plan, to the State Board of Optometry or the Department of Managed Health Care or any law enforcement or regulatory agency. [B&P Section 655(d)(13)]

Q: What is the notice requirement for lease termination?

A: The landlord shall provide the optometrist with written notice of the scheduled expiration date of a lease at least 60 days prior to the scheduled expiration date. This notice obligation shall not affect the ability of either party to terminate the lease pursuant to this section. The landlord may not interfere with an outgoing optometrist’s efforts to inform the optometrist’s patients, in accordance with customary practice and professional obligations, of the relocation of the optometrist's practice. [B&P Section 655(d)(14)]

Q: Does this law require a separate entrance for the optometrist?

A: No. The law requires the leased space to be definite and distinct from space occupied by other occupants of the premises, have a sign designating that the leased space is occupied by an independent optometrist or optometrists and be accessible to the optometrist after hours or in the case of an emergency, subject to the facilities general accessibility. [B&P Section 655(d)(3)]

Q: Does this law apply to Kaiser?

A: No, there is an exception for organizations like Kaiser. [B&P Section 655(d)(16)]

Q: When does the law take effect?

A: The law went into effect on January 1, 2016, and as such health plans are no longer allowed to newly employ an optometrist. For those plans that currently employ optometrists, there is a three-year transition period during which they must convert their optometrist employees to a landlord-tenant arrangement.

Q: Why did COA agree to this?

A: When we first began this process, the cards seemed stacked against COA. The governor’s office, RDOs, health plans and other stakeholders supported the adoption of a moratorium on enforcing the laws governing the corporate practice of optometry. Together, the COA Legislation-Regulation Committee, COA Board of Trustees, staff and lobbyists spent several months crafting language to protect doctors of optometry and patients while working with these stakeholders to find a common-sense solution.

Q: What can I do if I work in a retail setting and feel like the new law is being violated?

A: Please contact the State Board of Optometry if you feel the law is being violated. Additionally, COA will investigate and intervene on behalf of our members, if possible, to ensure that the new law is fully enforced. If you lease space from an optical company, health plan or optician and are having concerns about corporate control of your practice, feel free to contact COA.

Click here to read the full text of the new California Business and Professions Code Section 655.

Note: The above information is provided for informational purposes only. It is not intended to replace the professional advice of legal counsel.

© 2016 California Optometric Association. All rights reserved.

updated: 06/19/2019