SESSION OF 2019
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2402
As Amended by House Committee on Health
and Human Services

Brief*
HB 2402, as amended, would allow a business entity
issued a certificate of authorization by the Board of Healing
Arts (Board) to employ or contract with one or more licensees
of the Board, for the purpose of providing professional
services for which such licensees hold a valid license issued
by the Board. The bill would provide nothing in the Kansas
Healing Arts Act (Act) would be construed to prohibit a
licensee from being employed by or under contract to provide
professional services for a business entity granted a
certificate of authorization as set forth in the bill. Medical care
facilities in compliance with the Kansas Department of Health
and Environment licensure requirements and defined as a
hospital, ambulatory surgical center, or recuperation center
would be exempt from the provisions in the bill. The bill would
not be construed to allow a corporation to practice optometry
or dentistry, except as otherwise provided in Kansas law. The
provisions of the bill would be part of and supplemental to the
Act.

Definitions
The bill would define the following terms:
● “Business entity” to mean:
○ An employer located in Kansas that utilizes
electronic medical records and offers
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
 medicine and surgery or chiropractic services
solely for its employees and the dependents
of such employees at the employer’s work
site;
○ An organization licensed to sell accident and
sickness insurance in Kansas that is also a
mutual or non-profit health carrier that utilizes
electronic medical records, or a wholly owned
subsidiary of such organization that provides
medical services solely for the organization’s
enrollees and dependents of such enrollees;
or
○ An information technology company that
designs, utilizes, and provides electronic
medical records for businesses and worksite
medical clinics for employers located in
Kansas and offers medicine and surgery or
chiropractic services solely to its employees
and the dependents of such employees at the
employer’s work sites in Kansas;
● “Licensee” to mean a person licensed by the Board
to practice medicine and surgery or chiropractic
and whose license is in a full active status and has
not been revoked, suspended, limited, or placed
under probationary conditions; and
● “Physician” to mean a person licensed by the
Board to practice medicine and surgery.
The bill would specify “business entity” does not include
medical care facilities, corporations, and professional
corporations as defined in current law.

Certificate of Authorization
The bill would allow a business entity to apply to the
Board for a certificate of authorization, on a form and in a

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manner prescribed by the Board, and would require the
following information be included;
● The name of the business entity;
● A list of the names of the owners and officers of the
business entity;
● A description of the apportionment of liability of all
partners or owners, if the business entity is
organized as a limited partnership or a limited
liability company;
● A list of each responsible official if the business
entity is organized as a governmental unit; and
● A list of all licensed physicians and chiropractors to
be hired by the business entity.
The bill would require, as a condition of certification, a
business entity to provide the Board evidence of the
following:
● The address of the business entity;
● A city or county occupational license; and
● Licensure of all physicians and chiropractors to be
employed by the business entity.
The bill would require the Board to issue a certificate of
authorization if it finds that the business entity is in
compliance will the requirements stated above. The certificate
would designate the business entity as authorized to employ
individuals licensed to practice medicine and surgery or
chiropractic.


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Application and Renewal Fee
A business entity would be required to remit an
application fee set by the Board through rules and
regulations, not to exceed $1,000. The bill would require a
certificate of authorization to be renewed annually and be
accompanied by a fee fixed by the Board.

Liability
The bill would provide, except as stated in the Health
Care Provider Insurance Availability Act (HCPIAA) (KSA 2018
Supp. 40-3403), no business entity issued a certificate of
authorization would be relieved of responsibility for the
conduct or acts of its agents or employees by reason of its
compliance with the provisions of the bill, nor would any
individual licensed to practice the healing arts be relieved of
responsibility and liability for services performed by reason of
employment or relationship with such business entity. The bill
would specify nothing in the bill would exempt any business
entity from the provision of any other law applicable to the
business entity.

Restrictions
The bill would prohibit a business entity from directly or
indirectly interfering with, diminishing, restricting, substituting
its judgment for, or otherwise exercising control over the
independent professional judgment and decisions of its
employed licensees as it relates to the care of patients; or
from prohibiting or restricting any employed licensee from
discussing with or disclosing to any patient or other individual
any medically appropriate healthcare information that such
licensee deems appropriate regarding the nature of treatment
options, the risk or alternatives, the process used or the
decision made by the business entity to approve or deny
healthcare services, the availability of alternate therapies,

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consultations or tests, or from advocating on behalf of a
patient.

Standards of Professional Conduct
The bill would allow a business entity’s certificate of
authorization to be revoked, suspended, or limited; publicly
censured or placed under probationary conditions; or an
application for certificate or reinstatement of a certificate
denied upon a finding of the existence of any of the following
grounds:
● The business entity has committed fraud or
misrepresentation in applying for or securing an
original, renewal, or reinstated certificate;
● The business entity has willfully or repeatedly
violated the provisions in the bill, the Pharmacy Act
of the State of Kansas, or the Uniform Controlled
Substances Act, or any rules and regulations
adopted pursuant thereto, or any rules and
regulations of the Secretary of Health and
Environment that are relevant to the practice of the
healing arts;
● The business entity has had a certificate, or
equivalent authorization, to employ licensees to
practice the healing arts revoked, suspended, or
limited; has been censured or has had other
disciplinary action taken; or an application for a
certificate or license denied, by the proper licensing
authority of another state;
● The business entity has validated any lawful rule
and regulation promulgated by the Board;
● The business entity has failed to report or reveal
the knowledge continuing law requires to be
reported or revealed;

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● The business entity has failed to report to the
Board any adverse action taken against the
business entity by another state or licensing
jurisdiction, a governmental agency, a law
enforcement agency, or a court for acts or conduct
similar to acts or conduct that would constitute
grounds for disciplinary action under provisions of
the bill;
● The business entity has engaged in conduct likely
to deceive, defraud, or harm the public;
● The business entity has engaged in conduct that
violates patient trust and exploits the licensee-
patient relationship for corporate gain;
● The business entity has used any false, fraudulent,
or deceptive statement in any document connected
with the practice of the healing arts including the
intentional falsifying or fraudulent altering of a
patient healthcare record;
● The business entity has failed to furnish the Board,
or its investigators or representatives, any
information legally requested by the Board;
● The business entity has had, or failed to report to
the Board, any adverse judgment, award, or
settlement against the business entity resulting
from a medical liability claim related to acts or
conduct similar to the acts or conduct that would
constitute grounds for disciplinary action under
provisions of the bill; or
● The business entity has been convicted of a felony
or class A misdemeanor, or substantially similar
offense in another jurisdiction, related to the
practice of the healing arts.


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 A business entity that holds a certificate of authorization
would be allowed to operate under an assumed name.

Health Care Stabilization Fund
The bill would require, for the purposes of determining
the impact on the Fund of requiring business entities to
comply with the provision of the HCPIAA, the Health Care
Stabilization Fund (Fund) to conduct such actuarial and
operational studies as are necessary to determine such
impact, and to report the finding to the Legislature on or
before January 1, 2020.

Rules and Regulations
The Board would be required to adopt rules and
regulations as necessary to implement and administer the
provision in the bill.

Effective Date
The bill would be effective from and after March 1, 2020.

Background
The bill was introduced in the House Committee on
Appropriations at the request of Representative Landwehr. In
the House Committee on Health and Human Services
hearing, proponent testimony was provided by
representatives from Blue Cross and Blue Shield of Kansas
City, Cerner, and the Kansas Chamber of Commerce. The
proponents generally stated enactment of the bill would allow
business entities to employ primary care physicians to
provide healthcare in stand-alone care clinics in Kansas and
would allow physicians to refer patients to specialists and
hospital systems who have the best clinical outcomes for the

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specific patient’s needs. A representative from Kansans for
Prosperity provided written-only proponent testimony.
Opponent testimony was provided by the Kansas
Association of Osteopathic Medicine, Kansas Chiropractic
Association, Kansas Medical Society, and Kansas Optometric
Association. The opponents generally stated this bill is not
necessary, and this bill should hold to the consistent
standards regarding independent physician judgment and
clinical care for those who practice medicine and employ
those who practice medicine. Representatives from the
American Academy of Pediatrics, Kansas Chapter; Kansas
Dental Association; Kansas Healthcare Stabilization Fund;
and the Kansas Hospital Association provided written-only
opponent testimony.
A representative of the State Board of Healing Arts
provided neutral testimony stating introduction of corporate
practice of medicine represents a major policy change for
medical practice in Kansas and impacts medical
professionals licensed by the Board. The representative
further stated the Board needs clear legislative direction on
important issues to facilitate implementing legislative intent.
The House Committee adopted amendments, as agreed
upon by stakeholders, to clarify the provisions of the bill do
not apply to medical care facilities defined in continuing law;
change the certificate application fee from a maximum of
$500 to a maximum of $1,000 and change the renewal period
from biennially to annually; clarify the language regarding the
business entity’s role as it relates to the employed licensees
and the care of patients; require the use of electronic medical
records by business entities; define “licensee”; insert
standards of professional conduct and corresponding
penalties for failure to meet such standards; and require the
Fund conduct such actuarial and operational studies as
necessary to determine impact on the Fund of requiring
business entities to comply with the provisions of the
HCPIAA.

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 A fiscal note was not available when the House
Committee took action on the bill.


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Statutes affected:
As introduced: 40-3401, 39-923, 75-6102, 65-2803, 65-2836, 65-2877a
As Amended by House Committee: 40-3401, 75-6102, 65-2803, 65-2836, 65-2877a