Section 139.32.
Cal. Labor Code - LAB § 139.32.
in effect(a)
For the purpose of this section, the following definitions apply:
(1)
“Financial interest in another entity” means, subject to subdivision (h), either of the following:
(A)
Any type of ownership, interest, debt, loan, lease, compensation, remuneration, discount, rebate, refund, dividend, distribution, subsidy, or other form of direct or indirect payment, whether in money or otherwise, between the interested party and the other entity that the employee is referred for services.
(B)
An agreement, debt instrument, or lease or rental agreement between the interested
party and the other entity that provides compensation based upon, in whole or in part, the volume or value of the services provided as a result of referrals.
(2)
“Interested party” means any of the following:
(A)
An injured employee.
(B)
The employer of an injured employee, and, if the employer is insured, its insurer.
(C)
A claims administrator, that includes, but is not limited to, a self-administered workers’ compensation insurer, a self-administered self-insured employer, a self-administered joint powers authority, a self-administered legally uninsured employer, a third-party claims administrator for an insurer, a self-insured employer, a joint powers
authority, or a legally uninsured employer or a subsidiary of a claims administrator.
(D)
An attorney-at-law or law firm that is representing or advising an employee regarding a claim for compensation under Division 4 (commencing with Section 3200).
(E)
A representative or agent of an interested party, including either of the following:
(i)
An employee of an interested party.
(ii)
An individual acting on behalf of an interested party, including the immediate family of the interested party or of an employee of the interested party. For purposes of this clause, immediate family includes spouses, children, parents, and spouses of children.
(F)
A provider of medical services or products.
(3)
“Services” means, but is not limited to, the following:
(A)
A determination regarding an employee’s eligibility for compensation under Division 4 (commencing with Section 3200), that includes both of the following:
(i)
A determination of a permanent disability rating under Section 4660.
(ii)
An evaluation of an employee’s future earnings capacity resulting from an occupational injury or illness.
(B)
Services to review the itemization of medical services set forth on a medical bill submitted
under Section 4603.2.
(C)
Copy and document reproduction services.
(D)
Interpreter services.
(E)
Medical services, including the provision of medical products such as surgical hardware or durable medical equipment.
(F)
Transportation services.
(G)
Services in connection with utilization review pursuant to Section 4610.
(b)
(1)
All interested parties shall disclose to a third-party payer or other entity to whom a claim for
payment is presented for services furnished pursuant to a referral, a financial interest in an entity providing services.
(2)
The disclosure pursuant to this subdivision shall be made in writing, at the time the claim for payment is presented for services furnished pursuant to a referral.
(c)
Except as otherwise permitted by law, it is unlawful for an interested party other than a claims administrator or a network service provider to refer a person for services provided by another entity, or to use services provided by another entity, if the other entity will be paid for those services pursuant to Division 4 (commencing with Section 3200) and the interested party has a financial interest in the other
entity.
(d)
(1)
It is unlawful for an interested party to enter into an arrangement or scheme, such as a cross-referral arrangement, that the interested party knows, or should know, has a purpose of ensuring referrals by the interested party to a particular entity that, if the interested party directly made referrals to that other entity, would be in violation of this section.
(2)
It is unlawful for an interested party to offer, deliver, receive, or accept any rebate, refund, commission, preference, patronage, dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement to refer a person for services.
(e)
A claim for payment shall not be
presented by an entity to any interested party, individual, third-party payer, or other entity for any services furnished pursuant to a referral prohibited under this section.
(f)
An insurer, self-insurer, or other payer shall not knowingly pay a charge or lien for any services resulting from a referral for services or use of services in violation of this section.
(g)
(1)
A violation of this section shall be misdemeanor. If an interested party is a corporation, any director or officer of the corporation who knowingly concurs in a violation of this section shall be guilty of a misdemeanor. The appropriate licensing authority for any person subject to this section shall review the facts and circumstances of any conviction pursuant to this section and take
appropriate disciplinary action if the licensee has committed unprofessional conduct, provided that the appropriate licensing authority may act on its own discretion independent of the initiation or completion of a criminal prosecution. Violations of this section are also subject to civil penalties of up to fifteen thousand dollars ($15,000) for each offense, which may be enforced by the Insurance Commissioner, Attorney General, or a district attorney.
(2)
For an interested party, a practice of violating this section shall constitute a general business practice that discharges or administers compensation obligations in a dishonest manner, which shall be subject to a civil penalty under subdivision (e) of Section 129.5.
(3)
For an interested party who is an attorney, a violation
of subdivision (b) or (c) shall be referred to the Board of Governors of the State Bar of California, which shall review the facts and circumstances of any violation pursuant to subdivision (b) or (c) and take appropriate disciplinary action if the licensee has committed unprofessional conduct.
(4)
Any determination regarding an employee’s eligibility for compensation shall be void if that service was provided in violation of this section.
(h)
The following arrangements between an interested party and another entity do not constitute a “financial interest in another entity” for purposes of this section:
(1)
A loan between an interested party and another entity, if the loan has commercially reasonable terms, bears
interest at the prime rate or a higher rate that does not constitute usury, and is adequately secured, and the loan terms are not affected by either the interested party’s referral of any employee or the volume of services provided by the entity that receives the referral.
(2)
A lease of space or equipment between an interested party and another entity, if the lease is written, has commercially reasonable terms, has a fixed periodic rent payment, has a term of one year or more, and the lease payments are not affected by either the interested party’s referral of any person or the volume of services provided by the entity that receives the referral.
(3)
An interested party’s ownership of the corporate investment securities of another entity, including shares, bonds, or other debt instruments
that were purchased on terms that are available to the general public through a licensed securities exchange or NASDAQ.
(i)
The prohibitions described in this section do not apply to any of the following:
(1)
Services performed by, or determinations of compensation issues made by, employees of an interested party in the course of that employment.
(2)
A referral for legal services if that referral is not prohibited by the Rules of Professional Conduct of the State Bar.
(3)
A physician’s referral that is exempted by Section 139.31 from the prohibitions prescribed by Section 139.3.
(j)
This section does
not preclude the applicability of any other law that applies or may apply to a transaction.
References
referencesCal. Labor Code - LAB § 3200.
referencesCal. Labor Code - LAB § 4660.
referencesCal. Labor Code - LAB § 4603.2.
referencesCal. Labor Code - LAB § 4610.
referencesCal. Labor Code - LAB § 129.5.
referencesCal. Labor Code - LAB § 139.31.
referencesCal. Labor Code - LAB § 139.3.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026