Governor Terminates Privacy Bill
Health Data Management (September 30, 2004)

California Gov. Arnold Schwarzenegger (R) has vetoed legislation that would have expanded the reach of state privacy laws outside of the state. Senate Bill 1451 was one of three pieces of legislation restricting the practice of outsourcing in California that the governor vetoed in recent days.

The bill, sponsored by state Sen. Liz Figueroa (D-Fremont), would have prohibited a person or entity outside the state that receives protected information--such as health or financial data--from sharing or disclosing the information in violation of California privacy laws. The bill would have required a person who has access to information protected under California laws but who is not subject to the laws "to treat the information with the same care that would be required of a person who is subject to any of those provisions," according to an analysis of the bill. Further, violators would have been civilly liable and subject to legal action in California courts.

In his veto message to the California Senate, Schwarzenegger said the bill was well intentioned and he would consider signing a similar measure in the future. "But unfortunately, this bill has an ambiguity that could be interpreted to conflict with the California Financial Information Privacy Act, specifically Financial Code section 4052," the governor said in his message. "I would prefer to sign a bill without the ambiguity and look forward to working with Sen. Figueroa to craft a measure I can support."

David Link, counsel to Sen. Figueroa, says the state senator is working to resolve the ambiguity and the governor can expect to see a substantially similar bill next year. "It's an extremely minor interpretative issue and something that is easily solvable," he adds.

In a printed statement, Sen. Figueroa said the issue of interpretation was brought up only after the bill reached Schwarzenegger's desk. "I will introduce this bill again next year and I will hold industry representatives to the commitments they have made to me to ensure that the language we have already agreed upon becomes law at the earliest opportunity," according to the statement. "I will also ask the governor to make good on his promise to work with me to craft a bill he can support."

Text of SB 1451 as enrolled and sent to the governor is available at

Posted to HIPAAcomply 9/30/04